Federal government plans to gradually reduce heat pump subsidies – industry association advises households to act

People with very low annual incomes below 30,000 euros are to be better off for the time being. They can – provided the draft is confirmed by the budget committee in this form – count on up to 22,400 euros this year for the installation of climate-friendly heating systems. In the coming years, however, this amount is also to be reduced.

Who benefits, who loses out

A child bonus is also planned. For a family with children, the income threshold for the highest subsidy amount is to rise to 40,000 euros. This 10,000-euro bonus for families with children also applies to higher incomes. Minor children in the household are also to lower the income relevant for subsidy calculations on a one-off basis and thereby increase the grant.

With the cuts, the federal government aims to save around 2.1 billion euros by 2030. The committee is to address the matter on Wednesday. At the same time, the coalition of CDU/CSU and SPD plans, as part of a new Building Modernization Act, to scrap key elements of the previous traffic-light government's Building Energy Act, including the 65-percent rule, which requires newly installed heating systems to operate at least 65 percent on renewable energies.

Exceptions for families and low-income earners

The so-called climate speed bonus, which supports the swift switch from fossil-fuel to climate-friendly heating systems, is also to be phased out gradually. New gas and oil heating systems are to be permitted again going forward, provided operators gradually increase the share of CO2-neutral fuels such as biomethane. CDU/CSU and SPD also want to legally require retailers to fully switch to climate-neutral fuels from 2045.

The German Heat Pump Association (Bundesverband Wärmepumpe) deems the planned cuts fundamentally acceptable, though it had previously advocated for unchanged subsidy amounts and structures. Managing Director Martin Sabel told MDR AKTUELL: „Es gibt keinen Grund zu warten, aber es gibt jetzt auch keinen Grund, panisch zu werden“. Anyone considering installing a heat pump is „gut beraten, nicht allzu lange zu warten“. The tight budgetary situation makes the cuts „wahrscheinlich unumgänglich“. At the same time, he criticized parallel changes to regulatory law that lead to a loss of orientation.

Reactions from the coalition, opposition and industry

Mixed signals are coming from the successor coalition to the traffic-light government. SPD parliamentary group leader Matthias Miersch said: „Nicht jeder muss in gleicher Höhe gefördert werden, wie wir das in der Vergangenheit hatten. Ich glaube, dass wir da jetzt eine gerechtere Komponente haben.“ They want to maintain pressure on manufacturers, „weil wir feststellen, dass die Produktpreise im Vergleich zum Ausland hier noch viel zu hoch sind“. At the same time, he expressed hope „dass wir jetzt in diesem hoch umkämpften Gebiet der letzten Jahre eine Befriedung hinbekommen, so dass es auch Planungssicherheit gibt. Wir haben noch einmal sehr intensiv miteinander diskutiert in der Koalition.“

Federal Economics Minister Katherina Reiche (CDU) stated that the Building Modernization Act adopted by the federal cabinet gives people back freedom over their heating. The Greens' spokesperson for energy policy, Alaa Alhamwi, warned on the contrary: „Die Bundesregierung hat den Menschen eine verlässliche Heizungsförderung bis 2029 versprochen. Wer dieses Versprechen jetzt aufweiche, sorge für massive Verunsicherung.“ She also sees risks for the skilled trades and the heat pump industry.

Greens parliamentary group leader Katharina Dröge criticized that Economics Minister Reiche had been unable to answer „zentrale Fragen zu den Kosten, zur Klimawirkung und zu den wirtschaftlichen Auswirkungen des Gesetzes“. „Und ich finde, eine Wirtschaftsministerin, die so arbeitet, die macht ihren Job nicht.“ The German Heating Industry Association (Bundesverband der Deutschen Heizungsindustrie) stated that adjustments had to be made with „Augenmaß“. „Entscheidend sei, dass notwendige Investitionen in den Gebäudebestand nicht ausgebremst würden.“

Open questions and timeline

In the responsible Bundestag committee, experts had already voiced massive criticism of the plans some two and a half weeks ago – citing, among other things, bureaucracy, social risks, lack of practical feasibility and constitutional concerns. The Left party has filed a lawsuit in Karlsruhe because it sees the law being rushed through parliament under an expedited procedure. The black-red coalition also wants to await a ruling from the Federal Constitutional Court. It remains open whether the bill will make it onto the Bundestag's agenda before the summer recess.