District heating and individual heating are still dominated by fossil fuels and inefficient burning of wood without regard to sustainability criteria, in combination with a low degree of energy efficiency. This has to change, since heating plays a crucial role in the transition into a clean and zero-carbon economy.
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Coal is still very present in heat consumption. When considering cleaner alternatives, decision makers mostly opt for gas or biomass, and for Combined Heat and Power (CHP) technology.
None of these are sustainable heating solutions. In addition to massive dependency on polluting fuels, district heating systems are often characterised by outdated and leaky pipelines, and a distribution network serving buildings with poor energy efficiency performance. Governments are lacking a progressive vision and political will to embrace truly clean solutions.
Heating and cooling in buildings and industry accounts for half of the EU’s energy consumption, making it the biggest energy end-use sector ahead of both transport and electricity. According to 2019 figures from Eurostat, approximately 75% of heating and cooling is still generated from fossil fuels while only 22% is generated from renewable energy.
Similarly, in the Western Balkans indoor heating and hot water supply account for 43% of energy consumption. Around 14% of the total regional heat demand is produced and distributed to final users in district heating systems. It is based predominantly on fossil fuels (coal/lignite ~21%, petroleum products ~9% and natural gas ~67%). In total, a staggering 97% of the regional district heating is based on fossil fuels and only 3% on other energy sources such as biomass and waste heat.
Nearly half of the coal heat supply in Europe is burned in household coal stoves, which are almost exclusively located in Poland. Not only do they cause significant CO2 emissions, but the largely unfiltered exhaust gasses also lead to serious air pollution, which causes severe health problems and premature deaths.
The second half of coal-derived heat is generated in combined heat and power plants (CHP) and, to a smaller extent, in heat-only boilers. These facilities supply mostly urban district heating grids and are primarily located in Poland, Germany, and the Czech Republic. More installations can be found in Northern Europe (Denmark, Finland), Eastern Europe (Slovakia) and South East Europe (Bosnia and Herzegovina, Bulgaria, Greece, Romania). In the Western Balkan countries (in particular Montenegro), there are projects to connect existing conventional coal power plants to district heating systems.
When considering cleaner alternatives to transform the heating sectors, decision-makers mostly opt for gas, or biomass, and for Combined Heat and Power (CHP) technology. None of these are truly sustainable heating solutions.
Many district heating systems were built around the 80s. They are mostly 2nd generation systems running on high temperatures above 100 C. In some locations like the Western Balkan region district heating is used for space heating only. The old heating networks suffer from poor insulation of pipelines and high losses of heat and water leakage. On the demand side, deep renovations of the existing building stock are lacking, and people often have little or no control over the heat consumption in their homes.
Gas is a fossil fuel with significant carbon intensity – when counting methane leaks during extraction and transportation, gas is no better than coal.
In some parts of Europe, like in the Western Balkans, traditionally gas has not been used much. Albania, Kosovo and Montenegro have no access or limited access to gas at present. Pushing for gas means investing in hugely expensive infrastructure to be built, in some cases from scratch, along the entire demand chain, resulting in stranded assets that would lock these countries into another fossil fuel dependency, as well as an import dependency. The lifetime expectancy of these projects is at least 30 years, and on top of that there are usual delays in planning and construction (on average 5 to 10 years at the EU level). This would delay the transition to a zero-carbon economy, because investing in gas slows down the uptake of renewables.
There is also a growing trend of promoting hydrogen as a cleaner source. However, almost all hydrogen is currently made using fossil fuels, and even renewable hydrogen is pointless to use for heating as it is energy intensive compared to just using renewable electricity directly – some estimates find that the amount of green electricity needed to produce green hydrogen is 500-600 per cent greater than what is needed for the equivalent number of heat pumps.
Biomass is not a carbon-free fuel: its burning releases greenhouse gases. The theory put forth for why biomass can be considered carbon-neutral is that because trees or other crops used for biomass are replaced, they lock in the carbon that has been released by burning and so the cycle is carbon-neutral. However, addressing climate change is becoming so urgent that we simply cannot afford to wait decades for trees to re-grow, and there are increasing calls for the EU to stop treating biomass as carbon-neutral and to make sure its emissions costs are included in the EU emissions trading scheme. In addition, it cannot really be considered renewable unless strict sustainability standards are in place and are enforced, as it may lead to deforestation or the replacement of old-growth forests with plantations. Another problem is that the concept of biomass is rather vague and can mean different things, so defining what type of biomass could be suitable for large-scale use in district heating systems is important. Sustainability is especially problematic with ‘forest biomass’ and less so when the biomass used as an energy source is made up of wood residue and waste (e.g. residue from furniture production, sawmill facilities, etc.). Yet, more than a third of woody biomass used for energetic use originates from primary wood.
