Starting from 2025, European states will no longer be able to provide incentives forboiler installation powered solely by fossil fuels. This change is foreseen by the Green Homes Directive, which came into force on 28 May 2024, with the aim of completely decarbonising the European housing stock by 2050.
The directive requires governments to take measures to improve the energy efficiency of buildings, in particular through the renovation of the worst performing ones.
How will this new regulation be structured and what are the expected exceptions? What incentives will remain available for more sustainable heating systems?
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The ban on incentives: timing and exceptions
The ban on granting financial incentives for boilers powered only by fossil fuels will come into force on 1 January 2025, as specified in Article 17(15) of the Green Homes Directive.
From that date, Member States will no longer be able to provide subsidies, subsidized loans, tax deductions or other economic support for the installation, assembly or commissioning of boilers that run exclusively on non-renewable fuels.
However, the ban will not be applied without any flexibility: some exceptions are foreseen, which include projects financed by the National Recovery and Resilience Plan (PNRR) and the European Cohesion Funds, provided that the boiler replacement plans have been selected and approved before 2025.
These exemptions allow for the continuity of projects already underway, ensuring that ongoing energy modernization initiatives can be completed without interruption. This offers beneficiaries and Member States the possibility to gradually adapt to the new provisions, minimizing the economic impact and ensuring a planned transition.
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Incentives reserved for hybrid systems and renewable energy
To promote the use of sustainable energy sources, the Green Homes Directive provides incentives exclusively for hybrid heating systems and systems that use 100% renewable energy.
Hybrid systems combine at least two heat generation technologies: a common example is the combination of a heat pump with a fossil fuel boiler, or with solar thermal panels. In order for these systems to benefit from the incentives, the share of energy produced from the renewable source must be significant, contributing substantially to the building’s energy needs.
In particular, national governments will have to define clear criteria to determine the level of renewable energy produced by these plants, monitoring and checking periodically actual performance. Furthermore, there will be incentives proportional to the amount of renewable energy generatedso as to concretely encourage the transition towards a low-carbon heating system.
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Controls and monitoring on the effective use of renewable energy
To ensure that economic support is effectively allocated to plants that reduce emissions, the Directive requires Member States to activate monitoring mechanisms and periodic checks on the incentivized systems. These checks, carried out through on-site inspectionswill have the task of ensuring that the incentivized plants comply with European regulations and actually produce a significant share of energy from renewable sources.
This control structure represents an important step to prevent public resources from being allocated to systems that do not meet emissions reduction objectives. Through regular checks, Member States will be able to ensure that contributions to the energy transition are efficient and truly aimed at sustainable technologies.
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New guidelines from the European Commission for uniform application
To facilitate the adoption and implementation of the Green Homes Directive, the European Commission recently issued Communication 6206/2024, which provides detailed guidance to Member States on the phasing out of financial incentives for boilers powered solely by fossil fuels.
This document aims to standardize the application of regulations in the various EU countries, offering guidelines for the correct definition of “fossil fuel boiler” and for the management of the new incentives.
Particular attention is paid to regulatory clarity: precise and clear definitions avoid divergent interpretations by Member States, ensuring that incentives are provided only in contexts that comply with common directives for decarbonisation. Furthermore, the Commission is working to develop further guidance to incentivize the use of renewable energy systems in buildings, ensuring that the transition towards more sustainable buildings is supported in a coherent and functional way.
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Towards sustainable construction
With the ban on incentives for boilers powered by fossil fuels and the focus on hybrid and renewable systems, the Green Homes Directive confirms itself as a key measure for Europe’s energy transition.
From 1 January 2025, the phasing out of financial support for high-emitting technologies will mark a significant turning point, encouraging families and businesses to adopt more sustainable solutions. Thanks to the guidelines of the European Commission and the controls imposed, the legislation aims to ensure that public resources are invested effectively, contributing to the objective of a decarbonised building stock by 2050.
This ambitious strategy aims to reduce the environmental impact of buildings, supporting a sustainable energy future for future generations and consolidating Europe’s role in the fight against climate change. What will be the next steps for citizens and businesses in this transition towards greener buildings?
