Sara Stefanini provides a written summary of our panel discussion held on 10th February: District Heating under the “Fit for 55” package: challenges and opportunities. Under the “Fit for 55” package, the EC proposed several regulatory changes that, combined, are meant to decarbonise district heating in Europe. But are these options workable for all? The participants raise questions over the support for district heating, whether the multiple targets are sufficient and realistic, the optimal pathways, whether they account for the differences between member states, and more. It’s a full summary of the 90 minute discussion (including all presentation slides), but it begins conveniently with a summary of the highlights. Taking part are MEP Grzegorz Tobiszowski, Poland, ECR; MEP Pernille Weiss, Denmark, EPP; MEP Morten Helveg Petersen, Denmark, ALDE/Renew Europe; Przemysław Kołodziejak, CEO of PGE EC; Birger Lauersen, President and acting Managing Director of Euroheat and Power; Hans Korteweg, Managing Director of Cogen Europe; Andrea Voigt, Head of Public Affairs, Danfoss Climate Solutions; Andreas Graf, Senior Associate for EU energy policy, Agora Energiewende; Jonas Fredsted Villadsen, Head of Public Affairs, Grundfos. [Promoted by PGE]

Participants [and video timings]

• MEP Grzegorz Tobiszowski, Poland, ECR – [00:03:20, 01:16:36, 01:28:14]
• MEP Pernille Weiss, Denmark, EPP – [00:13:02, 01:19:29, 01:31:00]
• MEP Morten Helveg Petersen, Denmark, ALDE/Renew Europe – [00:19.55, 01:14:42]
• Przemysław Kołodziejak, CEO of PGE EC – [00:26:54, 01:23:58]
• Birger Lauersen, President and acting Managing Director of Euroheat and Power – [00:38:19, 01:27:23]
• Hans Korteweg, Managing Director of Cogen Europe – [00:44:08, 01:21:23]
• Andrea Voigt, Head of Public Affairs, Danfoss Climate Solutions – [00:51:14, 01:22:55]
• Andreas Graf, Senior Associate for EU energy policy, Agora Energiewende – [00:59:51, 01:25:38]
• Jonas Fredsted Villadsen, Head of Public Affairs, Grundfos – [01:06:50, 01:26:25]

Video

Contained in this summary: Highlights, Panel Discussion SLIDES and key points, Q and A and Closing Remarks

Highlights

Meeting the European Union’s goal for net zero emissions by 2050 requires an overhaul of the bloc’s heating and cooling system – shifting away from centralised systems dominated by fossil fuels and towards clean, flexible, efficient digital and low-carbon systems.

Heating and cooling accounts for around half of the EU’s total energy consumption, which means the policies that make up the “Fit for 55” framework will all have to support and incentivise a timely transformation. This will be complicated, however, as the policies will have to set EU-wide targets while acknowledging that heating and cooling systems vary widely across member countries.

District heating and cooling, which is well developed in some of the bloc’s colder countries, will play a key role in a flexible, efficient and decarbonised energy system. It allows for the increasing integration of renewable energy sources as well as waste heat. Data centres and supermarkets, for example, could feed the waste heat that comes from their cooling generation into nearby district networks. It also allows for more active energy efficiency, increased digitalisation helping to determine when heating and cooling is needed and at what temperature.

The European Commission’s “Fit for 55” proposals recognise the importance of decarbonising the heating and cooling system. However, there are concerns that it prioritises the quick rise of renewable energy sources over the shift to from coal to cleaner gas-fired cogeneration or the use of waste heat that is already being produced. There is also concern that shoring up the financing for large-scale renewable and district heating projects would take several years to finalise, making it hard to meet the “Fit for 55” targets in time.

The Commission’s proposal asking municipalities with more than 50,000 people to carry out heat mapping is also a welcome measure – as it can create a more accurate picture of demand and supply. This is such a useful measure that some want it to be applied more widely, to populations of 20,000 and above.

Today’s district heating and cooling system

• District heating now provides heat to around 60 million Europeans.
• Heating and cooling represents half of total energy consumption in Europe.
• There are big differences across countries, largely depending on their fuel supply and heating system. It’s more developed in cooler countries.
• CHP delivers 70% of district heating and cooling in Europe.

Decarbonising the heating and cooling system

• District heating can allow for flexible and clean sources including waste and renewables.
• District heating has to play a part in meeting the energy efficiency, renewable energy and energy performance of buildings directives.
• The IEA says the target of net zero emissions by 2050 requires at least 60% of renewable energy in power generation and 12% of total final energy consumption by 2030. Active energy efficiency can help cope with fluctuating renewables.
• District heating can help solve three key issues in Europe’s energy sector: 1) decarbonisation, 2) the transition to clean heating 3) growing energy poverty.

