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Taking the burn out of heating for low-income households

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The future of heat in buildings is not fossil fuelled. The urgency of the climate crisis, Europe’s 2030 climate targets, the current war in Ukraine and the resulting skyrocketing energy prices all mean we need to massively accelerate efforts to move away from burning fossil fuels in our homes. This is no small task as fossil fuels currently account for over 75% of heat supply, and the residential sector is Europe’s single biggest fossil gas user, responsible for 40% of gas consumption.

The recent energy price volatility and the cripplingly high gas prices make the economics of switching from fossil fuel heating to heating with a heat pump better in 2022 than before the crisis. Those households that can afford it may well be considering the switch.

For lower-income households, however, the high prices make all forms of heating – and most other household expenses – less affordable. For these people, the switch to clean heating is further away than ever. But the risks of remaining locked into expensive fossil fuel use are more acute due to high and volatile prices, rising costs of redundant infrastructure and, potentially, exorbitant costs for hydrogen.

RAP analysis establishes the upfront investment and running costs to switch to heating with a heat pump, before and after the price crisis. Based on this assessment, Louise Sunderland and Duncan Gibb set out strategies to make the switch to clean heating affordable and safe for lower-income households. Targeted subsidies for upfront investment in clean heating technologies are essential, alongside reforms to electricity pricing to help ensure bills are affordable. The study also explores a range of other strategies to secure affordable clean heat such as bringing together combinations of building-level technologies, services and the benefits of cheap renewable electricity generation. We present five recommendations for:

  • Prioritising lower-income households in heat decarbonisation strategies.
  • Ensuring an ‘energy efficiency first’ approach to reduce heating needs.
  • Providing targeted subsidies for clean technologies.
  • Rebalancing burdens away from electricity bills and directing social support to electricity bills.
  • Focussing Europe’s innovation attention on the needs of lower-income households.

Good COP/Bad COP: Balancing fabric efficiency, flow temperatures and heat pumps

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Heat pumps are widely recognised as the key technology to decarbonise building heat demand in Ireland. To receive grants for heat pumps, homeowners in Ireland are required to have a heat demand per unit of floor area, known as a ‘heat loss indicator’ (HLI), below a certain level. The HLI requirement was designed to protect households from high bills if they switched to a heat pump.  

There is a concern that the HLI is limiting heat pump deployment, thereby hindering Ireland’s goal of net zero in 2050. This review of the HLI policy and associated rules was undertaken alongside a discussion of heat pumping technologies and their operation, optimal performance and innovation. While there is still a major role for building fabric energy efficiency upgrades, innovation in heat pumping technologies means they may be able to more easily replace combustion-based technologies than has been previously assumed due to better performance and higher output temperatures.

To achieve more rapid and potentially smoother deployment of heat pumps, current HLI grant requirements should be reevaluated. Initially, the HLI requirements could be loosened, subject to relevant consumer advice and protections. In the longer term, a focus on flow temperatures and in-situ performance may be more appropriate. Building fabric efficiency requirements could be maintained but simplified. Finally, trials and programmes to evaluate heat pump performance in Irish buildings should be expanded and expedited in order to provide accurate and local data on this strategically important technology.

Hybrid Heat: the Cool Path to Home Heating

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The opportunity: If the over 50 million US homes that have central air conditioning and a separate heating system just replaced their AC with a look-alike and more efficient “two-way” heat pump unit, those households could not only cool over the summer, but they could also heat during the spring and fall. This would produce the immediate benefit of cutting a home’s fossil-fuel bill and its carbon emissions.

On a practical level, how easy is it to replace a failed central AC unit with a heat pump?

In a webinar last month, Make the Swap: Why It’s Time for Heat Pumps, Not ACs, CLASP,  RAP, and their guests answered this and other questions.

SPOILER ALERT:  It’s pretty easy.

“Make the Swap” assembled a panel of speakers to provide manufacturer, installer, and policy perspectives.  Camille Kadoch from RAP moderated a discussion with Matt Malinowski of CLASP;  Weston Berg of the American Council for an Energy-Efficient Economy (ACEEE); Nick Harbeck of Johnson Controls; and Nate Adams of HVAC 2.0.

