Germany reaching compromise on controversial move away from fossil fuels for heating

As more and more nations are emphasizing the importance of transitioning to use of greener fuels, Europe’s biggest economy are making political strides in that direction by agreeing on a controversial energy bill to ban the installation of new gas and oil-fired heating systems. 

Germany’s vice chancellor Robert Habeck of the Green Party wants to ban almost all new oil and gas heating systems in Germany from 2024, one year earlier than what was previously agreed upon by the current three-way coalition of center-left Social Democrats (SPD), Greens, and neoliberal Free Democrats (FDP), both for climate protection reasons and because the price for oil and gas has risen in the wake of the war in Ukraine. 

Previously the coalition government had agreed to ban new oil and gas systems from 2025 and permit only new ones that generate at least 65% of their heat from renewable energies. But even if the coalition is in an overall agreement, implementation and specifics are still being discussed. 

But Habeck's ministry now sees a need for swifter action saying: 

– Over 80% of the demand for heat is currently still met by burning fossil fuels. Every year, we burn more than 40% of the natural gas Germany imports to heat our buildings and supply them with hot water. Of the approximately 41 million households in Germany, nearly one in two heats with natural gas. 

And since cost of acquiring and installing such heating systems that will meet the governments renewable energy targes are prohibitively expensive for most households the coalition is finding it hard to agree on how to curb the costs for homeowners and tenants with a subsidy program that will potentially cost the state billions. 

Expensive and labor intensive 

Today around half of Germany's households are still dependent on gas and oil for heating, switching to alternatives is costly and simply not affordable for many. A heat pump costs between €11,000 ($11,700) and €25,000 for a single-family house. That's a big investment, even if the government subsidizes up to 40% of the cost. 

And there is a lack of skilled workers, both for the mass installation of new heat pumps and, for example, in the solar industry, which says it is currently lacking around 200,000 jobs. 

These are just two of the big hurdles in the ambitions project spearheaded by vice chancellor Habeck, who has yet to say exactly how large this program will be. 

One other major hurdle is getting the neoliberal Free Democrats (FDP) to agree with the bill. 

FDP, whose parliamentary group leader in the Bundestag, Christian Dürr, said promptly, 

– I think blanket bans are wrong; instead, we should remain open-minded and ensure that classic heating systems can also be operated in a climate-neutral manner in the future, according to DW. 

Compromise reached includes key exemptions 

In late March the coalition government reached a compromise on the energy bill that includes important exemptions and phase-in periods. 

The coalition agreement on the details of the bill — which still needs to be submitted to the federal states for consultation and passed by the cabinet — comes after the government reached an agreement on its future climate policy following 30 hours of negotiations as Germany aims to be climate-neutral by 2045.

The agreement scraps an initial plan to mandate replacing old oil and gas heaters that break down after 2024 with modern heating systems. Instead, reinstalling an oil or gas boiler will be allowed in the short term, provided the heating system is supplemented with new technology to reach the 65 percent target within three years. 

The 65 percent renewables requirement does not apply to homeowners who are older than 80. In those cases, it only comes into force once their house is inherited or sold, with a transitional period of two years.

 – The law sets another sector on course for climate neutrality and we enable a pragmatic transition," said vice chancellor Robert Habeck after the compromise was reached, according to Politico.