As one who holds to New Covenant Theology (NCT) I am frequently asked this question, “Do you believe in replacement theology? When I hear other teachers who embrace NCT try to answer this question I hear them giving rather involved answers in order to avoid receiving the label of one who holds to replacement theology. My answer is quite clear, I do believe in replacement theology. In fact, I would go as far as saying that I do not think that anyone who holds to NCT could answer the question any other way.
Our standard NCT definition of Israel is that it is a “temporary, unbelieving, picture of the people of God.” This definition comes from a variety of Scriptures. In Hebrews 8:7-13 we are told that the Old Covenant with Israel only produced unbelievers. Therefore, through the death of Jesus on the cross a new people will be purchased who will have their sins forgiven and will have a changed life or new heart. This work of Jesus is called the New Covenant. The Israelites, who were produced by the Old Covenant had neither their sins forgiven or had new hearts. Please keep in mind that were a remnant of believers in the Israel, but they became believers on the basis of the New Covenant to come.
On of the best places in Scripture that describes how the Old Covenant only produces unbelievers is Galatians 4:21-31. Here we find the allegory of Hagar and Sarah. Hagar is said to represent the Old or Mosaic Covenant and that covenant only produces unbelievers and is to be identified with Mount Sinai and the earthly city of Jerusalem. The verse actually says that the Israelites are in slavery. That would mean that they are slaves to sin and therefore unbelievers (Romans 6:17-18).
In Romans 9:30-10:3 the apostle Paul states quite clearly that Israel has not attained righteousness because they pursued it by works. True righteousness is described as the unconditional acceptance that believers receive when they trust in Jesus alone to save them by his death on the cross for their sins. When we believe in the saving work of Jesus Christ our sins are forgiven and therefore we have a clean record and are righteous and accepted by a holy God. Israel sought salvation by works and not by faith and were therefore viewed as unbelievers. Please note that Paul is describing Israel as a whole. The existence of a remnant of believers is not relevant to Paul’s argument. Israel is ALWAYS viewed as unbelieving.
The new covenant produces a new people of God who are the real people of God. Israel was only a picture of the people of God. That is why when Peter describes believers in the new covenant era he uses the language of the old covenant people of God.
But you are a chosen people, a royal priesthood, a holy nation, a people belonging to God, that you declare the praises of him who called you out of darkness into his wonderful light. Once you were not a people, but now you are the people of God; once you had not received mercy, but now you have received mercy (1 Peter 2:9-10 NIV).
The real people of God are those for whom Jesus died on the cross. The church in the new covenant era is made up of those who profess to believe the gospel message. They are trusting Jesus to pay for their sins and they are in love with the God of heaven and earth. Membership in the nation of Israel in the old covenant era was gained simply by being born into one of the Israelite families. Israel and the church are picture and fulfillment. The church does replace Israel since Israel was placed on this earth to be a temporary, unbelieving, picture of the people of God.