Financial and regulatory hurdles keep municipalities from tackling gas distribution grid shutdowns – DIW

German municipalities fail to adequately deal with the question of retiring no-longer-needed local gas grids due to the energy transition, because they face high financial and regulatory hurdles, said economists at the German Institute for Economic Research (DIW) and several universities. "The issue of natural gas distribution networks has largely been avoided in the local authorities' heating planning to date," DIW energy economist Franziska Holz said, underlining the findings of an assessment of initial heating plans of several communities. "However, local authorities should urgently address this issue, as unpleasant as it is, otherwise they are heading for major problems," she said. The researchers said that local utilities – many of which are owned by the municipalities – for example still have important revenues from the gas business, which makes the phase-out difficult. Where the grid is privately owned, the local governments would lose revenues from concession fees if the pipelines are decommissioned.

Grids for existing natural gas supply will no longer be needed in their current form and scope once the country approaches its target of becoming climate neutral by 2045, as consumption of climate-damaging fossil gas decreases significantly in the coming years. Germany has about 500,000 kilometres of gas distribution grid in addition to the large-scale transmission grid. A green paper by the German economy ministry last week kickstarted the planning for a gradual decommissioning of the country’s gas distribution network in order to organise a smooth transition to climate-neutral heating for consumers and operators.