Cogeneration and waste heat

• Cogeneration delivers around 12% of electricity and 16.5% of heat.
• Deploying CHP can bring significant energy savings and emission reductions by displacing more polluting and less efficient generation.
• By 2030 there is a cost effective potential for cogeneration to deliver 20% of EU electricity and 25% of heat using more renewable and low-carbon energy sources.
• This could reduce energy consumption by 870 TWh and CO2 emissions by 350 million tonnes by 2030.
• Data centres and supermarkets can create waste heat from cooling, that then goes into nearby district heating networks.

Fit for 55 benefits and challenges

• There is concern that for big heating systems, the European Commission’s proposed renewables target will be impossible to meet in the timeframe.
• There is also concern about the proposal to eliminate high-efficiency cogeneration from the definition of an efficient heating and cooling system from 2035.
• Poland wants to shift from coal to high-efficiency gas cogeneration, arguing it would reduce air pollution as well as CO2 emissions.
• Shoring up investment takes time. PGE says the investment process for building 1,000 MW of new low- and zero-emission capacity can take up to eight years.
• The proposal for regional and local authorities to prepare heating and cooling plans in municipalities with a population higher than 50,000 is welcome, although some want it to be for populations of 20,000 onwards.
• District heating is promoted, but only when progressing towards zero emissions.
• The package sets more ambitious goals for CHP and district heating and cooling, but without considering coherence with the uptick of renewable energy sources.

Policy needs raised by panellists

• The energy efficiency directive’s revision must allow for innovation of new technologies.
• The transition to renewables needs a higher degree of transparency, which requires a more digital district heating sector.
• Apply a more staged approach to the definition of an efficient district heating and cooling system so it’s achievable and just for all member states – as opposed to cutting off sources such as gas.
• The definition of efficient heating and cooling should prioritise CHP for the efficient use of thermal energy sources – natural gas and thermal renewables – until 2035 and beyond.
• An efficient integration of renewable energy sources and waste heat requires national policies setting supportive frameworks for efficient systems.
• The energy efficiency first principle should be applied to waste heat, too.
• Set binding EU and national energy efficiency targets of at least 40%.
• Introduce mandatory heat maps for municipalities with at least 50,000 people, ideally 20,000, because they help to tap into the potential of using synergies of heating and cooling.
• Ensure “Fit for 55” delivers investments immediately after its adoption.
• The energy efficiency directive should set requirements to use waste heat, e.g. make it mandatory for data centres to deliver their waste heat.

Panel discussion

This is a summary, not a verbatim transcript, of the key points made during the online panel event.

Matthew James
Managing Director, Energy Post (moderator)

The European Commission is counting on district heating to improve energy efficiency and reach net zero emissions by 2050. In cooler member states, district heating is more popular – in Sweden it’s already very advanced – while other countries are in transition. It’s a question of coordinating between the EU’s efficiency, renewables and energy performance of buildings directives, across member states where conditions are very different.

MEP Grzegorz Tobiszowski
Poland, ECR

The heating system in the EU is not a uniform solution, as countries have different specificities and conditions. District heating provides heat to around 60 million Europeans. The German and Polish systems have 6 million households using district heating, the Czech Republic and other countries in the region also have more developed systems than the rest of Europe.

The ”Fit for 55” package proposes far-reaching changes for heating, particularly district heating, that require re-thinking. For big heating systems, the Commission’s proposed target for increasing renewable energy sources will be an impossible challenge to meet in such a short time. It’s a question of reality.

For example, in the Warsaw heating system – which has an ordered thermal capacity of 5.6 GW – a 50% share of renewable energy sources would require the installation of around 2.3 GW of new capacity powered with sustainable biomass. Otherwise, it would have to completely rebuild the energy system.

There is a widespread discussion of high energy prices, which may lead to a deepening of energy poverty. Many additional risks arise from the “Fit for 55” package, for example the new ETS for buildings. The draft package fundamentally modifies the definition of an efficient district heating and cooling system by eliminating the high-efficiency cogeneration component from 2035.

Additional challenges come from the amendment to the energy performance of buildings directive, including the pace of change. In Poland the energy mix is still dominated by the coal system at over 70%. All the technologies that can be used for replacing the most polluting fuels should come into play.

