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.

How much insulation is needed? A low-consumption, smart comfort standard for existing buildings

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National and local governments are increasingly turning to regulated minimum standards for the energy performance of buildings to kick-start the renovation of the stock. But how can these standards be used to define the most efficient pathway for buildings to fully decarbonise? RAP outlines a standard that defines the minimum insulation, airtightness and ventilation levels needed to enable a building to be heated efficiently with renewable sources, via lower flow temperature water.

The zero-emissions heat solution for the majority of buildings will be either a heat pump, district heating or shared heating. Heat pumps run much more efficiently when they deliver lower flow temperature water. Running district heating at lower flow temperature could result in cost reductions of 14 billion euros a year across Europe. Buildings meeting the standard can also have their heating schedules operated flexibly at different times of the day to provide flexibility benefits to the electricity grid and cost savings to the occupiers.

This briefing draws on the recently developed Dutch home insulation standard that is designed to support households to adapt their homes in advance of the area-based phaseout of the fossil gas system, and transition to sustainable heat sources, by 2050.

EU can stop Russian gas imports by 2025

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The Russian government’s decision to invade Ukraine puts into sharp contrast the deep entanglement between energy, security and geopolitics. Now more than ever, the European Union needs unity and resolve in its response and a focus on resilience in the face of interlinking crises.

Authors from Ember, E3G, Bellona and RAP have collaborated to identify the indispensable role clean energy solutions play in rapidly ending the EU’s reliance on fossil gas imports from Russia.

Key findings of our analysis:

  • Clean energy and energy efficiency can replace two-thirds of Russian gas imports by 2025. Europe can cut Russian gas imports by 66% by delivering the EU’s Fit for 55 package and accelerating the deployment of renewable electricity, energy efficiency and electrification. This is equivalent to a total reduction by 101 billion cubic meters. An urgent uplift in policy is now required to achieve the necessary level of implementation.
  • New gas import infrastructure is not required. Security of supply and reduction of Russian gas dependence does not require the construction of new EU gas import infrastructure such as liquified natural gas terminals. Alternatively sourcing 51 billion cubic meters of gas imports via existing assets is sufficient.
  • Coal power does not need to be extended. The above measures would enable the EU to achieve the necessary decrease in fossil gas demand without slowing the decline of coal-fired electricity generation.

To achieve urgent reductions in the use of fossil gas in Europe, it is important for decision-makers to identify and tackle counterproductive policies. The authors recommend 10 key measures to realise the additional potential for reducing gas use identified in this analysis:

  • Increase ambition and fast track adoption of the “Fit for 55” package. This is relevant in particular for the Renewables Directive, Energy Efficiency Directive, Emissions Trading System and the Energy Performance in Buildings Directive.
  • Clarify financial resources to support clean energy solutions. Ensure that allocated funding under the EU’s Recovery and Resilience Facility is used to that effect. Establish a facility for early, front-loaded release of Multiannual Financial Framework funds where the delivery of gas savings can be accelerated.
  • Make energy efficiency an energy security priority and scale action. Energy efficiency has the largest potential to reduce cost impacts on consumers. Consider opening existing funding resources such as the Connecting Europe Facility for scaling national energy efficiency programmes.
  • Remove any incentives that currently deepen or perpetuate gas consumption. Examples include financial support for gas heating systems and special tax regimes or exemptions for industry. Replace them with investment support for clean heating, in particular for low- and middle-income families. Innovative schemes such as on-bill financing, tax credits or heating appliance lease schemes should be supported.
  • Support the rollout of renewables and heat pumps. Establish concrete investment programmes, reduce administrative burdens and accelerate support for critical enablers such as grid infrastructure, demand-side flexibility and better use of transmission networks and storage. Integrated regional markets can buffer fluctuating renewable resources across larger regions.
  • Make low-carbon supply chains an energy security priority. A skilled workforce and input materials to the low-carbon supply chain are critical to delivering this vision. The EU can enhance and scale Member States’ efforts and can establish a cooperative approach with the United States and other partners on scaling supply chains.
  • Ensure equity in the energy response. Governments must ensure the costs and benefits of the transition are shared fairly among consumers. Increased carbon revenues or windfall profit taxes can be earmarked for investments in renewables and efficiency, as well as bill support for vulnerable customers. Enabling access to energy services can unlock bill savings for low-income families. Regulators should address energy poverty by designing fair network tariffs and ensuring suppliers of last resort are properly financed.
  • Put in place a European Commission task force. This could drive and monitor a whole economy approach so that supply chain bottlenecks can be anticipated and efforts streamlined across different parts of the Commission.
  • Conduct analysis to identify latent potential that can be fast tracked. In particular, analysis should be identified for industrial end use of gas, or inefficiencies in gas use (transformation losses, methane leakage) to line up even higher gas savings post 2025.
  • Avoid gas infrastructure or contractual gas lock-in. The “substitution” effect from Russian gas to other sources is expected to decline sharply after 2025, meaning that additional import or other gas infrastructure will face rapidly declining utilisation.

