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Default common sense on gas tankless water heater install

Does it really need stainless to the weather cap? I've had the same
flue on my tank type for 10 years since I moved in, and I'm pretty sure
it has been there much much longer than that. I could see a couple of
sections near the heater needing to be SS, & maybe I'm fussing about
nothing, the whole thing can't be much more than 10'. If it is so hot
on the stack that stainless is required, how close can it come to wood?
Will it be necessary to sawzall the ceiling and roof and put in metal?

 
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