This is why in Poland we believe high efficiency gas-fired cogeneration should be one of the possible heat sources for an efficient heat system also after 2035. The emission criteria should start in 2030. Individual coal heating stoves have a hugely detrimental impact on the environment, and contribute to over 83% of PM2.5 emissions. Therefore, connecting consumers to the heating system reduces the environmental impact. The alternative is high pollution and smog, mainly from domestic heating stoves.

We should be open to all solutions. Emissions-free renewable sources should be used where possible, but they are not always good for providing heat. Air pollution in cities comes from transport and individual heating, not combined heat and power plants. It’s not possible to import surplus heat from far away, so EU regulations should allow local communities to choose from a wide range of available technologies – from gas generation to renewables, heat pumps, etc.

MEP Pernille Weiss
Denmark, EPP

I’m the shadow rapporteur for the revision of the energy efficiency directive in the ITRE Committee. With a changing energy landscape, it is important to discuss the role of existing and future technologies and the extent to which policymakers cherry pick the solutions for the European Green Deal targets.

I believe district heating has to play an even stronger role in meeting the energy sector’s challenges. We have to be smarter in planning the energy system. The landscape is changing, with new restrictions on energy consumption in new buildings, energy reduction requirements in existing buildings, changing conditions for heat pumps, etc. There are opportunities to adopt new technologies, so it’s important that the input we get on the energy efficiency directive’s revision tells us what kind of innovation framework we can use to make the directive work.

We need a more intelligent energy system with district heating playing a key role. But the transition to renewables also needs a higher degree of transparency, which requires a more complex and more digital district heating sector.

It’s more important than ever that we make use of waste heat through district heating. How can the ICT sector – data centres and the heat they produce – benefit in the green transition and be a part of a more energy efficient union?

With the revision of the energy efficiency directive, I really hope we can reach a good compromise in the European Parliament in a way that embraces technology neutrality. We need to create a stable legal framework that allows flexibility for member states in a way where the member states can co-create and learn from each other how it’s best done.

While everything else in the European Green Deal is about inventing new instruments through new directives, the energy efficiency directive is a mature principle and tool that can work from Day 1. Energy efficiency is the most cost-efficient tool for decarbonising our society.

MEP Morten Helveg Petersen
Denmark, ALDE/Renew Europe

We all agree on the need to achieve climate neutrality by 2050, and we need to significantly reduce heating demand and replace fossil fuel-fired heat. District heating is extremely important in decarbonising our heating sector, allowing flexible and clean sources including waste and renewables.

In Denmark, district heating is the leading solution. It has a 64% share in the residential sector, which keeps growing. We have legally binding targets across sectors in order to reduce greenhouse gas emissions by 70% by 2030, including to have a 90% share of renewable sources in district heating by 2030, phasing out natural gas. To do so, we have to accelerate the integration of on- and offshore renewable energy. Currently it has a 60% share, while waste heat recovery provides only 3%. Biomass is the main source and is expected to grow.

The situation is very different across member states. An efficient integration of renewable energy sources and waste heat requires national policies setting supportive frameworks for efficient systems. We need various direct and indirect support schemes all driving investments, with local governance and commitment involving all stakeholders. We need energy planning, urban planning and energy infrastructure using best practises from all over Europe. You need increased public awareness of this issue, supporting end users to make the right choices.

This entire energy transition cannot take place without the heating transition. That’s why district heating is extremely important, but the issue is extremely under-prioritised.

We have a mutual obligation and task to increase awareness. We have all the pieces of legislation on the table in the Parliament, so the next two to three years will be extremely busy. The energy efficiency directive and the renewables directive will be negotiated soon, and they have to increase integration. Then there will be the energy performance of buildings directive. District heating has to play a part in all of them.

Przemysław Kołodziejak
CEO of PGE EC

PGE covers around 25% of the cogeneration heat market in Poland. We operate 16 CHP with nearly 7,000 MW in total capacity, and operate district heating for around 2 million customers.

Over 20% of that heat is produced from gas generation built with a huge financial effort. By 2030, we aim to build 1,000 MW of new-build cogeneration capacity, so we’ll have sufficient heat capacity as well. We want to build it with low- and zero-carbon technologies. That will require huge capital expenditures – nearly €3 billion.

PGE assumes we will achieve complete climate neutrality in 2050. We’re also producing and supplying heat from renewable sources like biomass, as well as electrode power-to-heat boilers, and if we have energy from offshore wind we will expand that technology. We use hot water from waste treatment plants and are working on other forms of waste heat. We’re also producing cold from heat. We are providing education about energy savings.

