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Podcast S18E07

Shaping Energy Efficiency: The Brussels Debate on heating appliances

gas fire

In Brussels there is a growing debate about whether regulations should be introduced that require households to replace a gas boiler with a more efficient solutions. In this episode, Jon Slowe explores the nature of the discussion in Brussels with Mélanie Auvray, Senior EU Affairs Advisor, and Jozefien Vanbecelaere, Head of EU Affairs from the European Heat Pump Association.

Episode transcript

[00:00:00.090] – Jon Slowe

Welcome to Talking New Energy, a podcast from LCP Delta – the new energy experts. In the podcast, we'll be exploring how the energy transition is unfolding across Europe through conversations with guests from the leading edge of the transition.

 

Hello and welcome to the episode. To decarcarbonise heat, at some point, customers will need to replace a natural gas boiler with something else more efficient and lower carbon. A mix of carrot and sticks are likely to be required, and there's debate in Brussels at the moment about whether a large stick will need to be introduced at the European level that requires natural gas boilers to be replaced with something more efficient than a condensing gas boiler. Now, such a stick is actually on the cards in Germany for 2024, and there's a huge amount of discussion and debate about this topic. So, to explore it, I'm joined today by two guests from the European Heat Pump Association who, as you can imagine, are deep in the Brussels and European discussions. Jozefien Vanbecelaere, Head of EU Affairs, Hello, Jozefien.

 

[00:01:12.930] – Jozefien Vanbecelaere

Hello, Jon.

 

[00:01:14.250] – Jon Slowe

And Mélanie Auvray, Senior EU Affairs Advisor. Hello, Mélanie. Now, let's start by understanding the discussion in Brussels. So, Jozefien or Mélanie, would one of you like to explain to non-Brussels experts exactly what's being proposed or debated or put forward in Brussels at the moment?

 

[00:01:36.430] – Jozefien Vanbecelaere

Yes, I can start with also giving a bit more of the background. So, we have the target to achieve climate neutrality by 2050 in Brussels and to reduce our emissions by 55% by 2030. And in that framework, a range of legislations have been proposed. So, the Renewable Energy Directive, the Energy Efficiency Directive, all revisions of those Directives to achieve that target, as well as also the Emission Trading Systems and also the Energy Performance of Buildings Directive.

 

[00:02:13.630] – Jon Slowe

So, pushing forward on a lot of different things to meet that 55% and that target by 2030 and that 2050 target.

 

[00:02:21.370] – Jozefien Vanbecelaere

Exactly. So, that's really the broader framework. And it was always with the renewable, the climate and energy targets in the back of their heads that was really the broad target. But then you had the invasion of Russia into Ukraine, which caused a new type of problem or a new type of issue that was, how do we get more independent from Russian fossil fuels? And as a reaction to that, the European Commission published the Repower EU package, which set very ambitious targets for heat pumps, among others, but also other measures to reduce our gas use and to be more energy efficient. But then suddenly, also, heat pumps were seen as important for our energy independence and not only good for our energy and climate targets. So, a new aspect was added and in that framework, in this Repower EU package, one of the things that was proposed was to introduce a phase out of standalone fossil fuel boilers via Ecodesign.

 

[00:03:30.630] – Jon Slowe

Okay, so your jobs have got a lot busier in the last years, I imagine then.

 

[00:03:36.470] – Jozefien Vanbecelaere

Yes, we saw also the market really evolving a lot. So, in 2022, we saw an increase of sales of 39% in heat pumps. So, now we have a total stock of 20 million heat pumps in Europe and sales last year were 3 million. So, it's really, really growing a lot. And also, as the European Heat Pump Association, we see a lot more requests from journalists, from researchers, from policymakers to say it in short, in the past we were often knocking on their door to say, listen, heat pumps are an important technology and now they are coming to us because it's becoming so important for us. It's a big change.

