Germany Fast-Tracks Infrastructure and Revises Heating Law

Germany’s government is making a significant policy shift, prioritising economic acceleration and political pragmatism over the pace of its environmental transition. Chancellor Friedrich Merz announced a dual-track strategy to fast-track critical infrastructure and replace a contentious heating law. According to reporting on this development, the move aims to revive the country’s sluggish economy and address public dissatisfaction ahead of crucial state elections.

The new strategy seeks to balance urgent economic growth with long-term climate ambitions, creating a policy shift within the German government that will significantly impact infrastructure development. The core of the plan involves declaring major transport projects to be of “overriding public interest”, granting them priority in planning and approval to cut through regulatory delays that have long hindered modernisation efforts.

Streamlining Infrastructure to Boost the Economy

A central pillar of the government’s new approach is drastically accelerating infrastructure delivery. Under the planned legislation, a wide range of road, rail, and energy projects will benefit from streamlined approval procedures. All associated administrative steps will move to a mandatory digital-only process, a measure designed to eliminate paper-based backlogs.

Perhaps the most consequential change concerns environmental regulation. To speed up modernisation, plans to expand road sections of over 60 kilometres will no longer require a full environmental impact assessment (EIA). This exemption marks a notable policy adjustment, with the government framing it as a necessary balance between ecological protection and economic urgency. Chancellor Merz stressed that while environmental protection remains important, it should not result in prolonged procedures that block urgently needed upgrades.

This push for faster development is supported by a recent departure from Germany’s traditionally strict debt rules. The coalition has established a special fund enabling the state to borrow hundreds of billions of euros, arguing that substantial investment is required to reverse the deterioration of the nation’s once-renowned infrastructure following years of underfunding.

Replacing the Heating Law with a New Framework

Alongside infrastructure reforms, the government is dismantling a major climate policy introduced by the previous administration. The controversial heating law, which required most new heating systems to operate primarily on renewable energy, will be formally repealed. The legislation had triggered widespread backlash from homeowners concerned about high costs and rigid requirements, contributing to declining political support for its backers.

In its place, the coalition plans to introduce a new Building Modernisation Act. This replacement framework preserves the objective of reducing emissions from buildings but allows for greater flexibility. Homeowners will be given more technological options and extended timelines for compliance, a design intended to make the green transition more socially acceptable and manageable for ordinary citizens. The legislation is expected to be submitted to parliament by the spring of the coming year.

The Political Landscape Driving Change

The timing and scope of these policy shifts are strongly shaped by Germany’s current political environment. With five key state elections scheduled for the coming year, the ruling coalition is under mounting pressure. Both Chancellor Merz’s conservatives and their Social Democrat partners have experienced fluctuating support following a series of policy missteps.

Adding to this pressure is the continued rise of the far-right Alternative for Germany (AfD), which now leads in some opinion polls. This political backdrop has created an urgent need for the governing coalition to demonstrate tangible progress and economic competence to restore public confidence. The strategy of fast-tracking visible infrastructure projects and replacing an unpopular law represents a direct response to this challenge, aimed at signalling decisive action to revive economic growth.