How the German gas lobby gutted a new heating bill

The debate over a new heating law in Germany has sparked intense discussions. Learn about the interests and actors involved in this contentious issue.

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July 8, 2023

The debate about a new heating law has been raging in Germany for months. A look at lobby interests and actors.

(Original Article in German): The gas lobby is pleased, environmental, tenant and consumer associations are sharply critical: the heating law, which was originally ambitious in terms of climate policy, was gutted further and further after a long struggle within the coalition. The phase-out of fossil fuel heating, which is harmful to the climate and foreseeably expensive, is now likely to be pushed back a long way. In addition, the installation of gas heaters should continue to be permitted if they can be converted to hydrogen or are “h2-ready”.

“Hydrogen and green gases will be an integral part of the heating market in the future,” says Gerald Linke from the gas lobby association DVGW in the newspaper Die Welt after the traffic light coalition reached agreement on the heating law. The gas lobby has thus kept a door open to fossil fuel heating in the longer term. Because hydrogen is usually produced from natural gas. What also remains is massive insecurity among many people – including distrust in the political system. A look at the lobby interests in the dispute provides part of the explanation of how it came to this.

Interest in preserving fossil business models

In addition to the industrial consumption of gas, heating with gas is the largest business area in the gas industry: 50 percent of households in Germany still heat with gas. The gas industry has a lot to lose if heating with oil and gas – as originally envisaged in the traffic light coalition agreement – ​​is to be phased out quickly.

These interests and the power of the corporations behind them and their lobby groups have been addressed far too little in recent months. The role played by the gas lobby is a key reason why the debate about the future of heating was so fierce: an entire industry tried with all its might to defend itself against its foreseeable end in order to secure further billion-dollar business. Who is this gas lobby?

Over 40 million euros in lobby spending

The political power of the companies and lobby groups in the gas industry can be quantified based on their high lobbying expenditures: companies and lobby groups in the gas industry raised more than 40 million euros for their lobbying work in 2021. Added to this were millions more from the gas-consuming industry, of which 3.8 million euros alone came from the powerful BASF group. In the heating debate, the homeowners’ association Haus und Grund and the lobby of (gas) heating engineers also acted as a brake.

The players in the gas lobby are less well known than the big car companies or electricity companies. Along the gas supply chain, these are powerful gas production and trading groups such as Wintershall, VNG, the Gazprom successor company SEFE, network operators such as Open Grid Europe or Eon or Thüga as shareholders in numerous municipal utilities.

Their economic interests are clear: they want to hold off the phase-out of gas for as long as possible and also continue to use the existing gas infrastructure for as long as possible. In return, they envisage that the gas network could also be used in a climate-friendly manner with hydrogen in the future. However , according to expert opinion , this is only possible to a very limited extent . Instead, a focus on hydrogen threatens to become a cost trap.

Powerful lobby groups for gas heating

The gas companies have organized themselves into numerous lobby groups, all of which have loudly spoken out in the debate about the heating law in recent months: the Federal Association of Energy and Water Industries (BDEW) continues to promote the widespread use of natural gas in its joint gas campaign , and offers its members extensive marketing tools and advertising materials. This also includes advertising for the further installation of gas heating systems. BDEW only recently set up its own heat department in order to have more resources for lobbying around the Building Energy Act. With the former Green Party politician Kerstin Andreae at the helm, the connection to the Green-led Economics Ministry is short.

Another large industry association is the German Technical and Scientific Association for Gas and Water (DVGW) . This association has the function of developing standards for the industry, which are then recognized by the state within the framework of “technical self-government”. In addition, it acts like the BDEW as a lobby association for the industry. The gas lobby association Zukunft Gas also bundles the interests of large gas companies and conveys these to politicians and the public through large-scale campaigns. In addition, he involves public utilities in his lobbying work by wooing them with marketing tools and offering them special events.

