Is the Kremlin turning off the gas tap? Time to exclude gas and coal from households

Gas is primarily used in industry—as much as 40% of the total volume. The heating and power sectors use 26%, and 21% goes to households. Maintaining thermal comfort is a basic good and consumes a significant proportion of families’ income. Gas prices have risen significantly, which will cause social unrest and may contribute to an increase in fuel poverty.

In this article, we suggest how to reduce gas consumption by 65% and coal consumption by 75% in individually heated households by 2027. Such action will not only help households, improve air quality, and reduce CO2 emissions but also will reduce competition for raw materials between sectors.

Context

Heating is a difficult area, both on the social and technical side. Poor building quality, lack of technical support at the local level, and strong beliefs that “it can’t be done” are real barriers. Rising gas and coal prices will become a significant barrier to maintaining temperature standards in buildings.

Purpose of the analysis

Our simplified analysis aims to show how scaling up popular and well-known solutions in individual heating can reduce the problem of rising coal and gas costs. The measures we propose are better energy management, improved energy efficiency, electrification of heat, and use of RES. We have written about all of this previously in our reports. But now we are suggesting a significant acceleration and scaling up of action.

We are aware that some of the solutions analysed (electrification of heating and cooking, connection to district heating) will result in a partial transfer of demand for fossil fuels from heating to power and district heating systems. However, this will not be a transfer on a scale of 1 to 1, since, for example, the replacement of a coal boiler with a heat pump means a fourfold increase in the efficiency of the heating process. In addition, the power and heating sector will also change, and we assume that the share of RES will increase to a large extent.  

Main conclusion

Background

Below are the key considerations for coal and gas use.

Coal

• Individually heated households consumed a total of 8.7 million tonnes of coal in 2020[1] . In 2021, imports in the small consumer sector amounted to 7.1 million tonnes[2]. Russia’s share in coal imports was 87.7%2.
• The main reasons for import are quality parameters and price. Domestic installations do not have flue gas desulphurisation systems and dust removal equipment used in the power sector, so they need higher quality fuel. There is not enough of it in Poland.
• In the last year, the price of household coal has increased by more than 100%. In January 2021, it was 880 PLN/tonne and in April 2022 it was 1,770 PLN/tonne[3] .
• Abandoning coal from Russia means that Poland should eliminate this fuel from heating, which will improve air quality and reduce CO2 emissions. It will also reduce the pressure of rising costs, although through large investments.

Gas

• Households consume around 4.4 billion m3 (bcm) of gas. More than 3.5 bcm are for heating needs, and the rest is used for cooking meals.  This volume can be reduced by investing in energy efficiency, heat pumps, RES, and electrification of cooking.
• At the end of the year, gas from Russia (about 10 bcm) should be replaced by supplies from Norway via Baltic Pipe. In view of Gazprom’s decision to suspend supplies to Poland as of 27 April, the coming months will be nerve-wracking. However, from the new year there is a chance to balance the current gas consumption, which in all sectors of the economy amounts to about 20 bcm.
• The current transmission infrastructure has its limitations, and a rapid increase in gas transport from other directions will be difficult, especially in view of rising costs.
• New gas-fired power projects are under construction—in 2-3 years, demand will reach around 23 bcm.
• Wholesale gas prices have risen by 500% in the last year, which has translated into an increase in household tariffs of around 50%[4].
• If Poland wants to meet its gas needs from directions other than Russia, then where there are cost-effective alternatives, it must look for other solutions.

Assumptions

In the table below, we compile a description of the measures that need to be taken in the coming years to reduce household gas and coal demand in the short term. This is a very ambitious plan, but feasible. However, it requires a number of interventions and regulations from the state, starting with a change in energy policy, the introduction of energy efficiency standards, through support and financing mechanisms, to training of installers and comprehensive assistance at the local level.

We adopted the following assumptions to determine the effects:

Reducing demand for coal by 2027

Between 2022 and 2027, implementation of all the above-mentioned measures will reduce annual coal consumption by more than 75% from the current 8.7 million tonnes to 2 million tonnes (Figure 1). By taking action as early as this year and next, starting with lowering the temperature in buildings through initial investments in thermal renovation, electrification of heat and efficient management of installations, coal consumption by the end of 2023 could fall by a total of almost 3 million tonnes. The effects of our proposed measures are described below.

Reduce building temperatures by 1-2 DegC
This is the easiest measure to implement, and its effect will be most visible in the coming heating seasons. Reducing the temperature in a building by 1 DegC can result in a reduction of thermal energy consumption of between 5% and 13%[5],[6]. Research conducted by Izba Gospodarcze Ciepłownictwo Polskie6 shows that the majority of surveyed consumers maintain the temperature at 22 DegC or higher in their flat. The optimum building temperature is 20-21 DegC. Reducing the temperature by 2 DegC in 60% of households in Poland and by 1 DegC in the remaining buildings, without taking any additional measures, will make it possible to reduce coal consumption this autumn and winter by 0.4 million tonnes, and throughout 2023 by 0.7 million tonnes. However, it is important to remember that as coal boilers are replaced and energy efficiency increases, the impact of lowering temperatures on reducing coal use will diminish in subsequent years. This is illustrated in grey in the graph (Figure 1).

