Germany agrees tenant protection for fossil heating costs in buildings overhaul
Germany’s coalition proposes a 50-50 split of rising gas and oil heating operating costs, shielding tenants while keeping fossil systems an option under the planned Buildings Modernization Act.
The federal government has proposed that tenants and property owners equally share portions of the increased operating costs for newly installed gas or oil heating systems, marking a major tenant protection measure in the draft Buildings Modernization Act. The move, included in a six-point coalition paper, aims to prevent landlords from installing new fossil-fuel boilers and leaving tenants to shoulder higher running charges alone. The proposal sets a timetable for cost-sharing and phased biofuel mandates while promising a long-term evaluation of distributional effects.
Coalition sets 50-50 split for CO₂ and network fees from 2028
From 2028 the government plans to require an equal division between tenants and landlords of CO₂ pricing and gas network charges related to heating, according to the draft. The measure targets additional operating expenses that have been rising because of emissions pricing, network fees and planned increases in biofuel blending. Lawmakers say the rule is limited and designed to apply when an existing heating unit is replaced with a system running on gas, oil or liquefied petroleum gas.
Biotreppe rules to phase in biofuel shares beginning in 2029
The draft law also embeds a so-called “biotreppe” that will mandate growing shares of bio-derived fuels starting in 2029, applying to biomethane, bio-oils, biogenic liquefied gas and specified categories of low-carbon hydrogen. For the first three of four steps of the biotreppe, the government will halve the price components attributable to biogenic fuels for cost-sharing purposes. The paper foresees a comprehensive review of how these distribution rules function by 2036.
Scope and exemptions for existing buildings, new builds and self-suppliers
The new tenant protection is intended mainly for existing residential buildings where heating systems are replaced, but a complementary rule extends cost-sharing to new buildings first occupied by the end of 2029. Exceptions will be carved out, including hardship rules for under-modernised blocks with comparably low local rents. The proposal also addresses “self-supplying tenants” who hold separate oil or gas contracts, granting them a right to a half reimbursement from landlords when the landlord’s decision increases their running costs.
Ministries and parties back the compromise and timetable
Officials in the Economy Ministry, Justice Ministry and the Federal Building Ministry are reported to be jointly responsible for drafting the bill, and the coalition plans to present the text to cabinet in mid-May. Ministers involved have endorsed the compromise as a means to preserve technology openness in heating while offering tenants protection against sudden cost burdens. Lawmakers from the Union and SPD groups have signalled support for the negotiated formula, framing it as a practical balance between climate aims and affordability.
Critics warn of climate backsliding and investment disincentives
Environmental organisations and left-leaning politicians have sharply criticised the proposal, arguing that any subsidy or cost relief for fossil-based heating risks creating perverse incentives that slow the heat pump transition. The WWF and BUND contend that fossil boilers should not be encouraged and that landlords should bear the full cost of fossil choices. Industry and landlord groups counter that the change undermines investment certainty, with some warning the measure could deter upgrades and burden small private landlords.
Stakeholder reactions show deep division on policy direction
Tenant organisations welcomed the 50-50 rule as meaningful protection for renters who cannot choose their building’s heating technology. Consumer advocates said shifting part of the cost risk to landlords was equitable given tenants’ lack of control over technical decisions. By contrast, owner associations described the plan as unfair, arguing it redistributes the costs of broader energy policy failures onto property owners and could threaten the financial sustainability of the building stock.
The draft also flags practical issues that must be resolved during parliamentary debate, including how to separate fuel consumption between mixed-use buildings and how to operationalise supplier information duties so that biofuel shares can be transparently assigned. Government officials say the Economy Ministry is preparing supplier reporting obligations to ensure customers receive reliable information about the bio-content of delivered fuels.
The Buildings Modernization Act will alter an earlier heating law that had set a high threshold for renewable shares in new boilers, a provision that critics called an effective phase-out of gas heating. The new approach keeps gas and oil on the table but ties their operating-cost treatment to gradual blends of climate-friendly molecules and clear cost-sharing rules. Lawmakers stress that the intent is to reconcile climate targets with social fairness while retaining technology neutrality.
Parliamentary negotiations will determine final details, including the precise legal text that will be folded into the CO₂ Cost Allocation Act and related tenancy law changes. The government says it intends to move swiftly, arguing that citizens expect decisive action, but opponents are preparing to press for tighter climate safeguards or broader exemptions depending on their constituencies.
If adopted as outlined, the reform would mark a significant recalibration of Germany’s approach to residential heating policy by combining mandated biofuel phases with an explicit tenant protection mechanism that shifts a portion of running-cost risk onto property owners.
