IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v17y2025i9p4164-d1649410.html
   My bibliography  Save this article

From Inefficient to Efficient Renewable Heating: A Critical Assessment of the EU Renewable Energy Directive

Author

Listed:
  • Jan Rosenow

    (Environmental Change Institute, University of Oxford, 3 South Parks Rd, Oxford OX1 3QY, UK
    Cambridge Institute for Sustainability Leadership (CISL), University of Cambridge, 1 Regent Street, Cambridge CB2 1GG, UK
    Regulatory Assistance Project, Rue de la Science 23, 1040 Brussels, Belgium)

  • Duncan Gibb

    (Regulatory Assistance Project, Rue de la Science 23, 1040 Brussels, Belgium)

  • Samuel Thomas

    (Regulatory Assistance Project, Rue de la Science 23, 1040 Brussels, Belgium)

Abstract

The accounting methodology for renewable energy in the European Union’s (EU) renewable heating and cooling targets is often treated as a mere technical detail, yet it has profound implications for the effectiveness of climate policies. This paper highlights a critical misalignment within the Renewable Energy Directive (RED), which inadvertently disincentivises the deployment of more efficient heating technologies. By accounting for the energy harnessed to produce the useful heat, rather than the useful heat itself, the current metrics disproportionately credit the least efficient heating systems with generating the most renewable heat. An electric heat pump with a seasonal performance factor of 3 producing 100 units of renewable heat gets credited with 100 units of heat, despite using only 33 units of input energy, whereas a wood fireplace with an efficiency of 50% gets credited with 200 units of heat. The less efficient the device, the more renewable credits it receives for producing the same amount of useful heat. This misalignment undermines decarbonisation efforts by over-crediting inefficient technologies while failing to fully recognise high-efficiency solutions like heat pumps. This paper proposes revising the RED to account for useful energy output, ensuring a more accurate reflection of technology contributions. We also propose increasing the binding heating and cooling targets of 0.8 pp/year and 1.1 pp/year so that they reflect the needed contribution of the heating and cooling sector to reach the binding headline target of 42.5% by 2030. This shift would incentivise efficiency, better align with EU climate goals, and support the transition to a low-carbon heating and cooling sector in line with the 2030 emissions reduction target.

Suggested Citation

  • Jan Rosenow & Duncan Gibb & Samuel Thomas, 2025. "From Inefficient to Efficient Renewable Heating: A Critical Assessment of the EU Renewable Energy Directive," Sustainability, MDPI, vol. 17(9), pages 1-13, May.
  • Handle: RePEc:gam:jsusta:v:17:y:2025:i:9:p:4164-:d:1649410
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/17/9/4164/pdf
    Download Restriction: no

