Europe wants to become the world’s first carbon-neutral continent by 2050, and the EU Commission aims to reduce emissions by at least 55% by 2030. At Daikin, we support this direction, striving to become a carbon-neutral company globally by 2050.1
The European Green Deal Investment Plan2 wants to attract (at least) €1 trillion in investments from the European Union, National Governments and the private sector to decarbonize the EU.3 Now confronted with the COVID-19 pandemic and economic crisis, the Green Deal Investment Plan is also at the core of ‘Next Generation EU’, Europe’s COVID-19 -recovery program worth €750 billion.
Decarbonizing Europe and recovering from the COVID-19 pandemic are massive challenges. When presenting the Green Deal, the European Commission’s President even called it Europe’s “man-on-the-moon moment”. In implementing the Green Deal, we look forward to seeing the EU and its Member States promoting low carbon technologies, like heat pumps, by ensuring a fair carbon- based energy pricing and by discouraging incentives for fossil fuel heating.
Why heat pumps?
Today, the European building stock is responsible for approximately 36% of all CO2 emissions in the Union. Taking into account that almost 50% of Union’s final energy consumption is used for heating and cooling, of which 80% is used in buildings4, the potential for decarbonizing this sector is massive.
- Heat pumps are a proven solution, and Europe has the technology, the expertise and the investments to expand further. From single family to multi-family homes, from renovation to new housing, from small to large commercial buildings and industrial plants, heat pumps today are ready and fit for the EU Green Deal.
- Heat pumps are a low carbon heating technology. For each kWh of required heat, the carbon impact of a heat pump today is about half of a high efficiency gas boiler, with an even lower carbon footprint potential due to the further decarbonization of the EU electricity production5.
- Heat pumps make use of renewable energies such as thermal energy from the air, the water or the ground. These renewable energy sources are abundantly available in Europe; so do not need to be imported.
- Heat pumps will increasingly use renewable electricity and are on the way to being a fully climate neutral solution. For example, by 2030, the share of EU renewable electricity production is set to be at least double today’s level of 32% of renewable electricity at around 65% or more6.
- In addition, heat pumps are essential to enable balancing of the power grid, thus supporting the further deployment of a renewable energy production, for example by acting as a thermal storage battery and a tool for flexibly balancing the energy supply and demand.
Investing in heat pumps also boosts EU economic growth as these products are widely developed and manufactured in Europe. Daikin, for example, has a European R&D center and 5 factories in Europe related to heat pump technology.
Every euro invested in heat pump technology is a euro invested in local job creation. The heat pump industry as a whole currently employs 225,000 people in Europe7. New and further investments in renewable heating will pay dividends for the European economy as well as for our environment.
Swedish success story
Sweden started an ambitious policy in the 1980s to replace fossil fuel boilers with heat pumps. Today, heat pumps are the standard for heating Swedish homes. This push to make heat pumps the standard technology for residential heating helped reduce total greenhouse gas emissions by 33.7% between 1990 and 20188.
Other European countries are starting to follow suit. Recently, countries including France, Germany, Italy and the Netherlands have launched similar heat pump promotion and boiler replacement schemes.
End carbon-based incentives
Following the EU Green Deal initiative, policy makers in the EU member states can act on two levels to achieve decarbonization.
First, EU member states could commit to ending the use of fossil fuels. The most polluting heating systems must be phased out. Austria no longer allows oil-based boilers to be installed in new homes as of January 2020. This is an excellent initiative. Policy makers could avoid incentives for fossil fuels. Even today, direct or indirect incentives benefit oil or gas-based boilers, due to different taxation of heat pumps compared with boilers for instance.
Secondly, renewable technologies also need a level playing field. The gap between electricity and gas prices in many member states is too high to make a heat pump an economically attractive investment for EU citizens9. Incentives can bridge that gap for a certain period, but in the long run, the cost of energy should reflect the carbon intensity more. Carbon pricing can contribute to further emissions reduction by extending the EU Emission Trading System (ETS) to all emissions of fossil fuel combustion in buildings and revising the Energy Taxation directive10.
