Committee Approves Building Modernization Act

July 10, 2026

Source: E & M powernews

The Bundestag’s Energy Committee has passed the Building Modernization Act (GModG) in Berlin. It realigns the current Building Energy Act (GEG).

On July 8, the German Bundestag’s Committee on Economic Affairs and Energy approved the Building Modernization Act. The CDU/CSU and SPD parliamentary groups voted in favor of the federal government’s bill. The AfD, Alliance 90/The Greens, and The Left rejected the bill. A motion to postpone the vote by The Left had previously failed.

With this law, the federal government aims to fundamentally amend the existing Building Energy Act (GEG) enacted by the previous federal government. According to the plans, the continued operation and new installation of oil and gas heating systems will remain possible in the long term. However, starting in 2045, only climate-neutral fuels may be used. The federal government announced that it would introduce another law by the end of 2026 to regulate the green gas quota intended for this purpose.

Starting as early as 2029, newly installed oil and gas heating systems are to use gradually increasing proportions of biogas or bio-oil. At the same time, fuel suppliers are to blend increasing amounts of biogenic fuels into fossil fuels. According to the draft bill, this also includes hydrogen.

Hardship Provision for Landlords Added

During the parliamentary process, the coalition factions amended the draft to include a hardship provision for certain landlords. Owners with up to six apartments in housing markets where there is no shortage of housing will still be required to contribute to CO2 costs but will be exempt from the additional costs for biofuels and grid fees.

Other landlords, however, will be required to contribute to ongoing heating costs in the future if they opt for a new fossil-fuel heating system. Starting in 2028, tenants are to bear half of the grid fees and CO2 costs. Starting in 2029, landlords will also cover half of the additional costs for the mandated blending of biogenic fuels.

The CDU/CSU and SPD described the law as practical and technology-neutral. The coalition sees it as a binding path toward climate-neutral fuels by 2045. The specific details of the green gas quota are to be laid out in a separate law and take effect in 2028.

Criticism from the Opposition

The opposition parties, however, voiced strong criticism. According to the AfD, the origin and availability of the required quantities of biogas and bio-oil remain unclear. The party called for a feasibility study. Alliance 90/The Greens advocated sticking with the current Building Energy Act. The Left Party criticized, among other things, the lack of calculations regarding the climate impact and the financing of the proposed instruments. In addition, it stated that it had filed a constitutional complaint against the law.

At the same time, the committees addressed changes to the Federal Subsidy Program for Efficient Buildings (BEG). The federal government intends to realign subsidies for climate-friendly heating systems. According to the Federal Ministry for Economic Affairs, the program will be tailored more closely to households with low and middle incomes in the future.

According to Armand Zorn, deputy chair of the SPD parliamentary group, subsidy rates of up to 80 percent are possible. In addition, a staggered bonus is intended to create incentives for early heating system replacement. Starting in 2027, full subsidies for heat pumps will be tied to units manufactured in the European Union.

Rising Heating Costs Expected

Industry associations have reacted differently to the decisions. The German Corporate Initiative for Energy Efficiency (Deneff) states that while it sees greater planning certainty, it initially expects additional burdens for property owners and businesses.

The Berlin Bioenergy Office (HBB) particularly welcomed the planned green gas and green heating oil quotas, as well as changes to the sustainability requirements for biomass plants. The company Einskommfünfgrad views the agreement on heat pump subsidies as contributing to planning certainty but points to declining subsidy levels and higher costs for consumers in the coming years.

The Left Party’s parliamentary group in the Bundestag failed in its attempt in Karlsruhe to temporarily halt the planned passage of the new Heating Act. On July 9, the Federal Constitutional Court dismissed a constitutional complaint filed by the parliamentary group as inadmissible. As a result, the law is set to be passed by the Bundestag on July 10, before the summer recess.

Author: Susanne Harmsen