How to Ruin an Economy: Germany to Ban New Gas and Oil Heaters in Buildings by Next Year

18 April 2023, Lower Saxony, Hanover: Robert Habeck (Bündnis 90/Die Grünen), Federal Minister for Economic Affairs and Climate Protection, stands in front of a model of a wind turbine at the Phoenix Contact booth during a tour of the Hannover Messe industrial trade fair. The world's largest industrial trade fair …
Michael Matthey/picture alliance via Getty Images)

The German cabinet has backed legislation that would ban almost all new oil and gas heating systems for buildings by next year, despite widespread opposition from the public and concerns from within the coalition government itself.

On Wednesday, Germany’s Minister for Economic Affairs and Climate Action Robert Habeck announced that the cabinet of Chancellor Olaf Scholz will back the Building Energy Efficiency Act, which would require that all new heating systems run on at least 65 per cent of so-called renewable forms of energy. This would effectively ban new gas and oil heaters, which would need to be replaced with heat pumps or hybrid systems that only use fossil fuels as a backup.

According to the draft legislation, the plan would cost the Geman public some 9.16 billion euros ($10 billion) per year until at least 2028 when the government projects that costs would fall to 5 billion per year on the expectation of ramped-up production of heat pumps.

The move comes amid a wider push by the government to transition the German economy to climate neutrality by the year 2045. According to Reuters, heating represents over 40 per cent of the nation’s gas consumption, with nearly half of the 41 million households using natural gas for heating and 25 per cent using oil.

The green agenda push is apparently not appreciated by the German public, who have been suffering under an energy crisis as a result of dried-up supplies of Russian gas, which former Chancellor Angela Merkel turned to in order to make up the difference between the energy needed and the amount supposedly green sources were able to produce.

A survey conducted by Forsa found that 78 per cent of Germans are opposed to the legislation, as opposed to just 18 per cent who back the bill. Over six in ten people also told the pollster that they believed the move towards renewables would result in their heating bills costing more.

VKU, the German Association of Local Utilities also criticised the proposed legislation, claiming that it did not give enough time to make the change, saying in a statement: “The deadlines should therefore be extended. At least transitional periods are urgently needed.

The government has promised a subsidy of 30 per cent for residential properties to make the transition and an additional 10 per cent if the switch is made earlier than required by law. Those who receive welfare benefits could receive an extra 20 per cent in order to lessen the impact on the poorest households.

The money will be taken from the Climate and Transformation Fund, which currently has some 180 billion euros set aside for green projects over the next three years. Climate Minister Robert Habeck — of the German Green party — said on Wednesday: “The financing is secured.”

However, the leader of the pro-business Free Democrat Party (FDP) and finance minister in the coalition government, Christian Lindner has reportedly raised concerns about the cost to the public.

Following the announcement, Linder wrote on social media: “I expect that the necessary changes will now be made in the parliamentary process in order to eliminate concerns about affordability and feasibility and to burden people as little as possible.”

“The push to ban new gas and oil heaters comes just days after Germany closed down its final three remaining nuclear power plants over the weekend following a phaseout process begun under the Merkel government in 2011 following the Fukushima disaster in Japan.

Follow Kurt Zindulka on Twitter here @KurtZindulka

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