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PRESS RELEASESeptember 21, 2023

World Bank Warns Heating Sector Across Europe and Central Asia Needs Urgent Overhaul

WASHINGTON, September 21, 2023 ¡ª In a new comprehensive analysis of 23 countries* across Europe and Central Asia released today, the World Bank calls for a major revamp of the region¡¯s heating sector to deliver sustainable and affordable services to its people, especially the most vulnerable, and to reduce reliance on inefficient, carbon-intensive fuels.

The report, Toward a Framework for the Sustainable Heating Transition, underscores the urgent need to ensure efficient, clean, and affordable heating services for everyone. Achieving net-zero emissions by mid-century in the region requires drastic transformation of the heating sector, which today accounts for about 24% of regional energy demand and is responsible for about 22% of greenhouse gas (GHG) emissions.

"The transition to sustainable heating is one that countries across Europe and Central Asia cannot afford to postpone,¡± said Antonella Bassani, the World Bank¡¯s Vice President for Europe and Central Asia. ¡°It is possible for countries to reduce heating demand, improve air quality, and lower emissions this decade by adopting suitable policies and government programs with targeted subsidies for cleaner and more efficient heating technologies.¡±

The report finds that due to significant underinvestment, the heating sector across Europe and Central Asia countries often provides substandard services, fails to fully recover its costs, exacts a major toll on the environment, and impacts people¡¯s lives and livelihoods. About 30% of the region¡¯s population ¨C mainly in urban areas ¨C is served by district heating utilities, which are heavily dependent on subsidized fossil fuels and suffer from aging infrastructure and poor financial viability. In more rural areas, most families rely on high polluting firewood or coal stoves and boilers. Together, these fuel sources result in high levels of air pollution that contribute to some 302,000 deaths and incur a welfare cost of 7% of GDP annually. Compounded by an aging and energy inefficient building stock, affordability also remains a major concern, with one-third of the region¡¯s population struggling to pay heating bills or underheating their homes.

A sustainable heating transition in the region could substantially reduce deaths and welfare losses due to pollution as well as providing a clear path to reducing GHG emissions, according to the report. 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 report reviews the status and trends of space heating across countries, identifies common regional barriers and challenges to sustainable heating, assesses various heating options (including fuels, technologies and costs), and proposes a framework, with policies and programs, for government planning and the transition.

"We recognize the profound challenges faced by the heating sector across Europe and Central Asia countries. Our goal is to equip policymakers with data-driven insights and actionable solutions to advance this sustainable heating transition, ultimately improving the lives and wellbeing of the region's population," said Charles Cormier, the World Bank¡¯s Regional Infrastructure Director for Europe and Central Asia. ¡°Some notable progress has been made, with newer technologies and approaches already being tried and tested, but these efforts are not yet at the scale necessary to meet the carbon neutral mid-century targets.¡±

The report proposes a three-pillar strategy for governments to structure their transition plans effectively:

  1. Reduce heating demand through energy efficiency in buildings. Implement stronger building codes for new constructions and accelerate renovations of existing buildings. These efforts can halve heating demand by 2050, making the transition significantly less expensive for governments, businesses, and households.
  2. Bolster and decarbonize district heating in dense urban areas where viable. Upgrade existing district heating systems and shift to cleaner fuels like solar, geothermal, waste heat, and sustainable biomass. Where district heating is underperforming and may no longer be viable, a managed transition to individual heating systems may be needed.
  3. Promote clean individual heating systems in less dense areas. Studies are needed to identify sustainable, economically efficient heating options, such as heat pumps or eco-design pellet boilers, and these should be promoted through policies and targeted programs.

By adopting this comprehensive approach, governments across Europe and Central Asia can make efficient, locally suited, and affordable investments that contribute to a sustainable heating transition.

The report was sponsored by the World Bank¡¯s (ESMAP)

Å·ÃÀÈÕb´óƬ in Europe and Central Asia

Å·ÃÀÈÕb´óƬ works with countries in Europe and Central Asia to reduce poverty and promote shared prosperity, through boosting human capital, enabling markets, facilitating green transitions, and building and strengthening institutions.

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*This report covers the Emerging Market and Developing Economies (EMDEs) of Europe and Central Asia (ECA) including: Albania, Armenia, Azerbaijan, Belarus, Bosnia & Herzegovina, Bulgaria, Croatia, Georgia, Kazakhstan, Kosovo, Kyrgyz Republic, Moldova, Montenegro, North Macedonia, Poland, Romania, Russian Federation, Serbia, Tajikistan, T¨¹rkiye, Turkmenistan, Ukraine, & Uzbekistan.

PRESS RELEASE NO: 2024/ECA/005

Contacts

In Washington:
Zarina Nurmukhambetova

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