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    New Rules Needed for Heating: German Lobby Group


Changing the taxation rules would bring more bangs for the government's buck, argues Zukunft Erdgas.

by: William Powell

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New Rules Needed for Heating: German Lobby Group

German gas lobby group Zukunft Erdgas (ZE) has put forward a “holistic” climate protection concept for the heating market, it said July 17. Gas has the biggest share, covering almost half the market, it said. 

If Germany is to reach its goal of cutting CO2 by 55% by 2030, ZE recommends changing the regulations in a way that recognises CO2 savings, and a tax on the CO2 content would be a way forward.

Heating systems modernisation often provide the highest CO2 reduction at the lowest cost, it said, so in future, the "extensive funding" from federal and state governments should be awarded depending on how much CO2 is saved.

Although a CO2 price would cause little reduction in the foreseeable future owing to the inflexibility of demand, it would send a strong signal to consumers that energy costs will increasingly depend on the CO2 content of the energy sources used, and so influence their behaviour in the long term.

A revenue-neutral adjustment on fuels would correspond to a CO2 price of around €50/metric ton. The price of electricity would be reduced by 0.9 cents to 1.13 cents/kWh. By contrast, natural gas would go up 0.3 cents/kWh and fuel oil by 0.5 cents/kWh. The resulting additional costs could be offset by modernisation of heating systems, which can reduce energy use by up to 30%. 

These measures alone would not be enough to meet the targets, so the decarbonisation of energy sources must also be promoted, said ZE, also recommending a target for more green gas, including biogas, power-to-gas and decarbonised natural gas. A technology-oriented specification would stimulate a competition of ideas and guarantee the achievement of the climate goals at the best price, said ZE. 

"A CO2 price is an important lever on the way to climate neutrality, but it can only be part of an overall concept. In order to develop real climate effects in the heating market without risking social upheavals, a holistic system must be developed. This must offer tenants and landlords equal incentives for cost-effective climate protection. And we need a target for green gases, after all, gas heating can also be operated with CO2 -neutral gases in the future . With these building blocks, the entry into a fair climate concept succeeds, "said ZE CEO Timm Kehler.