We welcome the “Fit for 55” package as an opportunity to revamp our sector, but also see big challenges. Success depends on how the legal provisions are implemented.

The investment process for building 1,000 MW of new capacity can take seven or eight years, and we can’t speed it up. In some places, due to technical barriers to renewable energy sources, the first step has to be gas-fired cogeneration.

The proposal of the 270-gram emissions standard is achievable, but Polish companies need more time to achieve it. Without time we will achieve the opposite result, with a limited access to finance for the transformation and problems connecting new customers to the system and the disconnection of existing customers. We will get higher CO2 emissions, higher dust and air pollutants.

Without the conditions in the final package enshrining in a realistic way future decarbonisation process we will surely have serious problems with meeting the objectives.

Birger Lauersen
President and acting Managing Director of Euroheat and Power

We are very pleased the EU has recognised the importance of heating and cooling and has been developing a policy package since 2016.

“Fit for 55” grants us some of our wishes. For example, the European Commission recognises the need to promote district heating and cooling as an important part of transitioning not only the heating and cooling sector but a deeper integration of our energy sectors.

We appreciate the point of encouraging regional and local authorities to prepare heating and cooling plans in municipalities with a population above 50,000. We believe relevant stakeholders like utility providers should be given an opportunity to participate in the assessment and heating and cooling plans.

There is clearly a need for the proposed planning and coordination as well as stronger instruments to ensure the potential for waste heat is utilised. The proposal on the energy performance of buildings directive goes part of the way towards equal recognition of onsite and nearby renewable energy heat in buildings with regard to the fulfilment of directive targets. It also proposes to ensure the internalisation of carbon costs through the buildings and transport ETS. Our sector has long desired a level playing field.

But the package presents our sector with challenges too. District heat and cooling is promoted but the support is not unconditional, there should be progress towards carbon free district heating and cooling. We believe a more staged approach should be applied to the definition of district heating and cooling to make sure it’s achievable and just for all member states.

The Commission proposes to enshrine the “energy efficiency first” principle in law. This should apply to the treatment of waste heat too. Renewable heat should not be prioritised over the use of unavoidable waste heat. We accept the Commission’s higher targets for energy efficiency and renewable energy, provided they are fair and obligations cover the whole heat and cooling market and that the need for support is recognised and met.

The proposed energy taxation on biomass in district heating and cooling is unacceptable as it damages competitiveness and risks distorting competition with electricity, because biomass electricity would be taxed less than biomass heating.

Hans Korteweg
Managing Director of Cogen Europe

In today’s energy mix, cogeneration delivers around 12% of electricity and 16.5% of heat. Deploying CHP today translates into significant energy savings and emission reductions by displacing more polluting and less efficient generation. Further emission cuts are achieved through an efficient switch to lower carbon sources like natural gas and renewable energy. Renewable energy and CHP has tripled from 9% to 30% over the past 10 years.

We see the uptick of renewable fuels in CHP continue to increase – by 2030 there is a cost effective potential for cogeneration to deliver 20% of the EU’s electricity and 25% of heat using increasingly renewable and low-carbon energy sources. This could reduce energy consumption by 870 TWh and CO2 emissions by 350 million tonnes by 2030.

The cogeneration sector is committed to creating a resilient, decentralised carbon neutral energy system by 2050, with cogeneration as its backbone, empowering citizens and industries to generate their own heat and power locally.

District heating is a key application for cogeneration and will remain so. It’s complementary with the push to electrification and renewable energy growth, not in competition with it. Today, CHP delivers 70% of district heating and cooling in Europe. Most cities opt for a diversified mix that include CHP, like Vienna, Berlin, Bucharest and Munich and key cities in Poland. We have many examples of cities switching to green hydrogen to avoid curtailing wind and power.

By 2050, CHP will remain a key contributor to district heating, covering 30-40% of total heat and up to 90% for the non-electrified portion of heat. CHP will be critical for energy affordability in the next decade.

“Fit for 55” will be critical for the EU’s decarbonisation by 2050 – at the lowest cost to consumers. But the benefits of CHP are not fully acknowledged in “Fit for 55”, especially for district heating. It sets more ambitious goals for CHP and district heating and cooling, but without considering coherence with the uptick of renewable energy sources and understanding the operator’s challenge of shifting to low-carbon sources, stabilising the energy system and maintaining affordability for consumers.

The definition of efficient heating and cooling should prioritise CHP for the efficient use of thermal energy sources – natural gas and thermal renewables – until 2035 and beyond. We need to allocate sufficient funding for lower-carbon CHP and renewable investments and we need to account for system-level benefits rather than sector-by-sector.

