In order for Europe to reach its low carbon economy transition, the energy system has to become more efficient and renewables-based. Reducing energy demand in the buildings sector and powering buildings with renewables is critical as the sector makes up the vast majority of energy demand. District heating and cooling can play a major role in this process.

To pursue this objective successfully, it is important to have the right policy mix in place. Since their signature of the Energy Community Treaty, the Contracting Parties have an obligation to implement selected EU acquis, as if they were EU Member States. The Energy Efficiency Directive 2012/27/EU  already requires that the Contracting Parties carry out a comprehensive assessment of the potential for high-efficiency cogeneration and district heating and cooling.

In the European Union, the legal and regulatory framework has evolved in particular with the adoption of the Clean Energy for all Europeans Package in the course of 2018 and 2019. The Clean Energy Package considers the heating and cooling sector as one of the key tools to accelerate the decarbonisation of the energy system. The Package is expected to be adopted in the Energy Community in 2021.

The new Renewable Directive 2018/2001 firmly places heating and cooling in the centre of the energy system transformation, imposing for the first time an obligation to increase the share of renewable energy in this sector by 1,3 percentage points each year from 2020 to 2030. District heating systems will have to either contribute to this goal with 1 percentage point each year or to enable third party (energy producers from renewables and waste heat and cold) access to the network of district heating and cooling systems.

The need for the deep renovation of buildings is tackled by the new Energy Performance of Buildings Directive 2018/844. The amendments of Energy Efficiency Directive introduce the obligation of metering the consumption of  heat, cold and hot water and the provision of accurate consumption data on the consumers’ energy bill.

In June 2020, the European Commission adopted the EU Strategy for Energy System Integration. The Strategy emphasises the role of the district heating systems in sector coupling. The heating sector can be coupled with the power sector through the roll-out of heat pumps as a way for building electrification. Moreover, to ensure that local energy sources are sufficiently and effectively used, waste heat from industrial sites should be reused, on-site or trough district heating and cooling networks.

On 14 July 2021, the European Commission adopted a set of proposals to revise and update the Europan Union’s legislation on energy and climate as part of its Fit for 55 climate package.  The heating and cooling sector and especially the district heating sector are essential to achieve new goals of reduction of GHG emissions by 55% and increase of renewable energy in final energy consumption to 40% by 2030. New provisions that address these sectors are introduced in the proposals for recast Directive 2012/27/EU on Energy Efficiency and revision Directive (EU) 2018/2001 on Renewable Energy. The text outlines the major changes.

Read here: What does the Fit for 55 climate package bring for the district heating sector?

Check out a text providing examples of different forms of State aid granted to district heating/heating sector by EU Member States. You can find out how the European Commission assessed and concluded on different types of aid, granted for purposes of environmental protection but also rescuing undertakings in difficulty. The text also explains the Contracting Parties’ obligation to respect State aid rules in case of granting aid to district heating companies so as to ensure undistorted energy markets.