(Pictured above: Australian delegation at the Reichstag in Germany for energy efficiency.)
Frankie Muskovic, the Property Council’s National Policy Director, reflects on her recent participation on a delegation to Germany focused on energy efficiency in buildings.
I recently had the privilege of joining an Australian delegation of energy experts to Germany for a knowledge exchange focused on energy efficiency in buildings. The delegation arose from Australia and Germany’s strategic partnership on energy, focused on two areas the countries share ambition – hydrogen and energy efficiency.
It was an extraordinary time to be meeting in person with German policymakers, in the midst of an energy security crisis driven by Russia’s war with Ukraine, less than the distance between Sydney and Melbourne away from Berlin.
During the week we there, the German government announced a ‘Heat Pump Assault’. The language evokes both the emotion and the ambition in their imperative to transition away from use of Russian gas as quickly as possible, through diversification of supply and electrification of traditional gas uses, primarily heating. Since January this year Germany has already reduced reliance on Russian gas, going from 55 per cent of their supply to 35 per cent in just a few months. This gives some colour to the extremely high international gas prices now being felt here as European governments pay a premium for alternatives (including Australian LNG exports).
The heat pump announcement sees the German government targeting the installation of 500,000 heat pumps every year to support a decisive shift to electrification of heating their homes and commercial buildings.
This transition away from Russian gas combines Germans’ deeply felt moral position on Ukraine with their ambition on climate action. Whilst there is some policy-on-the-run happening, lots of initiatives are building on programs already in place:
- Rebates for homeowners and businesses to buy heat pumps – both as stand-alone rebates and part of blended loans to improve the overall efficiency of homes and commercial buildings
- Incentives for installers to switch to heat pumps and stop installation of gas heating
- Incentives for manufacturers to ramp up production of heat pumps
- Changes to the building code to stop gas in new buildings – by 2024 all energy systems need to be at least 65 per cent renewable (eliminates gas heating as an option
- Minimum standards for existing buildings – these are in development but would set minimum requirements for energy performance of existing buildings over time.
All this against the backdrop of the country preparing for potential shortfalls in gas supply this coming European winter. Homes will get priority for heating; however, I spoke to several commercial building owners and manufacturers preparing for the possibility that their gas use and hence entire operations will be cut off in the event of a shortfall.
While we are at the beginning of the electrification journey here in Australia, there are lessons we can learn from our German counterparts:
- electrification is the fastest way to eliminate fossil fuel use in buildings
- a combination of incentives to ramp up demand is necessary – for consumers, equipment installers and manufacturers
- a regulated, planned transition away from fossil fuel use in buildings is needed and there are obvious levers in the building code and planning policies to pull
- a focus on skills is necessary to ensure the workforce needed to drive electrification at scale will be ready when we need it
- consider the role of domestic manufacturing – we are going to be competing with Europe and many other countries for supply of heat pumps and other critical materials to drive this transition over the coming decade.
This is the first of a series of updates I’ll share from my trip to Berlin. Next time: the knowledge exchange validated a long-held hypothesis on where Australia is leading and where we are lagging – we ARE world leaders when it comes to commercial building energy efficiency and sustainability. And we are laggards when it comes to the efficiency and comfort of our established housing stock.
Frankie, Luke Menzel (CEO at the Energy Efficiency Council) and Carlos Flores (Director of NABERS) filmed a series of short video updates around Berlin during their visit, you can watch them here.