Heating and Cooling Policies

Globally, heating and cooling account for almost half of total global energy demand.112 Modern biomass, direct geothermal, and solar thermal technologies together represent a major portion of the energy produced with non-hydro renewables, and offer vast potential for meeting the world's residential, commercial, and industrial heating and cooling needs. As a result, countries continued to enact targets, policies, and incentives for the promotion of renewable heating and cooling technologies during 2013. However, this sector still lags far behind the renewable power sector for attention from policymakers.

The 28 EU Member States have introduced targets for specific shares of renewable heating and cooling. In addition, several countries in Africa, Europe, and the Middle East target the use of solar water heating.i 113 Overall, renewable heating and cooling targets exist in at least 41 countries worldwide (see Reference Table R14), and at least 19 countries have heat obligations/ mandates in place at the national or state/provincial level to promote the use of renewable heat technologies.

As in 2012, policy adoption was relatively slow in the heat sector, but a few countries and states enacted new standards for renewable heat in 2013 and early 2014. Albania mandated the use of renewable heat technologies in new buildings, requiring that certain building types be constructed with a minimum share (to be defined by May 2014) of solar thermal heat. In addition, solar thermal systems and components were exempted from customs duties and VAT.114 Half a world away, the Australian standards body introduced the world's first solar cooling standard in late 2013 to establish product performance benchmarks.115 India's Energy Conservation Building Code was extended to two additional states in 2013, so that it now mandates standards for renewable energy and energy efficiency in 8 of the 28 Indian states.116 (See Sidebar 8.)

Revisions to existing regulatory policies for heating and cooling were made by the Netherlands, which introduced technology-differentiated FIP tariffs to support the generation of heat from biogas, solid biomass, deep-geothermal, and solar thermal; and by the United Kingdom, which introduced a tariff degression mechanism to its feed-in policy for renewable heat, and began reducing rates as of mid-2013.117

Several countries, mostly in Europe, provide fiscal incentives, including grants and investment subsidies, to promote investment in renewable heating and cooling technologies. Austria doubled its subsidies for solar thermal systems to USD 192/kWth (EUR 140/kWth) to cover up to 30% of the costs of installation.118Cyprus reinstated a solar heating and cooling support programme, following its expiration in 2012, to provide investment subsidies in the form of grants of up to USD 4,129/kWth (3,000 EUR/kWth).119The Czech Republic launched its New Green Savings programme to provide grants for up to 40% of the cost of installing a solar thermal system.120Germany extended incentives to a host of renewable and efficient heating and cooling technologies—including solar thermal cooling, industrial waste heat, cogeneration, and district heating—to cover 25% of the investment costs for systems ranging from 5 kW to 500 kWth.121 Italy's Conto Termico incentive scheme came into force in early 2013 to provide capital incentives to renewable heat technologies, including biomass boilers, solar thermal systems, and also heat pumps.122 At the regional level, Wallonia, Belgium, introduced grants to cover 30-35% of the costs of installing renewable heating systems in buildings.123

Elsewhere, Australia provided national grants to municipal governments for the installation of solar and heat pump systems for water heating; India introduced a two-year rebate program to support solar hot water and solar process heat installations; Puerto Rico established a program to fully fund the replacement of conventional water heaters with solar thermal for low-income families; and Thailand extended subsidiesforsolar water heaters (SWH) to 2021, and set out a plan for a gradual degression from the current 25% subsidy.124

Additional forms of financial support, such as public investment, were introduced or revised during the year. South Africa announced a plan to provide fully subsidised SWH to low-income households, and aims to award contracts through competitive tendering for the manufacturing of 650,000 individual SWH by 2015.125 However, simultaneously, South Africa delayed the provision of incentives and postponed from 2014 to 2015 its target to install 1 million SWH.126 The U.K. allocated USD 8.24 million (GBP 5 million) to the installation of renewable heating technologies such as biomass boilers as well as heat pumps in public housing; and the Flanders region of Belgium allocated USD9.2 million (EUR 6.7 million) to promote renewable heat production, waste heat recovery, and the construction of district heat networks.127

i - The 28 EU Member States all have targets for renewable heating and cooling in their National Renewable Energy Action Plans. Additional countries include Bhutan, China, India, Jordan, Kenya, Lebanon, Libya, Morocco, Mozambique, Sierra Leone, Swaziland, Thailand, and Uganda.

SIDEBAR 8. THE LINKAGE BETWEEN RENEWABLE ENERGY AND ENERGY EFFICIENCY: FOCUS ON SUSTAINABLE BUILDINGS

The critical interplay between renewable energy and energy efficiency in achieving sustainable and inclusive growth has been widely recognised in recent years.i It was an impetus for the United Nations Secretary General's Sustainable Energy for All (SE4ALL) initiativeii, which resulted in important voluntary commitments from businesses, investors, and national governments during 2013 to advance renewables and energy efficiency.