Andrea Voigt
Head of Public Affairs, Danfoss Climate Solutions

Active energy efficiency is very important. That means energy flows should be managed and controlled actively, so use is adapted to actual needs and we can cater to the increasing amount of fluctuating renewable energy. Waste heat recovery and heat pumps are also important here.

The IEA says that to get to net zero emissions by 2050, we need at least 60% of renewable energy in power generation and 12% of total final energy consumption by 2030, and those renewables are fluctuating. So active energy efficiency is needed.

Heating and cooling represents half of total energy consumption in Europe, so if we want to achieve carbon-neutrality we need to decarbonise it. District heating provides the flexibility and storage solutions needed for the renewable energy increase.

Data centres are a good example of how district energy can make use of synergies between heating and cooling and reduce the need for heat. Data centres need to be cooled, and you can do that with a heat pump. Then we could use the heat pump to pump the heat generated by the cooling installations, and that can be fed into a district network nearby. That helps to move away from fossil fuels. The same principle is true for supermarkets. You can feed the waste heat into district energy networks.

Big industrial heat pumps are efficient, offer high storage management and can be tuned to work when renewable energy is available. Digital solutions for monitoring and controlling can enhance efficiency, for example software that adapts to temperatures.

Our policy asks: set binding EU and national energy efficiency targets of at least 40%. We need a strong focus on active energy efficiency. We need mandatory heat maps for municipalities with at least 50,000 people, ideally less, because they help to tap into the potential of using the synergies of heating and cooling.

We also want a strong focus on waste heat recovery, also from sources like supermarkets or data centres or industrial processes that use cooling; a mandatory sustainability scheme for data centres that would help avoid fragmentation; and a way to include waste heat recovery in hydrogen or power-to-x.

Andreas Graf
Senior Associate for EU energy policy, Agora Energiewende

Here is one scenario for how district heating can contribute to carbon neutrality in Germany, starting from a couple of years ago when industry was largely using coal and fossil fuel cogeneration. In 2045-2050 this energy supply will have to be fossil fuel-free, with the share of direct renewables and waste heat share rising from around 1% today to two-thirds of the energy supply. That’s a massive transformation.

We have to first focus on phasing out coal, with a ramp-up in 2025 of the direct renewables and waste heat transition.

By 2045, it would require a residential market share growth of 130%. Direct connections are being added at 220,000 per year between now and 2030 and 340,000 after that. Most challenging is the massive scale-up of direct renewables and waste heat supply and renewable hydrogen to match peak demand in winter to maintain security of supply.

This means a very quick investment timeframe – investments cannot wait until well into the 2030s but peak in 2030. We need a framework to ensure “Fit for 55” delivers investments immediately after its adoption.

As a whole, the way “Fit for 55” guides investment is more or less fit for purpose, providing some flexibility for industry to deliver investment. The framework’s provision on energy planning can be improved – the scope of municipal heat planning should be expanded, at least to be for populations of over 20,000, and made binding. It should also take into account the critical role of thermal heat storage and the role of biomass in district heating – without locking in unsustainable levels of biomass use. And we need to make sure the legislation ensures the building stock is fit for purpose.

Jonas Fredsted Villadsen
Head of Public Affairs, Grundfos

Fit for 55 is a golden opportunity to deliver on three challenges to the EU: decarbonisation, the shift from oil and gas heating to clean heating, and the mitigation of growing energy poverty. District heating can bridge these three challenges.

The revision of the energy efficiency directive, the energy performance of buildings directive and the renewable energy directive gives us the opportunity to deliver fourth generation district heating, where you lower the temperature in the network and connect new energy sources to the grid.

By adding these new sources of waste heat we can cover up to 25% of EU energy consumption. But there is no legal incentive in the EU legislation to drive this change. The energy efficiency directive should set requirements to use waste heat and make it mandatory for data centres to deliver their waste heat.

Q&A

How do you assess the idea of banning the use of heat pumps in areas where district heating can be built? This idea was suggested by EWII from Denmark.

Przemysław Kołodziejak, CEO, PGE EC: The proposal presented by the head of the Danish energy company Ewii is based on the fact that the Danish energy grid is under a high pressure. In recent years, the number of heat pumps in Denmark has practically doubled,It has had a major impact on the electricity grid due to the increased demand for electricity caused by heat pumps. In practice, this shows how crucial energy planning is, which has also an impact on the security of supply. We fully recognise the advantages of heat pumps in terms of the high efficiency offered by this technology. Heat pumps are an important element in the transformation of district heating, but they make the most sense where district heating is unavailable or not profitable, i.e. usually in less populated areas. On the other hand, district heating is becoming more and more climate-friendly, and thanks to its price competitiveness, often more attractive to customers than individual heat pumps.

