Efforts to phase out Russian gas in Europe could open up new opportunities for the district heating industry, which uses a network of underground hot water pipes to deliver heat to entire communities in European cities.[Ivan Kurakevich/Shutterstock]
The European Commission is revising the economic assumptions behind a package of energy and climate laws it proposed last year, saying sky-high gas prices triggered by the Ukraine war have strengthened the case for more ambitious energy efficiency targets.
Brussels proposed amendments to the Energy Efficiency Directive last year, introducing new targets to reduce primary (39%) and final (36%) energy consumption by 2030, legally binding at EU level.The current target – 32.5% overall by 2030 – is non-binding, leading to criticism that the EU is too weak in implementation.
“Obviously, things have changed because unfortunately we are now in a world of rising energy prices,” said Claudia Canevari, the EU official for energy efficiency at the European Commission.
“The committee is looking at how to achieve higher energy efficiency targets,” Canevari told participants at the EURACTIV event earlier this month.
The reformulated directive is currently being discussed by the European Parliament and the EU Council of Ministers, “so it is important to provide scientific support wherever possible so that the two joint legislators can agree on more ambitious targets,” Canevari added.
Previous estimates have found that the economic potential for energy efficiency improvements is 5% lower than the technical potential, implying that the cost of raising the target is too high.But with gas prices now likely to remain high for an extended period, Canevari said those assumptions need to be revised.
“Our assumption is that the five-point gap has narrowed. But we still don’t have the full analysis, so we’re looking at it,” she said.
In the European Parliament, there is a desire for higher goals.Niels Fuglsang, the lawmaker responsible for reformulating the energy-efficiency directive, proposed a “43% reduction in final energy consumption and a 45.5% reduction in primary energy consumption, respectively,” higher than the committee’s original proposal.
“The war in Ukraine has shocked and disturbed everyone,” said Eleonora Evi, an Italian Green Party lawmaker who is drafting the opinion of a parliamentary environment committee on an energy efficiency directive.
“The most effective way to stop Putin’s war is to improve energy efficiency and reduce our energy consumption,” she said, stressing that for every one percentage point increase in energy efficiency, Europe’s gas imports would decrease by 2.6 percent.
“This is fantastic. It shows us how important it is to talk about energy efficiency time and time again,” Evi said at the EURACTIV event.
The European Commission proposed on Tuesday (March 8) to reduce the European Union’s reliance on Russian gas by two-thirds by the end of 2022, as part of a plan to get rid of all Russian fossil fuels “well before 2030.”
Efforts in Europe to eliminate Russian gas and improve energy efficiency will inevitably affect European consumers, who rely nearly 40% on natural gas for heating.
This could open up new opportunities for the district heating sector, which uses a network of underground hot water pipes to deliver heat to entire communities in European cities.
District heating networks are considered to be one of the most efficient ways of supplying heat to homes.”All cities with ambitious energy and climate agendas intend to develop district heating,” said Birger Lauersen, president of Euroheat & Power, an association representing the district heating industry in Brussels.
“All the natural gas currently used to heat buildings in Europe can be saved by harvesting waste heat from industry and electricity production and using smart district heating networks,” said the EU-funded project assessing the potential of industrial waste heat in Europe.
But the industry also faces considerable challenges in moving away from fossil fuels.In Poland, nearly 6 million of the 14 million households use district heating systems, according to Poland’s state-owned power company PGE.70% of this is still done by burning coal, the most polluting fossil fuel.
“The reason we use so much gas and coal in district heating is simple—because they are cheaper to run,” said Jan Rosenow, European program director at the nonprofit Regulatory Assistance Program (RAP).
“The situation has changed: coal and gas have become more expensive, while at the same time the cost of renewable electricity and heat pumps has fallen,” he told EURACTIV.
Rosenow points out that district heating is an important sector, accounting for around 10% of European household heating supply.”So it’s big. Much of it is based on fossil fuels. Clearly there is potential to replace fossil fuels and now more and more natural gas with renewables.”
The Commission is aware of this and has proposed new energy efficiency standards in its proposed revision of the EU Energy Efficiency Directive (EED).”In district heating and cooling, the definition of ‘efficient’ systems will gradually tighten to move away from fossil fuel-based systems,” the commission explained.
Likewise, under the Commission’s proposal, cogeneration plants widely used in district heating systems would no longer be considered “efficient” if they emit more than 270 grams of carbon dioxide per 1 kWh of energy output.
But Warsaw worries that the standards are too strict and will not give Poland enough time to convert its coal-based district heating system to natural gas, which produces about half of global warming emissions.
“By 2030, we will completely phase out coal in Poland’s district heating system,” said Wanda Buk, Vice President Regulatory Affairs (PGE), which supports EURACTIV activities.
“Decarbonization of district heating must be carried out within a reasonable time frame in order to maintain uninterrupted heat supply to businesses and households,” Buk said. “From a Polish point of view, one of the must-haves in the package,” she insists. The prerequisite is to reshape the definition of efficient district heating systems and the definition of efficient gas-fired cogeneration under the Energy Efficiency Directive.”
In fact, the choice of fuel for district heating depends largely on local conditions, Lawson said.”Not all countries can replace all coal with solar PV or wind turbines, and many of them need some kind of thermal power. What’s the obvious option? In many countries, it could be natural gas,” he said.
“Whether natural gas should play a role in the energy transition is not determined by the district heating sector – it is a national choice every country will make,” Lawson told EURACTIV.
For Buk, Poland’s choice of natural gas as a transition fuel remains a valid option, despite the price hike due to the war in Ukraine.
“Poland’s situation is special because we are an already diverse country” and will continue to diversify in the years ahead, Buk said.”We have invested in an LNG terminal that ‘allows imports from the US’ and now we are continuing our investment in the Baltic pipeline, which will allow us to supply gas from Norway,” she explained.
Poland’s largest power company PGE has asked EU regulators more time to replace coal with gas in district heating systems, saying Poland’s gas is now mostly supplied by countries outside Russia.