Reform of Germany’s “heating law” to be tabled in February 2026

Germany will establish a new legal framework for decarbonising the country’s heating sector early next year, chancellor Friedrich Merz announced after months of speculation. “The so-called heating law will be abolished. It will be called Building Modernisation Act from now on,” Merz said at a press conference following a meeting of senior representatives of Merz’s conservative Christian Democrats (CDU) and their centre-left coalition partner Social Democrats (SPD). In a paper detailing the results, the parties said they aim to adopt the new law by the end of February 2026.

“As agreed in the coalition treaty, we will abolish the heating law,” the parties said. The Building Energy Act - the formal name of the law stipulating the gradual phase-out of boilers powered with fossil fuels - will be renamed the Building Modernisation Act, they added. The reform would allow more technology-openness and make procedures more flexible and simple, the coalition representatives argued. The paper stopped short of detailing which changes the parties aim to implement, but outlined that both the economy and buildings ministries will coordinate key steps by the end of January, before the government cabinet decides on the reform in the following month.

The so-called heating law marked a major dispute within the former coalition government of chancellor Olaf Scholz. Advocates of a rapid transition towards clean heating technologies argued it was key to reach climate targets and pointed to their low long-term running costs, while critics argued that investment costs would overburden homeowners and tenants.

The German Renewable Energy Federation (BEE) said the coalition’s announcement failed to alleviate uncertainty over the future direction of the heating transition. “A new label and a schedule are not enough,” said BEE head Ursula Heinen-Esser. The renewable energy industry has been waiting for clear signals for months to initiate investments, for which “continuity” in the new law is essential, she argued. “The reform should build on the main pillars of the [existing] Building Energy Act, including the requirement of a 65-percent share of renewable energy sources for individual heating systems,” Heinen-Esser added. “We are now eagerly awaiting the key steps at the end of January.”

In a similar vein, Viviane Raddatz of environmental NGO WWF said the further delay of the heating law’s reform is sending the wrong signals. “The time for political flip-flopping is over,” Raddatz said, arguing that the new law must enable households and companies to benefit from the phase-out of fossil heating systems through lower operating costs, higher resilience, and job creation in the heating industry.

Industry-affiliated foundation Stiftung KlimaWirtschaft said it should be welcomed that a solution for the “deadlock” in the heating sector is within reach. However, companies cannot wait much longer for the new regulation to provide clarity, said foundation head Sabine Nallinger. The coalition parties now must use the time until the end of January to present a law that is viable in the long-term and puts the country on track towards climate neutrality. This would mean including provisions for the EU’s planned carbon price in the heating sector (ETS2), lower construction and installation costs through reduced bureaucracy, and establishing a transparent monitoring and review process to correct course where necessary. “We need fewer disputes and more direction and clear decisions,” Nallinger said.