Cabinet launches faster heating transition

07.08.2025

Source: E & M powernews

The German government decided to classify geothermal energy and large heat pumps as being of "overriding public interest". The gas storage levy is to be paid from the state budget.

The German government wants to accelerate the climate-neutral heat supply in Germany. On August 6, 2025, the Federal Cabinet passed a draft Geothermal Acceleration Act (GeoBG) to this end. At the heart of the law from the Federal Ministry for Economic Affairs and Energy (BMWE) is the classification of geothermal plants, large heat pumps and heat storage facilities as projects of "overriding public interest".

The aim is to facilitate faster approvals for heating projects that use geothermal energy, water, waste water or industrial waste heat. Among other things, it should be possible to submit applications digitally in future, approvals for operating plans should be granted within one year and project managers should be appointed as permanent contacts. According to the draft, if authorities remain silent within one month, this may be regarded as consent - with the exception of water law permits.

BDEW calls for tightening up

The German Association of Energy and Water Industries (BDEW) sees the GeoBG as an important step towards strengthening climate-neutral heat sources, but is calling for improvements:

• Chief Executive Kerstin Andreae praises the simplification of the procedure, but considers the protection of public water supplies to be underestimated.
• In addition, the BDEW criticizes the fact that geothermal plants in outdoor areas - i.e. outside of development plans - are not legally privileged. This makes expansion more difficult, although comparable regulations exist for wind and solar energy.
• In addition, the scope of the law is too narrow. Smaller heat pipes and storage facilities should also be included, the association demands.

VKU calls for legal clarifications

The German Association of Local Utilities (VKU) sees numerous measures in the draft law that could significantly accelerate the expansion of geothermal energy. Among other things, it is in favor of the fixed deadlines, digital processes and the introduction of fixed contact persons in authorities. In addition, the VKU proposes nationwide manuals and guidelines for innovative heat technologies.

With regard to water law issues, the VKU suggests the creation of a project management system that would also coordinate water management projects and otherwise expresses similar views to the BDEW.

Geothermal energy association hopes for investment security

The German Geothermal Energy Association (BVG) sees the cabinet's decision as a signal for a future-oriented heat supply. Managing Director Gregor Dilger sees the new classification of geothermal plants as "increased investment security" for municipal utilities, citizens and investors. The deadlines and procedural simplifications provided for in the law are also suitable from the BVG's point of view for implementing projects more quickly.

However, Dilger warns that implementation in practice requires sufficient official capacities. The German government should also swiftly implement the announced insurance program for the exploration risk in order to close the financing gap for deep geothermal projects.

Gas storage levy from the climate and transformation fund

Parallel to the GeoBG, the cabinet also decided to abolish the gas storage levy. In future, the costs of 3.4 billion euros are to be covered by the Climate and Transformation Fund (KTF). This relief will affect both households and industry - for a four-person household, the expected savings are between 30 and 60 euros per year.

The BEE (German Renewable Energy Federation) has once again criticized the funding from the KTF. President Simone Peter speaks of a "misappropriation" and warns of false incentives in favor of fossil fuels. The abolition of the levy creates an imbalance between gas and electricity and counteracts the climate targets.

The opposition Greens are also critical. Julia Verlinden, deputy leader of the parliamentary group, accuses the black-red coalition of using climate protection funds for fossil heating systems and unsettling investors and households that have opted for electromobility and heat pumps. This is because the promised electricity tax relief would not be available to them. "This is not climate protection, but climate pollution," she said (see also separate reports on the Federal Cabinet with the topics of CCS, public procurement law, climate protection report and climate council).

Author: Susanne Harmsen