Germany Passes Controversial ‘Green’ Heating Law Estimated To Cost Economy €1 Trillion

A law would require newly installed heating systems to be powered by at least 65 percent renewable energy.

After six months of fierce debate, Germany’s left-wing government has passed the country’s controversial green heating law, the Building Energy Act (GEG), with high estimates indicating the law will cost Germany’s economy over €1 trillion over the next 20 years.

While politicians belonging to Germany’s three-way politician applauded the heating law coming into force on Friday last week, the political fallout has likely yet to be fully realized.

Many Germans — already struggling with inflation and a slowing economy — balked at the mandate to install new expensive heating systems, with the law being rejected by the majority of the populace, according to polling. The government is also being accused of a hasty legislative process and a lack of parliamentary hearings, calling into question the democratic basis for the law in its entirety.

The law mandates that Germans with older heating systems replace them within a certain time period, although the final bill passed watered down some requirements and carved out some exceptions. Nevertheless, the final cost of the bill is still expected to be enormous, with high estimates placing it at €1 trillion and lower estimates hovering at €600 billion.

Many Germans have all of their savings in their home, and for many seniors, their homes, often featuring older heating systems, have seen their value take a hit due to the law. At the same time, in the coming years, they will be forced to make costly heating upgrades — usually in the form of a heat pump and the associated costs of making it work efficiently inside a building — to meet new green standards. Experts are also warning that landlords will have an incentive to increase rents in response to the Building Energy Act. 

The problem is that approximately three-quarters of the old buildings in Germany were built before the first thermal insulation regulations came into force in 1979. Many of these buildings will now need to be made energy efficient, representing an enormous cost burden at a time when Germany has also phased out nuclear power and the price of energy, particularly oil and natural gas, has soared.

The Free Democrats (FDP), usually seen as a pro-business party, first fought their coalition partners on the proposed law, but in the end, the liberal party helped pass the law on Friday. There are already signs the FDP is paying the price for its decision, with the latest YouGov poll putting the party at just 5 percent, which is the threshold for entering the German parliament.

“There is fear among the population,” shouted Alexander Dobrindt (CSU) in parliament. He said it is “the height of disrespect” for the citizens to pass the law and that the CSU would work to abolish it. 

The Alternative for Germany (AfD), which saw its polling numbers soar around the same time the heating debate raged, has also said it will abolish the law should it come to power, saying it is an arduous tax on German businesses, pensioners, and those who invested in a home or apartment.

“The AfD faction strictly rejects Habeck’s (…) heating hammer. Despite severe criticism, the law was neither postponed nor defused,” said Marc Bernhard, a parliamentary spokesperson for the AfD. “The tricky thing about the law, however, is that the heating has to be torn out again if it does not meet the municipalities’ heat planning required by 2028. In this way, the government is hiding the devastating consequences for millions of people and is transferring the risk of the heat transition to the citizens.”

He further pointed out that the nuclear power plants would save twice as much CO2 if they were allowed to continue to operate. 

As Remix News reported last year, the proportion of poor people in Germany reached a new high, according to the Federal Statistical Office, with the data highlighting a sea change in the German economy. The report also only covered data up until the end of 2021 before the dramatic increase in food and energy prices in 2022.