 

[00:04:13.000] – Jon Slowe

So, tell us a bit more about this phase out of fossil fuel boilers then because there are so many households in Europe that have a natural gas boiler, condensing boiler, and when it needs replaced are used to just replacing it with another boiler. So, tell us a bit more about the plans to phase out fossil fuel boilers and what's involved.

 

[00:04:33.410] – Mélanie Auvray

Ecodesign plan is actually not so new, and Ecodesign has been here for so many years and they have been phasing out inefficient technology, heating technology, but it's also on other technologies here. What the Commission is proposing in its proposal that we saw two months ago is that they go for a minimum energy efficiency requirement for auditors from September 2029. And this minimum requirement is high enough so that it results in a progressive phase out of the standalone fossil fuel boilers. And this is where it will happen.

 

[00:05:17.270] – Jon Slowe

So, the Ecodesign is driving the energy label, if I understand right, or this ABCDE type rating, is that linked.

 

[00:05:26.410] – Mélanie Auvray

To Ecodesign efficiency via Ecodesign, and then you inform the consumer via the energy label.

 

[00:05:34.490] – Jon Slowe

And the proposal is that by 2029, the minimum standard would mean that you can't just replace a fossil fuel boiler with purely another fossil fuel boiler, is that correct? Wide, yeah. And then that needs to be that's a European directive that then needs to be put into national law or does that each country then have to do that, or each country automatically does that? How does that work?

 

[00:06:03.900] – Mélanie Auvray

It's a minimum requirement that is put on the manufacturers. So, the manufacturers will not be able to place anymore only alone boilers on the market, on the EU market anymore.

 

[00:06:16.800] – Jon Slowe

Okay, so that's quite a big thing. I mean, it seems to me like a very sensible step on the journey that we need to take to decarbonise heat and to meet the targets you described. What's the debate like in Brussels around this? Is it causing controversy? Is everyone in agreement with it? Is there lots of devil in the detail when you start looking at exactly how it's going to work?

 

[00:06:44.120] – Jozefien Vanbecelaere

Yeah, maybe I can start with a bit more the general. Yeah. And there's a lot of debate about this and it's not only linked to it's not only in equity design, but also, for example, the Energy Performance of Buildings Directive. Already there you have a lot of debate on this because this is a Directive which will have to be implemented then by the Member states. But also, there now there's negotiations between the Council, the Parliament and the Commission on the final text and things that are included. There are, for example, the ban on subsidies for fossil fuel heating systems, also a phase out date in general for fossil heating, which could be between 2035 and 2040 and then also more for when a renovation happens or when a new building is being built that also there. There would be a ban on standalone fossil fuel boilers. But this is really still in discussion, and this is very linked to Ecodesign because the one is really via buildings policy and then design is really more on the efficiency, really on Ecodesign is product policy. So, that is really the products that can be placed on the market whereas in Energy Performance of Buildings Directive, it's really the whole how to make our buildings more energy efficient. And already there we saw huge debates also in the European Parliament between the different political groups, which technologies should still be included, which not. So, the Trilogues no, the negotiations between the different political groups to come to an agreement in the Parliament took a really long time, were really difficult and now the Trilogues have just started. So, these trilogues are the negotiations between Parliament, Council and Commission. They just started beginning of July. But they are expected to be very difficult as well because exactly of this issue that for countries where there is still a lot of gas boilers, also countries with more low-income households, this seems to be more tricky and for certain political groups as well.

 

[00:08:59.790] – Jon Slowe

So, would you describe if on one end of the spectrum, Jozefien, you've got perfect consensus across Europe, across everyone, the different countries, the Council, the Parliament, the Commission and at the other end of the scale you've got complete non consensus. Where would you say we are on that? With this?

 

[00:09:20.610] – Jozefien Vanbecelaere

I would say we're rather at the non-consensus, but I would say more towards that end. It's very tricky.

 

[00:09:34.010] – Jon Slowe

Because of the sort of factors you described.

