Opinion Sem Oxenaar - 14/June/2023

How clean is Europe’s district heating?

Much of Europe’s district heating sector has been around for decades. But a lack of investment and cohesive thinking since then means many systems are lagging behind on their decarbonisation pathways, says Sem Oxenaar from the Regulatory Assistance Project

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The views expressed are those of the author and do not necessarily reflect the position of FORESIGHT Climate & Energy

District heating needs to speed up decarbonisation to reach climate goals

Over the past year, how we heat our buildings has become a top priority for most citizens, businesses and governments. And rightfully so, as a third of all energy in the European Union (EU) is used for heating and hot water in buildings, 72% of which comes from burning gas and oil.

As people seek to replace coal heating and oil and gas boilers due to the energy price spikes, demand for highly efficient and easily deployable heat pumps has boomed.

Millions of households in the EU, however, rely on district heating systems for their heating and hot water. In 2017 (latest data available), 12% of heat for space heating and hot water in the EU was supplied through such systems—and only one-third is generated from clean sources. Current district heating users cannot make the switch to clean heat by themselves.

To reach Europe’s 2030 climate target, the heating sector needs to rapidly speed up the rate at which it is decarbonising. Many buildings now using fossil fuel boilers will have to be connected to newly developed clean district heating systems while existing district heating systems will need to be modernised and switched to clean heat sources.



Overall, district heat in Europe is largely dependent on burning fossil fuels, waste and biomass. Gas dominates, making up 32% of the heat mix (see chart, below). With a high share of coal and lignite (26%), the sector is relatively greenhouse gas intensive.

The share of renewable heat has been increasing slowly but surely over the past decade—from around 7% in 2000 to 21.5% in 2017—but it predominantly comes from burning biomass and biofuels (22%) and renewable waste (7%).

These have limited potential to expand and can have sustainability issues. Although their contribution is currently marginal (<3%), the clean sources with the most growth potential are industrial waste heat, geothermal, large heat pumps and solar thermal.


Source: European Commission, 2022a.



Looking at the regional level gives a more differentiated picture. Many European cities constructed district heating systems as part of their post-World War II redevelopment. In the central and eastern parts of Europe, the sector expanded rapidly early on.

Consequently, many of these systems are now outdated and inefficient compared to current standards. Production plants are old, with more than 70% of coal and oil-based plants still operating beyond their technical lifetime.

Heat losses from distribution are excessive due to high flow temperatures, lack of pipeline insulation and leaks. Combined with a large share of older and less efficient buildings, limited controls and metering for end users, and a high prevalence of energy poverty, these systems face significant modernisation and decarbonisation challenges, while needing to keep heat affordable.



In the Nordic countries, mass deployment of district heating came later, following the 1973 oil crisis. As a result, and through ongoing modernisation, those systems have been built according to higher efficiency standards, often with insulated pipelines and combined heat and power production.

Significant steps towards phasing out fossil fuels have been made, using biomass and renewable waste. In Sweden, fossil fuels only make up around 10% of the district heating mix.



The Baltic states have also achieved high shares of renewable heat, making use of the large biomass waste streams from forestry. They do face efficiency challenges in district heating and buildings, however.

The higher investments in both district heat deployment and decarbonisation in the Nordics and Baltics have some relation to the climate, as countries with high heating needs are over-represented among the top-performing countries in these categories.

Finally, there are several EU member states with significant heating needs—such as France, Germany, the Netherlands, Belgium and Hungary—that have invested little in district heat, far below their cost-effective potential, and face the challenge of quickly expanding district heating.




Europe’s district heating systems need to accelerate the switch to low-carbon sources if we are to reach climate goals and give all households access to clean heat. The biggest challenge lies with the older and fossil fuel-intensive systems.

Luckily, there is enormous potential for clean district heating based on renewable heat, ambient heat with large-scale heat pumps and excess heat.

District heating needs to be able to compete economically with a booming and innovative heat pump market, however. In addition, especially in countries where district heating is currently less developed, trust must be built among end-users often weary of novel solutions.

Moreover, regulations have to be updated to support viable business models and protect end-users, and buildings will have to be made ready to be heated comfortably and efficiently with lower temperature clean heat sources.

This is no easy feat, but with the right policy and regulatory support, clean, efficient and smart district heating can play an important role in decarbonising our buildings. •


Across a three-part series, Sem Oxenaar is examining the state of district heating in Europe and charting a route forward to clean, efficient and smart systems. You can read part one on the future of district heating here.

If you have a thoughtful response to the opinions expressed here or if you have an idea for a thought leadership article regarding an aspect of the global energy transition, please send a short pitch of 200 words outlining your thoughts and credentials to: opinion@foresightdk.com.


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