Germany Needs €14 Billion to Make Gas and Heating Networks Clean

By Bloomberg

Jun 02, 2023

image is BloomburgMedia_RVMQ08T1UM0W01_03-06-2023_16-00-07_638213472000000000.jpg

BERLIN, GERMANY - JANUARY 21: Steam and smoke rise from the Reuter West coal-fired power and heating plant on January 21, 2016 in Berlin, Germany. Though Germany has invested heavily in renewable energy sources and has set ambitious goals for energy production from wind and solar parks, the country will nevertheless remain heavily dependant on coal for its energy needs for decades to come. (Photo by Sean Gallup/Getty Images)

(Bloomberg) -- Germany expects the cost of transforming its natural gas and heating networks to reach as much as €14 billion ($15 billion) by the end of the decade, the first time an official estimate has been given.

The country wants to start using hydrogen and expand district heating to reduce its heavy fossil fuel dependency and cut overall carbon emissions by two thirds by 2030, according to an Economy Ministry document seen by Bloomberg. The cost will be about €1 billion a year for upgrades to each network for the next seven years.

Cleaning up heating systems and replacing gas are key areas to tackle if the government’s climate goals are to be met. While policy makers argue it’s more expensive to rely on fossil fuels in the long run, the cost of the energy transition is becoming a political issue. The government is being forced to water down a plan to ban boilers next year after pressure from the the Free Democrats.

The think tank Agora Energiewende warned that Germany’s plan to switch to renewable energy sources could lead to decommissioning of over 90% of its gas distribution network, with risks of €10 billion of stranded assets.

By Petra Sorge