For CEE, transitioning to sustainable heating is both a challenge and an opportunity

Emerging Europe’s subzero winters necessitate heating that accounts for much of the region’s energy demand. Transitioning its heating sector away from polluting fossil fuels and firewood and updating its aging infrastructure would save lives, lessen harm to the environment, and boost affordability.  

For the many parts of emerging Europe and Central Asia blanketed in snow or showered in frozen rain during long, cold winters, heating can be a matter of life and death.  

The region has a large number of aging, unrenovated, energy-inefficient buildings in dire need of heating that give it a much higher average energy consumption for space heating in residential buildings in terms of the heated floor area—160 kilowatt hours per square metre—than the European Union (EU) average of 110 kWh per square metre or the United States average of 70 kWh per square metre.  

Buildings in emerging Europe often consume two to three times more energy per square metre than those in Western Europe even though most countries in emerging Europe and Central Asia have a lower overall per capita energy use.  

According to a new World Bank report, Toward a Framework for the Sustainable Heating Transition, the heating sector accounts for 24 per cent of energy demand in 23 countries across Central and Eastern Europe (CEE), the Balkans, South Caucasus, and Central Asia but is still overwhelmingly reliant on the pollutive burning of fossil fuels and biomass to fill much of this demand.  

At least 83 per cent of space heating is derived from fossil fuels, and 22 per cent of greenhouse gas emissions in the region come from heating. The war in Ukraine has also proven that Europe’s reliance on fossil fuels from Russia is unsustainable for security and environmental reasons. 

“The transition to sustainable heating is one that countries across Europe and Central Asia cannot afford to postpone,” says Antonella Bassani, the World Bank’s vice president for Europe and Central Asia. “It is possible for countries to reduce heating demand, improve air quality, and lower emissions this decade by adopting suitable policies and government programmes with targeted subsidies for cleaner and more efficient heating technologies.” 

A major revamp of the region’s heating sector could deliver sustainable and affordable services to its people, especially the most vulnerable, and reduce reliance on inefficient, carbon-intensive fuels. 

The cost of dirty heat 

30 per cent of emerging Europe’s population, chiefly in urban areas, use district heating—which relies on coal and natural gas and is typically unable to recover its costs—while rural households depend on burning underpriced coal and unregulated firewood in inefficient and polluting boilers and stoves.  

Together, these fuel sources result in high levels of air pollution—around 50 per cent of fine particulate matter emissions comes from burning solid fuels in individual single-family homes, though in Skopje and much of Poland that number is between 80 and 90 per cent. This, in turn, contributes to some 302,000 deaths and incurs a welfare cost of seven per cent of gross domestic product (GDP) annually.  

“Some notable progress has been made, with newer technologies and approaches already being tried and tested, but these efforts are not yet at the scale necessary to meet the carbon neutral mid-century targets,” adds Charles Cormier, the World Bank’s regional infrastructure director for Europe and Central Asia. 

Due to significant underinvestment, the heating sector across emerging Europe and Central Asia often provides substandard services, fails to fully recover its costs, exacts a major toll on the environment, and impacts people’s lives and livelihoods. Affordability also remains a major concern, with one-third of the region’s population struggling to pay heating bills or underheating their homes. 

A framework for transition  

A sustainable heating transition in the region could substantially reduce deaths and welfare losses due to pollution as well as providing a clear path to reducing greenhouse gas emissions. Between 2024 and 2050, such a transition would avoid the emission of an estimated 8.9 gigatons of CO2 from building-related space heating.  

The World Bank report proposes a three-pillar strategy for governments to make efficient, locally suited, and affordable investments that contribute to a sustainable and effective heating transition. 

First, implementing stronger building codes for new constructions and accelerate renovations of existing buildings to improve energy efficiency can reduce heating demand and halve heating demand by 2050, making the transition significantly less expensive for governments, businesses, and households. 

Secondly, countries must bolster and decarbonize district heating in dense urban areas where viable by upgrading existing district heating systems and shifting to cleaner energy sources like solar, geothermal, waste heat, and sustainable biomass. Where district heating is underperforming and may no longer be viable, a managed transition to individual heating systems may be needed. 

Thirdly, clean individual heating systems must be promoted in less dense areas. Further research is necessary to identify sustainable, economically efficient heating options, such as heat pumps or eco-design pellet boilers, and these should be promoted through policies and targeted programs. 

The report estimates that the investment required for the sustainable heating transition in the region would be in the trillions of US dollars but that its benefits are projected to be even greater. Most of the costs will have to be borne by district heating utilities, heating customers and building owners, but targeted government subsidies can play a role. The subsidies needed to support the transition would be about 1.3 per cent of the region’s annual GDP—or about half of the region’s fossil-fuel subsidies through 2050.  

The EU’s Energy Efficiency Directive (EED) includes provisions pertaining to the upgrade of heating and cooling systems including district heating, but some of these provisions leave room for member states to consider and rely on fossil gas as a “transitional fuel” in order to modernise their district heating systems, risking a lock-in into fossil fuels. 

Success stories 

In Priboj, Serbia, KeepWarm—an EU-funded project whose objective is to accelerate cost-effective investments in the modernisation of district heating systems—contributed to the decision to replace heating pipes and substations as well as fuel oil boilers with a wood chip plant, for a total investment amounting to seven million euros and creating many local jobs. 

KeepWarm has also helped a Brno, Czechia district heating company replace 27 kilometres of inefficient steam pipelines with a modern distribution network running on hot water that will reduce energy losses in the distribution from 18 per cent to six per cent and contributing.  

In Croatia, it worked with the operators of the district heating system of Zaprešić  to connect heating stations into a single network that will also integrate large-scale solar collectors’ field as well as solar collectors installed on the roof of one of the heating stations. 

In Lithuania, district heating supplies warmth to more than 50 per cent of households and covers 33 per cent of the annual heat supply for its capital of Vilnius. Through a 90 million euros investment from the EU’s Cohesion Funds, Vilnius built a new biomass cogeneration system finalised in 2021 to replace existing fossil gas boilers and plans to further diversify its heat sources beyond biomass and to incorporate solar thermal energy, heat pumps, and waste heat from retail centres or wastewater treatment plants.  

A 43 million euros investment from the European Investment Bank has allowed it to begin upgrading its system to reduce heat losses and optimise the heat supply to consumers while 20 million euros from the Mobilisation Fund will be put into building insulation through 2027 to improve energy efficiency and reduce greenhouse gas emissions through the renovation of public buildings. 

The transition will continue across the region for years to come—alleviating energy poverty and air pollution alike. But to ensure the EU meets it climate goals, the EED must be revised to introduce a clear fossil fuels phase-out requirement in heating. Switching from coal to fossil gas for cogeneration and district heating and burning biomass are not sustainable—a fully sustainable energy system must be fully renewable. 

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