What follows are excerpts from their discussion.

The Premise

Matt Malinowski, who spent over a decade supporting the federal Energy Star efficiency programs and is now CLASP’s director of climate research, framed the discussion with a short presentation that builds on CLASP and RAP’s recent study, Combating High Fuel Prices with Hybrid Heating: The Case for Swapping Air Conditioners for Heat Pumps. In a nutshell: Today, the homes that cool during the summer with central AC, heat during the cooler months with a separate furnace or boiler. When that AC unit dies, if it’s replaced with a heat pump, then that efficient appliance could not only cool the home more efficiently in the summer months, but it could also heat the home in the fall and spring, displacing less-efficient fossil or electric resistance heating.

“It’s a little sneaky,” admitted Malinowski when questioned by Kadoch. “Getting at heating load through cooling allows people to keep their current heating systems and does not require a full change out.”

Why Is This Hybrid Approach Possible?

According to Malinowski, Americans buy 4 million heat pumps and 4 million gas furnaces each year.  But they also buy 6 million central AC units each year. If, over ten years, those AC units were replaced with heat pumps, then more than half the US housing stock would have installed heat pumps, independent of any other efforts to swap out furnaces and boilers.

Kadoch noted, “So, this approach is about ‘displacing’ and not ‘replacing.’ ”

“Yes, our modeling for the lower 48 states and Washington DC, found that under very conservative assumptions — the ‘changeover,’ where the heat pump hands back home heating to the furnace at 40 degrees Fahrenheit — we could eliminate 39% of fossil fuel heating.” Furthermore, he explained, “under those assumptions, household utility bills and CO2 emissions would drop by 11%, and emissions reductions would grow to about 50 million tons of CO2 annually by 2032.”

As Matt’s summary made clear, there are many advantages to this approach. They include reduced consumer costs, increased choice, a cold climate backup with the existing furnace (but avoided fossil-fuel emissions when that furnace doesn’t need to be used) and ease of installation: heat pumps can be “dropped in” to replace central AC.

How Can Heat Pumps Just Be ‘Dropped In’?

Kadoch then turned the conversation to Nate Adams, the “House Whisperer” who has been electrifying homes since 2014 and is CEO of HVAC 2.0, a nascent network for HVAC contractors that lean towards electrification.

Kadoch: “Nate, so, what does it look like when you replace a failed central AC unit with a heat pump? Are we ready for this?”

Adams: “The answer is there’s not a big difference. The way that I compare a heat pump and an air conditioner, it’s like two identical cars, but one [the heat pump] has a reverse gear and the other doesn’t.”

“Are we ready, largely, yes. It doesn’t take much more time to install — 20 or 30 minutes.  Fundamentally, it’s the same piece of equipment; all the connections are the same.”

Kadoch: “Is it going to be challenge finding someone to do this installation?”

Adams: “One  of the reasons this hybrid approach came up in the first place — it lets everyone keep their existing heating system — their safety blanket. You can do this in any home with central AC with little pushback from contractors.”

“But the critical thing that needs to happen — because the vast majority of installs are done on an emergency basis when the AC fails on a hot day — is that a heat pump needs to be available in the contractor’s supply house.  Otherwise another air conditioner will get installed. A contractor puts in what’s on the shelf.”

“The wholesale cost difference, what the contractor pays off the shelf at the supply house, runs generally between $300 and $600 difference for the same type of unit.”

Getting Heat Pumps on the Shelf

Kadoch then questioned Nick Harbeck, manager of regulatory and environmental affairs at Johnson Controls, a company manufacturing residential and commercial heat pumps in Wichita, Kansas and Norman, Oklahoma.

Kadoch: “Nate, given that there are more ACs sold today than heat pumps, are manufacturers now targeting the AC market with heat pumps?”

Harbeck: “Yes. We view this as an enormous opportunity both from a market perspective and with respect to CO2 reductions.”

“It is also important to recognize that there are programs out there to incentivize the installation of heat pumps. So, in addition to the low cost of switching from an AC to a heat pump, there is the Inflation Reduction Act, for example. Section 25C provides homeowners with a tax credit for investments in certain high-efficiency appliances, and the HOMES program is a rebate program for housing energy retrofits. Both provide strong encouragement to install heat pumps. Those incentives are very rich and can be expected to move the needle toward the more advantageous equipment to install.”

