The Building Modernisation Act, valid since 29 July 2026, replaces the previously enacted Building Energy Act. A key difference lies in the removal of the obligation for newly installed heating systems to operate with at least 65% renewable energy. Instead, the so-called "bio-staircase" is intended to ensure climate targets are met by mandating a successively increasing proportion of biogenic fuels or climate-neutral gases for new gas and oil heating systems.
DIP partner Aengevelt Immobilien points out that this regulation will result in a significant increase in heating costs if gas heating systems continue to be operated. A substantial part of these additional costs will in future have to be borne by landlords.
Requirements of the "bio-staircase" and its economic consequences
The "bio-staircase" defines binding quotas for the use of climate-neutral gases or biogenic fuels. This includes biomethane, climate-neutral hydrogen, or synthetic methane. The quotas are staggered: at least 10% from 2029, at least 15% from 2030, at least 30% from 2032, and at least 60% from 2040. Analogous blending quotas apply to biodiesel for oil heating systems. The climate-neutral gases are to be blended by local gas suppliers.
A meta-study by the Scientific Services of the German Bundestag dated 7 July 2026 shows that hydrogen, as well as synthetic methane produced from hydrogen, are primarily needed for industrial purposes. This means that the requirements of the "bio-staircase" will mainly have to be met by biomethane. Biomethane is produced from renewable raw materials such as maize, grass, beet, cereals, slurry, and waste and residual materials. However, there are also capacity bottlenecks here, as currently only 270 of Germany's approximately 10,000 biogas plants possess the technology for processing biogas into biomethane. In addition, increasing consumption in the transport sector is driving up demand.
The costs for biomethane are significantly higher than for natural gas. According to Aengevelt, the price for natural gas under long-term supply contracts is about EUR 37/MWh, while biomethane costs between EUR 85 and EUR 100/MWh depending on the type of production. The German Economic Institute (IW) predicts that heating costs in a partially renovated old building apartment could rise by 80% by 2040 and by 119% by 2045 compared to current levels. The "bio-staircase" is responsible for 74% of these price increases, while increased grid fees (21%) and the CO2 levy (5%) account for the remaining proportions. A large part of these additional costs will be imposed on the landlord according to the new legal situation.
Alternatives and assessment
The economic viability of a heat pump largely depends on the specific characteristics of a building, including insulation standard, orientation, geometry, and type of radiators. According to Aengevelt, a financial advantage may only arise in the long term, which deters many owners, especially older ones, from the high initial investments. While district heating represents an alternative, it is not always competitive or even available due to potentially high connection costs and dependence on the supplier.
Dr. Wulff Aengevelt, Managing Partner of Aengevelt Immobilien, states that while the new Building Modernisation Act has lifted the investment obligation of the previous law, tenants and landlords are confronted with drastically rising heating costs. He criticises that property owners must also bear part of the potential energy wastage by tenants, which he considers a perverse incentive. Dr. Aengevelt concludes that the costs of overambitious climate protection remain too high if heating costs could more than double by 2045.
