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Germany’s Heating Overhaul Stalls as Coalition Weighs Weaker Mandates and Subsidy Cuts

Policy uncertainty is chilling the heating market, leaving cities far short of heat‑pump targets.

Overview

  • Germany’s Gebäudeenergiegesetz still requires new urban heating systems to run on 65% renewables from mid‑2026, yet CDU/CSU negotiators say they plan to decouple municipal heat‑planning deadlines from the law’s trigger.
  • Stuttgart illustrates the gap between plans and reality: the city needs roughly 3,400 heat pumps per year but logged only 319 subsidy applications last year and 363 in the first half of 2025.
  • Current federal support can reimburse up to 70% of costs for climate‑friendly heating, capped at €21,000 for a single‑family home, but Union leaders are pushing to scale back grants and shift relief toward tax write‑offs, with the SPD exploring tighter targeting.
  • Industry data show a deep slump in demand for new heating systems, with sales down 46% in 2024 and a further 22% drop in the first half of 2025 to 296,500 units.
  • Environmental groups urge keeping the 65% rule and prioritizing heat pumps, warning that weakening requirements could force CO₂‑certificate purchases and load the federal budget with an estimated €13–34 billion by 2030.