While the oil crisis in Germany in the 1970s led to walks on empty autobahns, Denmark took the shock as an opportunity to redesign the entire heating network. Today the country is reaping the rewards – and showing what a successful heat transition looks like.
The year is 1973. The Arab oil states are cutting production and imposing an embargo. All of Europe is feeling the consequences of the oil crisis massively. But every country deals with it differently: while Germany introduces a Sunday driving ban and frees up motorways for walkers, Denmark is turning the entire heating network upside down. A decision that still has an impact today. “Denmark is the best example of a successful heat transition,” says Matthias Sandrock, energy consultant and co-founder of the Hamburg institute.
Because 50 years later, 63 percent of Danish households are supplied with district heating. Today, only 15 percent of households heat with natural gas – and only 8 percent with oil. In Germany, these figures are almost exactly the opposite – almost 75 percent of German households are heated with oil or gas.
So how did Denmark – a country heavily dependent on oil until the 1970s – become one of the pioneers of the heat transition? The short answer is: continuity. “Regardless of which government has been in power since then, it has always been said: We have to get away from fossil fuels,” says Sandrock. This consistent behavior over the last 50 years has given investors, private homeowners and municipalities planning security.
Municipal heat strategies
From the outside, it seems like a simple fix. But the implementation was of course not that simple. It started with the smallest unit: the municipalities. In Denmark, since 1979, municipalities have been obliged to draw up long-term heating plans. “They had to work out the best solution from a social and economic point of view,” explains Sandrock. Because, as in Germany, the needs of the individual regions are different – single-family houses in the provinces can be more easily converted to heat pumps than large apartment buildings in large cities such as Berlin or Hamburg.
The municipalities’ plans were then largely financed with taxes on fossil fuels. While the Federal Republic often works with subsidies to create incentives for switching to heat pumps or renewable heating systems, Denmark decides to make fossil energies permanently unsuitable for the market. At times, the tax on every kilowatt hour of gas or oil was up to three cents. For comparison: In Germany, the long-term average price for a kilowatt hour of gas is seven cents. That would correspond to a tax rate of almost 50 percent.
Is district heating the solution?
As a result, many communities have opted for district heating networks – down to the smallest settlement. “These district heating systems can be very easily converted to renewable energies because a wide variety of energy sources can be integrated,” says Sandrock. Geothermal energy would then be an option for Munich – the largest geothermal power plant in Europe is currently being built there. Wind energy would make more sense for Hamburg due to its geographical location.
In Germany, the municipal approach was also implemented in the 1980s after the oil crisis. Sandrock can still remember how he worked on a municipal heat plan for Hamburg. But then oil prices fell again and the pressure to get away from fossil fuels quickly eased again. Unlike Denmark, the Federal Republic back then relied on market freedom and gave energy suppliers, but also private owners, the choice of how and what they wanted to build. “They just didn’t do that in Denmark,” says Sandrock.
Instead, the Danes regulated. And strong. Today, district heating suppliers are largely non-profit-oriented. The small profits they are allowed to make are reinvested. “District heating companies in Denmark are also often cooperatives and the citizens are involved in them,” says Sandrock. “So there is a completely different transparency.”
The time factor
The big difference between the heat transition of the two countries is the time factor. Denmark has already made enormous progress. Germany is just beginning: With the new energy law, the traffic light now wants to push the move away from fossil heating systems. From 2024, at least 65 percent of newly installed heating systems should be operated with renewable energies. Denmark already banned fossil heating systems in new buildings in 2013. Since 2016, gas and oil heating systems may no longer be replaced by new fossil heating systems.
“Germany overslept a bit there,” says Sandrock. Now the Federal Republic has to switch to climate-neutral heating in a much shorter time. It will cost a lot of money to implement within 20 years what Denmark has achieved in more than 40 years – Sandrock makes no secret of that either. Because by 2045 at the latest, Germany has committed itself under constitutional law to be climate-neutral. “Even as part of the so-called ‘effort-sharing’ within the EU, Germany has committed itself to binding targets. If these are not achieved, Germany has to compensate this financially with a lot of tax money.”