The EPBD mixes up the energy performance of buildings with the energy supply to the same buildings. This favours onsite production of RE as compared to offsite RE delivered to the buildings through district energy systems. What will you do to fix this?

Przemysław Kołodziejak, CEO, PGE EC: We share this view regarding the undermined role of district heating systems in the EPBD recast. New Annex III requires that, from 2030, new and renovated zero-emission buildings (in the case of new and modernized zero-emission public buildings – from 2027) should, as a rule, be supplied only by renewables or waste heat and this pertains also to district heating and cooling systems. In practice, this provision means the degradation of existing district heating systems, in which heat is produced from fossil fuels, including natural gas. It should be pointed out that this requirement, in conjunction with the draft proposal for a recast of the Directive on energy efficiency (EED), lead to policy overlap. Although under the draft EED, the use of an appropriate volume, e.g. heat from high-efficiency cogeneration produced in a cogeneration unit fired with natural gas, could constitute the basis for meeting the criterion of an efficient system, the revision of the EPBD through the given criteria would significantly limit the connection of new users to such systems after 2030, and thus – block the development of efficient heating systems.

How can CHP become climate neutral?

Przemysław Kołodziejak, CEO, PGE EC: Cogeneration units can and do play a large role in the zero-emission transition of the EU. In the future, to reduce carbon dioxide emissions high-efficiency gas solutions will be ready to be adjusted to be fueled with hydrogen or biomethane, or fully hydrogen to achieve zero emissions. However it cannot be completed overnight since it strongly depends on the availability of carbon-neutral gases and sustainable biomass potential. In the upcoming years, high-efficiency natural gas or biomass cogeneration will be the most preferred technologies for the Polish district heating systems, given the atmospheric conditions, temperature parameters of district heating networks, and above all, required large installed capacity, which cannot be provided today by low-temperature RES installations.

In the event of a conflict in the East will Europe be safe by becoming dependent on gas supplies from Russia?

MEP Grzegorz Tobiszowski, ECR, POLAND: The current situation clearly shows that the Polish government actions aimed at independence from gas supplies from Russia are the right decision. As a country, we must have our own sources of energy – both electricity and heat – independent of external countries, including Russia. It is also worth noting that Germany – by importing gas from Russia and striving to complete the Nord Stream 2 pipeline – hopes that selling Russian gas in Europe will provide it with tangible financial benefits.

In this situation, it is even more important that Poland – wishing to be a sovereign country – should act to have a factual impact on its energy security understood as: ensuring continuity of supplies, maintaining energy prices which would allow the Polish economy to remain competitive and providing the amount of energy that will enable new investments. Therefore, Poland must take all possible steps not to be dependent on energy streams flowing from neighbouring countries.

District heating in Poland has been struggling in the last 3-4 years in part due to the inability work out a sensible policy in re to EU ETS, without proper approach companies are losing money increasing the cost to the end users. What are your thoughts on this? Second, what are your thoughts on the recent initiative by MEP Jerzy Buzek? Only 9 MEPs supported this move, while recently you and nearly 80 other MEPs were able to reach cross party agreement on taxonomy. Why there is no unity on EU ETS? Peter Liese and German Greens are also supportive in this regard.

MEP Grzegorz Tobiszowski: Regarding the first question, district heating companies have so far used allowances allocated for free to a certain extent to avoid high heating prices and finance investments in low-carbon generation. Free allocation allowed them to partially accumulate necessary capital for investments, covering also an replacing of ineffective coal-fired heating plants with natural gas high-efficiency cogeneration and renewable energy sources.

With the current carbon price in the EU ETS, the further reduction of free allowances allocation will become a huge challenge, because in the first place, the costs of CO2 will have to be borne also in the transition period – being extended for Poland. Thus, district heating companies will have less resources to invest in solutions that are replacing solid fossil fuels in heating systems. District heating needs to be perceived as a whole, also in order to direct the financial flow to new, inevitably more expensive technologies in the best possible way. What should be noted is that in the case of Poland, where coal is responsible for more than 70% of energy generation, switching the entire energy system to zero-emission generation overnight is extremely difficult. Investments in district heating sector requires several years to be implemented, also because of the large spectrum of involved stakeholders and the need to address social aspects as well. In the energy sector, especially in district heating sector, high price of CO2 will not accelerate investments beyond their natural investment cycle.