 

[00:09:37.290] – Jozefien Vanbecelaere

Yes, we also see that the elections are approaching, so the European level elections, but also this goes together with some in some member states, also national elections and this is very how do you say yeah, it goes immediately into people's own houses. So, to say if you as a politician proposes, a lot of them are afraid to yeah, that this would come back at them during the election, so they don't often dare to make a clear pro climate, more energy efficiency decision.

 

[00:10:11.890] – Jon Slowe

And are there I don't know how much you want to give examples of countries that are really supportive or countries that have got concerns. Is that all public at the moment? Or could you bring the debate to life a bit through some of the different points of view from the Ecodesign side?

 

[00:10:25.160] – Jozefien Vanbecelaere

We are at the moment discussing it with the different stakeholders we have the NGOs, the industry and the member states. We all submitted our written comments to the Commission about a week ago. Now the Commission is studying it. In this group of member states, you see three groups, different groups, one group that didn't submit their formal responses, yet they are still, I guess, discussing it. We know that in this group there are many member states that are quite positive, but they are looking at exemption and looking at how can they improve the proposal of the Commission. So, we are waiting for them.

Then we have another group that is quite significant still of member state against the proposal because they want a bottom-up approach and looking at local heating and cooling planification, considering their countries and localities specificities. They are also willing to have a technological neutrality approach rather than having one technology. And there have many worries on the transition, mainly pushed by the gas industry, many worries around the heat pump, how they can be installed in renovation case, many worries about the electricity, electricity grid capacity, also about the heat pump feasibilities with multi-family houses, things like that.

And you have a last group, the third group that is in favour of the proposal of the Commission, but they think that is not possible at once and they want some kind of exemptions, they all propose different type of exemption. And now it's the Commission that needs to see where we can have an agreement in some kind of exemption. So, exemption on space constraints, exemption on local regulation, exemption on buildings, type of buildings, things like that. And we don't have a position for the EPBD, we don't have per se and it's middle, we don't have a position per se right now.

 

[00:12:53.350] – Jon Slowe

Yeah, okay, so three quite distinct groups there, but all of them talking about the detail of exemptions or practically how can this work as the EHPA? Are you worried about exemptions that you could end up with this being so watered down, so many exemptions that it has no teeth left at the end of it?

 

[00:13:18.590] – Jozefien Vanbecelaere

Yeah, maybe I can take this. Indeed, for us, these exemptions are actually out of the question because we have a technological solution. The heat pumps work for all these different types of buildings. Also, we brought our experts as the EHPA. We also have members from research institutes and universities to really show that to the member states. For example, we know that France has a lot of questions on heat pumps in multifamily buildings, so in apartment buildings to show all the solutions that are possible. So, for us, these exemptions are really yeah, this would indeed water down the whole proposal and it's out of the question because you have a solution for every type. You also have different types of heat pumps adapted to all these questions that the member states might have. So, this we have shown repeatedly, but still we faced with these questions. And maybe I can add as well what is super important also for the heat pump sector so, now we have seen that there's 5 billion of investments announced by heat pump manufacturer and also fossil fuel heating manufacturers that are switching to heat pumps, that are building new factories, that are adapting production lines to really move to the production of heat pumps.

And we really need to sustain that investment to really keep this going in the long run. And for that we need policy clarity. This goes on all types of levels. But having this clear Ecodesign proposal would be a very clear policy signal also for the consumers, for the installers, for the manufacturers, for the whole sector. Okay, this is the way to go. We fully stop producing fossil fuel heating systems. We fully go to heat pumps. So, it's clear for everyone and we just go for it by always having.

 

[00:15:06.320] – Jon Slowe

I was going to ask how much is, you are naturally interested in the heat pump angle to this. But in countries like Austria, you have lots of pellet boilers in other countries in southern Europe, solar, for example, solar thermal could play a role not just in Southern Europe. So, there are lots of technologies even before you go to the topic of hydrogen boilers, which I know is probably another angle to this. But how much is this a heat pump debate and how much of this is wider? Can you help our listeners understand a bit more around the technologies?

