Germany: Building Energy Act row shows failure of capitalism to deal with climate change

Illustration of a phase change heat pump. The installation of a new heating system or a heat pump can cost homeowners in Germany tens of thousands of euros (Graphic:: CC)

A debate in Germany over the Building Energy Act, the so-called “heat transition”, has been boiling up for weeks. The conservative CDU has announced that it will make the fight against this law an issue in every upcoming election campaign. The liberal FDP (which is part of the Federal Government in the so-called ‘traffic light’ coalition with the social democrats and Greens) has only conditionally approved the bill in the federal cabinet. Criticism comes from all sides. According to a survey by n-tv, 79 per cent of the population think that the federal government does not take enough account of people’s financial situation in its climate protection measures. The topic of “heat transition” shows that climate protection becomes a contradiction within the framework of capitalism. Therefore, there is no alternative to a socialist solution if the mass of the working population is not to pay for it.

The draft law stipulates that from January 2024, new heating systems must be powered by at least 65 per cent renewable energy. From 2045, there is to be no more oil or gas heating. There is a need to banish fossil fuels from heating systems. After all, up to one-third of all greenhouse gas emissions are generated in buildings.

Reducing the social burden

Around 42 per cent of the population live in their own homes. The installation of a new heating system or a heat pump can cost homeowners tens of thousands of euros. The federal government has presented a subsidy plan that provides a basic subsidy of thirty per cent for everyone – regardless of whether the person is a pensioner, a welfare recipient, a skilled worker or a capitalist. In addition, there are socially graduated bonuses that allow for a maximum subsidy of fifty per cent – but this also means that the other half has to be financed out of everyone’s own pocket, regardless of whether they are rich or poor.

It is understandable that this is a horror scenario for many people. Instead of using a watering-can approach, we need a truly socially graduated relief for wage-dependent and middle-class homeowners. Depending on the income and wealth situation, this could mean that the state takes over these costs entirely or supports them with interest-free loans, or that the relief should not go beyond covering the saved energy costs over a certain period of time.

Tenants’ rights

Tenants must be protected from rent increases. The costs of the so-called “heat transition” must not be passed onto the rent. To this end, the modernisation levy (which gives landlords the possibility to raise rents after modernisation measures) must be abolished. It is already often misused by landlords to carry out unnecessary “modernisations” in order to drive up rents and drive out existing tenants.

The costs must be borne by the profits of the energy and real estate corporations, which should be taken into public ownership with democratic control by the working people and compensation on the basis of proven need. The necessary money could be raised through higher taxation of corporate profits, assets and inheritances.

Planning needed

But the Building Energy Act raises not only the question of who should bear the costs of converting heating systems to renewable energies but also how this conversion should be fundamentally designed and how energy can be saved in buildings.

The latter would be possible through comprehensive building renovations, which would have to include façade insulation, the installation of modern windows and roof insulation.

The measures envisaged by the ‘traffic light’ coalition are now in a one-sided fashion, oriented towards the electrification of heating systems and focus on the installation of heat pumps. This also creates a large market in the short term, in which capitalists can enrich themselves subsidised by tax money, without prices being controlled.

The fact that the electricity with which these heat pumps are operated may not be generated from renewable energies plays no role in the government’s considerations. Nevertheless, electricity is considered renewable.

At the same time, the electricity price for the industry is to be subsidised by the state, while the mass of people continues to struggle with high and rising electricity prices.

Instead of working on a comprehensive plan for society, as a whole, the solutions are oriented towards the installation of new heating systems or heat pumps in individual houses. Above all, this fails to include the enormous potential of district heating and neighbourhood solutions. Experts point out that heat pumps are not the universal solution and that communal heating plans and neighbourhood solutions are needed that use different renewable energy sources, for example, solar energy, deep geothermal energy, biomass, biogas, etc. This also raises the question of whether the overall eco-balance of the conversion will be positive at all if, for example, the possibility of running gas heating systems on biogas is excluded.

Capitalism fails

The debate about the Building Energy Act shows the limits of the capitalist market economy in the conversion to renewable energies and the necessity of an overall social, democratic planning oriented towards the needs of people and the environment.

This also applies to the fact that the heating conversion in the time frame now envisaged means an enormous demand for production capacities and labour. The heating industry in Germany is strongly characterised by small and medium-sized enterprises, and these companies have understandable concerns that they will not be able to meet the demand and will not be able to withstand the competition from large suppliers from the USA or Asia. Thus, the potential for creating new jobs could have the opposite effect. Here, too, the state should ensure that publically owned production capacities are built up, skilled workers trained and jobs created.

The best way to do this is by nationalising large corporations and enterprises under democratic control and management. A public investment programme could support smaller companies at the same time but should be accompanied by democratic control rights for trade unions and employee representatives over working conditions and the use of funds. If this were part of the environmentally urgently needed change in transport policy – away from individual transport to the expansion of local and long-distance public transport – a conversion of the car industry could be used not only for the production of more buses and trains but also of products necessary for a real heat transition, such as large-scale heat pumps, geothermal drillers, etc. – without having to lose a single job

The “Wuppertal Institute for Climate, Environment, and Energy” has calculated that a heat transition, including the necessary housing renovations, would be possible by 2035 and would cost an additional fifty billion euros a year. This money would be there if the enormous assets, fortunes and profits of the capitalist class were taken and state funds were put into climate protection, instead of into the German military. But that would require a government prepared to break with capitalism and its profit-orientated logic.


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