A significant policy pivot in Germany’s heating sector is creating a favorable outlook for producers of sustainable gases. The governing coalition in Berlin, comprising the SPD, CDU, and CSU, has outlined key principles for a new building modernization law. This legislative move shifts the regulatory focus away from mandatory heating system replacements and toward binding quotas for the use of “green gases.” This framework enhances the long-term predictability for biomethane as a blending component, a development that is generating increased market interest in companies like Verbio.
From Mandatory Renewables to a “Bio-Blending Staircase”
The core of the political agreement involves abandoning the previous rule that required 65% renewable energy use when replacing a heating system. The proposed draft instead introduces a graduated obligation to utilize CO2-neutral fuels in new fossil-fuel heating installations.
The specifics mandate that from January 1, 2029, any newly installed gas or oil heating system must operate using at least 10% CO2-neutral fuels, with biomethane explicitly listed as a permissible option. This compulsory blending share is then scheduled to increase in three additional stages up to the year 2040.
For the market, a crucial implication is that fossil fuel heaters will remain permissible in principle, but only if these blending quotas are met. This establishes a structural, long-term demand driver for biomethane within the heating sector.
A Complementary Lever: A Broader Green Gas Quota from 2028
In a parallel measure, the government is planning a general green gas quota starting in 2028 for energy suppliers and distributors of natural gas. The initial requirement is set at 1%, with gradual increases to follow.
This represents a second regulatory tailwind for producers such as Verbio. It means that not only individual households but the entire gas industry would be legally obligated to incorporate a “green share.” From an investor perspective, this is particularly significant because it has the potential to not just initiate short-term demand but to embed it firmly within the market for years to come.
Should investors sell immediately? Or is it worth buying Verbio?
This growing optimism appears to be reflected in the company’s share price. Currently trading at €27.18, the stock is hovering near its 52-week high of €27.26 and shows a substantial gain over a 12-month period.
Criticism and Challenges: Supply Constraints and Cost Concerns
The proposed policy is not without its detractors. Environmental groups have raised concerns, primarily about the allocation of scarce biomethane resources. The German Federation for the Environment and Nature Conservation (BUND) argues that biomethane is urgently needed for decarbonizing industrial processes. The association also points out that biomethane’s share of Germany’s gas consumption was already at 1.6% in 2024, suggesting that an introductory quota of 1% starting in 2028 may lack an immediate additional steering effect.
The issue of cost presents another hurdle. Consumer advocates and industry experts warn that producing biomethane is more expensive than extracting fossil natural gas. A mandatory blending requirement could therefore lead to higher heating costs—a politically sensitive point that is likely to influence the final design of the legislation.
Short-Term Implications for Verbio
For Verbio, the regulatory direction is initially a clear positive. Higher quotas translate to potential for increased sales volumes, extending beyond the transportation fuel market into heating. This comes at a time when the company is regaining its footing after a challenging fiscal year marked by price pressures and contracting margins.
Furthermore, this regulatory momentum was preceded by a mid-February upgrade from Deutsche Bank analysts, who cited an improving regulatory landscape as a key reason for their more bullish stance.
The immediate catalyst remains political. The final impact will hinge on the precise quota levels written into the enacted law and the stipulated timeline for their increase, as these details will determine the certainty of the anticipated additional demand.
Ad
Verbio Stock: Buy or Sell?! New Verbio Analysis from February 27 delivers the answer:
The latest Verbio figures speak for themselves: Urgent action needed for Verbio investors. Is it worth buying or should you sell? Find out what to do now in the current free analysis from February 27.
Verbio: Buy or sell? Read more here...
