This report presents a comprehensive analysis of the state of the heating sector in countries of Europe and Central Asia and lays out a framework that would help governments ensure heating services are affordable, efficient, and clean, while helping countries decarbonize their economies by mid-century.
Achieving net zero targets by 2050 across the region will require a transformation in the space heating and building sectors.
ECA’s heating sector today is not sustainable—it is inefficient, carbon-intensive, unaffordable and a significant source of air pollution. But viable, affordable solutions are available.
Promoting sustainable heating solutions for Europe and Central Asia can bring in a wide array of benefits: from fuel and cost savings to better health and socioeconomic benefits for people. Between 2024 and 2050, such a transition would avoid the emission of an estimated 8.9 gigatons of CO2 from building-related space heating.
The transformation of the heating sector requires a three-pronged strategy: reducing demand through energy efficiency, bolstering, and decarbonizing the district heating sector and promoting sustainable individual heating systems (where district heating is not viable).
Governments play a crucial role in enabling and accelerating this transition by developing clear strategies and launching national programs — complete with policies, financing, incentives, and outreach. The public sector could lead by example, establish systems for heating upgrades and help catalyze markets which can bring down costs for businesses and households.
State of the Sector
Space heating across Europe and Central Asia is unsustainable today. It depends heavily on fossil fuels like natural gas and coal, as well as traditional biomass. District heating accounts for 43% of the demand and is mostly supplied by natural gas (70%) and coal (28%). Most of the buildings in the region are over 40 years old and are very energy inefficient. Rural areas see a higher dependence on biomass and coal, while urban areas use more district heating, electricity, and natural gas. This reliance on polluting fuels, especially in older buildings, has contributed to substantial air pollution, leading to negative health and economic consequences, with lower-income families usually suffering the most. Some 34% of the region’s population spend 10% or more of their average monthly expenditure on energy bills - the threshold for energy poverty.
The benefits of the sustainable heating transition
The report finds that the benefits of the sustainable heating transition, if done correctly, can greatly exceed the costs. Conservative estimates suggest that the economic net present value of the transition can be from $402 billion to $440 billion – even before taking into account such benefits as improved energy security, lower energy subsidies, reduced energy poverty, extended building lifetime, property prices, and better comfort.
By 2050 sustainable heating transition across Europe and Central Asia could help achieve the following:
Efficient buildings and reduction of energy use for space heating to 60-70 kWh/m2 (down from 160 kWh/m2 in the residential sector)
Less indoor air pollution, better health outcomes, more green jobs
More affordable heating, with average monthly expenditures on energy bills cut by 50%
Lower dependency on fossil fuels for space heating
8.9 Gt of CO2 avoided by 2050 from building-related space heating
Benefits spread across both rural and urban areas
Greening Space Heating in Europe and Central Asia: What Will It Take?