As for the second question, the MEP Buzek’s amendment, which was supported by colleagues from four member states, shows that there is a rising recognition of the fact that the European carbon market with an unlimited access of the financial institutions loses its primary environmental character and simply turns into another financial market. However, as far as the carbon costs drives key economic factors – such as electricity prices across the Europe, the access of financials  to this market should be limited to maintain necessary market liquidity, not to drive carbon price beyond 100 euros in two years, as we can see right now. The earlier letter on taxonomy was drafted in co-operation between many MEPs from different political groups and widely disseminated in the EP. On the other hand, the EU-ETS amendment was not widely advertised. However, I also support this initiative and I would gladly co-sign the amendment if given a chance. 

How do you assess the idea of banning the use of heat pumps in areas where district heating can be built?

Andrea Voigt, Head of Public Affairs, Danfoss Climate Solutions: District heating is a highly efficient approach to mitigate climate change and increase energy efficiency by providing optimized solutions, flexibility and thermal storage – enabling the utilization of heat sources that otherwise would be wasted or would be impossible to use on an individual scale. However, I do not see a no reason to ban anything. What we do need is systematic municipal energy planning in order to identify the right solution depending on local circumstances. Decarbonising heating is a massive task, which can only be achieved if we keep all options open.

As with any other type of infrastructure, district energy needs planning. How will the EU strengthen the planning efforts of member states, regions and ultimately municipalities?

Andrea Voigt, Head of Public Affairs, Danfoss Climate Solutions: Systematic planning at city level is a prerogative for the deployment of district energy networks. The Energy Efficiency Directive offers a perfect opportunity to boost such planning by requiring municipalities with more than 20,000 inhabitants to establish heat maps. This would also help to further expand the scope of waste heat recovery and systematically include waste heat from cooling, such as from supermarkets and datacenters.

In Sweden we have a lot of interesting cross-sector cooperations regarding district heating (from CHP:s) and waste heat going on. We have e.g. connected several cities DH networks and optimize them together (with a set business model for economy), we also optimize the heat network and also the consumer flexibility (in the buildings) and we can now also optimize industries and energy companies together. Do you see similar trends in other parts of Europe?

Hans Korteweg, Managing Director COGEN EUROPE: CHP is by its nature an integration solution, as it brings together electricity, heat and (in some cases) gas networks in a flexible and efficient way. Modern CHP systems will be able to produce heat and electricity when needed, complementing electrification and intermittent renewables. Increasingly, the energy system will need dispacthable electricity at times of insufficient wind and solar, which will occur more frequently in winter when heat pumps will require lots of electricity. CHP can be optimised to produce heat and power in synergy with the evolving needs of the energy system. Today more than 70% of DHC relies on CHP, mainly because of the complementarity between the two. As DHC networks expand across Europe, CHP will continue to play a role in the decarbonisation of cities via district heating. By 2050, most net zero scenarios show that CHP will make up 30%-40% of the DHC heat mix, remaining the highest contributor to DHC along heat pumps and other heat-only renewable solutions. There are great examples already where DHC uses CHP complemented by waste heat, heat pumps and hydrogen to deliver the lowest carbon and most cost-effective services to consumers. Here are two best practice from Hassfurt City example (https://www.cogeneurope.eu/knowledge-centre/mychp-campaign/generate-your-own-heat-and-power-with-pure-hydrogen); Szlachęcin, Poland (https://www.cogeneurope.eu/knowledge-centre/mychp-campaign/waste-heat-heat-pumps-and-cogeneration-working-together-in-poland)

How can CHP become climate neutral?

Hans Korteweg, Managing Director COGEN EUROPE: The cogeneration sector is committed to the creation of a resilient, decentralised and carbon neutral European energy system by 2050 with cogeneration as its backbone, empowering European citizens and industry to generate their own efficient, reliable and affordable clean heat and power locally. For this to be achieved, not only should CHP become increasingly lower carbon and renewable, but the overall enegry system should become more efficient through higher shares of CHP. By 2050, there is additional potential for CHP capacity to increase from 120 GW today to 160 GW, while switching to lower carbon and increasingly renewable fuels.This will save Europe up to EUR 8 bn per year from energy savings and emission reductions, equivalent to 9.5 times the Commission’s LIFE Climate Programme. At DHC level, we estimate that by 2050 adding CHP to the system will save a city up to EUR 3 million. To substantiate this vision, COGEN Europe has carried out an in-depth study on the role of CHP in a net-zero energy system by 2050. Here are the detailed results: https://www.artelys.com/wp-content/uploads/2020/11/Artelys-Presentation-Key-Findings-Study-Commissioned-by-CE-final-1.pdf

Mr Kołodziejak said there is a complicated obstacle in terms of getting directives amended to include proper definitions of an efficient heating system, and how you define a highly efficient cogeneration plant. Couple that with the fact that it takes up to eight years to get financing in place. What do you think of that?

