Rapid evolution towards carbon capture technology, while progress in renewable heating solutions moves at a more gradual pace.
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The German government is pushing forward with two energy laws to accelerate the country's energy transition, following a stalemate under the previous traffic light government. The Geothermal Acceleration Act and the CCS Act aim to boost renewable energy sources and carbon capture and storage (CCS) technology, respectively.
The Geothermal Acceleration Act is expected to provide market impulses for municipal heat planning and the heat transition in industry, while simplifying and reducing bureaucracy for traditional geothermal projects, large heat pumps, and heat networks. Ingo Sass, head of the Geoenergy section at the German Research Centre for Geosciences in Potsdam, asserts that a significant part of the technology for geothermal energy is ready for series production and can be easily installed and used across most of the country.
The CCS Act is crucial for industry and enables CCS infrastructure of overriding public interest, construction of CO2 storage facilities offshore, and federal states' decision on onshore storage. Klaus Wallmann, head of the research unit Marine Geosystems at the Helmholtz Centre for Ocean Research Kiel, states that the CCS Act opens the way for CCS technology in Germany, which is necessary to achieve the climate goals of the federal government. However, there is currently no business model for CCS technology in Germany, as CCS costs are significantly higher than CO2 emission prices in the European Emissions Trading System.
On August 5th, the Federal Cartel Office cleared the way for a major CO2 pipeline project, allowing Open Grid Europe GmbH to proceed with two pipelines in cooperation with ONTRAS Gastransport GmbH and Fluxys S.A. This project is a significant step towards Germany's CCS infrastructure development.
However, the so-called "heating hammer" (Heizungshammer) initiative, aimed at accelerating the switch from gas heating to heat pumps as part of Germany's energy transition, is facing significant challenges and delays. The planned strong push—especially the exemption from the electricity tax for heat pumps—that was part of the coalition agreement has not been implemented, causing doubts about the effective advancement of the politically desired transition to heat pumps under current policies.
The part of the RED III directive relating to onshore wind power is already adopted in the Bundestag, but the German Wind Energy Association (BWE) states that the implementation still falls short of the European legal possibilities for accelerating approvals. The new regulations on "energy sharing" will enable consumers to actively participate in the energy market and the energy transition, while the amendment to the Building Energy Act, the so-called Heating Act, is still awaiting a "reality check" of the energy transition.
The relief from the gas storage surcharge is expected to be around 30 to 60 euros per year for a four-person household, providing some relief for end-customers. The new regulations aim to boost digitization, requiring power suppliers to secure themselves against price risks and prevent major burdens on private households from excessive, non-market-driven price increases. The draft foresees further acceleration in the rollout of smart meters.
The German government's approach to RED III is generally welcomed by the affected associations, but the BDEW sees a need for improvement. The new regulations on the energy transition are a step towards a more sustainable future, but challenges remain, particularly in the transition from gas heating to heat pumps.
[1] Criticism points to the government’s failure to provide the promised financial incentives and regulatory measures, causing uncertainty for consumers and the heating industry. Experts note that without clear support, heating installers may revert to promoting gas heating systems instead of heat pumps, undermining the decarbonization goals. Therefore, while Habeck's "heating hammer" was initially promoted as a key element in Germany’s path to decarbonize heating, practical policy obstacles and the lack of tax relief measures risk stalling this transition, making the initiative's impact so far limited and contested within the industry and political observers.
- The German government's economic and social policy is focused on accelerating the adoption of renewable energy sources like geothermal and carbon capture and storage (CCS) technology to address climate-change.
- Significant advancements in environmental-science have made geothermal energy technology ready for series production and installation across most of the country.
- The financial sector, particularly the European Emissions Trading System, currently presents a barrier for the implementation of CCS technology in Germany due to higher costs compared to CO2 emission prices.
- The German economy is advancing towards digitization in the energy sector with the rollout of smart meters and incentives for consumers to participate more actively in the energy market.
- General-news outlets are reporting criticism of the government's approach to the transition from gas heating to heat pumps, as the lack of promised financial incentives and regulatory measures causes uncertainty for consumers and the heating industry, potentially hindering Germany's decarbonization goals.
