What the GMG really means in Germany and what it does not

On February 24, 2026, the black-red federal government published its key points for the Building Modernization Act. The cabinet decision is planned for Easter 2026, and the law is set to come into effect before July 1, 2026. The most important change: the so-called 65 percent rule – the obligation to operate new heating systems with at least 65 percent renewable energy – will be abolished. Those who wish to install a new gas heating system today can do so again without restrictions.

It sounds like freedom. And in the short term, it is – anyone wanting to buy a gas heating system today can do so again, without conditions, without a requirement for renewable energy, and without bureaucratic hurdles. This short-term relief is real. However, a heating system is not a short-term decision. A new gas heating system typically runs for 20 years. And during these 20 years, developments will arise for the buyer that the GMG does not change, prevent, or cushion: a European CO₂ price that is freely determined in the market; a bio-mandatory quota for fuels whose raw materials are scarce and expensive; and gas networks that are actively being dismantled in more and more cities. The GMG regulates what is allowed today – not what it will cost tomorrow.

The Bio-Staircase: What sounds green is primarily expensive

The GMG is introducing a so-called Bio-Staircase: Starting in 2029, oil and gas heating systems must use an "increasing share of CO₂-neutral fuels" – initially at least 10 percent, then in three further stages until 2040. The government has not yet communicated how high the final stage will be. What it has communicated is that the quota will increase.

This is not a side note. As long as the exact percentage figures for the intermediate stages are not established, it is also not possible to reliably predict what heating with gas or oil will actually cost from 2029 onwards. Homeowners who buy a gas heating system today are making an investment decision for 20 years – based on a cost framework that the government has deliberately left open.

Biomethane and green heating oil are currently scarce and expensive. Scientists agree: Hydrogen and biomethane will not be available in sufficient quantities for households. The amounts that do exist are needed far more urgently by industry and mobility than by residential buildings. Therefore, homeowners who rely on "green gases" are depending on promises from the gas industry – not on guaranteed availability. The additional costs do not come from the law, but from the market. And this market will not be favorable for private households – how expensive exactly, no one knows today.

The CO₂ Price: A Cost Avalanche in Slow Motion

Anyone installing a gas heating system today is buying into a price spiral that has already been politically decided and is largely economically predictable. The facts: 2026: The national CO₂ price will range from 55 to 65 euros per ton of CO₂. This level will also apply for 2027. 2028: The national emissions trading system will be replaced by the European ETS-2. The price will then be determined freely in the market. According to an analysis, the price in ETS-2 could be around 220 euros per ton of CO₂. The model calculations have been evaluated, and the values have ranged between 60 and 380 euros – most models show prices significantly above 100 euros.

What does this mean in concrete terms? An average gas-heated property causes around 7.84 tons of CO₂ per year, according to an analysis. At 55 to 65 euros per ton, this amounts to around 430 to 510 euros annually just for the CO₂ price. If the price rises to 200 euros per ton – and this is not an extreme assumption, but a moderate scenario – it would be over 1,500 euros annually. Per household. In addition to the already rising gas procurement costs. The Building Modernization Act does not change this price path. The CO₂ price is not legislation from the federal government, but a European instrument – and it is coming.

The Gas Network Question: What No One Says Aloud

There is a topic that hardly comes up in public debate: What happens when a city's gas network is no longer operated? This question is no longer just a theory. According to a survey by the Association of Municipal Enterprises (VKU) from autumn 2025, one in five municipal utilities is already planning to shut down its gas network by 2045 at the latest. Another 46 percent have not yet made a decision – but can also steer in this direction. Concrete examples: Mannheim plans to shut down its gas network by 2035, citing rising costs for consumers as one reason. Stuttgart: the same goal by 2035. Augsburg, Würzburg, Hannover: by 2040. Munich, Regensburg: by 2045 at the latest.

What does this mean for someone who buys a new gas heating system today – with a typical lifespan of 20 years? They are purchasing a system that will rely on an infrastructure that is actively being dismantled in many regions of Germany throughout its entire operational life. The economic mechanism behind this is unavoidable: The more households leave the gas network, the higher the network fees will be for the remaining customers – because the fixed costs are distributed among fewer users. Those who are the last to remain connected to the gas network will pay the most.

Who really benefits from the GMG – and who does not

The honest question is: Who has an interest in as many households as possible installing gas heating systems today? The answer is clear: Gas suppliers, gas heating manufacturers, and the mineral oil industry. They all have business models that depend on a prolonged consumption of gas.

Who, on the other hand, does not benefit from the GMG? The homeowner who installs a gas heating system now and finds out in ten years: 

- The CO₂ price has significantly increased their heating costs.
- A bio-mandatory quota further increases the cost of fuel.
- Their gas network is being decommissioned or the network fees have risen to an uneconomical level.
- The promised hydrogen infrastructure for households does not exist.

These are not scenarios from a climate activist agenda. These are the official plans of municipal utilities, the price forecasts from research institutes, and the legislation passed by the European Union.

What the EU Building Directive Will Bring

The GMG will "implement the EU Building Efficiency Directive 1:1" – this is stated in the coalition's position paper. What this means is that by 2030 at the latest, all new buildings must be constructed as zero-emission buildings. This effectively excludes gas heating. The 65 percent rule, which is being removed from national law today, will return in a different form at the European level. Additionally, the GMG includes an evaluation clause. In 2030, it will be assessed whether the building sector meets its climate targets. If not – and current forecasts are not very optimistic – legal adjustments will be made. What is currently being presented as relief could lead to a wave of costs in just a few years.

Heat Pump: The Only Heating System Without Open Questions

While gas heating systems depend on political decisions, CO₂ prices, bio-quotas, and gas network decisions made by municipal utilities, the heat pump has a different starting position: The heat pump is the only heating system that has not been questioned in any political debate in recent years. No law has restricted it, and no law will do so – neither the GEG, the GMG, nor the EU Building Directive. All upcoming regulations lead to the same conclusion: The heat pump will be the most future-proof solution.

Additionally, there are its technical capabilities. A modern heat pump generates three to five kilowatt-hours of heat from one kilowatt-hour of electricity. It utilizes domestic energy from air or ground, without dependence on international gas markets and the price shocks that come with them. It can also provide cooling – an advantage that becomes increasingly relevant with each hot summer. And when combined with a photovoltaic system, it can be operated almost emission-free and at low cost. This is not a vision for the future – it is a reality for thousands of households today.

Freedom is not the same as security

The Building Modernization Act creates freedom. But freedom also means bearing the consequences of a decision. Those who install a gas heating system today are not making a bad decision for 2026. They may be making a very costly decision for 2033 and 2038. The heat pump is not the heating system that one must buy. It is the heating system that one can buy – without having to ask questions in ten years that are already answered today: What will the CO₂ price be then? What will my local utility do with the gas network? Where will I get the bio quota from?

Those who choose a heat pump today are not buying technology. They are buying planning security.