Are EU homes ready for full electrification?

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To achieve climate and energy goals, decarbonising Europe’s building stock is critical. As part of the ‘renovation wave,’ solar photovoltaic power systems, heat pumps, electricity storage and electric vehicles chargers will become prevalent in our homes. This raises the question whether the EU dwelling stock is ready for this transition. Around 50% of domestic buildings were built before 1990 without anticipating the needs of today and tomorrow.

The deployment of safe, efficient and smart electrical installations on a large scale requires a long-term vision grounded in a strong foundation of policy, tools and standards.

The Electrification Academy welcomed Prof. Angelo Baggini from the University of Bergamo to share his analysis of electrical installations in Europe and proposes solutions on the path towards zero-emissions buildings by:

  • Showing the difference between an electrical installation from 1990 and the needs of today and tomorrow
  • Analysing the implications of far-reaching electrification from a technical, policy and consumer point of view.
  • Presenting two case studies of home renovations in typical EU dwellings: an apartment and a single-family house.
  • Recommending improvements to legislation and standards.

Minimum energy performance standards: A tool for building renovation in Spain

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Only 0.2% of Spanish buildings are renovated each year, which is far below the rate proposed by the European Commission. According to analysis by the Commission and by think tanks like the Buildings Performance Institute Europe, a rate of 2%, if not 3%, is necessary to reach the energy efficiency and decarbonisation objectives set for 2030 and 2050.

Minimum energy performance standards (MEPS) can promote building renovation by requiring buildings to meet a minimum energy or carbon efficiency level by a specified compliance deadline.

On 25 May, 2021, ECODES hosted a workshop at which environmental, social, financial and academic sector stakeholders discussed the introduction of MEPS in Spain. This report summarises the conclusions reached during the workshop and explores how MEPS could be implemented in the Spanish context.

A Spanish version of the report is available here.

Normas mínimas de eficiencia energética: una herramienta para la rehabilitación de edificios en España

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El ratio de regeneración urbana y de rehabilitación edificatoria en Europa en general y en España en particular está muy por debajo del que sería necesario para alcanzar los objetivos de eficiencia energética y descarbonización marcados para 2030 y 2050. Frente a un ratio de renovación profunda anual del 2% que propone la Comisión Europea o el 3% que defiende el Buildings Performance Institute Europe, en España se está rehabilitando solo el 0,2% del parque edificado al año.

Una herramienta que está demostrando ser muy útil en otros países para fomentar la renovación del parque edificado son las normas mínimas de eficiencia energética (MEPS en inglés), la cual obliga a los edificios, según su tipología, modelo de propiedad, etc. a cumplir unos requisitos mínimos en cuanto a eficiencia energética y emisiones de CO2 en un plazo determinado.

El 25 de mayo de 2021, Ecodes organizó un taller en el que agentes de interés del sector medioambiental, social, financiero y académico debatieron sobre la introducción de normas mínimas de eficiencia energética en España. Este informe refleja las conclusiones de esa sesión y reflexiona en torno a la posible implementación de las MEPS en el estado español.

Una versión en inglés del informe está disponible aquí.