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Monday 9 October 2023
Demand reduction is a powerful tool for decarbonization when combined with steady and strong deployment of renewables. In Europe last year, heat pump sales soared to 3 million units in response to the global supply crunch in natural gas, thus doubling market performance from two years prior, when sales reached 1.6 million. As a result, EU demand for natural gas absolutely cratered, dropping roughly 13%, according to the EI Statistical Review.
Data for the chart below comes from the European Heat Pump Association, and as you can see, EU heat pump sales began to lift above 1 million in 2017, then really got going thereafter. You will not be surprised to learn the EU is subsidizing adoption of this rather simple but powerful technology.
A heat pump uses refrigerant that is activated at low temperatures. It’s confusing for people how a heat pump can create heat in the winter months, but, the refrigerant itself has a low boiling point, and can reach that point even during cold outdoor temperatures. Similar action produces cool air in the summer. Needless to say, mass adoption of heat pumps transitions buildings from using natural gas for heating to electricity. And the EU, like the US and the rest of the world, is currently on a rip-roaring journey to create lots of new electricity from wind, solar, and batteries. In 2022 therefore, Europe clearly said no mas to Putin, and its structural dependency on Russian natural gas.
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There’s a nice analogy here to EV, in the heat pump story. Each technology wrestles away an energy service historically provided by fossil fuels—natural gas in heating, oil in transportation—and reestablishes that service on the electricity platform. In doing so, combustion and its hugely wasteful process is avoided.
Of the world’s big three economic domains, Europe is currently conducting energy transition most effectively, because it tends to deploy clean energy in conjunction with initiatives that suppress fossil fuel demand. The EU doesn’t just adopt electric cars, or wind and solar: it also places burdens on oil consumption, for example. The result is that EU oil demand has been in gentle decline for decades. And therefore, EU emissions too are already in sustained decline.
China and the US don’t exploit the powerful combination, unfortunately. Both countries are nicely deploying wind, solar and batteries, but China still won’t do much about its existing coal capacity, and the US won’t do much about existing internal-combustion-engine vehicles. While the US did achieve an initial burst of emissions declines the past decade from coal closures, the gains from that harvesting operation are slowing. The brake on US emissions growth has therefore eased, and frankly, the prospect for US emissions decline has actually deteriorated. The China story is similar: EV adoption and wind and solar growth are going crazy, but legacy energy sources still have an iron grip on the country’s political economy.
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