The Policy Environment

Kadoch also explored the policy landscape for heat pumps with Weston Berg, a senior researcher with ACEEE who provides research and technical assistance related to utility regulations, and is one of the authors of ACEEE’s State Energy Efficiency Scorecard since 2016.

“We are seeing the greatest amount of activity from states that have recently passed clean energy legislation and want to secure carbon reductions from the power sector,” Berg said. “California and Massachusetts get mentioned a lot, but just in the past year we’ve seen activity in the Midwest — Minnesota’s Eco Act, Illinois’ Climate Equitable Jobs Act, and energy legislation and other policies coming out of Colorado.”

“Perhaps the biggest barrier that we see is that utility energy efficiency programs are not inclined to support fuel switching from fossil fuel heating to electric. In some places it is actually prohibited.”

“That said, we are seeing states do the work and try to reform those types of policies,” Berg added, highlighting states such as Maine and New York that are setting particular targets for heat pump adoption, as well as others that are retooling their efficiency targets to emphasize total fuel savings or avoided emissions.

“The second point is that states are changing energy efficiency rules to make clear that programs can fund electrification as a form of energy efficiency, when it saves total energy and avoids GHGs,” Berg said. “Giving a green light for funding, of course, provides some certainty and enables utilities to go after those savings in a deliberate way.”

Berg went on to explain that cost-effectiveness tests are a key determinant as to whether utilities can go after these savings. Not valuing the full range of benefits skews the analysis and will impede heat pump adoption. Colorado, for example, now requires the analysis of heat pumps to incorporate the social cost of carbon. Some states are adopting performance incentive mechanisms to reward utilities for heat pump adoption. There are also cases where utilities are rewarded for building retrofit measures or where jurisdictions adopt building codes that incorporate electric-ready requirements.

Summary

This hybrid approach is available today for more than 50 million US homes. Doing it sounds pretty easy, too. Perhaps most important, this is urgent, as the authors of Combating High Fuel Prices with Hybrid Heating emphasized:

Every six seconds a new residential furnace or air conditioner starts up in the United States, and that decarbonization opportunity is lost until 2035-2040.

Czyst(sz)e ciepło: Zmiana uwarunkowań ekonomicznych dla pomp ciepła w Polsce

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W ciągu ostatnich dwóch lat Polska znacząco przyspieszyła transformację systemów ogrzewania w budownictwie jednorodzinnym, zwłaszcza jeśli chodzi o rozwój pomp ciepła. Postęp ten zawdzięcza silnemu wsparciu politycznemu w zakresie wycofywania węgla do ogrzewania indywidualnego. Jednak zależność Polski od paliw kopalnych w ogrzewaniu jest nadal bardzo wysoka, a inwazja Rosji na Ukrainę pokazała, że kraje silnie uzależnione od paliw kopalnych są narażone na ekstremalne ryzyko cenowe.

W niniejszym opracowaniu Duncan Gibb i Monika Morawiecka pokazują, że inwestycja w pompę ciepła ma sens dla polskich gospodarstw domowych z punktu widzenia ekonomicznego, środowiskowego, ochrony klimatu i bezpieczeństwa energetycznego. Analiza przedstawia także kilka rekomendacji, które pozwolą upewnić się, że polityka w zakresie czystego ogrzewania uwzględnia długoterminowe cele dekarbonizacji, jakości powietrza i skutków społecznych. Rekomendacje odnoszą się m.in. do właściwego uwzględnienia kosztów zewnętrznych paliw kopalnych, wzmocnienia przepisów dotyczących jakości powietrza oraz wdrażania skutecznych regulacji dla dekarbonizacji ogrzewania.

A policy toolkit for global mass heat pump deployment

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Heat pumps, a critical technology for clean energy systems, are poised to become the most important technology for heating decarbonisation. Currently, the vast majority of heat is provided by fossil fuels. In order to promote and encourage heat pump installations across the globe, the Regulatory Assistance Project, CLASP and the Global Buildings Performance Network have developed this heat pump policy toolkit, which provides a suite of tools, and advice on how to use them, for policymakers interested in promoting this critical technology.