 

[00:15:43.100] – Mélanie Auvray

From the Ecodesign point of view, the solar thermal device, they will still be allowed. They are actually one of the technology that will allow some of the boilers to be still on the market by doing an hybrid system. Hybrid system will be allowed after 29.

 

[00:15:59.760] – Jon Slowe

So, a boiler, condensing, natural gas boiler with a solar thermal.

 

[00:16:07.030] – Mélanie Auvray

A boiler with a heat pump, they will be allowed. So, it's not a ban on or phase out on gas, it's a phase out on inefficient technology.

 

[00:16:16.650] – Jon Slowe

Yeah, okay, so there's a whole range of technologies that could meet the new Ecodesign minimum performance standard.

 

[00:16:24.640] – Jozefien Vanbecelaere

Maybe I can also add to that that it's very much a heat pump debate because the heat pump is really applicable all over Europe, from north to south, from east to west. We have a lot of heat pumps, for example, in Scandinavia, also in the southern countries, you have a lot of heat pumps because heat pumps cannot boat to heating and cooling. Whereas for solar thermal, of course, they are more used in countries with more sun and then they are less used in Scandinavia, for example. And then biomass. There you have more questions on the sustainability of the biomass used. So, that's why I think it's more about focused on heat pumps. But indeed, these technologies are also still there, and it’s purely product level efficiency.

 

[00:17:09.690] – Jon Slowe

I don't want to get into the details of this, but how is hydrogen being factored into this discussion?

 

[00:17:15.460] – Mélanie Auvray

Hydrogen, it's a fuel. So, what we are discussing is rather like an efficiency part of the technology. We are not discussing about the fuel. We are technology neutral. We are focusing on the efficiency of each technology, but we are not looking at the fuels, we are not looking at each part of technology that we want, or we don't want. It's just neutral.

 

[00:17:37.570] – Jon Slowe

Yeah. Okay. So, conversion of the fuel to the useful heat or the useful cooling, that's important. Okay. So, that gives us a really good picture of the discussion. I'm interested a bit whether Germany is figuring much as an example of what can be done, because Germany is probably ahead of most other countries or certainly at the front of the pack with what it's proposing for next year. Is this helping? Is this showing what's possible? Or is there so much contention in Germany that this is just leading to more contention in Brussels?

 

[00:18:10.130] – Jozefien Vanbecelaere

Exactly. I would say what you just mentioned. So, what we really would not want is that the same very politicised or very political discussion that happened in Germany, really with all the newspapers, magazines involved, that this becomes the same type of discussion in Europe, because we saw also so much misinformation, really, it was really a bit of a fight in the media. So, this is really what we should avoid. And in Germany, I wouldn't say that this is really okay. The proposal initially was a good example, but now the final compromise that they reached last week and that they now are finalising the text, it's really weakened a lot. So, I don't think that's really the direction is a good example to show that it's where they want to go. But now it has been watered down a lot, so I don't think that's really the aim to go for. And also, maybe now I speak a bit on behalf of Mélanie, but if we look at also Germany's position in the debate at the EU level, they would want exactly the same as what's going on in Germany at EU level.

 

[00:19:19.830] – Jon Slowe

Yeah, having gone in one direction, they don't want the European level to go direction to be different from what they've done. And for those of you not familiar, for listeners not familiar with how European policies developed, I think one of you mentioned before, you've got the European Parliament, you've got the European Commission, you've got the Council of Ministers. Where's the power? Who actually decides this amongst those three, or is it always compromised between the three?

 

[00:19:52.350] – Jozefien Vanbecelaere

Well, in general, for directives and regulations in general, you have the code decision procedure, where it's usually the Commission that proposes something and then the council and the parliament have their position and debate and then they come to a final outcome. But Ecodesign is specific a different procedure.

