1. Key message from IW Cologne
The Institute of the German Economy in Cologne (IW Cologne) warns strongly against installing new gas heating systems today. The study says that, although new gas boilers remain legally possible, they are likely to become an uneconomic investment by 2040 and beyond. In plain terms: homeowners who install new gas heating now risk paying substantially higher running costs and facing reduced value from that investment.
What the IW found about costs
IW Cologne’s analysis suggests that annual heating costs for a newly installed gas heating system could nearly double by 2040. By contrast, operating costs for a heat pump are expected to remain largely stable over many years. For partially renovated older apartments, the IW quantifies the difference at about 1,000 euros or more per year in savings when using a heat pump instead of a new gas boiler.
2. The regulatory and political background
The legal framework for heating in Germany has shifted rapidly in recent years. Earlier rules had effectively pushed new buildings away from pure oil and gas systems by requiring a large share of renewable energy. More recently, a new law replaced that requirement and reopened the option to install conventional oil and gas systems. At the same time, long‑term climate rules remain in place: from 2045 buildings must be heated only with renewable or fully climate‑neutral fuels.
Key regulatory milestones homeowners should know
| Year / Period | What changes or rules apply |
|---|---|
| 2024–2028 | Transition period: legal variations and preparations in municipal heat planning; installations in this window may be subject to later bio‑fuel quotas. |
| From 2029 | Start of mandatory progressive bio‑fuel quotas (Biotreppe) for fossil fuel use: owners must accept an increasing share of biomethane or bio‑heating oil in supplied fuels. |
| 2035 | Higher required share of climate‑neutral fuels under the quota rules. |
| 2040 | Further increase in mandated share of biofuels. |
| 2045 | Hard deadline: heating must use renewable or fully climate‑neutral fuels; operation of fossil oil and gas heating as such is not allowed. |
| Note | Exact quota percentages and timing vary depending on the final legal implementation and the date of installation, but a clear upward trajectory toward 100% climate‑neutral fuels by 2045 is established. |
3. Economic risks and evidence from other studies
IW Cologne’s warning is reinforced by other research that highlights structural risks for gas heating. One major concern is falling demand for fossil gas: as fewer customers remain on gas networks, the cost per customer to maintain pipes and infrastructure will rise. Those increased net charges, together with CO2 pricing and bio‑fuel surcharges, can make operating a gas heating system significantly more expensive over time.
Stranded‑asset risk and potential extra costs
Analyses referenced in the study suggest a real risk of stranded assets if owners invest now in pure gas heating. Environmental organisations and independent studies warn that households could face several thousand euros in extra costs compared with an earlier switch to renewable heating—figures cited include up to around 4,000 euros in additional lifetime costs in some scenarios. In short: the combination of higher running costs, rising network charges and required bio‑fuel mixes creates a material risk that a new gas boiler will be a poor long‑term investment.
4. Market and technology trends
The market data show a clear technology shift. Heat pumps have been gaining ground: household adoption rose from around 0.8% in 2021 to 1.9% in 2024 in residential buildings, with uptake holding at that level in 2025 in the analysed panel. Moreover, recent data indicate that heat pumps were the most frequently installed heating type in 2024, signalling a broader move toward electrified, renewable heating technology.
What ‘H2‑ready’ and bio‑fuel quotas mean in practice
Some installations and market advice mention technical standards like ‘H2‑ready’ equipment and the forthcoming increasing shares of biomethane or bio‑heating oil. Being H2‑ready generally means that a gas boiler is technically prepared for future operation with hydrogen blends, but this does not remove the economic risks flagged by research. The bio‑fuel quota (Biotreppe) will gradually force users of fossil fuels to accept rising shares of climate‑neutral fuels, which tends to increase costs and add complexity to long‑term operation of gas systems.
5. Practical guidance for homeowners
If you own or manage a building and are considering a heating replacement, the combined evidence points toward caution before choosing a new gas heating system. The choice is legally possible in many cases today, but the long‑term economic and regulatory trajectory suggests a high risk of additional future costs or of having to replace the system earlier than expected.
Decision checklist
- Assess long‑term running costs: consider projections of rising fuel prices, CO2 costs, and network charges.
- Compare with heat pump options: include expected electricity price trends, efficiency, and available incentives.
- Factor in building condition: heat pumps perform best with good insulation and reduced heat demand; for partly renovated older apartments, potential annual savings of ~1,000 euros or more have been estimated.
- Consider stranded‑asset risk: think about the likelihood of gas networks being scaled back or shut down by 2045 and the effect on resale and replacement costs.
- Seek independent energy advice: get an assessment from a neutral energy consultant who can model your specific case and explain obligations like future bio‑fuel shares.
Short‑term versus long‑term tradeoffs
Installing a gas boiler might look cheaper initially in some contexts, but the long‑term outlook is uncertain. Owners who opt for a gas system should understand they are taking on most of the financial risk tied to future fuel mixes, network costs and potential legal limits. Conversely, switching earlier to renewable heating such as heat pumps can reduce exposure to those future costs and aligns with the 2045 target for climate‑neutral building heating.
6. Conclusion: why IW Cologne advises caution
IW Cologne’s recommendation is clear and straightforward: although installing a new gas heater may be legally permitted in many places today, the available studies and market signals indicate a high probability that such an investment will be uneconomic or require replacement well before the expected technical lifetime. Homeowners should weigh the near‑term convenience of gas against a growing body of evidence—regulatory timelines, rising operational costs, shrinking gas networks and independent studies—that points toward heat pumps and renewable heating as the more future‑proof option.
In short: think long term, get independent advice, model your specific costs, and consider renewable heating alternatives before deciding to install a new gas heating system.