Lobby project: “Transformation path for the new gases”

In the past, gas companies, with the help of PR agencies, presented fossil natural gas as the supposedly clean energy of the future. For a long time, natural gas was presented and perceived as a clean and climate-friendly energy source and a so-called “partner in the energy transition”. What is ignored is the fact that natural gas is a highly climate-damaging energy source due to methane leaks along the supply chain .

In the middle of the debate about the heating law, the three influential lobby groups BDEW, DVGW and Zukunft Gas jointly presented a transformation path for the new gases . In it, the associations explain that the gas industry is now becoming a hydrogen economy. They continue to spread the myth that hydrogen is a future technology that could replace fossil natural gas in a climate-friendly way. The associations also include biogas, which is also only available to a limited extent, among the “new gases” – or hydrogen, which is produced from gas and is therefore not climate-neutral.

What is also questionable about this study is that the scenarios about the future availability and costs of green hydrogen relate almost exclusively to studies commissioned and financed by the gas industry itself . Only one study by the Energy Economics Institute (EWI) is not paid for by the gas industry, but the EWI is also closely linked to the gas industry . Here one seems to want to calculate the costs and availability of hydrogen in their own interest.

The gas lobby and the role of public utilities

The many local municipal utilities, which are responsible for the energy and heat supply, play a central role in the dispute over the future of heating. They also own the gas distribution networks, which mainly supply households with gas for heating. These gas distribution networks have so far brought the municipal utilities large revenues. However, they are used less when households switch to heat pumps for the heating transition or municipalities to district heating networks. There is no question that this poses major challenges for Stadtwerke.

Stadtwerke usually have municipal shareholders. However, what many do not know: Large corporations such as Eon or Thüga have bought into several hundred public utilities and are thus exerting a concentrated influence on their future orientation. They are interested in the fact that the public utilities remain their customers of gas and also take up the myth of heating with hydrogen. These municipal utilities in particular are finding it difficult to free themselves from their dependence on gas.

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The Association of Municipal Enterprises (VKU) is the central lobbying association for municipal utilities. It has the task of bundling these different interests. In the debate about heating with hydrogen, he has positioned himself clearly with his own platform: together with the DVGW association, the VKU operates the H2vorOrt lobby platform, in which around 40 municipal utilities are members. The platform propagates that municipal utilities prepare their gas distribution networks for use with hydrogen. H2vorOrt was thus a powerful actor that lobbied on behalf of the municipal utility to anchor heating with hydrogen in the heating law.

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Lobby platform H2vorOrt uses SPD politicians

For this purpose, H2vorOrt also involved relevant politicians – such as the Düsseldorf SPD member of the Bundestag Andreas Rimkus. Rimkus is the hydrogen officer of the SPD parliamentary group and in this role promotes the widespread use of hydrogen. He regularly appears at hydrogen lobby events. He can be quoted as follows on the H2vorOrt website : “The transformation of the gas distribution grids is one of the decisive factors for the emergence of an H2 economy. H2vorOrt makes a very valuable contribution to this.” In his function as rapporteur on the heating law, he was a key player who – as insiders report – helped soften the heating law.

Similar to H2vorOrt, the PR lobby association Zukunft Gas also involves the public utilities in its lobbying work. Around 90 municipal utilities are still members of this association and are integrated there via the special platform H2kommunal. Here, too, the aim is to suggest to the municipal utilities that they could use their gas distribution networks for hydrogen in the future . Politicians were also involved in Zukunft Gas via an advisory board – including Timon Gremmels, member of the SPD in Kassel. Although Gremmels left the Advisory Board of Zukunft Gas at the end of 2021, he remained in contact. As an energy politician for the SPD, Gremmels was also a key player in the drafting of the heating law.

