Why heating and cooling is the missing piece of Europe’s energy transition

The heating and cooling sector is the next frontier for renewable and sustainable energy growth in Europe. Aurélie Beauvais explains why.

Fourteen years after Europe’s first Climate and Energy package, our energy system is in the midst of a profound and essential transformation.

Most of these efforts continue to concentrate on delivering a modernised, sustainable electricity sector.

This article was originally published in The Guide 2022-2023,
our exclusive, annual print magazine.

Read more articles from the magazine.

With increased ambition and focus, electricity is now well on its way to becoming Europe’s cleanest energy carrier.

Driven by the impressive growth of wind and solar, the European electricity transition is testimony that with a shared purpose and proper incentives, there are almost no limits to what we can achieve.

This inspiring success story has provided a blueprint for other parts of the world and propelled Europe into a new industrial era.

Yet, the current crisis provides a sharp reminder that this is no time to rest on our laurels. The conflict in Ukraine has once again highlighted our problematic fossil fuel dependency, and the devastating droughts that have hit Europe are further evidence that the climate crisis is nowhere behind us.

To solve the global climate and energy crisis, it is now essential for policymakers and industry to look beyond electricity and deliver a system-wide energy transition.

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The heating and cooling sector is a critical piece of the equation. Vital to our homes, cities, and industries, it currently represents 50% of total EU energy consumption, with more than 70% coming from fossil fuels.

The heating and cooling sector is the missing piece of Europe’s energy transition and most probably the breeding ground for our next clean energy revolution.

The demand for local and sustainable heat sources has never been higher. Additionally, the growing need for cooling, especially in the tertiary and residential sectors on hot summer days, is evident across Europe and deemed to increase exponentially.

Yet, little has been done over the past decade to accelerate the clean transition of our heating and cooling industry.

Without a proper implementation framework, the European heating and cooling strategy published in 2016 – even before the EU committed to being climate neutral – has not had the desired impact. It is urgent to propose a revised European heating and cooling strategy, matching the ambition of achieving climate neutrality by 2050 and responding to the challenges brought by the current energy crisis.

Decarbonising the heating and cooling sector is not an easy task: yet it provides an exciting industrial opportunity for Europe.

Heating and cooling is the next frontier for renewable and sustainable energies growth, and we are in pole position to lead this global race. Locally-owned and a true European industrial flagship, district heating and cooling networks are a perfect illustration of this.

District energy networks are an effective solution to be used to decarbonise and deploy more renewable heating and cooling in our homes.

This is demonstrated by success stories across Europe: the seven countries with the highest national shares of renewable heating and cooling (Iceland, Sweden, Estonia, Finland, Latvia, Denmark, and Lithuania) also have the highest shares of district heating in their heat markets.

District heating is also one of Europe’s most untapped clean heat resources: from 12% today, it could provide up to 50% of the heat demand in Europe by 2050.

But to realise this potential, the heating and cooling sector must accelerate its transition away from fossil fuels. On this journey, there are at least three very good reasons to be optimistic.

The first reason is that with appropriate regulatory frameworks, the next decade is expected to bring significant growth in local renewable heat sources such as geothermal, sustainable bioenergy, and solar thermal.

This additional clean capacity can be integrated swiftly into existing and future district energy networks to replace polluting fossil fuels.

The second reason for optimism is the growing integration of the electricity and heating sectors – also known as sector coupling.

This is particularly true in markets characterised by the quick uptake of variable renewable energy sources such as wind and solar.

Coupled with large heat pumps and thermal storage, district energy networks will convert excess renewable electricity into renewable heat, providing cost-efficient balancing and storage to the electricity grid.

According to Euroheat and Power’s 2022 DHC Market Outlook, power-to-heat could become a major supply source for DHC networks by 2050, reaching 44% of the energy supply in Germany and 45% in Denmark.

District cooling can also play a key role in smoothing out peak demands from increasing electrification shares across sectors. It reduces the need for electrification as it can tap into alternative sources, such as free cooling from rivers and the sea. This flexibility is expected to yield significant benefits as demand for cooling increases.

The seven countries with the highest national shares of renewable heating and cooling: Iceland, Sweden, Estonia, Finland, Latvia, Denmark, Lithuania.

Thirdly, the recovery of waste heat from industrial processes like paper and cement, energy production such as electrolysis or tertiary activities like data centres is a prolific, yet largely untapped, resource to supply European cities with sustainable heat.

According to the Heat Roadmap Europe, industrial waste heat could supply up to 25% of district heating and cooling demand by 2050.

As businesses shift to renewable energy sources, their excess heat becomes renewable heat that can be recovered and supplied to residential or commercial buildings.

This will bring new opportunities for businesses to increase their sustainability while generating new revenue from the sale of their heat production.

We have a critical challenge, reasons to be optimistic, and no time to waste. District heating and cooling is ready to leave its mark on Europe’s energy transition, but we must move with speed and get everyone working. The revision of the 2016 EU heating and cooling strategy is a prerequisite to get the ball rolling. On the industry side, we must keep innovating and create new bridges between the heating, energy and industrial sectors to unlock this tremendous potential.


Aurélie Beauvais is Managing Director of Euroheat & Power.

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