Share of renewable energies in gross electricity consumption, in final energy consumption for heating and cooling and in final energy consumption in the transport sector Development from 1990 to 2020

Figure 2. Source:

Federal Environment Agency (UBA) based on AGEE-Stat as of 10/2021

Share of electricity

Share of heat

Share of traffic

ply are nothing fundamentally new. Therefore, and in light of the stagnating progress in recent years, one can question if this actually could be a tipping point in Germany’s efforts to decar- bonize its heating sector. However, it is not just the well notice- able drive of the new German Federal Government that should nurture optimism. In fact, there are several reasons to assume that Germany means business in the heating transition and that district heating is at the core of the government’s strategy. Germany’s strategy for the heating sector First, climate protection recently gained constitutional status in Germany. In an infamous ruling last year, the Bundesverfas- sungsgericht, Germany’s constitutional court, declared its cli- mate policy partially unconstitutional as its lack of ambition violated inter-generational justice. The Federal Government ramped up its climate goals in response to this decision. In- stead of a CO 2 reduction by 55% by 2030, the new aim is set to 65%. And instead of aiming at achieving climate neutrality by 2050, the new end goal is already the year 2045. Besides the higher ambition, the architecture of the climate law itself should lead to changes in the heating sector. The law breaks down the overarching goal for 2030 into separate annual emission budgets for every CO2-related sector (indus- try, buildings, energy, etc.) to create accountability. Should a sector exceed its budget, it cannot hide in the mix. Instead, the responsible ministry is obliged to take immediate action to bring the numbers back on track. In 2020, all sectors except the building sector reached their goal. Hence, immediate ac- tion is required in this sector. Second, we can see that several alterations are already under- way. Many of the German local utility companies (“Stadtwerke”) have taken on the responsibility and adopted the climate goals from the federal level or created more ambitious goals. They have started to create their own roadmaps to climate neutrali- ty by drawing up transformation plans. A study commissioned by AGFW, the German DH Association, estimates that invest-

ments by the magnitude of 33 billion Euros are needed for DH to support Germany’s 2030 goal adequately.

A federal support scheme for efficient heating grids (Bundes- förderung effiziente Wärmenetze, BEW) will soon come into operation to supply the Stadtwerke with funding. The scheme will cover investments connected to the expansion, densifica- tion, and decarbonization of heating grids. Furthermore, the scheme includes an operation bonus (payment per kWh) for solar thermal plants and large-scale heat pumps. To be eligible for any funding, companies either need to present a transfor- mation plan for an existing grid or a feasibility study regarding a planned grid - a pre-requisite the support scheme also partly finances, which is quite noteworthy. Moreover, the planning does not stop at the company level. Germany increasingly looks towards heat planning as a pivotal instrument to prepare the heating transition at the municipal level. The states of Baden-Württemberg and Schleswig-Hol- stein have already made it mandatory for their larger mu- nicipalities to engage in heat planning. In addition, Minister Habeck announced that his ministry would work towards a nationwide rollout. This new focus is all too understandable. Heat is a predomi- nantly local commodity that can hardly be traded across vast distances. Considering this, the heating transition can be un- derstood as a mosaic consisting of a great myriad of local tran- sitions, each unique in their preconditions. Therefore, putting the municipalities as the true experts of the particular local circumstances into the driver’s seat makes sense. But let us not ignore the challenges of delegating this kind of responsibility down to the lowest level of governance. Challenges and possible first solutions By a rough estimate, Germany’s plans for mandatory municipal heat planning could confront about 700 German municipali- ties with a new task. For some of them, especially the medium

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