Decarbonisation lessons from Scandinavia

Jen Johnson takes a look at building decarbonisation in Scandinavia and what we can learn from the region on all things green.

The city of Gothenburg, Sweden, decided to reduce its reliance on fossil fuels many years before widespread awareness of climate change existed. At the end of the 1970s, soaring oil prices made it prohibitively expensive to run the eight district heating “islands” that many residents relied on for warmth. City officials therefore decided to link the nodes together to create one network and source waste heat from local industry (as opposed to using oil-fired hot water stations). This approach meant Gothenburg could make the most of readily available energy resources that would otherwise have gone to waste.

Some four decades later, about 90% of the city’s apartment buildings are connected to the district heating network. The vast majority of the heat it supplies has been recovered from other activities – though 19% is sourced from renewables and the remaining 11%  comes from fossil fuels, such as gas. There’s even an entire neighbourhood, Kvillebäcken, where the building stock is not only connected to the heating network but has also been designed with low energy requirements in mind. The area has been billed as Gothenburg’s first green district – though similarly ambitious schemes also exist in Sweden’s other cities.

The country has long been viewed as a global leader in all things green, and its built environment is no exception. It has been able to achieve this status thanks to the successful rollout of various incentive policies. For instance, Sweden can boast that it currently has the highest number of ground source heat pumps per capita in the world – and these are spread across its residential and commercial properties. Many developers now view them as the default heating technology for all new buildings not due to be connected to a district heating network.

Heat pump take-up

Government subsidies are partly responsible for the widespread take-up of heat pumps: Householders can enjoy 30% tax rebates on the labour costs of retrofit installations up to €5,000 a year. The industry was also able to flourish once manufacturers and installers began working together on training programmes and maintenance services. Supporting these measures was “an energy strategy that lowers the cost of electricity whilst taxing oil and disincentivising the use of and reliance on natural gas”, according to a 2022 paper on building decarbonisation from researchers at Imperial College London.

Put simply, consumers need a financial push to adopt a new technology and competition in a nascent green heating sector must be encouraged so that companies provide quality service at an attractive price. Heat pumps have become increasingly popular in other Nordic counties thanks to similar carrot-and-stick regimes. Sales of the technology in Norway hit a record high last year as households sought out ways to save on electricity (and their bills). The Norwegian government offers subsidies in the form of €1,000 grants for developers hoping to put heat pumps in new homes, or retrofit them in an existing property.

Neighbouring Finland also offers a combination of grants and tax deductions for the replacement of oil-burning heating systems. Sales of heat pumps grew by 50% in the country last year. The UK government is clearly hoping to stimulate a similar kind of demand with the improved Boiler Upgrade Scheme it debuted in October. The programme offers up to £7,500 towards the cost of a new heat pump – a 50% improvement on its prior offer. The UK is currently aiming to halve its CO2 emissions from heating buildings by 2035. The built environment makes up nearly one quarter of the country’s total fossil fuel demand.

Efficiency upgrades

Of course, reaching this target will also mean making some serious upgrades to the energy efficiency of housing stock. Britain’s homes are thought to be among the worst in Europe in terms of heat loss – and the current climate of sky-high interest rates means that homeowners don’t feel they can invest in refurbishment. A recent survey by British Gas revealed that more than 80% of landlords in the private rental sector think their properties need additional green improvements, but less than a quarter said they’d be willing to take such measures.

Here, as in other areas, Sweden could provide a helpful blueprint for inciting change. Between 2008 and 2020, the country strived to shrink the ratio between primary energy consumption and GDP by 20%. It achieved this by 2017 thanks largely to a scheme known as the Rekorderlig Renovering, or record-breaking renovation. At its core, the initiative aimed to give homeowners accurate and cost-effective advice on how to increase the energy efficiency of their properties. The process would begin with a feasibility study then upgrades would be undertaken before final feedback is provided.

Unlike its approach to heat pumps, the Swedish government did not provide any financial support for energy efficiency upgrades. Instead the Rekorderlig Renovering offered a kind of operational support to help homeowners make decisions that would save them money in the long run. The current state of the economy means UK policymakers are going to have to be similarly creative in encouraging people to invest in the fabric of their homes and businesses. Reaching our own net zero targets depends on it.