Germany plans to ban installation of most oil and gas heating from 2024

Germany plans to ban the installation of most oil and gas heating systems from next year, with proposals approved on Wednesday triggering angry divisions in the cabinet.

The radical plans are designed to transform Germany’s heating systems in an attempt to meet net zero emission targets that critics have called unworkable and discriminatory. About half of Germany’s 41m households currently use natural gas heating, and almost a quarter use heating oil.

Championed by the economics minister, Robert Habeck of the Greens, the bill is due to come to parliament in June. But the pro-business FDP has lashed out, calling it the equivalent of an “atomic bomb” for Germany and expressing concerns about its effect on the economy, the burden it will put on poorer households and the technical practicalities of implementing it.

The FDP’s leader, Christian Lindner, who is also the finance minister, indicated in a protocol note sent to his cabinet colleagues that he was prepared to support the bill only if changes were made. He said he feared the budget needed to carry out the task would in effect blow up Germany’s tight debt control mechanisms. The party’s general secretary, Bijan Djir-Sarai, said the proposal was not practical and would have to be changed.

The opposition CDU, which has said it would oppose the bill, has called it a “crowbar reform”, and Jens Spahn, the vice-parliamentary group leader, said his party would “do everything possible to ensure this law doesn’t happen in this form”.

Environmentalists have largely welcomed the proposal, with Greenpeace calling it a long overdue milestone. Many experts have said it does not go far enough.

Habeck said it was a necessary part of Germany’s ambition to become carbon neutral by 2045, and he said the country was lagging behind. “Comparative to other countries who’ve done this earlier, we’re starting late with this,” he said, referring to Nordic countries, which are far less reliant on fossil fuels to heat their homes.

He hit back at the criticism from the FDP, saying that “gazing in astonishment at a problem does not make things better”.

If the bill is passed in June, it will enact a virtual ban on the installation of gas and oil heating from 2024. It will require almost all newly installed heating systems to run on 65% renewable energy in new as well as old buildings, in which defunct models would need to be replaced.

Homeowners will be encouraged to install heat pumps to run on renewable sources of electricity, or to switch to district heating, electric or solar thermal systems. Biomass heat, hydrogen and gas obtained from an approved environmentally friendly source, such as biomethane, will all be encouraged under a programme of subsidy payments of 10-40% for each heating system,.

In addition, “Klimabonis” or additional climate bonus payments, will be available in certain cases, for instance if someone voluntarily switches to a more climate-friendly system, regardless of their income.

The bill is being championed by Robert Habeck of the Greens. Photograph: Christian Mang/Reuters

The challenge will be to make these energy sources more readily available. Other questions relate to a shortage of heating engineers – industry estimates a shortfall of 60,000 workers – supply chain problems and lack of technological development. Heat pumps are still thought unsuitable for many older types of houses, for which they require large amounts of electricity to be effective, even as the bigger heating sector providers are working feverishly to improve the systems.

Homeowners over the age of 80 will be exempted from having to switch to new systems, as will those who receive social welfare benefits.

Germany’s Association of Local Utilities (VKU), which governs municipal infrastructure, urged the government to extend the transition periods, calling the proposed law an “emotional rollercoaster”.

A poll by the Forsa Institute showed 78% of Germans were against the plans and 62% expected heating bills to increase as a result of the move to renewables.

The scheme is initially expected to cost German taxpayers about €9.16bn a year until 2028, decreasing to €5bn from 2029 as renewable energy expansion and a reduction in the cost of heat pumps because of mass production help to offset costs.

It is to be financed from the €180bn Climate and Transformation Fund, into which the money raised from a CO₂ emission levy on fossil fuels is paid. A large segment of this fund is already dedicated to building insulation projects to make them more energy efficient, prompting concerns that finances may be tight.

Fines of €5,000-€50,000 can be imposed on people failing to abide by the law.

The discussion about phasing out gas heating in Germany was the preserve of environment experts until Moscow’s invasion of Ukraine, which halted gas and oil supplies from Russia and turbo-charged the decision to switch from fossil fuel imports.

Last week, Germany turned off the last of its three working nuclear power plants, after decades of discussion.