The Renewable Energy Directive (RED), designed to help meet the EU’s ambitious 2030 and 2050 climate targets, sets targets for growing renewables usage for heating and cooling in the building sector. As currently written, however, the RED encourages inefficient uses of renewables in buildings to meet these goals.

In this paper, we suggest reforms to the RED would ensure a more efficient and balanced approach to renewable heating and cooling in the EU. It shows that the RED’s metric for determining the contribution of renewable heating and cooling tends to favour less efficient technologies. The paper also discusses how the use of electricity for heating and cooling is not accounted for in the RED definition of renewable heating and cooling, nor in the methodology for the renewable contribution of heat pumps.

By adapting the definition of renewable heating and cooling and updating the definition of renewable heat from heat pumps, the RED can provide a more comprehensive overview of the status of decarbonising the sector. We recommend the following policy adjustments:

• Amend Article 7 (3) of the RED to calculate the useful energy produced instead of fuels consumed to produce it.
• Mandate Eurostat to develop a consistent method for counting the amount of (renewable) electricity used for different services including heating and cooling, both in general and from heat pumps. To avoid double counting, remove this electricity from the heating and cooling sector when calculating the headline renewable share.
• Amend Annex VII of the RED to include the electricity used to drive heat pumps so that it accounts for the full contribution of heat pumps.