Squaring the costs of the heat transition. Cost allocation in the heat transition

Squaring the costs of the heat transition by way of the energy infrastructure will not overcome the barriers currently holding back that transition. The main barriers are the rise in overall cost of space heating, which many households will be unable to shoulder, at least not all at once, and the unlevel playing field when it comes to competition between natural gas and zero-carbon heating options. The first of these barriers can best be resolved via income policy, the second through a substantial increase in the price of CO2 emissions, by making natural gas more expensive. Until such time as the latter has a robust impact, a temporary subsidization of low/zero-carbon heating systems can help kick-start the required heat transition.