Clean heat standards would impose quantitative targets such as the number of heat pumps to be sold, emission reductions achieved or the amount of renewable heat supplied
COMING OF AGE
Sales of heat pumps in Europe are rapidly increasing but are still being out-competed by fossil boilers
TRIED AND TESTED
Many markets around the world have imposed, or are considering, clean heat standards
KEY QUOTE
Ambitious targets must go hand in hand with an economic and legislative framework that promotes the rapid adoption of clean heat technologies such as heat pumps
Heat pumps have gone mainstream. UK parliamentarian Jacob Rees-Mogg and other detractors may continue to insist hydrogen is a “silver bullet” to decarbonise heating systems, but a growing body of science shows electric heat pumps are the cheapest, most efficient way to reduce emissions from heating systems, and lawmakers are increasingly coalescing around this idea. This growing collective understanding, in conjunction with the added imperative to get off gas created by Russia’s invasion of Ukraine, has sent heat pump sales soaring across Europe. Nonetheless, oil and gas continue to dominate space heating in the EU.A report published this week by the Regulatory Assistance Project (RAP), an energy transition think tank, suggests the European Commission and national EU governments should set clean heat standards to speed up the switch to heat pumps and other non-fossil fuels heating options. The upcoming Net Zero Industrial Act, scheduled for March 14th, would be the ideal place to make such a proposal, argue the researchers. Two-thirds of the energy the EU uses to heat buildings comes from fossil fuels. Heat pumps are better for the climate since they can be powered by renewable energies like solar and wind and are around four times more efficient than fossil gas boilers. Hydrogen has been touted as a potential low-carbon heating solution, with the UK having been, until now at least, a particular advocate. A paper published in 2022 by RAP’s Jan Rosenow concluded, however, there is a plethora of technical issues to overcome before hydrogen could be “piped through to people’s houses to heat them during the winter”, as Rees-Mogg asserted.
COMING OF AGE
Further, the technology is considerably less efficient and more expensive than alternatives such as heat pumps, district heating and solar thermal heating, found Rosenow. Other scientific papers come to similar conclusions. After years in the wilderness, heat pumps came of age in 2022—a record 3 million were installed in Europe, representing an increase of 38% compared to 2021, according to data from the European Heat Pump Association (EPHA). France led the way with the highest sales of heat pumps, while Poland saw the biggest growth, with its market more than doubling in size. Except for a few mature markets, like Norway and Finland, however, fossil fuel boilers still lead the field by a mile in Europe. In 2017, around 83% of the installed capacity of space heating in the EU—some 129 million boilers—was fossil-fuel fired, states RAP in its clean heat standards report. “Sales of condensing boilers are typically three to four times greater than heat pump sales,” it states. “In Germany alone, 700,000 oil and gas boilers were installed in 2021 compared to 154,000 heat pumps.” Data from January 2023, shows the situation is slowly starting to change. In 2022, the German heat pump market grew by 53%, with 236,000 heat pumps sold. There is, however, still a long way to go before the gas boiler goes the same way as the brachiosaurus.
THE PATH AHEAD
Heat pumps will be the dominant space heating technology by midcentury, predictions suggest
AMBITIOUS PLANS
The European Commission’s REPowerEU plan, published in May 2022 and aimed at rapidly reducing dependence on Russian fossil fuels and accelerating the green transition, wants 30 million additional heat pumps installed across the EU by 2030. Today there are around 17 million heat pumps in action in the 27 EU member states and other non-fossil fuel heating options, from district heating to biogas or biomass, also only have a small share of the market. The war in Ukraine and the push to reduce gas use across Europe have helped make the case for heat pumps in the past 12 months. The decision by the EU to cap greenhouse gas emissions from heating and transport fuels under a new emissions trading system; the creation of a Social Climate Fund—which EU member states can use to support households to change their boilers—and the fact some countries, like Germany and the Netherlands, have agreed dates by which standalone fossil fuel boilers will no longer be sold, have also helped change the status quo. And there are further measures are in the pipeline, such as the Commission’s planned revision of ecodesign rules for heating appliances, “meaning a de facto ban of the sale of standalone fossil fuel boilers by 2029,” says RAP. Yet, the think tank insists additional policy action is needed to ramp up the supply chain, sale and installation of heat pumps across Europe. And, just as importantly, to ensure “a fair transition, wherein low-income households are able to switch heating systems and are first in line to benefit from the energy transition”. 
INDUSTRY OBLIGATIONS
RAP’s solution is for the European Commission and member states to introduce clean heat standards on energy network companies, energy suppliers and heating equipment manufacturers. Such standards would impose quantitative targets—like the number of heat pumps installed or sold, emission reductions achieved or the amount of renewable heat supplied—on fossil fuel providers. RAP compares these standards to energy efficiency obligation schemes whereby “market actors play an active role by choosing the best routes for compliance”, with obligated parties able to decide whether to conduct activities themselves or hire a third party or, for example, include the option of exchanging credits with other parties who overachieve their targets. Such standards could help decarbonise the heating industry, says Thomas Nowak, of the European Heat Pump Association. “Ambitious targets must go hand in hand with an economic and legislative framework that promotes the rapid adoption of clean heat technologies such as heat pumps,” he says. “Product and buildings-related minimum energy performance standards are powerful tools to guide consumers toward highly efficient, renewable-based solutions.” To ensure full delivery and increase public confidence in their benefits, however, “they must be backed by information and financial support,” adds Nowak.