High energy prices and global fossil fuel subsidies—estimated to be at least USD 544 billion in 2012—have reinforced the need for energy efficiency improvements and renewable energy, and have highlighted the potential for adding value by focussing on both areas. Energy efficiency can be considered the "primary fuel" laying the foundation for a low-carbon energy future. When employed in concert, energy efficiency and renewables offer significant economic benefits and a wide range of co-benefits, including climate change mitigation, health improvements, energy access, and job creation.

Annual relative global primary energy intensityiii is trending downwards again, after a sudden increase during 2009 and 2010. The developments in 2011-12 provide some optimism that energy demand can be further decoupled from GDP growth.

Assuming the full implementation of policies and measures already enacted to advance energy savings, as well as those currently under discussion, it is estimated that primary energy demand in 2035 could be 7% lower than under a business-as-usual scenario. The majority of these savings would come from efficiency gains in end-uses; industry would account for 37% of these efficiency-related savings, followed by transport (31%) and buildings (26%). Savings would still fall short of the full economic potential available in 2035, however, and it is expected that the greatest unrealised potential would be in the buildings sector.

Considering that a building's lifetime is 50 years or more, optimising efficiency and use of renewables as early as possible is critical for maximising potential energy savings while avoiding further lock-in to inefficient building stock. Integrating efficiency and renewables into the design stage is particularly relevant for emerging economies, where rates of urbanisation and building construction are high; in India, for example, about 70% of the building stock expected by 2030 has yet to be constructed. Developed countries face a different challenge in that most of the energy efficiency potential lies in retrofitting of the existing building stock.

To address these challenges, more governments around the world are focussing on the building sector. China, for example, published new policy measures in 2013 to encourage the adoption of green building practices. Two additional Indian states adopted the Energy Conservation Building Code, which integrates renewable energy and energy efficiency and mandates the use of solar water heating in specific building types. In Australia, around 100 local governing authorities received grants under the Local Government Energy Efficiency Program to install energy efficient solar and heat-pump systems for water heating in their buildings and community facilities.

Several agency initiatives and programmes were started during 2013. For example, the Renewable Energy and Energy Efficiency Partnership (REEEP) and the Global Buildings Performance Network (GBPN) launched the "1 Billion m2 of Positive Energy Buildings" intervention, which aims to promote transformational change in the building sector by shifting the concept of buildings as energy consumers to energy producers that can meet their own energy needs. In addition, the International Partnership for Energy Efficiency Cooperation (IPEEC) conducted a survey on building rating tools in order to identify how they can help reduce energy consumption and associated greenhouse gas emissions.

Also in 2013, various national green building councils continued to promote the adoption of voluntary green building rating systems. For example, the U.S. Green Building Council launched a new, more rigorous version of the LEED rating system, which is used internationally. Bottom-up demand for green buildings expanded as well. By year's end, the Australian Green Star had been awarded to over 650 projects, and more than 50% of these were certified in the past three years. In South Africa, the green building movement has gained ground rapidly, with 36 buildings receiving a Green Star SA rating by mid-2013.

This sidebar on renewable energy and energy efficiency linkages is a regular feature of the Global Status Report.

Source: See Endnote 116 for this section.

i - For more on the interplay between energy efficiency and renewable energy, see Feature section in GSR 2012.

ii - The SE4ALL initiative targets, by 2030, universal access to modern energy services, a doubling of the share of renewable energy in the global energy mix, and a doubling of the global rate of improvement in energy efficiency. By early 2014, more than 80 governments from developing countries from all regions had joined the initiative. See http://www.se4all.org/our-vision/our-objectives/.

iii - Primary energy intensity is commonly used as a proxy for energy efficiency, even though it fails to cover the multi-dimensionality of the latter.

At least two countries adopted or revised low-interest loans to support renewable heat. Spain approved a USD 172 million (EUR 125 million) programme to offer zero-interest loans for energy efficiency retrofits of existing buildings, which also include the incorporation of solar thermal.128Tunisia extended to 2016 its existing preferential low-interest loans for SWH, and began providinga 30% investment credit forsolarthermal process heat systems.129

Although support in the sector is generally increasing, there were a few instances of policy expirations and downwards revisions. A law expiration in Chile at the end of 2013 led to the removal of tax rebates for solar thermal systems, and India's Ministry of New and Renewable Energy reduced grant support for SWH.130

112 IEA, "Solarenergycould meet one-sixth of global demand for heating and cooling in under40 years," 9 July 2012, http://www.iea.org/newsroomandevents/news/2012/july/name,28298,en.html.