The structure of the toolkit is loosely based on that of a Greek temple, with foundations and pillars, supporting a rapidly growing heat pump market. The interactive toolkit (which includes clickable links throughout) also features short videos that give an overview of each relevant element of the toolkit. These videos make up a short series which complements this document.

This toolkit works as a synthesis of policy approaches to heat pump deployment and a guide to designing the best packages of policies. As you’ll see in the toolkit (and in the graphic below), a complete policy package needs to consider foundational elements and must also take account of each pillar. We provide details, examples and potential issues, and solutions within the various policy elements discussed.

Heat Pump Toolkit temple

Foundational elements of this toolkit recognise the need for coordination and communication around heat pump policy efforts and strategies.

Pillar 1 considers economic and market-based instruments. These instruments are fundamentally associated with balancing the economics of heat use towards clean options, such as heat pumps, so that their lifetime costs are cheaper than fossil-based alternatives.

Pillar 2 considers financial support. Within this pillar, we identify three key elements of financial support for heat pumps — grants and tax rebates, loans and heat-as-a-service packages.

Pillar 3 considers regulations and standards. We look at buildings codes and standards, appliance standards and heat planning and zoning.

To build an effective heat pump policy package, policymakers must consider foundational elements as well as each of the pillars. And even within each pillar, combinations of elements may be appropriate.

Cleaning up heat: The changing economics for heat pumps in Poland

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Over the past two years, Poland has become a remarkable success story for deployment of clean heat systems, especially heat pumps. Its progress is due to strong policy support for phasing out coal for individual heating. However, Poland’s dependence on fossil fuels for heating is still high, and Russia’s invasion of Ukraine has shown that countries heavily reliant on fossil fuels are exposed to extreme price risk.

Duncan Gibb and Monika Morawiecka show that investment in a heat pump makes sense for Polish households from an economic, environmental, climate and energy security standpoint. This analysis investigates two current economic cases and makes several recommendations to make sure that policies for clean heating consider long-term objectives of decarbonisation, air quality and social impacts. These include properly pricing externalities into fossil fuels, strengthening clean air legislation and effectively regulating to decarbonise heating.

Make the Swap: Why it’s Time for Heat Pumps, Not ACs

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If the video is not visible, please accept all cookies to enable the player.

Amidst rising gas prices and groundbreaking US climate legislation, heat pumps are in the national spotlight. Now is the time to accelerate the deployment of this super-efficient technology across the country. But on a practical level, what is the most feasible and cost-effective path for consumers to adopt and operate heat pumps in their homes?

CLASP and RAP co-hosted a dynamic conversation about the opportunities to increase the deployment of heat pumps by using them to replace end-of-life air conditioners. This unique solution, in which the legacy heating system remains in place as a backup for high heating loads, offers consumers leading cost and energy savings while taking vital steps toward full home heating decarbonization.

Participants heard from leaders across the policy, research, industry, and installer communities to learn more about how this solution is already contributing to state and federal decarbonization goals.

For background information and analysis of this opportunity, please see the latest report from CLASP and RAP or the two-page summary.

A Win for Building Electrification: EPA Elevates Heat Pumps over One-Way ACs

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Millions of U.S. homes have central air conditioning for the summer and separate fossil fuel heating systems for the winter. A great way to boost home heating electrification is to replace those central air conditioners with look-alike “two-way” heat pump units, which can provide highly efficient heating in addition to cooling, at little extra up-front cost. CLASP and RAP analyzed ways to make this happen in a recent report. Our recommendations included revising appliance standards to require ACs to have two-way operation.

Central AC vs. Heat Pumps

Earlier this month, the Environmental Protection Agency put this idea into policy, saying that two-way heat pumps deserve the agency’s coveted Energy Star “Most Efficient” rating — and that even the best traditional one-way air conditioners no longer do.

