German homeowners still opt for gas boilers over heat pumps when changing heating systems

Homeowners in Germany installed more gas boilers than climate-friendly heat pumps when replacing their heating systems in 2024, though the gap is closing, found a report by the government-funded research alliance Ariadne. A small share of homeowners, 1.3 percent, modernised their heating systems last year, with 0.7 percent installing a gas boiler and 0.5 percent choosing a heat pump. "While the installation rate of heat pumps lagged significantly behind that of oil, gas or pellet-based heating systems until 2023, it has almost caught up with fossil fuel technologies by 2024," the authors wrote.

Heating modernisations in owner-occupied homes peaked in 2022, with 4.6 percent of homeowners replacing their boilers. The drop to 1.3 percent in 2024 indicated "a lack of information about subsidy programmes, as well as political uncertainty surrounding climate policy, the building energy act [which spells out the gradual phase-out of fossil boilers] and municipal heat planning," said Kathrin Kaestner of the RWI, the Leibniz Institute for Economic Research and co-author of the report. All of this was "slowing down the politically desired heating transition."

Energy efficiency renovations, another key measure to lower heating needs and bring Germany's buildings closer to their climate targets, have picked up a little since 2021, the report found. In 2024, 1.1 percent of owner-occupied homes underwent a renovation – still below the two percent annual target.

The cost of buying and running a new gas boiler in Germany is predicted to be twice as high as a heat pump over a 20-year period, according to a report by non-profit consultancy co2online. The cost difference is in large part due to the rising price of CO2, which makes burning fossil fuels more expensive year-on-year to incentivise the move to cleaner alternatives.

"Households with a higher heating cost burden in proportion to their income tend to reject the CO2 price," found the Ariadne report. The authors pointed out that the energy cost burden decreases as income rises, and as such well-off households have a more positive attitude towards the levy. For climate policy to gain broad support, they recommended that political measures take into account the barriers to energy-efficient renovations and heating replacement, and that perceived and actual costs are given greater consideration.

Germany's national carbon price on heating will be integrated into the European Emissions Trading System (ETS II) in 2027, which in the long run is set to steeply increase the cost of heating with oil and gas.