Building Modernization Act: Green Gas Quota Opens Path for Heating Transition in Existing Buildings

• The GModG enables technology-neutral modernization pathways for the existing building stock.
• The legally mandated introduction of a green gas quota creates a binding outlook for biomethane and hydrogen.
• Kehler: “Climate neutrality in the building sector cannot be achieved solely by replacing heating systems. Equally important is the gradual decarbonization of the energy sources used.”

The German Bundestag today adopted the Building Modernization Act (GModG) in its second and third readings. Die Gas- und Wasserstoffwirtschaft (The Geman Gas and Hydrogen Industy) welcomes the fact that, ahead of the summer recess, a reliable framework for the heating transition in existing buildings is now being established. The association views the legal anchoring of the green gas quota positively, while still seeing a need for improvement in the allocation of costs between tenants and landlords.

With today’s decision, the Bundestag is sending an important signal for technology-neutral modernization of the building stock. The law opens up different compliance pathways and, with the green gas quota, creates a binding perspective for the use of climate-neutral gases. The quota is to be specified in detail in a separate law by December 2026. What is now crucial is to develop reliable framework conditions for biomethane, hydrogen, and derivatives such as synthetic methane.

“Climate neutrality in the building sector will be achieved not only through the replacement of heating systems, but also through the gradual decarbonization of the energy sources used,” explains Dr. Timm Kehler, CEO of the association Die Gas- und Wasserstoffwirtschaft. “The green gas quota provides a reliable outlook for this. It creates predictable demand for biomethane and hydrogen and will thus stimulate investment in production, imports, and infrastructure. This makes it clear: the future of gas networks does not lie in their blanket decommissioning, but in their targeted further development for climate-neutral gases.”

The GModG has the potential to significantly advance modernization in the existing building stock. More than half of homes are currently heated with gas. The law now enables both modernization with new, efficient gas condensing boilers and heating system replacement with hybrid systems that combine a heat pump with a gas heating system. This solution is often cost-efficient and quick to implement, particularly in existing buildings, and makes use of existing infrastructure.

However, the association takes a critical view of the regulations on cost allocation in rental relationships, which it considers unnecessarily complex. “Germany has the highest share of tenants in the European Union. Therefore, the practicality of the law will be determined precisely in the rental sector. The current system risks making billing and implementation unnecessarily complicated and could hinder investment. There is still a need for improvement here,” Kehler added.