113 Table 3 and REN21, Renewables 2005..., op. cit. note 1.

114 Bärbel Epp, "Albania: New Energy Law Shows Country's Strong Commitment to Solar Thermal," Solar Thermal World, 25 June 2013, http://solarthermalworld.org/content/albania-new-energy-law-shows-countrys-strong-commitment-solar-thermal.

115 Interim Standard AS 5389 (Int): Solar heating and cooling systems-Calculation of energy consumption, per Tildy Bayer, "Australia Leads with Solar Cooling Standard," Renewable Energy World, 9 September 2013, http://www.renewableenergyworld.com/rea/news/article/2013/09/australian-solar-cooling-standard-published?cmpid=SolarNL

116 Sidebar 8 from the following sources: USD 544 billion from IEA, World Energy Outlook 2013 (Paris: IEA/0ECD, 2013). Note that, according to the IMF, subsidies are USD 1.9 trillion if considering total post-tax subsidies, from International Monetary Fund (IMF),"Reforming Energy Subsidies Summary Note," 2013, http://www.imf.org/external/np/fad/subsidies/pdf/note.pdf.; "primary fuel" from IEA, Energy Efficiency Market Report 2013 (Paris: IEA/0ECD, 2013); co-benefits from IEA, Spreading the Net: The Multiple Benefits of Energy Efficiency Improvements (Paris: 2012); global primary energy intensity saw an average annual decrease of around 1.5% between 2011 and 2012, per IEA, World Energy Outlook 2013, op.cit.this note, p.234; 7% reduction in primary energy demand, or 1,260 Mtoe in absolute terms, from IEA New Policies Scenario (the business-as-usual scenario is lEA's Current Policies Scenario), per IEA, World Energy Outlook 2013, op.cit.this note; greatest unrealised potential from IEA, Energy Efficiency Market Report 2013, op.cit.this note; high rates of urbanisation and construction from McKinsey Global Institute, Urban World: Cities and the Rise of the Consuming Class (London: 2012); 70% of ndian building stock from S. Kumar et al., "Developing an Energy Conservation Building Code Implementation Strategy in India," 2010 ACEEE Summer Study on Energy Efficiency in Buildings, unpublished manuscript, May 2010; Chinese policies from Frank Haugwitz, "Briefing Paper- China Solar PV Development" (Beijing: Asia Europe Clean Energy (Solar) Advisory Co. Ltd., September 2013); India's Building Code is now mandatory in eight of the 28 Indian states, and indicates that solar water heating systems should be planned to meet at least 20% of expected demand, perlEA, World Energy Outlook 2013, op.cit.this note, and Indian Ministry of Power, "Energy Conservation Building Code 2007" (New Delhi: 2007); Australian Government Department of Industry, "Local Government Energy Efficiency Program," http://ee.ret.gov.au/node/2121, viewed 5 February 2014; REEEPand GBPN initiative from REEEP, "Interventions," www.reeep.org/interventions, viewed 17 December2013, and from M. Hiller et al., "1 Billion m2 of Positive Energy Buildings – A REEEPand GBPN Intervention," unpublished manuscript (Vienna: REEEP, 6 May 2013) (asan example of otherongoing initiatives, UNEP is implementing Development of Nationally Appropriate Mitigation Actions (NAMAs) for the Building Sector in Asia, a four-year project under the International Climate Initiative funded by the German Federal Ministry of Environment, Nature Conservation and NuclearSafety(BMU). The project will help Indonesia, the Philippines, Thailand, and Vietnam identify policies or projects to increase energy efficiency and/or incorporate renewable technologies to reduce greenhouse gas emissions from the building sector, and incorporate them into NAMAs and nationa climate and development strategies); IPEEC, "Building Energy Rating Schemes: Assessing Issues and Impacts," forthcoming March 2014; LEED (Leadership in Energy and Environmental Design) from Marisa Long, "LEED v4, the Newest Version of LEED Green Building Program Launches at USGBC's Annual Greenbuild Conference," 20 November 2013, atwww.usgbc.org; Australia's Green Star rating system, launched in 2003, from Green Building Council of Australia, "Green Star Project Directory," www.gbca.org.au/project-directory.asp, viewed 5 February 2014; Green Building Council South Africa, "Escalation of Green Star SA ratings in month of June," 3 July 2013, at www.gbcsa.org.za.

