Germany plans to become climate-neutral by 2045 and to reduce its GHG emissions by 65% compared to 1990 levels. Today, 53% of residential buildings are heated with natural gas. The regulatory framework for the transformation of the heating sector is currently set by the Building Energy Act (GEG), which the federal government now intends to amend through the Building Modernization Act (GModG). This analysis by the Institute of Energy Economics at the University of Cologne (EWI) investigates possible gas price developments based on scenarios for the growth of biomethane demand in Germany’s residential building sector, as well as the European supply potential for biomethane.
The findings of the analysis “Biomethane in the German Building Sector – A scenario-based analysis of Price developments” show that the biomethane quota proposed in the GModG could lead to a shortage of biomethane. If Europe’s production potential for sustainable biomass remains at current levels, prices could rise starting in 2040 due to scarcity. As a result, end-user prices for gas could increase tenfold by 2040, making gas heating systems uneconomical for all residential buildings. A comparison of heating costs in archetype buildings with a heating replacement in 2026 shows that installing a heat pump is the most cost-effective option in multi-family houses – regardless of the scenario. For single-family houses, installing a new gas boiler can still be in the short term, but it could be subject to high gas prices in the long term. The operating costs of a gas boiler are subject to high uncertainty, as they depend on the gas price, which could rise starting in 2040. Households in single-family homes that would install a gas boiler in 2026 face the risk that the boiler becomes uneconomical compared to a heat pump by 2040. In the long term, heating with biomethane can only be economically viable if the European production potential increases.
