Winter is coming in the northern hemisphere and keeping homes warm is on everyone’s minds. Much housing stock is old, inefficient and leaks heat, and the energy used to generate that heat is still largely dependent on fossil fuels. Big changes are needed.
In the UK which has a particularly old housing stock and a low rate of new building, the government recognised this recently when it issued a 10-point plan to boost the green economy with £4 billion of new public investment. A comprehensive plan from the government’s official advisor, the Climate Change Committee, identifies the need for £50 billion per year investment in low carbon energy, transport and home heating, and says this is mostly paid for by cost savings from no longer buying fossil fuels. Simultaneously, a new global plan outlines the differing transition pathways for richer and poorer countries to hit the 1.5℃ climate target. At number 7 in the UK 10-point plan, sits the aim of making UK buildings warm and more energy efficient – with a specific target to install 600,000 heat pumps every year by 2028. This is sorely needed, according to the All Party Parliamentary Group on the Green New Deal recent report on How to reset the economy. Decarbonising the UK’s 29 million homes and buildings through energy efficiency and greener heating would cut emissions significantly, as almost 40% of total final energy consumption currently occurs in buildings.
Worldwide, heat remains the largest end-use service for energy, with heating for homes, industry, and commercial applications accounting for about 50% of total final energy consumption. Only about 10% of annual global heat production currently comes from renewable or low-carbon sources. In the European Union, a huge 84% of heating and cooling needs are still met by fossil fuels, and heating and hot water account for 79% of total final energy use in European households, which is 192.5 million tons of oil equivalent. Heat also makes up a significant part of European carbon footprints – more than electricity or other household energy use.
A recent study of rapid transition in moving energy sources quickly and at scale in the domestic environment looked at several successful examples in China, Finland, Denmark and the UK from the 1960s to the 2000s. It focused on hot water solar installations in China, heat pumps in Finland, district heating systems in Denmark, and the shift from coal gas to natural gas in the UK (see earlier case study here.) In time frames from 18–35 years, these deep transitions together reached over 100 million households or more than 310 million people. From 1995 to 2015, China successfully drove adoption rates for solar thermal systems to over 95% of the market in many urban areas. In Denmark district heating grew from 1976 to 2011 to reach 80% of household needs. From 2000 to 2018, in Finland heat pumps reached almost a third of all homes.
The scale and depth of change in these three cases is striking. China is – and has been for at least two decades – the undisputed world leader in the manufacturing, use, and export of household solar thermal technologies; the top four manufacturers of solar thermal systems and about 95% of patent holders for solar thermal technologies worldwide are Chinese. The scale is such that this technology and process alone has played a significant role in China’s transition to a more low carbon economy. China’s solar thermal production grew from 3.5 million square meters in 1998 to 70 million square meters by 2015 – a 20-fold increase. Denmark leads Europe in the per capita use of district heating, converting almost a million household heating systems in under five years. Finland is one of the world leaders in heat pump use by the share of population, with an estimated 930,000 heat pumps sold in the country of just 5.5 million people – often replacing oil-fired heating systems.
Changing heating is not easy, because boilers are pricey and replacing them before they fail is a big, costly decision for individual families and organisations. However, these examples remind us that it is both possible and likely to be more successful if what this study describes as a “polycentric” approach is taken, which means including multiple actors in a variety of different ways. New technologies can play a major role, but they are most effective when supported with enabling regulations, improved energy standards, a range of incentives, training and finance. When programmes are governed well, polycentric approaches to heating transitions have the ability to create a framework that is inclusive, accountable and adaptable. In all of these cases, the state was willing not only to give direction to programmes and policies, but also to encourage action that helped industry groups, civil society actors, and individual households to play their part.
Although the efficacy of multiple actors is the real story here, the role of government still plays a major part. In 2006, the Law of Renewable Energy was implemented in China by the National People’s Congress, signifying government commitment to the development and industrial manufacturing of solar water applications. A series of local, regional, city and national incentives were then rolled out to part-fund solar hot water installations. This was captured in the overarching framework of the country’s 12th (2011–2015) and 13th Five Year Plans (2016–2020), which framed solar energy as a crucial part of the country’s climate change action. This long-term plan, supported by legislation, set a strong backdrop for rapid action. Transnational partnerships also played a role, notably in the case of Canadian firms partnering with Chinese institutes in the 1970s and 1980s to perfect evacuated tube technology, and the United Nations Development Programme (UNDP) who supported with standards and certification.
Finland also saw a wide range of government policies, targets and taxes increasingly encourage a switch from fossil fuel based heating systems to renewables from about 2000, including national climate and energy strategies in 2005, 2008, 2013 and 2017. Tax on heating oil more than doubled between 2004 and 2017 and oil heating systems continue to be replaced with heat pumps at a high rate. In 2001, a National Climate Strategy outlined plans for the decarbonisation of heat, specifically mentioning heat pumps as a mature technology that could be installed in new buildings. At the same time, energy efficiency requirements of new buildings were tightened by 30%. The authorities used the tax system to support this drive, allowing for the deduction of household expenses related to the installation costs of heat pumps in the home. The Finnish heat pump transition also created jobs in manufacturing, installation and maintenance, with an estimated 3000 people employed in the sector.
The example of Denmark also shows how leaders can influence others and have an impact beyond their own borders. Countries such as Latvia, Estonia, Sweden, Finland and Iceland all chose to follow Denmark’s example in having a high percentage of citizens accessing district heating. Finland and Sweden are close to 50%, while Latvia and Estonia are over 60% and Iceland is over 90%. However, the initial shift away from oil to reduce its dependency on imports led initially to an unfortunate increase in carbon-intensive coal use. Between 1976 and 1981, Danish electricity production changed from 90% oil-based to 95% coal-based. This might have created a new problem for Denmark in the long term, but practically all oil-based systems were converted to equipment that burnt coal, natural gas, or biomass, so there were some opportunities to move away from coal when the moratorium was placed on it in 1990.
