EU to End Financial Incentives for Fossil Fuel Boilers from 2025
The European Commission has today released the first in a series of documents providing guidance to support EU countries in transposing and implementing the updated Energy Performance of Buildings Directive (EPBD) into national legislation. Today's document (C/2024/7161) clarifies the requirement under Article 17(15) to end all financial incentives for the installation of new standalone fossil fuel boilers no later than January 1, 2025. Specifically, the document clarifies the concepts of "standalone fossil fuel boiler," "hybrid heating system," as well as "installation" and "financial incentives."
For example, grants, preferential loans, or tax benefits such as reduced tax rates cannot be provided for the purchase, installation, or commissioning of new standalone boilers running on natural gas, oil, or coal, regardless of whether the installation is part of a renovation project. No public authority at national, regional, or local level is entitled to provide economic or other support using public resources to buyers, installers, or third parties for the installation of such boilers.
The document also defines forms of incentives that may remain. For instance, hybrid heating systems that combine a boiler with a renewable energy heat generator can only be incentivized if the renewable energy share is significant and the incentive amount is proportional to this share. Additionally, incentives approved under EU funds, financing for additional costs related to transitioning to renewable gases in boilers, support for maintenance, repair, or decommissioning of fossil fuel boilers, or income support for fossil fuel heating may be maintained. Similarly, incentives that have already been granted at national, regional, or local level and communicated to a specific recipient may continue to be paid out.
Context
The updated Energy Performance of Buildings Directive (EPBD) defines how the EU can achieve full decarbonization of its building stock by 2050 through a series of measures, while reducing energy bills for European citizens through structural improvement of buildings' energy performance. The Directive entered into force on May 28, 2024, with the transposition deadline for most provisions set for May 29, 2026. However, Article 17(15) has a shortened transposition deadline - January 1, 2025. The Commission is working on several other guidance documents on elements of the updated EPBD, planned for adoption next year.
Future of Individual Boilers
The updated Energy Performance of Buildings Directive (EPBD) does not set specific dates at the EU level for a complete ban on installing existing fossil fuel boilers or mandatory decommissioning of already operating boilers. However, there are several key points to consider:
1. End of Financial Incentives (from January 1, 2025)
The Directive stipulates that public financial support for fossil fuel boiler installations must end no later than January 1, 2025. This includes grants, loans, and tax benefits for such installations.
2. National Implementation May Set Stricter Deadlines
The EPBD sets general objectives but allows individual EU member states to adopt stricter measures, such as a complete ban on new fossil fuel boiler installations or setting specific deadlines for decommissioning existing ones. Some countries have already introduced or plan to introduce stricter frameworks in line with their national energy and climate plans. For example, Austria banned solid and liquid fossil fuel boiler installations from 2020, France banned gas boilers in new buildings, and the Netherlands has prohibited connecting new houses to gas networks since 2018.
3. Focus on Decarbonization by 2050
The directive's main goal is to achieve a fully decarbonized building stock by 2050. While this implies phasing out fossil fuel boilers, specific timelines for decommissioning existing systems will likely be determined by national governments rather than at the EU level. For instance, Germany plans to phase out all fossil fuel boilers by 2045, while Denmark plans to connect all buildings to district heating systems or heat pumps by 2029.