The FDP as the voice of the fossil lobby

In addition to the SPD, the FDP in particular has shown itself to be the brakeman on the heating law within the coalition. As in the debate about phasing out combustion engines, the FDP attracted attention above all by lobbying for the use of a controversial energy source with the narrative of “technology openness” – at that time the combustion engine with e-fuels, now heating with hydrogen . Within the FDP, it was above all Member of Parliament Frank Schäffler who opposed his own party leadership at a party conference and urged them to further water down an already negotiated compromise on the heating law.

It is important to know that Schäffler is the founder and managing director of the Prometheus think tank , which misuses the term freedom to ward off any state intervention, for example to protect the climate. Prometheus is also in the lobby register, but refuses to provide information about their donors and their lobby expenses. Even when asked, Schäffler does not say who finances the association.

Prometheus is part of the “Atlas Network”, which was sponsored by the oil and gas company ExxonMobil, the tobacco company Philipp Morris and the right-wing conservative US billionaires Koch Brothers, among others. The network promotes neoliberal and libertarian organizations worldwide. Schäffler describes himself as a “climate skeptic” and downplays the climate crisis with such statements: “And if it gets a little warmer, then I’ll be happy about the better crop yields, the milder winters and the better wine.”

“Habecks Heiz-Hammer” and the role of the Bild newspaper

A particularly conspicuous player in the heating debate was the Bild newspaper from the Springer publishing house. For months, the newspaper made mood against “Habeck’s heating hammer”. The journalist Malte Kreutzfeldt determined in a broad evaluation that many of the statements made by the Bild newspaper were demonstrably false . The wave of hate speech and misinformation about a climate policy project was unprecedented and had a significant impact on the political and public debate. Above all, the FDP used this for their coalition-internal resistance to the heating law.

Here, too, it is important to know that a fossil company is involved: the KKR group holds 35.6 percent of the shares in the multinational media group Springer. In a 2022 study that evaluated the portfolios of the world’s largest private equity firms for climate-damaging investments, KKR came in third worst. However, it cannot be proven whether KKR exerts a direct influence on the reporting in the Bild newspaper.

But one thing is clear: KKR has fossil interests and will benefit if laws are prevented in Germany that accelerate the phase-out of natural gas. And the so-called “Döpfner leaks” have also shown that Springer boss Döpfner does have an influence on reporting – and clearly against more climate protection.

A glimmer of hope: Stadtwerke are defying the gas lobby

The gas lobby’s march through the heating law cannot be clarified in all details – at least not yet. It remains unclear which contacts were made during the negotiation of the heating law and who might have written which papers or speaking notes. More transparency is urgently needed here – for example in the form of a lobby footprint that would make the influence on the legislative process in the ministries more visible.

In our extensive gas lobby study, however, we were able to show how long the gas lobby has built up its narratives and networks and how political institutions have opened their doors wide to the gas industry. The gas industry thus had the best pipelines in politics. This long-term preparatory work has now apparently paid off for the gas industry: Ministry officials and members of the Bundestag were already influenced by the narratives of the gas lobby and were already partly integrated into their networks.

Even if the heating law will probably be passed after the summer break, the debate about the future of heating is far from over. Public utilities are now coming more into focus here – and here there are some divisions: On the one hand, the VKU is in favor of the hydrogen option for heating on behalf of the public utilities . On the other hand, a municipal utility group around Stadtwerke München warns of “hydrogen as a cost trap”.

A glimmer of hope over the last few weeks: several municipal utilities have already left the gas lobby association Zukunft Gas – partly in response to an open letter in which we asked them to leave . Some of the justifications that the municipal utilities provide make you sit up and take notice. For example, Falk-Wilhelm Schulz, managing director of Stadtwerke Tornesch, told the Schleswig-Holstein newspaper: “We have to get out of gas – what am I supposed to do with a lobbying association that advertises gas from renewable sources?” Heating with hydrogen – according to Schulz – is “total nonsense” and much too expensive. It is to be hoped that such voices will become louder in public – and protect consumers and municipalities from bad investments and benefit climate protection.

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