IEA analyst: A heating and cooling target ‘could make a big difference’

Interview published on Euractiv

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As talks on the EU’s renewable energy rules resume, one of the main talking points is how to decarbonise the heating sector, and deploy technologies like heat pumps and district heating. The International Energy Agency’s Ute Collier told EURACTIV in an interview that the task is complex and difficult.

Ute Collier is senior programme leader at the International Energy Agency’s renewables division. She is the author of the 2018 publication, Renewable heat policies: Delivering clean heat solutions for the energy transition.

She spoke to EURACTIV’s energy and environment reporter, Sam Morgan.

You are the author of a new International Energy Agency report on heat policies. What are its main aims?

We do renewable energy market reporting here at the IEA that looks at the global power sector, heating and cooling, and the transport sector, on an annual basis. Clearly, heating and cooling is globally significant. But heat data is not actually collected in our data sets so we have to make a lot of assumptions.

My report was focused on what is actually driving the deployment of heating technologies like heat pumps. Also, what kind of policies are countries using and how effective are they?

In the EU, there is a fair amount of information because of the renewable energy directive, but in this report, I decided to look a little bit beyond Europe, which is where it becomes quite interesting.

Sometimes it’s difficult to get information from places like China and the US, but they are the two largest heat consumers globally.

How does the EU compare to the rest of the world?

When you do comparisons on a regional basis like this, the EU does end up looking good, in terms of percentage of renewable heat.

But that actually tells us very little. Within the EU, we have leaders like Sweden, which has 70% renewable heat, while places like the UK and the Netherlands really lag behind.

Obviously, there are factors like local infrastructure and conditions in play. Take somewhere like Malta, which clearly has different requirements to the Nordic countries.

And it’s not just about space heating either, as disparities in industrial heating needs are obviously dependent on what a country produces. It’s a more complex task than just looking at the power sector. In this paper, I try to group countries to make the comparison a little more worthwhile.

How do countries get more renewable energy into their heating and cooling systems? Does district heating hold the answer?

It’s one of the points I make in the paper. District heating undoubtedly increases the potential but doesn’t mean that heating will automatically become cleaner and greener. Just look at countries like Poland, which has a lot of district heating but still runs largely on coal. You still need that political will and drive to meet RES targets.

But district heating is indeed fantastic infrastructure that allows you to tap into not just renewables but also waste heat, as well as increasing efficiency.

Countries that have little district heating face more challenges in increasing efficiency. Much of the housing stock isn’t actually suitable for renewable sources. You can’t just put a biomass boiler into every house, especially flats. Heat pumps face similar obstacles.

District heating makes energy centres possible that can tap into those technologies though, as it is so flexible.

District heating seems like a long-term policy measure though, as it takes so much planning. Are countries put off by that?

It’s certainly a challenge. The Nordic countries, for example, started building up these systems back in the 1950s and 1960s, which only accelerated during the oil price shocks during the 1970s. That required a lot of commitment from public financing and local authority involvement.

A country like the UK, which doesn’t have a lot of district heating, faces a number of obstacles. Firstly, infrastructure costs. Denmark put all this in place over the last forty years. Couple those costs with the need to meet carbon targets over the next decade or so and it becomes difficult to actually justify that investment, even before you start building up your renewables.

Then you have the disruption issue, as the most obvious place to install district heating is in urban centres. That means ripping up roads to lay pipes. It shouldn’t be a precluding factor of course, as roads have to be dug up for other work, and even countries that have district heating already need to maintain them. Ultimately, installation would just be a matter of timing and planning this altogether.

But there is also a lack of consumer awareness problem in countries that don’t have these systems in place, as well as a consumer confidence issue. Again, Denmark has been clever with it and employed measures like zoning that mean households have to connect to district heating. Other countries are less keen to do that, which means you have to rely on consumers making the choice themselves.

But district heating struggles in places like the UK, as there used to be more of it in place but it gained a reputation as being unreliable. This was due to outdated infrastructure, so time and effort is going to have to be invested in order to overcome that.

Heating clearly dominates cooling in terms of energy demand and use. But cooling is slated to become more important in the coming years. Why is that?