 

[00:20:10.300] – Mélanie Auvray

So, there will Ecodesign before going to the consultation of the parliament and the council. The turning point of Ecodesign is that the member state experts, so the member state representatives sent by the government will have to vote on the proposal of the commission. And there you need the majority and 65% of the population, the EU population, so that they compromise go through. So, the turning point is coming close. We are guessing that it's coming after summer because there is no way that we find a compromise right now with the holiday season. But it's coming really soon.

 

[00:20:49.550] – Jon Slowe

Yeah. Okay, so there's no veto. It's at 65% of the population. As long as that agrees, then the Ecodesign standard will happen. Are you both very confident that there will be a big step forward with Ecodesign or is it still how do you read it? We're verging into the crystal ball question, but I can't wait to that. I want to get your views now. How do you see that Ecodesign vote going?

 

[00:21:16.060] – Mélanie Auvray

It’s not going to be an easy task. The commission is looking to have a major discussion after summer. They are also working right now on a compromise with potential exemption to add it to this proposal. We still delete the same ambition but adding some type of exemption that will not water down the text and the presentation will happen in September. We hope that it will gather enough member states looking at our data and the information that we have on the different member states. It's something that is doable to try to convince all of them and to also debunked all the lies that were circulated around by the other industry and to prove that heat pumps are here ready. We are investing and the technology is there. And this is something that we are working on over summer, and in autumn also.

 

[00:22:12.890] – Jon Slowe

So, does that mean you two I hope you both get a summer holiday still, but you've got a very busy summer ahead.

 

[00:22:22.010] – Mélanie Auvray

The middle state representatives also want some holidays.

 

[00:22:27.870] – Jon Slowe

What is it like to be in the middle of all these discussions? Because this is really, I think, a really pivotal time in decarbonising, how whether and how we push forward in Decarbonising heat across Europe. Question for both of you. What does it feel like? Is it a pressure cooker? Is it exciting? Is it frustrating? How would you describe it?

 

[00:22:51.140] – Jozefien Vanbecelaere

For me, I think it's super exciting because as I mentioned a bit in the beginning, already in the past, we were really asking for our technology to be recognised. We were really a bit shouting from the side-lines like, here we are, look at it. It's an important technology. It's good for air quality, it's good for energy efficiency targets at renewables and so on. But now suddenly we shifted from trying to get recognised, to get this full recognition. We're also part of this Net Zero Industry Act, which is the proposal of the Commission to push more for manufacturing of clean tech industries in Europe. And heat pumps are one of the six technologies that is clearly mentioned. So, now we are really on the scaling up of the sector of the industry. So, it's a completely different situation, it's super exciting. But what we also see now that we are finally been taken serious, is that it's also becoming really a threat to other existing technologies, to say it very clearly the gas sector. So, suddenly we are a real threat. So, we see, for example, also in the media, all these myths going around, our heat pumps do not work, they do not work in cold climates, all these types of things which are absolutely not true.

For example, in Scandinavia you have more heat pumps than in the other European countries. So, it's really a lot of also fighting back or having to explain and to really come up with good explanations on why these things are not true and why they do work.

 

[00:24:31.820] – Jon Slowe

And really yeah, it sounds like a fascinating time, I must say. Now I think we have to bring up the talking new energy crystal ball now, because we've described we're coming up to this pivotal moment and I think listeners will be really interested to look forward and see where you think we'll be.

So, I'm going to set the crystal ball now to 2028, which is just before that 2029 period. Actually. No, I'm going to change it. I'm going to set it to 2030. Let's set it to 2030 after that 2029-time frame you talked about. And I'd like each of you to give me your own prediction about what will be in place at the European and national levels and what this will mean for us, people listening in Europe when they need to replace their heating system. So, let's go for 2030. What will people who are listening, who've maybe got a natural gas boiler in their homes, what would they have to do if they need to replace that in 2030? Jozefien, let's go with you first and then Mélanie, you.

