EU Looks To Cut Reliance On Russian Gas With New Investment In Heat Pumps

Russia’s ongoing invasion of Ukraine has brought instability, violence, and human tragedy on a massive scale, with effects rippling across the continent and globally. Beyond the immediate security impacts and the devastating toll on human welfare, the crisis has also shaken up the energy sector. One-fourth of Europe’s energy comes from natural gas, nearly 40 percent of which is imported from Russia. As European countries take swift action to de-risk their gas supply and ramp up alternative sources, the alternatives they choose will have significant climate implications.

As the humanitarian crisis unfolds in Ukraine and nations seek to insulate themselves from the volatility of fossil fuels, especially Russian gas, two major global announced decisive energy policy actions on March 8. On the same day that President Biden announced a US ban on Russian oil imports, the branch of the European Union unveiled a plan to slash the EU’s dependence on Russian gas.

One of the pillars of the European Commission’s new REPowerEU plan is the increased deployment of electric heat pumps to displace fossil gas demand for heating in Europe. With this new plan, the EU will target programs and policies to accelerate the installation of clean, efficient heat pumps to the tune of 10 million new heat pump installations in the next five years.

The increased near-term goal for heat pumps is a first step — one that we hope will lead to increased ambition from the EU to further ramp up decarbonization of heating in line with global climate goals. Through the Clean Heat Forum, RMI and its partners aim to carry forward ambitions such as the EU’s new heat pump targets and expand them, both in the EU and worldwide.

Image courtesy of Rheem

An Ambitious Plan

The European Commission’s REPowerEU plan is an ambitious roadmap containing diverse actions to reduce Russian fossil fuel dependency by two-thirds in this year alone, underpinned by a goal of mitigating near-term price shocks threatening European families and businesses. In the years that follow, the plan seeks to eliminate dependence on Russian fossil fuels entirely “well before 2030.”

Renewables, energy efficiency, and heating electrification are crucial to the REPowerEU plan. By the end of this decade, those three solutions will more than displace the current consumption of Russian gas. Importantly, the short-term target of 10 million new heat pumps appears to be readily achievable, based on current deployment rates, but the EU will need to pick up the pace increasing to meet its longer-term goals. Our European partners at the Regulatory Assistance Project (RAP) lay it out in this great Twitter thread.

Why Buildings Matter

Reducing or eliminating fossil fuel use in buildings will be critical to limiting Europe’s exposure to the volatility of fossil fuel markets and meeting its climate goals. More than one-quarter of total EU energy consumption goes toward space and water heating, according to a report from ECOS, and more than 75 percent of heating energy in residential buildings comes from fossil fuels. On a global scale, the combustion of fossil fuels in buildings accounts for nearly 10 percent of climate-disrupting greenhouse gas emissions.

That is why last year RMI supported the launch of the international Clean Heat Forum at COP26, which included initial membership from more than half a dozen national and subnational governments and leadership organizations like RAP, E3G, REN21, the European Heat Pump Association, and KT -Energy LLC. The Clean Heat Forum, housed within the UN Environment Program’s Global Alliance for Building and Construction (GlobalABC), brings together governments in the EU and beyond, along with civil society organizations and industry experts, to identify critical policies, programs, and opportunities to rapidly increase the installation of clean heating solutions like heat pumps.

Just this week, as the EU was unveiling its REPowerEU plan to displace Russian fossil fuels, RMI and other leaders of the Clean Heat Forum were presenting to the GlobalABC Annual Assembly on the critical steps needed to equitably decarbonize heating systems across the globe. During the Assembly, the Clean Heat Forum launched two ongoing working groups focused on developing and sharing best practices for policy and regulatory changes to accelerate clean heating solutions, as well as publicly engaging more governments and NGOs on the issue of climate-aligned clean heating solutions .

Deploying more heat pumps will also shield individual households from the volatility of fossil fuel prices. A November 2021 analysis from RMI showed that, in light of natural gas prices, homes with rising high-efficiency electric heat pumps in the United States are likely to spend less on heat than households with gas furnaces. Furthermore, US electricity prices have historically been much less volatile than gas prices. A recent analysis from RAP arrived at a similar finding for the UK, concluding that efficient heat pumps are now 27 percent less expensive to operate than gas boilers in UK homes.

Looking toward 2030

The REPowerEU plan’s target of 10 million heat pumps installed in the next five years implies a modest — and highly achievable — increase over recent sales trends. In 2020, approximately 1.8 million EU households purchased a heat pump, according to the International Energy Agency (IEA). Despite healthy growth in the heat pump market, further policy support will be needed to deploy heat pumps even faster in the EU and around the world to hit 2030 climate goals and align with a 1.5°C future, as explained in a recent Carbon Brief post . Indeed, the international community is counting European nations and other leading to completely transition away from the sale of new fossil fuel heating systems for residential and service buildings, according to the same IEA Net Zero by 2050 Roadmap.

To lower household energy bills, align the buildings sector with climate goals, and protect nations from the dangerous and price-volatile fossil fuel industry, global leaders must follow the lead of frameworks like REPowerEU plan while also building on their ambition. Key policy actions to accelerate the transition to clean heat include increasing manufacturing of efficient, cold-climate heat pumps; investing in training programs and resources for building designers, contractors, and installers; and enacting pricing protections. We are pleased to see that some of these actions are part of the REPowerEU plan. Finally, we must ensure that heat pump retrofits are folded into holistic efficiency retrofit programs across the EU — and the United States — to provide relief to the households most burdened by energy and housing costs.

The EU’s new plan is a step in the right direction. We look forward to working with our partners in Europe and around the globe in the coming years to take progressively larger steps away from fossil fuels and toward a clean, climate-aligned future for the buildings where we live and work.

© 2021 Rocky Mountain Institute. Published with permission. Originally Posted on RMI Outlet.

Featured image courtesy of Oak Ridge National Laboratory.


 

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