The German government is embroiled in a contentious debate over the reform of the Building Energy Act (GEG), with Economics Minister Katarina Reiche (CDU) advocating for a significant reduction in financial incentives. In an interview with the Frankfurter Allgemeine Sonntagszeitung, Reiche positioned the proposed changes as a pivotal choice: prioritizing coercive measures or leveraging carbon pricing and targeted support to encourage energy-efficient renovations.
Reiche’s argument centers on the perceived cost-ineffectiveness of the current system. She claims the level of subsidies has driven up the price of installations like heat pumps, rendering them considerably more expensive in Germany compared to other nations. The minister signaled a shift toward more focused assistance, concentrating resources on households with lower incomes.
This policy reversal follows months of negotiations with Construction Minister Verena Hubertz (SPD), highlighting the deep divisions within the governing coalition. The push to scrap the existing GEG, colloquially known as the “Heating Law” was a central promise of the CDU and its Bavarian sister party, CSU, during the recent election campaign. The coalition agreement now mandates a broader consultation process, bringing in faction leaders and subject matter experts alongside the two ministerial portfolios. The rebranded “Building Modernization Act” reflects this intended shift in focus.
While the SPD reportedly supports curtailing heating subsidies for higher-income earners, the party remains steadfast in its demand for a ban on new installations of climate-damaging heating systems. Despite the disagreements, Reiche expressed optimism regarding a potential compromise. She emphasized her ongoing dialogue with all stakeholders, stating her confidence in finding “a sensible solution” within the coalition.
However, the policy shift has drawn criticism, particularly from climate action experts. The Expert Council on Climate Issues, responsible for monitoring compliance with Germany’s Federal Climate Protection Act, asserts that significant action remains necessary within the building sector to attain national climate targets. They warn that delays in reducing building-related emissions will intensify the burden on energy consumers – and exacerbate potentially significant social costs across Germany and the European Union. The debate underscores a fundamental tension: balancing the financial realities of climate policy with the urgency of environmental action and ensuring equitable distribution of the costs involved.
