Germany's move to climate neutrality makes 90% of gas distribution grid obsolete – think tank

Germany should ensure an orderly retirement of its gas distribution grid to avoid enormous costs for consumers and billions of euros of stranded assets for operators, as the pipeline network is set to become largely obsolete with the move to climate neutral energy sources, think tank Agora Energiewende said. “With the goal of climate neutrality by 2045, there is foreseeably no longer any use for over 90 percent of the existing gas distribution networks,” the organisation said in a press release. Agora proposes a new regulatory framework for the network of pipelines to distribute natural gas to final consumers, such as businesses and homes, and argues that current rules are geared towards an “indefinite, unchanged existence of the natural gas infrastructure.” The think tank suggested to introduce more efficient infrastructure planning – where grid operators could receive a bonus if they decommission certain parts of the grid at the right moment. This could partly be financed through grid fees and possibly with state support.

Hydrogen, meanwhile, would not justify keeping the current grid alive, said Agora. “All major energy system reports show that only a fraction of today's natural gas demand will be replaced by renewable hydrogen,” Germany Director Simon Müller said. Reports showed that in 2045, hydrogen demand will be on average 30 percent less than that of current natural gas demand, and will mainly be needed in power plants and industrial facilities – not by consumers connected to the distribution grid. Still, parts of the distribution grid would have to be converted to transport hydrogen.

Costs for operation, maintenance and development of the gas distribution grid are passed on to consumers through grid fees they pay with their gas bills. As there will be fewer and fewer gas consumers mainly due to the switch to climate-friendly heating, the grid fees would increase more than ten-fold by 2044 for the remaining users under existing plans and regulation, Agora said. As Germany aims to become climate neutral by 2045, fossil fuels, including natural gas, have to be phased out. It is mostly used for heating and in industry. The country aims to largely replace fossil gas applications with those using renewable electricity, but also green hydrogen in some cases. Agora’s report focuses exclusively on Germany, but other countries in Europe face a similar transition.