This is big news for building electrification. It means that the hybrid electrification idea — where households ease into electrification, retaining their old fossil systems only for backup on the coldest days — is gaining ground. This approach has the immediate benefit of cutting fossil-fuel use, as households use their legacy fossil systems less. It also helps to smooth the path to full home electrification by boosting demand for heat pumps, increasing the capacity of heat pump contractors and installers, and raising consumer familiarity with heat pumps.

The details of EPA’s move: The agency issued final recognition criteria for specific products to qualify in 2023 as Energy Star Most Efficient. In its response to stakeholders who encouraged the EPA to remove one-way central AC units from the Most Efficient program, the agency wrote that it “expects 2023 to be the last year we recognize central air conditioners” as qualifying for the rating. It went on to state that it “agrees that hybrid heating is the logical next step for retrofits in existing homes, given the modest incremental cost to install a heat pump instead of an AC.” Furthermore, it indicated that it is adjusting its “marketing and communication strategy accordingly.”

In encouraging the EPA to reach such a conclusion, stakeholders pointed out that traditional central AC units only provide cooling and are currently paired with a fossil-fuel-fired furnace that delivers 100% of a home’s heating needs. By contrast, switching from central AC to heat pumps would allow consumers to use a cleaner and more efficient appliance for at least some of their heating needs. That in turn would avoid approximately 250 million tons of CO2 over 10 years, save $27 billion on heating bills, and produce an additional $80 billion in societal benefits.

The hybrid heating strategy, as a way to kickstart home electrification in the United States, is described in detail in CLASP and RAP’s report: Combating High Fuel Prices with Hybrid Heating: The Case for Swapping Air Conditioners for Heat Pumps. We make the case for appliance standards requiring ACs to have two-way operation, and the EPA decision is an important step in that direction. We also provide analyses of four major heating fuel types — oil, propane, methane and electric resistance — and outline key recommendations for how state governments and utilities can support accelerated heat pump adoption across the country.

The Energy Star Most Efficient designation is intended for use at point-of-sale on materials and product literature. The goal of the program is to encourage new, more energy-efficient products into the market more quickly by targeting early adopters. With the EPA’s decision, consumers will now have better information about the most efficient choices to make for cooling appliances.

This change should also have significant effects on state- and utility-run efficiency programs across the country due to their reliance on Energy Star information to decide what appliances to support. Fifty-four million American homes have one-way central ACs that can be easily swapped for a two-way heat pump, which would run in a hybrid configuration to both cool and heat the home, with the existing heating system as colder-weather backup. In a world where fossil fuel prices are high and volatile, the electric grid is getting cleaner, heat pumps are getting more and more efficient, and the demand for air conditioning is increasing, a big push for a swap of air conditioners to heat pumps over the next five to 10 years will smooth the way for full building electrification.

Turning off the gas: Stronger and coherent EU policy to accelerate the fossil gas phaseout

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Rapidly phasing out fossil gas demand has become a top priority in Europe. Existing European legislation is expected to achieve only moderate reductions by 2030. The ongoing energy crisis has provided an opportunity to aim for even more extensive decreases in fossil gas demand. Legislation under negotiation, informed by the European Commission’s REPowerEU plan, is expected to go further, yet more ambitious targets and a unified policy approach could achieve potential reductions currently left on the table.  

RAP’s analysis finds that even with full implementation of the REPowerEU plan, by 2030 natural gas demand in Europe will remain roughly equivalent to Russian gas imports in 2021. A stronger energy efficiency target in the Energy Efficiency Directive (EED) and a higher renewable energy target in the Renewable Energy Directive (RED) could reduce gas demand and eliminate Russian gas imports. 

Furthermore, the Hydrogen and Decarbonised Gas Market package should emphasize integrated planning and targeted applications of alternative gases to ensure its consistent with a fossil gas phaseout. 

A joint, coherent policy approach — addressing more ambitious targets for the EED and the RED and complementary metrics applied to the Hydrogen and Decarbonised Gas Market package — would guarantee that fossil gas use is rapidly reduced and the infrastructure is in place to meet the remaining demand equitably and efficiently.

How the European Union incentivises inefficient renewable heating

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The EU’s renewables directives count what fuel is burned for heating, as opposed to the amount of heat produced.

