IW Study Warns Gas Heating Costs Could Double: What It Means for German Households

The German Economic Institute (IW) has released a study warning that households using gas heating could see their annual heating costs double in the coming years. The study attributes the potential cost surge to rising carbon prices under the national emissions trading system and the phase-out of fossil fuel heating subsidies. For a typical single-family home, annual gas heating costs could rise from around €1,300 to nearly €2,600 by 2030 if current policies remain unchanged. The study's authors argue that the cost increase would hit low- and middle-income households hardest, as they are less able to afford the upfront investment needed to switch to alternatives like heat pumps or district heating. The IW recommends that policymakers combine stricter emissions pricing with targeted financial support to help households transition without excessive burden. The study comes amid ongoing debate over Germany's Building Energy Act, which mandates a shift to renewable heating in new and existing buildings. Critics of the law have warned that hurried implementation could impose high costs on homeowners, while proponents say the long-term savings from reduced fossil fuel use will outweigh the initial expenses. The study adds a concrete cost projection to that debate, underscoring the financial urgency of the energy transition.