European Climate Foundation: The socioeconomic impacts of zero carbon housing in Europe – (updated)

Last year the European Heat Pump Association and Cambridge Econometrics published a study on the “Socioeconomic impacts of zero carbon housing in Europe“. Skip ahead to today and the unexpected war in Ukraine and rebound effects of the Covid-19 pandemic have led to energy price inflations, dramatically changing the landscape in which that report was based on.

The objective of this updated report is to understand the impact that large-scale energy efficiency improvements and heat pump (HP) deployment could have, as a result of changed fossil fuel price projections considering EU-27 up to 2050, with a special emphasis on results by 2030.

Specifically:

1. Increased fossil fuel prices (projections presented in the REPowerEU plan).

2. The heat pump (HP) deployment targets (suggested by the REPowerEU plan).

3. A revised projection for the ETS2 price, in line with the recent decision to postpone the implementation of ETS2 to 2027 and set a cap of the ETS2 price of 45 €/ ton carbon up to 2030 (Euractiv 2022).

Key findings:

• Higher energy efficiency: The electrification of the heating supply through heat-pumps increased supply-side efficiency. By 2050, total final energy consumption for heating decreased significantly.

• Lower pollution: The adoption of heat-pumps led to a drastic reduction (reaching values close to zero by 2050) in emissions associated with heating. The renovation of housing stock also contributed to this as higher efficiency led to a reduction in heating demand and pollution.

• Lower energy costs: Cost savings were made by EU27 countries because of higher supply-side energy efficiency through heat-pump adoption and renovation of the housing stock.

• Mitigate impact on low income households: The increase in heating costs due to higher energy prices, which is most strongly felt by the lowest income groups, can be mitigated through renovation of the housing stock and, especially, through heating electrification (as high energy costs are prevented via technology substitution).

• Employment creation: Electrification due to prevented energy costs allows for more spending on retail and services, leading to higher output and therefore job creation. On the other hand, greater efforts to renovate the housing stock were found to lead to small positive labour impacts in the construction sector.

• Decreased energy import dependency: The decarbonisation of the heat supply and/or suppressing of heating demand through housing stock renovations was found to lead to lower final energy demand for residential heating and therefore a reduction of energy import dependency for the EU27.

The modelling in this report has been used by the European Climate Foundation and the European Heat Pump Association for a study that compares the 60 million more heat pumps by 2030 scenario to a business-as-usual one with a continued high reliance on fossil fuel boilers.

See the full report here – Europe’s Leap to Heat Pumps – European Heat Pump Association (ehpa.org)