The EU's heat pump problem
The EU is struggling to encourage mass electrification even as pressure to wean off of natural gas ramps up.
Why it matters: The EU is years ahead of the U.S. in both electrification policy and practice, so its struggles could be a harbinger of troubles as the U.S. catches up.
State of play: Much of the EU is under pressure to wean itself off of natural gas supplies from Russia amid the war in Ukraine, but there are hurdles.
- Europe's aging housing supply lacks the ability to support electrified appliances like heat pumps, and there is also a lack of government subsidies to bring down costs.
Zoom in: The EU consumes most of its natural gas for heating in winter months.
- In a push to electrify heating, many countries have urged people to adopt heat pumps in homes and apartments with the goal of installing 10 million units in the next few years.
- A heat pump costs roughly €10,000 (~$10,475), compared to roughly €2,000 (~$2,100) for a traditional natural gas boiler.
- But government support (primarily via subsidies) has been lacking, S&P Global Insights manager Adrian Dorsch tells Axios.
- "To electrify heating demand is a gigantic task," says Dorsch, who manages European long-term gas analytics for S&P Global Insights.
The intrigue: Germany and the Netherlands have both announced an intent to ban boiler installation in new buildings as well as boiler replacements in existing buildings by 2025.
- Dorsch says that even though the bans will likely increase demand for heat pumps, there is still a shortage of qualified professionals to install them and many homeowners will have to retrofit existing homes to become energy efficient.
The bottom line: The EU has been the pace setter for societal climate technology adoption, and if it's struggling, that bodes ill for lagging markets.