Birger Lauersen, President, Euroheat and Power: The problems PGE describes are not unknown across Europe. We can’t change district heating overnight. We have to be aware of the investments needed in district heating, and they need to be upfront. How are we going to finance district heating infrastructure while scaling up renewable energy sources? We need to use waste heat regardless of source, even if it’s fossil fuel-based. This is an important transition all district heating systems have to go through. This is not to legitimise the use of fossil fuel-based heat, it’s a fact of life.

Closing Remarks

Morten Helveg Petersen

The notion of mainstreaming the “energy efficiency first” principle is one of the most important points here. It’s the overarching principle that needs to guide us, and it needs to be applied in all the legislation we have on the table.

Heat mapping seems interesting and necessary, because it would give us knowledge of where we are and then allow us to discuss measures for where we go.

Grzegorz Tobiszowski

Today’s discussion shows that the matter is complex; we made the right decision to deepen the matter concerning the differences between countries.

Different member states have different heating conditions, especially in the heating network. Heating systems are local and regional, and that relates to the availability and type of fuel, and the layout and density of heating networks, resulting in it being very difficult to find universal solutions.

Legislation should be adapted to the specific conditions of member states, considering the characteristics of heating systems and energy mixes. Only that will facilitate meeting of any new targets.

Pernille Weiss

I find the idea of heat mapping very interesting, it echoes what I hear from stakeholders in municipalities across Europe. National targets would be preferable, but in a politically realistic world we need to bridge the Commission’s proposal of a binding EU target for energy efficiency. Maybe heat maps can help us make that a reliable agreement that delivers in 2030 and channels funding.

Hans Korteweg

It’s easy to say we should prioritise energy efficiency, but we need to see that in the legislative proposals. It’s not just about final energy savings, it’s the total system efficiency starting from the supply, where CHP will play a key role.

District heating needs to be promoted to support the cost-effective decarbonisation of heat. District heating and cooling play an important role in all of our communities, CHP should be prioritised to ensure an efficient and resilient switch to low-carbon and increasingly renewable district heating and cooling networks, and CHP must be smartly integrated into the definition of efficient heating and cooling and consistently prioritised across “Fit for 55” and relevant legislation.

Andrea Voigt

I have three points:

1) We have to tackle heating and cooling because it will solve half of the EU’s energy challenge,

2) District energy is a triple win because it accelerates the phasing in of renewables, it reduces the energy needs for heating and it reduces costs,

3) We need an ambitious Fit for 55 and energy efficiency directive to make this happen – with a binding energy efficiency target of at least 40%; mandatory heat pumps for municipalities over 20,000 people; waste heat recovery from cooling that can be combined with heat pumps; and mandatory sustainability schemes for data centres.

Przemysław Kołodziejak

There are no doubts about the need to decarbonise heating, and we are going in that direction. However, for this to be possible, certain conditions have to be met. We are starting from a different point compared to other EU states.

This transformation needs to have a more evolutionary nature. That does not mean it should not take place, but it should consider the issues of social acceptability.

[Holds up document with heat map of Krakow] This is a heat map for the city of Krakow, where we have shown how the heat supply should be transformed to meet citizens’ requirements. If the “Fit for 55” provisions do not allow us to do it, then unfortunately this map will go in the dustbin.

Andreas Graf

We will not be able to avoid a conversation about countries working from different starting points. I believe the scenario I painted today for Germany can be applied in other countries, so we need to talk about the conditions needed to get there.

Jonas Fredsted Villadsen

The value of heat planning is very important to include in the energy efficiency directive in order to lower the temperature. Imagine a future where your favourite Netflix TV series is heating your cellar!

Birger Lauersen

We as a sector wish for a predictable and coordinated legislative framework that accommodates diversity while guiding the heating and cooling sector through a cost-effective transition to decarbonisation by 2050.

Grzegorz Tobiszowski

My final words to wrap up our roundtable is a will to continue this discussion on district heating challenges in various forms in order to engage all relevant stakeholders. Our task now is to try to channel today’s conclusions into legislative amendments with a view to reaching a good compromise.

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Summary compiled by Sara Stefanini

Produced by Energy Post