The delay will give industry and off-grid homeowners more time to adapt to the energy transition, writes Waldemar Jaszczyk
The German LPG industry is breathing a collective sigh of relief as last-minute changes to the country's updated heating legislation have resulted in a delayed ban on the installation of new fossil fuel heating systems.
The second amendment to the 2020 Building Energy Act aims to transition heating to 100pc renewables by 2045. Germany's buildings produced over 115mn t of CO2 equivalent (CO2e) in 2021, about 15pc of the country's total greenhouse gas (GHG) emissions. Around 80pc of heat generation was from fossil fuels in 2021.
Under the original legislation, announced this year by German economy and climate protection minister Robert Habeck, all new heating systems would be required to use at least 65pc renewable energy from 1 January 2024. But a German coalition of the Greens, and the SPD and FDP parties unveiled changes to the law on 13 June that limit the new rules to only new buildings in areas of residential development. Enforcement of the rules for existing buildings will be delayed until municipal authorities submit their decarbonisation heating plans, which are not required until 2028. The linking of the municipal and federal legislation gives off-grid homes time to participate in the energy transition, German LPG Association DVFG spokesperson Olaf Hermann says.
The initial obligations would have been problematic for the German LPG industry. The country has one of Europe's largest LPG residential heating markets, with over 650,000 off-grid households consuming around 700,000 t/yr. Sales of bio-LPG began less than five years ago, but supplies stood at only 18,400t in 2020, the DVFG says. The industry is forecast to reach 152,000 t/yr by 2030, but few firms sell the product — SHV Energy subsidiary Primagas and distributor Rheingas. The former receives it from Finnish company Neste Oil's 40,000 t/yr unit in Rotterdam.
Large-scale production of bio-LPG and other renewable gaseous fuels is years away, market participants say, despite German LPG retailer Friedrich Scharr signing an agreement with US company bioLPG to launch production in the country. Other ventures such as Rheingas' attempt to produce LPG from hydrogen and CO2 ended owing to a lack of government support. Further investment is necessary to secure the quantities needed for a successful transition, the DVFG says.
The amendment provides time for firms to invest and a chance to transition the around 830,000 off-grid homes that use heating oil to bio-LPG or LPG-electric hybrid systems. About 143,000-365,000 LPG heating systems could be installed by 2030 if enough bio-LPG is available, the DVFG says. Cost may be the main incentive to switch given recent energy price volatility, with half of Germans negatively affected by heating cost rises, the DVFG says. LPG heaters are the most affordable "clean" option, with installation costing €11,600 ($12,657) compared with €21,000 for heat pumps, even after state subsidies. "The heat planning will clearly show the possible heating options relevant for people in rural areas, for example, LPG hybrid heating systems and heating systems with renewable LPG," Hermann says.
