© Adobe Stock / Andrey Popov

More than half of the energy consumed in Germany is used to heat our homes, offices and shops and to supply heat for industry and commerce. While private households are responsible for 45% of consumption, industry accounts for 38% and commerce, trade and services for 17%. If heat supply is to become climate-neutral by 2050, we have to drastically reduce our demand for heat and convert the heat system in a step-by-step process to renewable heat and what is known as 'unavoidable waste heat'. This is, in fact, an essential aspect of a climate-neutral energy supply system. Therefore, the 'heat transition' is being viewed as a key element of the energy transition – and as a mammoth task that can only succeed in an adequate policy environment.

A comprehensive dialogue to chart the course towards climate neutrality

In a dialogue on 'climate-neutral heating' launched in February 2021, the Federal Ministry for Economic Affairs and Energy is engaging with heat market stakeholders to find out how climate neutrality can become a reality in Germany’s heat sector. The dialogue follows on from a decision of the 2030 Climate Action Programme. The first interim results are to be announced before this year’s summer recess.

At the outset, there are – as is to be expected from any dialogue process – more questions than answers: What can the Federal Government do to speed up the process? What should be the design for planning processes for a climate-neutral heat supply at the municipal, Länder, and federal levels? How can decision-makers from different sectors be brought together? Only if the right answers are found can the heat transition – the energy transition in the heat sector – become a success.

The stage has been set for the heat transition

The past five years have seen major decisions in the context of the heat transition that will make it possible to achieve the energy and climate targets for 2030. These include the coal phase-out, the introduction of a carbon price for the heat and transport sectors, the determination of binding, sector-specific annual emission budgets by 2030 (in German only), the National Hydrogen Strategy and improved funding ptions for energy efficiency (in German only), renewables-based heat and unavoidable waste heat (e.g. from industrial plants).

However, if climate neutrality is to be achieved by 2050, the heat transition must pick up speed. Energy producers, consumers and infrastructures are changing, new business models are emerging and buildings could soon be used as increasingly self-sufficient 'power stations'. Businesses are therefore keen to consolidate their technological lead and open up promising markets. They are demanding planning security with a view to facilitating national and international investments in climate-neutral products, installations and services.

Dialogue input paper: energy efficiency to play a key role in almost all scenarios

As the heat transition advances, more and more technological solutions are becoming available. Temperature levels vary greatly according to the intended use: while buildings rely on low-temperature heat, process heat in the industrial sector requires a lot of high temperature heat. Commerce, trade
and services tend to use heat at low and medium temperature levels.

The input paper that guides the dialogue on 'climate-neutral heat' describes the available technologies with a view to achieving climate neutrality and addresses policies and instruments to facilitate their market roll-out. A number of scenarios outline possible paths to climate neutrality in the heat sector by analysing the potential of electricity-powered heat pumps, electricity-based fuels such as green hydrogen, solar and geothermal installations, the use of unavoidable waste heat, energy-efficient heating networks, and – to a minor degree – biomass. The key insight from these different scenarios is that they have a lot in common, with virtually all stressing the importance of energy efficiency and predicting a major trend in industry towards the use of power-based fuels such as green hydrogen. Moreover, most of them expect a further increase in the share of electricity-based heat generation via heat pumps. In new buildings, heat pumps already account for half of all heating systems. In late March 2021, a new regulatory sandbox for the energy transition (in German only) was launched with a focus on large-scale heat pumps. Its aim is to explore and test practical uses of large-scale heat pumps in district heating networks with a view to decarbonising the heat sector. To this end, large-scale heat pumps are being installed at power plant sites in Berlin, Stuttgart, Mannheim and Rosenheim and integrated into the local district heating systems. The installations feed heat from renewable energy sources as well as waste heat – for example from industry and commerce – into the heating networks. In this way, large-scale heat pumps can contribute to decarbonising the heat supply.

The dialogue on 'climate-neutral heat' certainly won’t be able to tell what exactly a decarbonised heat supply system will look like in 2050. But simply waiting for things to happen is not an option. Therefore, the policy environment and instruments ought to be designed in a way that leaves abundant scope for innovation and technology development. Germany has set sail for the heat transition, and – if necessary – is prepared to adjust its course during the journey.