The incineration of waste for heating/CHP is problematic for several reasons. Municipal waste is composed of different fractions, most of which can and should be either prevented, recycled or composted. This is the goal of the EU’s circular economy policy, which includes a commitment to prevent or recycle 65 per cent of municipal waste by 2035. Using waste as a fuel crowds out investments in waste selection and recycling measures.
In addition, burning waste creates air pollution including carcinogenic substances like dioxins and furans. The composition of waste can be highly variable and in some countries there are no strict standards in place to monitor and control what type of waste is used as energy fuel. It is clear from the experience with existing industrial and energy facilities in the Western Balkan region that the authorities are not effective with enforcing pollution control legislation, so it is highly risky to build incinerators. Even where proper filters are used, the ash from the incinerator (about 30 per cent of the weight of the original waste) as well as the highly toxic filter residues, have to be disposed of somewhere, and the Western Balkan countries do not have secure enough facilities for this. In other words, whatever toxic substances are in the waste or are generated during combustion have to end up somewhere – either in the air, ash, or filter residues.
Decarbonise heating through fossil fuel phase-out and modern and clean technologies based on renewables
Governments (central and municipal) need to be progressive in thinking how to transform their heating sectors. Focusing on ‘transitional’ fuels like gas or biomass CHP is a 20th century solution, resulting in a lock-in to another unsustainable heating source for decades.
Instead, to ensure a high level of comfort and cleaner air, and to achieve the climate and energy targets and fulfill their commitments, the authorities should embrace fourth generation heating. Where feasible and economically justified, district heating systems should be used, as they offer numerous advantages in more densely populated places – scale, efficiency and significant reduction of air pollution. Such fourth generationx systems include advanced low-temperature technological solutions of different scales, based on renewables and recycled/reused heat, which can be integrated into existing networks or be used for the design of new systems. Heat pumps are one such solution that are already being promoted, but overall, governments should be looking at diversified solutions based on the local potential for renewables (solar, geothermal, electricity produced from renewables like wind), excess heat recovery from industry and services, and seasonal heat storage.
Even though fourth generation solutions can be expensive to implement, over time they are becoming less costly, and their long-term benefits – including sustainability, no import dependence, clean air, economic growth and the creation of new jobs – greatly outweigh the costs. Such systems are decentralised, combine several sources of heat, and require high and long-term investments – it takes several years to bring them from planning to full operation.
There are many existing fourth generation systems around Europe, primarily in Denmark and the Nordic countries, but also Germany, Italy, etc. In smaller places, the transformation has been easier (e.g. Marstal in Denmark), and in bigger cities like Helsinki which has an existing district heating system, the transition from fossil fuels has been gradual. What is common for locations where fourth generation heating already exists is that the full transformation does not have to happen over night: it can be done in stages over a period of time, which also helps to spread the costs and utilize local capacities and expertise. Municipal authorities and local communities are the most engaged actors and need to work together on the transformation. Locals are involved through ‘energy communities’ that pool finances, set up collective ownership of district heating networks, engage in prosumer activities, etc.
An example of a location where the transformation of the heating system is underway is a case Bankwatch has been working on in Slovakia. A study was done to propose alternative solutions to the heating provided from the coal-based CHP plant Novaky, scheduled to shut down by the end of 2023. The proposed solution in the study, which was completed in the beginning of 2020, is to prioritise energy efficiency through savings in buildings and in the distribution network, and to combine several renewables based on the local potential, including geothermal, solar energy, heat pumps, and biomass (from the CHP plant), together with seasonal heat storage.
Reduce heat demand through energy efficiency
Without ‘energy efficiency first’, there can be no modern and affordable heating, either in district heating systems or in individual heating. Energy efficiency is crucial for bringing down heat demand, which is needed to reduce costs for consumers.
The Heat Roadmap project recommends overall demand reductions of approximately 30-45 percent of current levels. The “Paris Agreement Compatible Scenarios for Energy Infrastructure” (PACS) even assume demand reductions of nearly 70 percent.
Measures for energy efficiency consist of energy efficiency improvements in buildings, especially deep renovation that would lead to substantial energy savings: comprehensive insulation of the facade, floors, roofs, windows and air sealing; improvements in the internal distribution systems; and also protection against heat in summer to reduce cooling demand. They should also cover improvements to the heat networks (the pipelines and the grid), in order to allow for decreasing the temperature in the networks, which will lead to further energy savings and integration of renewables. In addition, there needs to be an overall shift toward demand-driven systems where the users can actively control their consumption. The introduction of metering and consumption-based billing together with adequate control equipment enables consumers to control their heating expenses and motivates them to invest in energy efficiency improvements, as long as it is coupled with appropriate education measures.