ITRE Committee compromises in Parliamentary vote
On 9 February the Industry, Research and Energy (ITRE) Committee of the EU Parliament adopted its position on the proposed revision of the Energy Performance of Buildings Directive (EPBD). The EPBD is the main piece of EU legislation addressing decarbonisation of buildings, which are responsible for over a third of emissions.
The position will go to the full plenary vote of the EU Parliament in the next few weeks.
This adopted position by the ITRE Committee results in a compromised position.
Ahead of the vote, Climate Bonds had called for more ambitious Minimum Energy Performance Standards (MEPS) for buildings. Operational emissions (energy performance) are widely recognised as the largest material contributor to existing buildings’ carbon dioxide inventory.
However, after negotiations between parties, the resulting text is only a slight improvement on the Commission’s proposal:
Potential introduction of hydrogen into energy mix has risks
To reach this slight improvement on MEPS, the Committee accepted an amendment which potentially introduces significant risk to building decarbonisation pathways. This amendment could allow hydrogen-ready boilers to be exempted from the ban on fossil fuel heating systems by 2035.
By implication fossil-fuel boilers will be accepted beyond the 2035 deadline date. The consequence is that there could be an indefinite delay to the deadline of fossil fuel use. There are also various technical and practical challenges around introducing hydrogen into an existing gas network.
One of the current leading position is that hydrogen be blended with natural gas. An EU Commission research paper finds that the hydrogen share in the blend could be around 5-10% in the immediate future, rising to 15-20% overtime. Such proposals are already being touted as part of hydrogen energy strategies in the UK and Norway.
The questions about whether it constitutes as a meaningful reduction in greenhouse gas emissions remains questionable. Bloomberg reports that even a 20% hydrogen mix would only result in only a 7% reduction in carbon emissions.
Most existing hydrogen in the market still uses significant fossil fuels during the production process.
A market dominated by fully ‘green hydrogen’ (created using renewable power) is still a long way off.
Hydrogen is not a general solution for heating buildings
Hydrogen is an important energy store and will be vital in the decarbonisation of heavy industries (e.g., replacing coking coal in the production of steel, or as a fuel replacement in the maritime shipping and long-haul trucking transport sectors.)
Successfully achieving a just industrial transition remains challenging enough without diverting scarce green hydrogen to areas such as powering buildings, where better options already exist.
Hydrogen does remain a good option for storing surplus energy, (e.g., continuing to power wind farms in periods of low demand).
To produce enough surplus green hydrogen to power homes, EU countries would first need to generate enough renewable energy, and then supply the surplus required for heavy industries. To illustrate the point, Ireland achieved its renewable energy target of 40% by 2020 but does not expect meet 80% until 2030.
Overly ambitious claims about the merits of future, widespread hydrogen use in buildings is likely to reduce the support for electrification(a proven pathway to decarbonisation).
Various studies have concluded that rapid building electrification and increased efficiency retrofits are crucial to meeting the 2050 net-zero Green House Gas (GHG) emissions target. Additionally, continuous investments into existing gas networks advocating the potential for future hydrogen use possess significant lock risks.
This expensive pathway to decarbonisation could result in the stranding of gas or hydrogen networks.
There are very material requirements to upgrade the existing network infrastructure needed to make blending possible. These include upgrades to the pipeline network to account for the leakiness of hydrogen, and new transport and storage facilities. A review of 32 independent studies has found that none recommended hydrogen heating as a feasible option.
Hydrogen is recognised as having an equivalent GHG impact of 11 times that of CO2 (notably less than 80 times of methane, but still notably not net zero).
Heat pumps and existing renewables solutions already provide viable options
Viable alternatives to hydrogen for powering buildings already exist and remain a strong financial alternative to hydrogen infrastructure. Climate Bonds expanded on this in our paper Accelerating the Fossil Gas Transition to Net Zero:
‘In most cases, low-carbon hydrogen is not likely to outcompete direct electrification in decarbonising decentralised heating as it is more expensive than electric heat pumps and requires appliance retrofit. Blanket incentives for hydrogen-based decentralised heating would undermine strategic deployment elsewhere in the economy and create inefficiencies. However, it could fill a midterm decarbonisation need for district heating – in instances where waste heat, geothermal, and heat pumps can’t be used.’
Currently viable options such as a mass rollout of heat pumps and solar PV panels can be pursued immediately, without having to divert green hydrogen from better suited industrial uses. To illustrate this fact, heating a home with hydrogen requires five to six times more renewable sourced electricity than heating the same home with an equivalent heat pump (equivalent to more than 4.5 times more efficient).
The Last Word: Next for the EPBD and Europe
As the ITRE Committee position has already adopted the hydrogen amendment, Climate Bonds is calling on the Rapporteur Ciaran Cuffe to table tight parameters for hydrogen-boiler adoption ahead of the plenary vote.
The legislation may specify certain building types where boilers may still be installed beyond 2035 (e.g., limited use in such cases as heritage buildings that cannot be electrified).
The EPBD should set out a requirement for all EU Member States to carry out detailed CBAs in developing and expanding into green hydrogen infrastructure for use as heating in mandated national building renovation plans. Consideration should be given to whether Member States have realistic decarbonisation pathways in place to meet MEPS targets, should they pursue a hydrogen boiler strategy.