Never has the spotlight shone so brightly on Europe’s heating and cooling sector. And for a good reason. Fossil gas makes up around 39% of the energy used to heat buildings and much of Europe wants to rapidly phase it out.

To help do so, the European Parliament recently voted in favour of a key amendment to the Renewable Energy Directive (RED): raising the annual target for the share of renewable energy in heating and cooling.

The new goal—a 2.3 percentage-point increase each year until 2030—is roughly double the one proposed in the Fit-for-55 package unveiled in 2021.

The clear signal has been set, yet there is something off with the way the metric is measured. By counting fuel burned instead of heat produced and not including electricity used for heating or cooling, the RED favours inefficient technologies.

Ignoring the mushy peas on the floor

Imagine a toddler having lunch. Her father has prepared a bowl of 300 grams of mushy peas and figures that this meal should meet half of the two-year-old’s nutrient needs for the day. She is a messy eater though and jettisons around half of her food on the ground. Once her dad sees the empty plate, he pats himself on the back, thinking that he filled her belly. He should look at the floor.

Measuring the renewable share of heating and cooling in the RED is simple. It tallies all the energy used to heat and cool from renewable sources, then divides it by the total. The key question is: which energy counts as renewable?

Unfortunately, the RED’s answer to this is flawed. It only counts final energy use or, in other words, the fuel that is delivered to the customer to use in their heating appliance. That means if someone burns a log in a fireplace at 50% efficiency and it produces 100 kilowatt-hours (kWh) of heat, how much “renewable heat” does that account for?

If you were thinking “100 kWh” you would be wrong. The RED counts that as 200 kWh, since that is the energy content of the biomass that was combusted at 50% efficiency.

That is a big problem because heating systems have different efficiencies. An electric heat pump typically produces 100 kWh of heat with 33 kWh of input electricity. The remaining 67 kWh is drawn from the ambient air for free. An 85% efficient pellet boiler needs 117 kWh.

The point: Less efficient technologies need more input energy for the same useful heat outcome. The RED discourages switching to more efficient heating appliances and electrification. It counts the full weight of the mushy peas, not just those that were eaten.

Anti-electrification policy

The other problem with the RED methodology is its scope. It does not consider the renewable electricity used for heating and cooling at all. Whether it is used to drive a heat pump or just an electrical resistance heater, it does not count toward the renewable heating and cooling target. Even for cooling, which is virtually only based on electricity.

This is an effort to avoid double-counting. The data wranglers do not want to count renewable electricity in both the power sector and the heating and cooling sector. As a data wrangler myself, I appreciate their commitment to neat allocation. But in this case, neatness has its downside.

Electricity providing a heating or cooling service should be considered towards the renewable heating and cooling target. Otherwise, heat pumps could be undervalued in terms of their contributions. If the methodology does not even consider where the electricity comes from, the heat output of the heat pump can never be fully renewable.

If the renewable share of electricity would be considered in the RED’s methodology as a heating and cooling service, the incentive to promote heat pumps would even be stronger. Member States will thus be encouraged to implement policies that aim to achieve the heating and cooling target, with the ancillary benefit of growing the deployment of efficient heat pumps to do so.

As it stands, the least efficient and least electric technologies are those that have the most potential to meet the goals under the RED. More efficient and electricity-based heating appliances risk falling behind.

The way forward

Getting metrics right is crucial to ensuring a rapid and balanced transition to clean heating and cooling. The Renewable Energy Directive’s goal should be to promote efficient heating and cooling technologies that maximise useful energy while minimising input energy.

This means counting the useful heat that is produced by a heating system, not the input energy needed. It also means including the electricity used for renewable heating and cooling.

Since electricity realistically contributes to both the headline renewable energy target (32% in the RED II and voted to increase to 45% by the European Parliament), as well as the renewable heating and cooling target. Both calculations should factor it in so that the statistics are accurate.

Double-counting can be avoided by ignoring the electricity used in the heating and cooling sector when calculating the headline target.

Metrics matter. Only by counting the useful heat produced can the Renewable Energy Directive provide the right incentives for phasing out fossil gas and spurring the clean electrification of heat.

 

A version of this article originally appeared on Foresight Climate & Energy.

Photo: Holger Schué from Pexels.