117 Robert Schachtschneider, "Heating& Cooling Promotion in Netherlands," RES Legal, 12 November 2013, http://www.res-legal.eu/search-by-country/netherlands/tools-list/c/netherlands/s/res-hc/t/promotion/sum/172/lpid/171/page.pdf?out=pdf; U.K.from Diarmaid Williams, "Amended Renewable Heat Incentive regulations published," Cogeneration & On-Site Power Production, 13 May 2013, http://www.cospp.com/articles/2013/05/amended-renewable-heat-incentive-regulations-published0.html.

118 EurObserv'ER, Solar Thermal and Concentrated Solar Power Barometer (Paris: May 2013).

119 Incentives are provided through the Fund for Renewable Energy and Energy Saving, per Barbel Epp, "Cyprus: Grants Scheme for Solar Cooling Systems," Solar Thermal World, 27 February 2013, http://solarthermalworld.org/content/cyprus-grants-scheme-solar-cooling-systems.

120 Barbel Epp, "Czech Republic: New Green Savings Programme Gets Off on the Wrong Foot," Solar Thermal World, 30 August 2013, http://solarthermalworld.org/content/czech-republic-new-green-savings-programme-gets-wrong-foot.

121 FrankStier, "Germany: Additional Support for Small Solar Cooling Systems," Solar Thermal World, 3 February 2014, http://solarthermalworld.org/content/germany-additional-support-small-solar-cooling-systems.

122 GSE, "Heating and Cooling," http://www.gse.it/en/Heating_Cooling/Pages/default.aspx.

123 Portail de l'energie en Wallonie, "Amelioration de la performance energetique des bailments," 28 March 2013, http://energie.wallonie.be/nl/amelioration-de-la-performance-energetique-des-batiments.html?IDC=6431&IDD=83066.

124 Australian Government Department of Industry, "Local Government Energy Efficiency Program," http://www.ee.ret.gov.au/energy-efficiency/grants/local-government-energy-efficiency-program; Barbel Epp, "India: Rebate Programme for 400,000m2 in public, social and industrial sector," Solar Thermal World, 17 March 2014, http://solarthermalworld.org/content/india-rebate-programme-400000-m2-public-social-and-industrial-sector; Barbel Epp, "Puerto Rico: New Solar Thermal Programme to Benefit Low-Income Families," Solar Thermal World, 16 April 2014, http://solarthermalworld.org/content/puerto-rico-new-solar-thermal-programme-benefit-low-income-families; Stephanie Banse, "Thailand: Ministry of Energy Extends Incentive Programme until 2021," Solar Thermal World, 2 February 2014, http://solarthermalworld.org/content/thailand-ministry-energy-extends-incentive-programme-until-2021.

125 Barbel Epp, "South Africa: Planned Rollout with 650,000 Solar Water Heaters," Solar Thermal World, 4 September 2013, http://solarthermalworld.org/content/south-africa-planned-rollout-650000-solar-water-heaters.

126 South Africa Department of Energy, "Annual Performance Plan 2013-14," http://www.energy.gov.za/files/aboutus/DoE%20 APP%202013-14.pdf.

127 U.K.from Eclareon, Monthly Progress Update: Part of the project "Assessment of climate change policies in the context of the EU Semester" (Brussels: European Commission, 5 November 2013), http://ec.europa.eu/clima/policies/g-gas/progress/docs/progress_201310_en.pdf; Flanders from Eclareon, Monthly Progress Update: Part of the project "Assessment of climate change policies in the context of the EU Semester" (Brussels: European Commission, 6 August 2013), http://ec.europa.eu/clima/policies/g-gas/progress/docs/progress_201307_en.pdf.

128 Bärbel Epp, "Spain: Most of these companies will survive thanks to internationalization," Solar Thermal World, 16 December 2013, http://solarthermalworld.org/content/spain-most-these-companies-will-survive-thanks-internationalisation.

129 Tunisia's incentives are offered under the country's PROSOL scheme, per Barbel Epp, "Tunisia: Government Extends PROSOL Support Scheme," Solar Thermal World, 19 March 2013, http://solarthermalworld.org/content/tunisia-government-extends-prosol-support-scheme; Barbel Epp, "Tunisia Funds Solar Process Heat," Solar Thermal World, 7 October 2013, http://solarthermalworld.org/content/tunisia-funds-solar-process-heat.

130 Bärbel Epp, "Chile: So Far No Government Compromise on Extending Tax Credits," Solar Thermal World, 8 July 2013, http://solarthermalworld.org/content/chile-so-far-no-government-compromise-extending-tax-credits; Barbel Epp, "India: National Incentive Programme Reduces Grants," Solar Thermal World, 30 June 2013, http://solarthermalworld.org/content/ndia-national-incentive-programme-reduces-grants.