Energy management
Energy management is an underestimated area. The potential for simple improvements in installations is high. In buildings with an energy class equivalent to the building stock in Poland in the 1990s, investments with a payback period of six months to six years can save 21%-46%[7] of the building's final energy consumption.

The core activities are:

• Reducing the temperature in the building at night by 2-3 degrees, saving 5-10% in energy consumption[8],[9]
• Switching off radiators in unused rooms, saving 4% of heat consumption.
• Valve replacement, insulation of the heating system in the building, optimum setting of the heating curve, hydraulic balancing.

In 2022 alone, the potential for implementation of these solutions is a reduction in coal consumption by 64,000 tonnes, and in subsequent years this may be increasingly greater. Assuming that improvements to heating systems will be undertaken in about 500,000 buildings per year (this is the amount equivalent to the annual sales of heating equipment in Poland), this will result in savings of 50-110,000 tonnes/year each year. In total, this is a reduction in coal consumption of 0.5 million tonnes by 2027.

Deep thermal renovation
Thermal renovation will be the basis of the process of moving away from fossil fuels in heating. According to the assumptions of the Long-term Strategy for Renovation of Buildings[10], the recommended scenario in Poland assumes thermal modernisation of all buildings with the highest energy intensity index[11] by 2027. Taking into account the structure of heat sources in buildings[12], Poland needs to modernise about 110,000 single-family buildings fired with coal and 6,000 multi-family buildings. It is important that these are deep renovations to current energy standards. As a result of ambitious renovations, energy consumption in buildings will be reduced by over 75%[13]. The annual effect of reducing carbon will be about 0.5 million tonnes. The effect by the end of 2027 will be a reduction in coal consumption of 2.7 million tonnes.

Electrification of heating
Electrification should be the target solution in individual heating. Today, sales of heat pumps in new and existing buildings are around 100,000 units. If Poland wants to quickly move away from coal and gas in heating, sales in existing buildings alone should be at least 225,000 units, of which 160,000 units should replace coal boilers. Of these 160,000 units, more than half (about 82,000/year) should be installed in single-family buildings after thermal modernisation. In buildings of average energy standard, Poland should install 73,000 of these devices, and in existing multi-family buildings, about 2,500. This will result in an annual reduction in coal consumption of 0.3 million tonnes. The total reduction in coal consumption is 1.9 million tonnes by 2027.  

Connection to district heating networks
Where technically possible, multi-family buildings should be connected to the district heating network. We estimate that this will apply to around 4,000 multi-family buildings that have undergone thermal modernisation and were previously fuelled by coal. Each year, this will contribute to a reduction in coal of around 30,000 tonnes. In the analysed period the effect will amount to 0.16 million tonnes.

Solar collectors
Installing 1 GW of solar panels in coal-fired buildings each year will reduce domestic coal consumption by 70,000 tonnes per year. The cumulative effect by 2027 is a reduction of over 0.4 million tonnes of coal consumption.

Biomass boilers
In our previous studies, we advocated limiting the role of biomass in heating. Its status as RES is in question, as biomass is a source of air pollution. The extraction of biomass also may have a negative impact on the environment. Moreover, the prices of this fuel have significantly increased in the last year following the prices of coal. In view of today’s difficult conditions, we allow biomass to be maintained, albeit in a limited capacity. Today, annual sales of biomass boilers are around 80,000 units. This number should be reduced to about 55,000 units/year. This is sufficient to significantly reduce coal consumption in parallel with other measures. We estimate that 30,000 of them will be in buildings after renovation, and the rest in buildings of average energy standard. As a result, we can reduce coal consumption each year by 0.1 million tonnes. The total effect is 0.7 million tonnes by 2027.

Reduction of gas demand by 2027

In parallel with the transition away from coal, measures to reduce household gas consumption should be pursued. The reduction potential resulting from our proposed measures in 2022-2027 is 65%, from the current 4.4 bcm/year to 1.6 bcm/year (Figure 2). By the end of 2023, we can reduce the demand for gas in households by a total of 1.2 bcm. This is a value comparable to gas consumption in district heating in Poland.

Electric cooking
A significant reduction in gas consumption in households will be brought about by the replacement of gas cookers with electric ones. In each year, this will bring about 0.13 bcm in savings in the consumption of this raw material, i.e., about 0.77 bcm by the end of 2027.

Reduce building temperatures by 1-2 DegC
similar to reducing coal consumption, reducing the temperature in buildings will have its greatest effect next year. This year, it will be 0.16 bcm and next year 0.3 bcm. With the increase in energy efficiency and replacement of gas boilers in the country, this effect will gradually decrease, as illustrated in grey in the graph (Figure 2).