 

[00:25:50.950] – Jozefien Vanbecelaere

Well, I think there, will be for sure close to 60 million additional heat pumps. That's really also the target of the repower EU. We've also asked our national associations and they would see in a conservative business as usual, 43 additional 43 million additional heat pumps. So, it will be between 43 and 60, but I think closer to 60, because we see all policy really going in that direction.

What I don't think is that it will go from one day to another, for example, that this Ecodesign yeah, I hope, but I'm afraid it will not be the case, that there will be no exemptions at all and or the phase out will be there in 2029. But you will see that everything really goes in that direction. Also, you have the emission trading system being in place as from 2027, so that will have an additional effect. So, that will mean a carbon price on fossil heating, so that will also have an effect. And we see more and more also at national level. For example, what happened in Germany, even though it's watered down, it still shows the direction. And you see now there's also a public consultation going on in France on phasing out fossil fuel heating systems. You see this really in the Netherlands as well. You have this hybrid heat pump action plan. And it's really something a debate that is coming up more and more. So, I think the direction is quite clear, could be clearer with even clearer policy signals. But, yeah, I think there's no way around it anymore, or, no, we will not go back to complete…

 

[00:27:29.870] – Jon Slowe

Okay, pragmatically, we'll probably have some exemptions, but there's enough political momentum, enough desire that in a lot of countries, people will have to do something. The cat stick will be there, the carrot will be there. And that 20 million heat pump number you talked about at the beginning, installed base will have gone to 40, 60 out of 120. What's the number of homes, households in Europe?

 

[00:27:58.580] – Jozefien Vanbecelaere

Hundred and 16 millions provide around 16% of the European buildings, 30%, 50%, something in that range.

 

[00:28:13.140] – Jon Slowe

Okay. And I guess just to put a bit of fuel neutrality into it, that could be most people will think of a heat pump are electrically driven heat pump, but it could be a thermally driven heat pump. That still is 150% running on natural gas, maybe running on hydrogen in the future. But it's not necessarily a fuel efficiency.

 

[00:28:32.610] – Mélanie Auvray

But we have many technologies. Part of the heat pump. When you say heat pumps, it means also hybrid heat pumps or terminally driven heat pumps or electric heat pumps.

 

[00:28:42.250] – Jon Slowe

It's about squeezing every bit out of the fuel as we can. Okay, well, I wonder if listeners of the podcast are now thinking, will there be an exemption in my country or my building, or am I on this journey as well? And I think probably from what you both said, most listeners will be on this journey if they're replacing their boiler in the next what are we now? 2023, so in the next seven years. So, we hopefully on the journey to ratcheting that efficiency up, squeezing every bit of performance out of the fuel input that we can, and reaching our decarbonisation of heat goals. We're well on the way to doing that. Jozefien and Mélanie, two things. One, thank you so much for your time and sharing the intricacies of what's going on in Brussels at the moment, bringing that to life, which I think is important for all of our listeners to understand and know more about. And secondly, good luck over the summer. I hope you get a break and good luck in the nitty gritty discussions about the standards, the exemptions, the details of all of this.

 

[00:29:51.950] – Jozefien Vanbecelaere and Mélanie Auvray

Thank you, thank you very much.

 

[00:29:55.390] – Jon Slowe

And thanks, as always to everyone for listening. We hope you found that useful and it's given you food for thought. Remember, if you're enjoying the podcast, please rate us wherever you listen, and you can send us ideas for future episodes at talkingnewenergy@lcp.com. Thanks very much and speak to you soon. Bye bye.

If you enjoy the podcast, then please rate it, and share it with your friends and colleagues. If you're as passionate about the energy transition as we are, then you can keep in touch with us and look at our research, insights, podcast transcripts and download reports all at www.lcpdelta.com.

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