According to International Energy Agency (IEA) website publication on Renewables 2022 Analysis and forecast to 2027 report:
Heating is the world’s largest energy end use, accounting for almost half of global final energy consumption. Industrial processes are responsible for 53% of the final energy consumed for heat, while another 44% is used in buildings for space and water heating and, to a lesser extent, cooking. The remainder is used in agriculture, primarily for greenhouse heating. The heating sector is largely dominated by fossil fuels, with renewable energy sources meeting less than onequarter of global heat demand in 2021 (and the traditional use of biomass makes up half this amount).
Recent trends and policy update
With the global economy rebounding in 2021, heat consumption increased by 4% year-on-year, exceeding the pre-pandemic level and reaching a record-high 219 EJ. Excluding the traditional use of biomass, modern renewables(22) fuelled just 13% of this growth, leaving the share of modern renewables in global heat consumption almost unchanged from the previous year’s 11%.
Modern bioenergy made the largest contribution to the increase in renewable heat consumption, owing essentially to rebounding activity in industry, followed by renewable electricity as heat pump deployment in the buildings and industry sectors accelerated. Annual heat-related CO2 emissions rose by almost 0.6 Gt CO2 to 14.1 Gt CO2, representing 39% of global energy-related CO2 emissions.
The rise in policy attention renewable heat is gaining worldwide is due not only to environmental considerations but to acute energy security concerns in the context of the current global energy crisis. Major recent heat-related policy updates include the US Inflation Reduction Act passed in August 2022, which allocates an estimated USD 22 billion (out of an estimated USD 369 billion for overall energy and climate change spending) for home energy supply improvements. The bill includes substantial rebates (of up to USD 8 000 for a space heating heat pump for low- and moderate-income households) and ten years of consumer tax credit (30%, or up to USD 2 000) for heat pumps, geothermal heating and electric heating appliances (e.g. stoves and clothes dryers) as well as high-efficiency biomass stoves and boilers.
The REPowerEU plan, communicated in March and published in May 2022, aims to reduce EU dependency on Russian gas and proposes to revise the EU target for renewables in total final consumption from 40% to 45% by 2030 under the Fit for 55 package. In addition to a solar PV strategy, it contains provisions for industry sector decarbonisation through (among other measures) electrification, the use of large-scale heat pumps and renewables-based hydrogen, and the deployment of other renewable energy sources, including by integrating solar thermal and geothermal technologies into district heating systems.
The plan also proposes the cumulative installation of 10 million new hydronic heat pumps in the next five years and 30 million units in the buildings sector by 2030. This would mean a more than 20% annual increase in hydronic heat pump installations in the European Union throughout this decade, from a starting point of 1.1 million units in 2021. To align with the ambitions of the REPowerEU plan, ongoing negotiations on the revision of the European Renewable Energy Directive include proposals to strengthen member state’s targets for renewable heat deployment in the buildings, industry and district heating sectors.
In November 2022, the European Commission proposed a new temporary emergency regulation to accelerate permit-granting for heat pumps by introducing a three-month deadline and simplifying the grid connection procedure for smaller units.
Meanwhile, the targets of China’s 14th five-year energy plan to 2025, released in March 2022, include a 20% non-fossil-fuel share in the energy mix by 2025 and 60 million tonnes of coal equivalent (about 1.8 EJ) of non-electric use of renewables (i.e. for heating and transport). A total budget of RMB 27.5 billion will be allocated to clean heating and air pollution control measures.
In Chile, the National Heat and Cold Strategy of 2021 targets 40% GHG emissions reductions in the heating and cooling sector by 2030 and 65% by 2050, and aims for 45% sustainable energy in heating and cooling by 2030 and 80% by 2050. The plan promotes renewable energy sources, particularly solar thermal and biomass, as well as district heating projects.
Several other countries, including France, Denmark, Canada, the United Kingdom, Luxembourg, Austria and Malta, have also implemented new financial incentives for renewable heating and cooling or have extended or enhanced existing ones since 2021. Heat pumps have received particular attention, with most support in the form of tax incentives and grants.
(22) In this report, “modern renewable energy” excludes traditional uses of biomass. Modern renewable heat covers the direct and indirect (e.g. through district heating) final consumption of bioenergy, solar thermal and geothermal energy, as well as renewable electricity for heat based on an estimate of the amount of electricity used for heat production (including through heat pumps) and on the share of renewables in electricity generation. Although credited as a renewable heat source, ambient heat harnessed by heat pumps is not considered in this report due to data insufficiency, especially for the industry sector. For the sake of simplicity, “modern renewables” is shortened to “renewables” in the remainder of this report.
