Off the gas - can municipalities soon turn off the gas tap at businesses?

At the end of January, the public participation round for the Municipal Instruments Heat Transition Act (Wgiw) closed. This law gives municipalities the power to determine that areas should be taken off the natural gas. This creates a big stick for energy transition. If municipalities start using these powers, it could have far-reaching consequences for businesses and residents.

New powers

The most far-reaching power given to municipalities, if this bill is passed, is the power to determine in an environmental plan that natural gas may no longer be supplied in certain areas. If the municipality uses that power, owners will be required to modify their property because the existing use cannot continue without modification. This is no longer a case of permissive planning as it has almost always been until now, but of an ('active') obligation to adapt an existing situation.

'Gasless area' designation conditions

A municipality cannot haphazardly designate areas on the map where gas may no longer be supplied. Before the municipality may designate a 'gasless area', a heat program [1 ] must first be established for that area and a (district) implementation plan must be ready. This heat program is also called the Heat Transition Vision [2].

Transition vision and implementation plan

In that Transition Vision and the implementation plan, a municipality must indicate the time frame describing how to shape the transition to alternative heat sources. In doing so, the municipality must identify:

• Which buildings, homes or businesses will be preserved;
• What the energy needs of those buildings, homes or businesses are;
• What alternative, reliable and sustainable energy infrastructures are potentially available that can meet the heat demand; and
• What the costs of different heat alternatives are.

The Transition Vision and the implementation plan together serve as the justification for a decision deciding that gas may no longer be used in a certain area. The designation decision may only be taken if the heat program and implementation plans have been adopted and it follows that a (real) alternative form of heat supply is available in the designated area, such as a connection to the electricity or heat grid with sufficient capacity. Drawing up these heat programs and implementation plans will require a great deal of administrative capacity, much of which is already needed for the transition to the Environment Act. As a result, when gasless areas will be designated may vary greatly from one municipality to another.

Conditions regulate ownership

Designating an area where gas may no longer be used is quite radical. This is because such a designation interferes with the right of ownership. To determine whether such a designation is lawful, there must be a fair balance between the regulation and the interests of the owner. Whether that fair balance can be achieved will vary for each area, building, business or decision. When there is that fair balance, the government may impose an obligation that a property be retrofitted (within a certain period of time).

The heat program is the main document that will serve as the foundation for that fair balance. When a decision to designate a "gasless area" is challenged before a judge, the judge will look at whether the designation meets the requirements of proportionality (is there a reasonable relationship between the encroachment resulting from the measure and the objective pursued by the measure?) and subsidiarity (can the objective be achieved with less drastic measures?).

Manufacturing companies using gas and the environmental plan

As currently (still) designed, this law could also be used to designate industrial businesses or existing business parks as "gasless areas. The explanation states that this law is primarily aimed at residential areas and that other policies have been laid out for industrial activity. The fact that this law is not intended (for now) to regulate businesses does not mean that it could still be used for that purpose.

Exception List

To prevent a municipality from using this law to achieve its energy goals more quickly at the expense of companies, the law does include an escape . This is because the law includes an option for the government to draw up a list of categories of buildings or environmentally harmful activities to which the "gas ban" may not apply. The explanatory note to the law indicates that this list is primarily intended for hospitals, emergency facilities or power plants that burn gas. It is possible that this list will later be expanded to include companies for which the use of gas for production is essential. This is not the case for the time being.

If the waste heat from a production company can be used to heat homes, that seems a good reason to be included on that list. Exactly how that will work under the Environment Act will probably be regulated in the future Collective Heat Supply Act (Wcw). A link between the waste heat of a production company and homes will probably offer production companies the possibility to continue to use gas for the production process.

Conclusion

The eventual designation of a 'gasless area' should be seen as the culmination of a long (research) process. The threshold for designating an area as 'gas-free' is fairly high. Municipalities will not 'just' designate areas to be off-gas because such a decision must be based on solid grounds. In the Transition Vision and implementation plans, a municipality will have to meticulously map out the energy needs of buildings and demonstrate that there are affordable alternatives to gas.

In addition, generous subsidies may have to be offered for switching to another heat source in order to achieve a fair balance. To make well-considered investment decisions in the future, it is therefore important to keep a close eye on what heat policy will be adopted in a municipality. This heat policy probably also offers many production companies interconnection opportunities if the waste heat released by the production process can be used to heat homes.

We are closely monitoring developments regarding this law and the heat transition. Do you have questions about what changes this upcoming law will bring for you? Please contact Mink Oude Breuil. He will be happy to help you!

[1] As referred to in Article 3.14, second paragraph, Environment Act.

[2] Both terms refer to the same municipal decree. "Heat transition vision" is the term that was used in the Climate Agreement based on the policy content of that decree; "heat program" is the term that matches the legal terminology of the Environment Act in embedding that decree in the Environment Act.