Consumers who are looking to replace their fossil fuel systems need to be motivated to take a closer look at heat pumps. The industry innovates relentlessly to make heat pumps attractive through a mix of product features, pricing, design, and installer- and end user friendliness11. The industry can put more effort in explaining the benefits of heat pumps so that end users become more aware of them.
Governments draw consumers’ attention to heat pumps through incentives for residential renovations, but also other means could make opting for heat pumps beneficial, such as reflecting the use of renewable energy in the building’s total energy score. This sends a strong signal and invites consumers to do a detailed calculation of total cost of ownership and ecological advantages12. At this point, the benefits of heat pumps will become evident to consumers.
Accessible to all Europeans
In the short term, government incentives can help accelerate the transition to carbon- neutral heating and make heat pumps accessible to all Europeans, but in the longer term accurate energy prices and a correct indication of the energy and carbon performance of a building need to be the end user motivations to invest in heat pump technology.
The examples of Sweden and other European countries show us this strategy works. For instance, France and Germany have set up extensive and widely popular oil boiler replacement schemes. In addition, Italy launched its ‘Superbonus’ to promote heat pumps thanks to a 110% payback credit.
Daikin, together with other heat pump industry leaders, will take on the challenge to make sure end users are aware of heat pumps and their advantages. We’re also working daily to create a well-trained installer base to ensure proper installation and carefree follow-up for the consumer.
Daikin has set itself the ambition to become a carbon-neutral company on a global scale by 2050. We are convinced that all stakeholders – policy makers, industry leaders and consumers – have the same goal, to lay the foundations of a carbon neutral future. Together we can decarbonize the heating sector in Europe and achieve the Green Deal’s bold target. We just need to act now.
1 Daikin Environmental Responsibility, https://www.daikin.eu/en_us/about/environmental-responsibility.html
2 European Commission, Questions and answers, consulted 14 September 2020, https://ec.europa.eu/commission/presscorner/detail/en/qanda_20_24
3 European Parliament, ‘Europe’s one trillion climate finance plan’, consulted 6 August 2020, https://www.europarl.europa.eu/news/en/headlines/society/20200109STO69927/europe-s-one-trillion-climate-finance-plan
4 An EU Strategy for Heating and Ccooling, consulted 17 September 2020, https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52016DC0051&from=EN and its Staff Working Documents, consulted 17 September 2020, https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52016SC0024&from=EN
5 VHK Review study Ecodesign and Energy labelling of Space and combination heaters, Task 5, Figure 7, consulted 17 September 2020, https://ecoboiler-review.eu/Boilers2017-2019/downloads/Boilers%20Task%205%20final%20report%20July%202019.pdf
6 Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, consulted 17 September 2020, https://ec.europa.eu/clima/sites/clima/files/eu-climate-action/docs/com_2030_ctp_en.pdf
7 European Commission, ‘Competitiveness of the heating and cooling industry and services’, consulted 28 June 2019, https://www.euneighbours.eu/sites/default/files/publications/2019-08/20190822%20MJ0319513ENN.en_.pdf
8 International Energy Agency, Sweden country profile, consulted 14 September 2020, https://www.iea.org/countries/sweden
9 Eurostat, Electricity price statistics: Statistics explained, consulted 17 September 2020, https://ec.europa.eu/eurostat/statistics-explained/pdfscache/45239.pdf
10 Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, consulted 17 September 2020, https://ec.europa.eu/clima/sites/clima/files/eu-climate-action/docs/com_2030_ctp_en.pdf
11 See Daikin’s Altherma 3 H HT: https://www.daikin.eu/en_us/product-group/air-to-water-heat-pump-high-temperature/daikin-altherma-3h-ht.html
12 Daikin for instance provides a solution selection tool to installers and consumer called Stand by me, https://standbyme.daikin.eu/