Climate change will undoubtedly play a role but, globally, emerging economies, rising incomes and increased urbanisation will increase cooling demand, as many of those countries are located in warmer climates.

Currently, a lot of people still live in rural areas so warm summers are easier to deal with but that will change according to current trends. Rising incomes already mean there is growing demand. Cooling only accounts for roughly 2% of energy consumption globally at the moment but that will increase.

Another factor is unfortunately about the way we actually build. Yes, there are building codes but buildings are not always constructed to take advantage of natural ventilation. Office spaces are often built with a lot of glazing and the aim of reducing cooling needs is not always considered. It’s not an impossible ask, there are numerous examples of buildings that do take this into account.

District cooling is an option and, like heating, it increases the potential for renewable energy input. There’s also the possibility to use what is called ‘free cooling’. Here in Paris, we already use the Seine as cooling.

Negotiations on the EU’s Renewable Energy Directive (RED II) ramp up on 27 March, with heating and cooling included in the proposed update for the very first time. The European Commission wants a 1% annual increase, while the Parliament is in favour of 2%. Member states are typically divided. But both 1% and 2%, on the face of things, appear low. Is that the case?

I think those numbers could make a big difference. In the EU, we’ve already seen quite a big change because of the current RED thanks to it being based on final energy consumption rather than just renewable power targets like other countries.

This new specific heating and cooling target will really focus minds. Obviously, 2% is better than 1%, but as we’ve seen with other countries, once that target is in place, they start to develop strategies and they start to rethink their support frameworks.

Heating and cooling is really the Cinderella of energy policy, so having it written into legislation like this will only be good.

Heating and cooling takes up 50% of the EU’s energy demand but still remains a somewhat fringe issue in energy policy. Are things changing in that regard?

People are beginning to talk about it. You only have to go back a few years and no one was. Ever since the Commission brought out its first-ever heating and cooling strategy, the conversation has really accelerated. Conferences in Brussels, events, almost always dedicate time to it. Again, the fact that it has this specific proviso in the RED II proposal is evident of that.

But it will be a difficult sector to do, more so than electrification. In other policy areas, people get excited about power plants and wind farms but in this sector engineers and the like are interested in specific pieces of technology, individual heating appliances, tailor-made heat pumps and so on.

That also means that the industry is incredibly fragmented, where there are a few large-scale manufacturers coupled with lots of small outfits and installers rather than big renewable developers.

It goes down to the level of a plumber installing a heat pump in a flat rather than a big company putting up ten wind turbines. As it is so tricky to get right, it’s important that the kinds of discussions going on in Brussels and elsewhere at the moment continue.

In terms of obstacles to more renewables in heating and cooling, what really stands out?

As countries differ so much, it is impossible to pinpoint one particular challenge across the board. In some countries, it’s a simple lack of infrastructure. In others, it’s the cheapness of fossil fuels but natural gas in particular. That isn’t limited to price per kilowatt hour but also associated costs like gas boilers, which are cheap.

Renewable sources have higher capital costs, often higher installation costs. Fossil fuel prices remain low, so competing with natural gas is difficult. But places like Sweden where carbon taxes have been in place for a number of years, are more successful in levelling the playing field.

Does the falling price of renewable energy also mean then that heating and cooling will become greener?

The problem is that while we see wind and solar prices fall in the power sector, we don’t see the same kind of reduction of costs in the heating and cooling sector.

A lot of the cost is related to installation. Look at complex systems that we tend to use in Northern Europe, like solar power water heaters; the price of manpower alone remains significant.

But there are cost reductions due to economies of scale, again due to district heating. The Danes are doing this by plugging a lot of solar heating into their systems and because this is happening on a large-scale, the costs come down.

With all this in mind, I can’t really see renewable heating ever becoming that cheap. We have to accept that there is a cost there and we need to price carbon properly.

In a lot of European countries, there hasn’t been a lot of progress there. In Finland, they’ve recently revised their carbon taxing to put more on gas and peat, which they really shouldn’t be using. That has made biomass more attractive, for example.

Price will always be the main factor though.