    File URL: https://www.mdpi.com/2071-1050/17/9/4164/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Kranzl, Lukas & Hummel, Marcus & Müller, Andreas & Steinbach, Jan, 2013. "Renewable heating: Perspectives and the impact of policy instruments," Energy Policy, Elsevier, vol. 59(C), pages 44-58.
    2. Riccardo Fraboni & Gianluca Grazieschi & Simon Pezzutto & Benjamin Mitterrutzner & Eric Wilczynski, 2023. "Environmental Assessment of Residential Space Heating and Cooling Technologies in Europe: A Review of 11 European Member States," Sustainability, MDPI, vol. 15(5), pages 1-22, February.
    3. Steinbach, Jan & Ragwitz, Mario & Bürger, Veit & Becker, Liv & Kranzl, Lukas & Hummel, Marcus & Müller, Andreas, 2013. "Analysis of harmonisation options for renewable heating support policies in the European Union," Energy Policy, Elsevier, vol. 59(C), pages 59-70.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bauermann, Klaas, 2016. "German Energiewende and the heating market – Impact and limits of policy," Energy Policy, Elsevier, vol. 94(C), pages 235-246.
    2. Florian Knobloch & Hector Pollitt & Unnada Chewpreecha & Vassilis Daioglou & Jean-Francois Mercure, 2017. "Simulating the deep decarbonisation of residential heating for limiting global warming to 1.5C," Papers 1710.11019, arXiv.org, revised May 2018.
    3. Paul Baginski & Christoph Weber, 2017. "A Consumer Decision-making Process? Unfolding Energy Efficiency Decisions of German Owner-occupiers," EWL Working Papers 1708, University of Duisburg-Essen, Chair for Management Science and Energy Economics, revised Aug 2017.
    4. Zhu, Tong & Curtis, John & Clancy, Matthew, 2023. "Modelling barriers to low-carbon technologies in energy system analysis: The example of renewable heat in Ireland," Applied Energy, Elsevier, vol. 330(PA).
    5. Lim, Sesil & Huh, Sung-Yoon & Shin, Jungwoo & Lee, Jongsu & Lee, Yong-Gil, 2019. "Enhancing public acceptance of renewable heat obligation policies in South Korea: Consumer preferences and policy implications," Energy Economics, Elsevier, vol. 81(C), pages 1167-1177.
    6. Büchele, Richard & Kranzl, Lukas & Hummel, Marcus, 2017. "What is the impact of the policy framework on the future of district heating in Eastern European countries? The case of Brasov," MPRA Paper 93225, University Library of Munich, Germany.
    7. Charlotte Senkpiel & Audrey Dobbins & Christina Kockel & Jan Steinbach & Ulrich Fahl & Farina Wille & Joachim Globisch & Sandra Wassermann & Bert Droste-Franke & Wolfgang Hauser & Claudia Hofer & Lars, 2020. "Integrating Methods and Empirical Findings from Social and Behavioural Sciences into Energy System Models—Motivation and Possible Approaches," Energies, MDPI, vol. 13(18), pages 1-30, September.
    8. Prasad, Ravita D. & Bansal, R.C. & Raturi, Atul, 2014. "Multi-faceted energy planning: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 38(C), pages 686-699.
    9. Fehrenbach, Daniel & Merkel, Erik & McKenna, Russell & Karl, Ute & Fichtner, Wolf, 2014. "On the economic potential for electric load management in the German residential heating sector – An optimising energy system model approach," Energy, Elsevier, vol. 71(C), pages 263-276.
    10. Totschnig, G. & Hirner, R. & Müller, A. & Kranzl, L. & Hummel, M. & Nachtnebel, H.-P. & Stanzel, P. & Schicker, I. & Formayer, H., 2017. "Climate change impact and resilience in the electricity sector: The example of Austria and Germany," Energy Policy, Elsevier, vol. 103(C), pages 238-248.
    11. Nägeli, Claudio & Jakob, Martin & Catenazzi, Giacomo & Ostermeyer, York, 2020. "Policies to decarbonize the Swiss residential building stock: An agent-based building stock modeling assessment," Energy Policy, Elsevier, vol. 146(C).
    12. Ringkjøb, Hans-Kristian & Haugan, Peter M. & Solbrekke, Ida Marie, 2018. "A review of modelling tools for energy and electricity systems with large shares of variable renewables," Renewable and Sustainable Energy Reviews, Elsevier, vol. 96(C), pages 440-459.
    13. Huakun Huang & Dingrong Dai & Longtao Guo & Sihui Xue & Huijun Wu, 2023. "AI and Big Data-Empowered Low-Carbon Buildings: Challenges and Prospects," Sustainability, MDPI, vol. 15(16), pages 1-21, August.
    14. Knobloch, Florian & Pollitt, Hector & Chewpreecha, Unnada & Lewney, Richard & Huijbregts, Mark A.J. & Mercure, Jean-Francois, 2021. "FTT:Heat — A simulation model for technological change in the European residential heating sector," Energy Policy, Elsevier, vol. 153(C).
    15. Barış Aydın & Kinga Stecuła & Piotr Olczak & Jarosław Kulpa & Beniamin Stecuła, 2025. "Exploring the Green Horizon: Recent Research on Renewable Energy in Poland—A Review," Energies, MDPI, vol. 18(7), pages 1-35, March.
    16. Heiskanen, Eva & Matschoss, Kaisa, 2017. "Understanding the uneven diffusion of building-scale renewable energy systems: A review of household, local and country level factors in diverse European countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 75(C), pages 580-591.
    17. Isabel Haase & Herena Torio, 2021. "The Impact of the Climate Action Programme 2030 and Federal State Measures on the Uptake of Renewable Heating Systems in Lower Saxony’s Building Stock," Energies, MDPI, vol. 14(9), pages 1-25, April.
    18. Popovski, Eftim & Fleiter, Tobias & Santos, Hugo & Leal, Vitor & Fernandes, Eduardo Oliveira, 2018. "Technical and economic feasibility of sustainable heating and cooling supply options in southern European municipalities-A case study for Matosinhos, Portugal," Energy, Elsevier, vol. 153(C), pages 311-323.
    19. Nis Bertelsen & Brian Vad Mathiesen, 2020. "EU-28 Residential Heat Supply and Consumption: Historical Development and Status," Energies, MDPI, vol. 13(8), pages 1-21, April.
    20. Müller, Andreas & Hummel, Marcus & Smet, Koen & Grabner, Daniel & Litschauer, Katharina & Imamovic, Irma & Özer, Fatma Ece & Kranzl, Lukas, 2024. "Why renovation obligations can boost social justice and might reduce energy poverty in a highly decarbonised housing sector," Energy Policy, Elsevier, vol. 191(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:17:y:2025:i:9:p:4164-:d:1649410. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.