Costs major hurdle to reaching climate neutrality in 2045 – local utilities
Clean Energy Wire
More than two-thirds of municipal utilities in a survey by the German Association of Local Utilities (VKU) consider the country's target to reach climate neutrality by 2045 to be unrealistic under current framework conditions. The biggest hurdles to reaching climate neutrality, according to managing directors, were high costs for municipal companies, businesses and citizens (37%), unclear financing (20%) and extensive bureaucracy (18%). Out of a total of 1.584 companies, 536 took part in the survey.
"The need for investment in the infrastructure and systems of municipal utilities is enormous," VKU said. Therefore, Germany’s next government must focus on reducing costs and providing clarity on financing, the association said. "Climate neutrality can only be achieved if we reduce costs and better coordinate the processes of the energy transition," said VKU head Ulf Kämpfer. He also called for the next federal government to establish alternative forms of financing, such as an "energy transition fund."
To ensure affordable prices, 75 percent of surveyed CEOs supported reducing the electricity tax for everyone, while 54 percent favoured reducing grid charges using subsidies from tax revenue or other financing sources. In addition, 47 percent of company CEOs advocated for a reality check on every decision and every law; 44 percent wanted faster planning and approval procedures; and 39 percent supported a clear prioritisation of affordability and economic efficiency with regard to energy policy.
In view of the fact that municipal utilities have to invest billions in the expansion of electricity and district heating networks, as well as in water supply and wastewater disposal systems, the VKU is calling for the mobilisation of private capital via an energy transition fund backed by the government. It stressed that 721 billion euros was necessary for the energy transition by 2030, with a further 800 billion euros required for water and wastewater by 2045. Water management systems in particular are reaching the end of their useful lives and must be adapted to the consequences of climate change, the VKU added.