Energy management
In 2022 alone, assuming the implementation of basic energy management measures in 8% of buildings heated with gas, consumption can be reduced by 26 bcm. With the progressive replacement of systems and equipment with more modern ones, gas savings will amount to 26-50 million m3 each year. The cumulative effect by 2027 is 0.2 bcm.

Deep thermal renovation
Thermal renovation is the basis for maintaining thermal comfort in buildings. Assuming each year deep renovation in 40,000 energy-intensive single-family buildings and 2,500 multi-family buildings heated with gas, Poland will reduce the demand for this raw material by 0.1 bcm each year. The total savings from this measure will amount to 0.6 bcm by 2027.

Electrification of heating
Electrification will significantly reduce the need for gas in heating. The installation each year of 29,000 heat pumps in single-family buildings after thermal modernisation, 36,000 heat pumps in buildings with medium energy efficiency, and 800 heat pumps in multi-family buildings will reduce gas demand by around 0.1 bcm in each year. By the end of 2027, the reduction will amount to 0.6 bcm.   

Connection to district heating networks
The remaining multi-family buildings should be successively connected to the district heating network. We estimate that this will concern about 1,600 buildings after renovation, which have so far been supplied with gas. Each year, this means a reduction in gas consumption of 7 million m3. The total effect by 2027 is 40 million m3.

Solar collectors
The installation of 1 GW of solar panels in gas-fired buildings each year will contribute to a reduction in blue fuel of around 50 million m3 per year. The cumulative effect by 2027 is a reduction in gas demand of 0.3 bcm.

How to encourage action?

The political and social will to eliminate dependence on Russian energy resources is strong, but without proposals for action and assistance from the state, enthusiasm will wane in the face of the mounting costs. Turning off the gas tap forces us to act. How to support society in the smooth passage of the crisis? What is necessary is:

• The formulation of clear targets—boiler replacement, energy efficiency, and RES targets in heating—to mobilise the market and inform citizens;
• Regulation, e.g., specifying technical standards for buildings;
• Organisation by the state of technical support;
• Financial support for thermal modernisation and electrification;
• Education and information campaigns;
• Monitoring of the process and regular reporting of information; and,
• Penalties or charges for non-compliance.

Below are recommendations on how to do this.

1. No gas or coal in new buildings or retrofitted buildings:

• Legally mandated abandonment of coal combustion in individual heating by 2030—this is currently the goal formulated in the PEP for cities by 2030 and in villages by 2040. This process should accelerate.
• Legally mandated abandonment of gas combustion in individual heating by 2030.
• No more sales of new coal-fired boilers from 2023. 
• End of sales of new gas boilers from 2024.

2. Efficient heat management and temperature reduction in buildings:

• Nationwide energy-saving programme:
  • Information campaign on how to reduce heating costs
  • Developed network of energy advisors at local level
  • Implementation of stricter energy consumption standards for new and deeply renovation buildings into building law
• Obligation for all energy distributors (electricity, gas, heat) to provide with the utility bill information comparing the customer’s consumption to the regional average and the most efficient group, as well as energy saving tips for gas meter owners.
• Obligation for manufacturers of heating equipment to set default settings favourable to heat reduction (e.g., automatic night-time temperature reductions at heat sources or a base temperature set at 20 DegC).

3. Accelerated renovation of buildings

• Implement public support and market mechanisms to enable mass renovation of buildings (systemic support for ESCOs, tax breaks, PPPs, combination of subsidy and market mechanisms).
• Support for vocational training to ensure a sufficient number of well-qualified employees involved in renovations
• Implement consumer awareness mechanisms—building energy-rating system, local one-stop shops.
• Organisation of technical support centres at the national and local levels.

4. Electrification and RES instead of gas and coal

• Implement tools to support the flexibility of heat pump operation by consumers (DSR, flexible electricity tariffs, heat storage).
• Introduction of appropriate legal provisions obliging the installation of RES sources in new and renovated buildings.
• Introduction of an obligation to design heating installations adapted for low-temperature heat extraction (in new buildings and those thermally modernised under support programmes).

5. Sustainable biomass in heating

• A national bioenergy plan should be developed, and national potentials should be identified in particular for sustainable woody biomass and organic waste streams feeding biogas plants. This should be the starting point for prioritising sectors with demand for these feedstocks.
• Introduction of quality parameters for biomass acceptable for sale to households in the relevant legislation.

Summary

This simplified analysis heralds a revolution. It is necessary. We are witnessing an extremely brutal war taking place right next door. We propose a change of approach to make a civilisational shift in response to the galloping energy crisis and Russia’s aggressive policy. As a result of the proposed measures, heating costs will be kept in check or start to fall, air quality will improve, and CO2 emissions will be reduced. By replacing coal and gas in heating, we are reducing fuel pressure throughout the economy. By operating in “clean heat” and taking intensive measures, we will improve the quality of life for households, while generating thousands of jobs in Poland. This can be achieved with the support of EU and national funds (e.g., from revenues from the sale of CO2 emission allowances).