CLEAN HEATING
Oil and gas continue to dominate space heating in Europe
NEW STANDARDS
Clean heat standards are already being rolled out in various guises across certain US states and in a couple of European countries. Marion Santini from RAP and one of the report’s authors, argues it would be “quite natural” for the European Commission to include clean heat standards in its Net Zero Industry Act that is scheduled to be published on March 14th. “The Commission could write the existing target for heat pumps in law and require member states to deliver it with an obligation on energy companies,” says Santini. “Alternatively the Commission could design an EU-wide obligation on heating appliance manufacturers to increase heat pump sales, anticipating the upcoming end date for the sale of fossil fuel boilers,” she adds. Richard Cowart, also from the think tank, is clear that without clean heat standards, heating systems will not be decarbonised in line with climate goals. Asking why such policies are needed to drive the decarbonisation of the heating sector is like asking why a renewables mandate is needed to built out wind and solar power and why this growth cannot be left to cap and trade systems or a higher carbon price, he says. “You can’t take a carbon price to the bank. Developers tell me they would never have got financing for a wind farm based on a carbon price alone. Renewables mandates give certainty,” says Cowart. To meet climate targets and reduce emissions apace in the building sector, the carbon price would have to be very high and it would take a long time, he says. Carbon pricing alone is a “somewhat blunt tool to drive the transformation of the heat sector”. Likewise, appliance standards and bans on fossil fuel boilers are “useful and necessary”, says Cowart, but they only push the transformation of the heating sector at the rate that naturally occurs, when boilers come to the end of their lives. Clean heat standards can force faster change, he believes. Richard Lowes, another of RAP’s report authors, insists EU plans to phase out fossil fuels in heating and cooling by 2040 at the latest cannot be achieved without support from policies such as clean heat standards that will encourage the removal of oil and gas boilers before the end of their lifetimes. BEST PRACTICE
Various parts of the world seem to have already grasped these facts. In Colorado, Vermont, Massachusetts and other US states, legislators have, or are considering, placing obligations on heating fuel suppliers to force them to provide increasing amounts of clean heat either via electrification through heat pumps or through biogas blending, biomass or demand reduction through efficiency improvements, explains RAP. In Massachusetts, the Commission on Clean Heat advises the Commonwealth’s government and recommends a clean heat standard based on a credit system, which would entail a “strong preference towards pursuing electrification”. Lawmakers in Maryland, Maine, Connecticut and New York are also at the early stage of considering clean heat standards. Across the Atlantic, France and Ireland are adopting obligations that will encourage heating fuel suppliers to increase the share of renewable energy in fuels provided to customers. As in the US, such measures will not necessarily result in more heat pumps. France’s scheme, in particular, is focused on increasing the amount of biogas injected into the gas network. The Irish scheme is broader with obligations falling on all heat fuel suppliers, not just gas, and the focus is on all renewable heat solutions. Rather than implementing clean heat standards on fossil fuel importers and suppliers, the UK is looking at placing them on heating appliance manufacturers. The obligation would require them to ensure that a minimum proportion of their overall UK heating appliance sales to end-consumers were low-carbon heat pump sales. Manufacturers who overachieve their target would be able to trade credits with other manufacturers. The decision to focus on appliance manufacturers is to protect the UK manufacturing base, says Lowes. As to whether clean heat obligations should incentivise biogas, biomass or other non-fossil fuel alternatives to oil and gas as well as heat pumps, Santini says RAP would encourage countries “to prioritise heat electrification as part of these policies”.
TURNING POINT
The sales of heat pumps are growing rapidly but are still a fraction of gas-powered boilers
LOW-INCOME SUPPORT
Clean heat standards can help at all stages of the energy transition, argues RAP in its report. While fossil fuel boilers remain on the market, these standards can encourage energy companies to promote upgrades of heating systems before they break down, avoiding emergency purchases of fossil fuel boilers. After fossil fuel boilers are no longer being sold, clean heat standards on energy companies “can ensure the replacement of existing heating equipment occurs at the pace needed to meet GHG reduction goals”, says the report. Such standards can also help low-income households, suggests RAP, if energy companies are given a sub-target detailing how many low-income households should be supported in their transition to low-carbon heating. The clean heat proposals from Vermont and Massachusetts include specific requirements to deliver bill-reducing clean heat measures to lower-income households, highlights RAP. “The climate transition needs to be equitable and inclusive and take into consideration the energy burden faced by lower-income households,” says Cowart. 
MONEY SENSE
Clean energy standards that speed up the transition away from fossil fuel boilers could also be good for the EU economy. A report published in early 2023 by McKinsey, a US-based consultancy, says that an ambitious roll-out of heat pumps and solar panels could contribute to the creation of two million jobs across Europe by 2030, with heat pump manufacturing potentially accounting for a €57 billion EU industry by 2030. The beauty of clean heat standards is that they can be a “comprehensive umbrella across all complementary policies that reduce fossil fuel use in the thermal sector”, argues Cowart. “Instead of creating competition across programmes, they can create synergies.” And they can come in different forms to best suit national or sub-national circumstances—“clean heat standards are not a cookie cutter,” says Cowart.
TEXT Philippa Nuttall IMAGES Aboodi Vesakaran , Unsplash & Julian Hochgesan, Unsplash