Building Modernization Act: Pragmatism for the Heat Transition in Existing Buildings

• Building Modernization Act Creates Broad-Based Options for the Heat Transition Through Biomethane
• 13.9 Million Gas Heating Systems Supply Around 56 Percent of All Homes – Bio-Step Model, Green Gas Quota, and Hybrid Heating Systems Open Up Realistic Modernization Options
• Kehler: “Anyone Who Wants an Effective Heat Transition Must Offer Broadly Applicable Solutions for Existing Buildings.”

In the view of the association Die Gas- und Wasserstoffwirtschaft, the planned Building Modernization Act (GModG) can pave the way for the use of green gases such as biomethane and hydrogen in the heat transition. On the occasion of today’s cabinet discussion, the association emphasized that the legislation creates additional options for action, particularly in existing buildings, in combination with biomethane and new technologies such as hybrid heating systems. However, it remains unclear how the green gas quota and the so-called bio-step model are intended to interact in practice.

With the GModG, the German government aims to fundamentally revise the existing Building Energy Act. In particular, many detailed technical requirements are set to be removed. Instead, the current draft includes, among other measures, the so-called bio-step model, which foresees gradually increasing shares of climate-neutral gases for new heating systems starting in 2029. The law is also intended to be accompanied by the introduction of a green gas quota. In doing so, the draft legislation opens the door for biomethane and other renewable and decarbonized gases such as hydrogen and its derivatives to make a significant contribution to the heat transition, especially in existing buildings.

“The Building Modernization Act creates cost-efficient options for reducing CO2 emissions, particularly in existing buildings and therefore across the broader heating market,” explains Dr. Timm Kehler, Managing Director of the association Die Gas- und Wasserstoffwirtschaft. “Good policy starts by acknowledging reality: well over half of all heating systems in Germany are gas heating systems. Anyone seeking to advance the heat transition must offer solutions that work at scale while thinking in terms of both electrons and molecules. Heat pumps, hybrid heating systems, district heating, biomethane, and eventually hydrogen are not contradictions, but building blocks of a resilient and affordable heating system.”

Around 13.9 million gas heating systems are currently in operation in Germany, supplying approximately 56 percent of all homes. The replacement of these systems has so far progressed only slowly. Hybrid solutions combining gas condensing boilers and heat pumps could become a key technology in this context. Especially in existing buildings, they enable a pragmatic entry into electrification without prematurely abandoning existing infrastructure. According to calculations by the association, significant modernization progress can be achieved through the replacement of gas heating systems with heat pump systems and through the expanded use of hybrid technologies.

Primarily due to building modernization measures and the expansion of hybrid heating systems, the association expects gas consumption in the building sector to be reduced by around half by 2045. A heating market model developed by the association projects a remaining gas demand of around 120 TWh per year in a modernized building stock by 2045. Despite declining sales volumes, no dramatic increase in grid charges is expected.

According to calculations by the association Die Gas- und Wasserstoffwirtschaft, the initial volume requirements of the green gas quota and the bio-step model can already be met with current production capacities. Upcoming investments are expected to significantly expand these capacities by 2030. Meeting the further volume requirements at affordable prices is considered realistic.

“However, the still insufficiently defined interaction between the green gas quota and the bio-step model remains critical, as does bureaucratic overregulation regarding the cost-sharing between landlords and tenants,” Kehler added.

The association therefore calls for the GModG to be specifically geared toward simple and practical implementation in the further legislative process.