Building Decarb Deep Dive: May 15, 2020

After watching the Regulatory Assistance Project's Heating Without Hot Air: Principles for Smart Heating Electrification on May 7th (I live Tweeted the event HERE), I began to ask the question, "Does CA have a comparable European country counterpart for building electrification? And if yes, what can we learn from them?" Well, we do, and it is the United Kingdom.

• Both have adopted long term economy-wide decarbonization goals. (UK, CA)
• Both have aggressive electricity sector decarbonization goals. (UK, CA)
• Both have extensive natural gas systems built out, serving most of its population's heating demand. ~85% for the UK, and ~90% for CA (UK, CA)
• And both have to electrify millions of space and water heating appliances to achieve their climate goals. (UK, CA)

So what can California learn from the United Kingdom? Well, not much, yet. Both are grappling with the speed and scale that natural gas appliances will need to be replaced. For existing homes, the rate in the UK is ~20,000 per week every week from now through 2050, and the in CA is ~9,300 per week every week from now through 2045. That's a ~3% and ~4% electrification rate per year for the UK and CA, respectively. Both rates of replacement are above the ~2% that McKinsey recently identified in their 1.5-degree pathway report (Yes, I am still upset about that.)

So if we can't learn from one another, what countries can we learn from? Fortunately, this fantastic research paper titled "Best Practice in Heat Decarbonisation Policy: A Review of the International Experience of Policies to Promote the Uptake of Low-Carbon Heat Supply" does the analysis for us. Analyzing various European countries, including Austria, Finland, France, Germany, Ireland, Italy, Netherlands, Norway, and Sweden, the paper identifies key policies and approaches that have enabled the deployment of heat pump technologies and district heating.

Not all countries are appropriate comparables for the UK or CA. Countries like Finland & Sweden never built out a natural gas system to serve their citizens. But countries like Germany and Italy where the natural gas system is built out does provide good comparables.

The research paper finds that a combination of policy factors enables the growth of heat pump technologies. These factors include:

• First and foremost, "policy stability promotes industry and consumer" confidence. Countries' heat pump marketplaces can suffer significantly from varying political support for the technology. Denmark had its marketplace crash due to the withdrawal of financial and political support in the 1990s.
• Incentives, taxation, and subsidies can all successfully increase demand. But for incentives and subsidies to be successful, they must be paired with quality control programs. If consumers do not trust the technology, the installation quality, or have a poor experience demand plummets. Also, in countries with built out natural gas systems, "fossil fuel taxes have been the most significant driver of heat pump deployment." Proving again that consumers adopt technologies that are cheaper for them to operate.
• Technical standards and programs that drive the adoption of high performing and quality installations are vital in ensuring consumer adoption. Low consumer confidence acts as a "barrier to uptake of heat pumps." It is also important to allow consumers to have a mechanism to file complaints. In Sweden, they even established a " "Heat Pump Court" to address litigation cases relating to the false claims of installers about heat pump performance." Amazing.
• Whether it comes from a trade association, like the Swiss Heat Pump Association, or from government agencies and utilities like in Germany, consumer education has a role in generating demand. In Denmark, in combination with other policy support and an information campaign helped "increase heat pump installation from 25,00 per year in 2011 to 200,000 per year in 2020".
• In closing, the paper finds that it is clear that with "sustained policy support over a period of 3-4 decades, it is possible to bring about a profound shift in the means by which heating is provided."

Let's all continue to learn from one another and get back to work.

Special thanks to Jan Rosenow for directing me to the paper. If you haven't read the RAPs Principles for Smart Heating Electrification, I highly suggest you do so. It looks more comprehensively at the topic of building electrification, including the importance of envelope energy efficiency, and utility rate designs.