Meeting climate target with realistic demand-side policies in the residential sector in the EU-27

The EU has established an ambitious policy framework for demand-side mitigation in buildings towards net-zero targets. Here, we conduct a comprehensive quantitative assessment of 384 demand-side policy mixes for residential space heating that complement supply-side decarbonization efforts. We show that the implementation of EU Emissions Trading System 2, combined with energy supply deep decarbonization, falls short of climate targets and requires ambitious subsidies for heat pumps in most countries. Implementing a large ‘Renovation wave’ is not a cost-effective strategy at the EU level and would require large increases in public spending. Combining carbon tax and heat-pump subsidies with target subsidies for home insulation could alleviate potential strain on the electricity system and reduce energy poverty, while supporting residential sector decarbonization.

Recommended citation: Vivier, L. and Mastrucci, A. Meeting climate target with realistic demand- side policies in the residential sector in the EU-27. Under review.
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