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Is the heating market too difficult for policymakers?

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Policy is increasingly shaping the heating market – but is decarbonising heat in buildings just too difficult for policymakers?

 “Buildings must be decarbonised.” The European Commission could not have been clearer in its 2016 Heating & Cooling Strategy.

But, apart from some nudges here and there, policymakers seem reluctant to tackle the challenge head on, resulting in modest market change so far.

We believe that there are several signs currently suggesting that this may be about to change and it is this change, disruption and impact we will be discussing at our upcoming European Heat Summit.

Policy is becoming one of the biggest new influences on the residential heating markets. After decades of minimal policy and regulatory intervention in how most European homes are heated, the market in many countries is today being gently pushed in new directions by policy change. However, it will have to do more than nudge if longer term decarbonisation goals are to be reached. 

Most policymakers think the heat market is too difficult

The problem is that for policymakers, it’s all seen to be too difficult. ‘Encouraging’ voters to change their heating systems – either through expensive incentives or unpopular mandate – is seen as too politically risky in the short-term when the targets and benefits are far into the future.

The key question is therefore: will we continue to see some pushes here and there, with targets not achieved? Or will we see the scale of intervention that is apparently required to hit those goals?

At Delta-ee, we think there may be ways to ‘square this circle’.  Here are a couple of examples that may show the way, and so reassure policymakers that this may not be ‘too difficult’ after all.

First, there are interesting things happening in the Netherlands. One of our four Summit policy panellists – speaking in the How will policy interventions drive market change? session – is from Alliander, the Dutch energy networks company. The Netherlands intends that all residential buildings are disconnected from the gas grid by 2050, with the gas network being decommissioned piece by piece – a mandate-type approach. This transition is already underway and, so far, it seems to be working well, with many neighbourhoods getting involved. Our Summit attendees will hear how and why this approach looks like it’s had a good start.

Is there a path of least resistance to heat decarbonisation?

Secondly, the idea of the ‘path of least resistance’ is gaining traction in the UK. Another Summit panellist, from the UK Policy Exchange, will argue that the only way for the long-term goals to be successfully achieved is to identify this ‘path of least resistance’ for energy users - the path that causes least disruption for them, and therefore for policymakers. 

This means, for example, limiting as far as possible major changes to the appliance mix, focusing on reducing energy demand, rolling out more efficient gas appliances and keeping the more intervention-heavy growth of heat networks and electrification to manageable levels, maybe through innovation in business models. Delta-ee’s recent energy modelling for Policy Exchange gave one scenario, shown below, for how a reduction of more than 80% can be achieved in this ‘balanced’ approach.

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Figure 1.  An >80% carbon emissions reduction scenario. The technology mix to achieve this in the UK residential sector. Delta-ee for Policy Exchange, 2016.

So, we think it likely that policymakers will begin to recognise that decarbonising heat may not be ‘too difficult’ after all, leading to earlier and stronger intervention - and more significant market impact.

Making the right investment decisions in heating markets (and in upstream energy infrastructure) requires a clear view of the likely range of policy interventions. At our European Heat Summit we’ll be exploring this topic, as well as other key factors affecting the future heating market.

Find out more at or get in touch via +44 (0)131 625 1011.



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