Parliament also delegated authority to local municipalities and emphasised the use of both natural gas and biomass for combined heat and power systems. A national natural gas project was established and as early as 1981, district heating systems were introduced that combusted straw. There were other energy policy shifts too as Denmark embarked on a bold expansion of wind power. In the two decades from 1983 this relatively small country saw 3GW of wind energy capacity installed and by 2014 wind power was providing 39% of Denmark’s electricity.
In 1986, Danish energy policy encouraged even more decentralised generation and built a range of different-sized straw demonstration plants, from 100 to 3000 kW, driving up investment into the market. From 1990 to 1997, over three-quarters of all new capacity joining the Danish grid were small CHP plants for district heating or industrial use fuelled by natural gas or straw, and about 350 district heating companies were operating. By 2011 more than 50% of CHP fuels came from renewable resources and 25% from natural gas. Combined heat and power systems in Denmark contributed to reductions of carbon dioxide of 20% below 1990s levels by 2005, also as well as a reduction in sulfur dioxide by 60% and nitrogen oxides by 50%.
In the late 1980s, the people of China began to demand hot water in their homes as regular warm water bathing was becoming the cultural norm. The weather – particularly in southern China – made solar thermal the sensible choice, especially where electricity distribution was less reliable. Solar hot water began to feature prominently in the Solar City Strategy of many urban areas and the 1990s saw the rise of several large solar manufacturers such as the Himin Group. Their success – together with technological improvements from the Beijing Solar Energy Research Institute in the production of glass vacuum tubes and heat exchangers – brought a flood of smaller firms into the market.
Denmark’s population were used to oil-fired heating and hot water systems, but after the 1970s oil shock, the government wanted to minimise the country’s dependence on fossil fuels and to improve the efficiency of their existing thermoelectric power plants. There was also a move to decentralise energy supply and establish heat networks that could minimise air pollution and carbon emissions, while maintaining some level of self-sufficiency in energy production.
Finland was similarly affected by the oil shock in the 1970s and focused early on heat pump technology, but the quality was unreliable and they stayed a niche concept. However, in the early 1990s, air source heat pumps began to be introduced from Sweden, where the technology was successful and the government had supported the market. A Finnish national heat pump association (SULPU) was established in 1999 by a heat pump entrepreneur and a heat pump researcher, with support from the government energy efficiency agency Motiva. The entrepreneur aimed to sell 1 million heat pumps in Finland by 2020, but by 2000, the market remained small – about 10–15 heat pump resellers. They remained hampered by a lack of training, quality standards, and maintenance capacity, which kept them niche, despite their suitability for rural areas where people still largely relied on oil.
These three examples of rapid transition illustrate a huge range of different mechanisms in play, any of which alone may have had limited impact, but when teamed with others resulted in a broad and deep shift. We see the use of law and policy, public subsidies, cost sharing, targets, peer-to-peer learning and local involvement by a diverse number of stakeholders, including households and users, rural communities and the private sector. Some academics argue that this kind of polycentric approach can also promote dialogue, provide a regulatory safety net, enhance accountability, and maintain economies of scale in the context of energy security and climate change mitigation.
For example, the Danish heating policy worked with kommunes (municipalities), urban utilities, and rural cooperatives when setting guidelines for combined heat and power plants. National planners provided appropriate tariffs and clear guidelines about minimising the use of oil and coal, while local planners carried out heat plans and prioritised the connection of buildings to district heating. The Danish heat transition benefited greatly from good coordination between governmental entities, non-profit cooperatives, financiers and banks, and those designing heating systems. It successfully blended small-scale decentralised community control with national standards and policies.
Finland’s transition saw a mix of subsidy, certification, and training schemes, and well thought out maintenance standards, much of which was down to the hands-on knowledge of the SULPU. As a result, training and standards for installations improved throughout the 2000s, boosting the reputation of the sector and leading to increased sales. The early 2000s also welcomed the arrival of user-led online heat pump discussion forums, where users and installers swapped knowledge to great effect in an environment of trust. The role of these online fora was particularly important in showing that heat pumps were suitable for use in Finland’s cold climate and in developing user-led innovations. In 2009, Finland was finally accepted into the European Heat Pump Association’s (EHPA) quality control committee, setting up their own national quality committee to ensure standards were consistent. SULPU, which collects sector statistics also used by the Finnish national statistics, has reported year-on-year steady increases in sales. A substantial programme of new house building also helped, along with the taxation of fossil fuels, and a historic culture of building homes with high energy efficiency measures such as triple glazed windows and insulation. In this context, heat pumps made sustainable homes even more so. Some 70% of new built small houses choose a heat pump according to SULPU figures for 2018, and roughly an additional 5000 oil boilers are replaced with a heat pump each year.
A clear system of specific targets that include particular technologies had an impact in all these cases. In China, this included binding national targets across multiple Five Year Plans. The desire to develop ‘solar cities’ to mitigate climate change and the need to improve China’s dire air pollution problem brought a range of levers to bear: low-cost loans, tax rebates, research grants, and even reduced price land provided by municipal governments. The transition was also coupled with political goals relating to national planning and innovation, and changing cultural notions of hygiene and self-sufficiency. Finland also set clear targets: in 2008, a national target for heat pumps was set at 5 TWh by 2020. This was part of a larger target of 38% of energy end use to come from renewables by 2020.