Berlin The traffic light coalition is still struggling to get the reform of the Building Energy Act (GEG) ready for decision. The law is due to pass the Bundestag next week so that citizens will have final clarity before the parliamentary summer recess as to what exactly is in store for them in the next few years.
Most recently, the coalition partners agreed on further details for individual regulations. These must now be incorporated into the existing draft law by the Ministry of Economic Affairs in legally secure formulations. The plans are now much less rigid, there are transitional periods and high subsidies for replacing the heating system.
The reactions to the emerging agreement were mostly positive. For example, the Federation of German Industries (BDI) said that the agreement opens up the required breadth of solutions on the way to a climate-neutral building sector. The possibility of using electricity and district heating as well as renewable solid, liquid and gaseous fuels without discriminatory requirements is immensely important. This is the only way to completely decarbonize the building sector by 2045.
How much will the subsidy be?
According to coalition circles, there should be a basic subsidy of 30 percent for everyone when replacing the heating system. Anyone who switches to a climate-friendly solution before 2028 will receive an additional bonus of 20 percent, which will then be reduced by three percentage points every two years, which should create incentives for a quick change.
For incomes below 40,000 euros a year there could be a bonus of 30 percent. About 45 percent of all homeowners are below this limit. The bonuses can be added together, but the funding must not exceed 70 percent of the costs.
Economists are divided on the present solution. The energy economist Andreas Loechel from the Ruhr University Bochum criticized: The switch to the heat pump should apparently be “subsidized”. However, the long road to climate neutrality can hardly be financed by the state.
If you now pay such high state aid, you could have implemented the heat transition with higher CO2 pricing, said Loeschel. “Large parts of the population could even be better off with a simple, even redistribution.” Climate protection against the market is unnecessarily expensive.
When replacing the heating system with a heat pump, there should be a basic subsidy of 30 percent.
(Photo: dpa)
The management Veronika Grimm also reacts cautiously. “The procedure for funding households appears to be application-intensive and costly,” she says. In particular, the dependence of funding on income could lead to false incentives. “The question is how that will be implemented. Can I install the heating during a phase of low activity and then get back in full?“, complains Grimm.
Achim Wambach, President of the Center for European Economic Research (ZEW) in Mannheim, however, praised the agreement on funding. “The funding structure is complex, but individual justice is not achieved, the households are too heterogeneous for that,” said Wambach. Nevertheless, it is good that special attention is paid to poorer households, because they are usually more affected than others by the climate policy measures.
When does the amendment to the law come into force?
The plan is to start in January 2024. However, the regulations on heating replacement should only take effect once the municipal heating plan is available. Only when people know their options for climate-friendly heating in the place where they live do the rules of the GEG take effect, according to FDP faction circles.
In principle, however, there should only be heat planning in municipalities with more than 10,000 inhabitants. For cities with 100,000 or more inhabitants, it is currently planned that they will have to develop a heating plan by the end of 2027. The GEG reform would then apply from 2028. Cities between 10,000 and 100,000 inhabitants should be given a deadline of the end of 2028.
Is district heating better than a heat pump?
District heating makes the installation of a new heating system superfluous. The investments for connecting to a district heating network are less expensive than installing a heat pump. Instead of switching to heating with renewable energies yourself, this task is delegated to the operator of the heating network. Economics Minister Robert Habeck (Greens) recently said that heating networks make it possible “to cover the heat requirement without major renovation of the building from central, future renewable sources”.
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Where are the chances that there will be district heating?
This is more likely to be the case in larger cities. The federal government is pushing for an expansion of the district heating networks. However, this is expensive and not always economical. In September last year, the federal government launched the “Federal Funding for Efficient Heating Networks” (BEW) program, which is worth three billion euros, in order to advance the expansion of heating networks. The program runs until 2026. Six out of 43 million households in Germany are currently supplied with district heating, which corresponds to a market share of 14 percent.
The municipal utilities, which operate 90 percent of the heating networks in Germany, are confident about the expansion. “We think that district heating’s market share could triple by 2045,” says Ingbert Liebing, General Manager of the Association of Municipal Enterprises (VKU). However, Liebing has one condition: “We need three billion euros a year until 2035.” He suggests providing the money from the Climate and Transformation Fund (KTF).
Aren’t the prices for district heating very high?
Here the political pressure on utilities to limit price increases is increasing. District heating tariffs have been the subject of heated debates for years. In many cases, consumer advocates accuse the operators of abusive pricing. The background is that the operators of heating networks are monopoly suppliers. Anyone who has scrapped their old boiler and has it connected to the heating network usually has to be contractually bound for many years and has hardly any options to switch.
The German Tenants’ Association (DMB) and the Federal Association of Consumer Organizations (VZBV) are therefore calling for improved consumer and tenant protection when expanding district heating. This is the only way to create broad acceptance among the population and for district heating to make its contribution to the heat transition, according to a joint demand paper by the DMB and VZBV.
Does it make sense to install gas heaters after January 1, 2024?
Gas heaters must be convertible to hydrogen in the future. However, many experts consider hydrogen to be a bet on the future. According to the housing industry, without a network operator’s assurance that affordable hydrogen will be delivered, this could be a bad investment. Then you have to invest in a heat pump later. CO2 pricing will also make fossil fuels much more expensive in the future.
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How big is the chance of running a gas boiler with hydrogen in the future?
Most experts assume that hydrogen-powered heaters will remain the absolute exception in the future because hydrogen is likely to remain scarce and expensive. Municipal heating planning regulates whether the requirements for the procurement of hydrogen are met. The following conditions must be met here: A municipality must have identified a hydrogen expectation area in its municipal heating plan and at the same time there must be a binding agreement with the supplier to convert the gas to hydrogen networks.
Only in these cases is the installation of a gas heating system that can be converted to hydrogen permitted after the municipal heating plan has been submitted. So the hurdles are high. From today’s perspective, it seems unlikely that many municipalities will make such agreements with the utility. Where there is still no municipal heating plan and owners do not yet have final clarity as to whether a hydrogen area will be designated on site, there is at least a legal option to opt for a gas heating system that can be converted to hydrogen.
However, owners are taking a considerable financial risk, because all heating systems that are replaced or newly installed after 2024 must meet the 65 percent renewable requirements for climate protection in the short or medium term. Anyone who decides to use gas heating again during the corresponding transition period – for example in anticipation of a hydrogen area that will not come at all – must then adapt it to the 65 percent requirement.
What should tenants expect?
Tenants should not be overburdened. Therefore, a new modernization levy for the heating exchange is created, which is linked to the fact that a subsidy is claimed. Ultimately, rents should not be allowed to rise by more than 50 cents per square meter when the heating is replaced. From the point of view of the real estate association ZIA, this is clearly too tight. The effect could be fatal, warned ZIA President Andreas Mattner. “Even the most willing landlords could therefore shy away from modernizing the heating systems.” It is to be expected “that against this background, some will postpone the investments that are so important in terms of climate policy for the time being”.
Does the rule that people over 80 years of age are exempt from the provisions of the GEG remain the same?
That is still open. However, it is likely that the age limit will drop. “We don’t want to oblige anyone to do something that is not affordable in their respective circumstances,” said the SPD, Greens and FDP recently. “That’s why the exceptions, such as the 80-year limit, are being revised and made more plausible.”
At this point, the Grimm economy calls for a clear cut: It makes sense if the age limits are dropped and, above all, not lowered any further.
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