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8 | THE PERFECT FIT REGULATORY ASSISTANCE PROJECT Reforming the Fit for 55 package The Fit for 55 proposals are set to modify existing legislation which impacts the heating market, and some of the proposals appear beneficial for heat pump deployment and low-carbon heat planning more generally. However, the proposals could go further to support heat pumps, and there are also concerns that the proposals may be watered down, limiting their impact. The key heat pump issues we have identified with the package are summarized below: • Revisions to the EU Emissions Trading System (ETS) Directive to develop an ETS 2 which would include transport and buildings could provide a strong boost for heat decarbonisation and heat pumps. Significant efforts, however, need to be made to ensure that carbon prices will not escalate to unacceptable levels if Member States do not directly support decarbonisation measures. Strengthening heating equipment and building energy efficiency requirements would significantly reduce this risk, while strengthening the effort-sharing regulation would ensure that Member States are held accountable to deliver. A cap on ETS 2 allowance prices and targeted recycling of revenues could also limit equity impacts. • Revisions to the Energy Taxation Directive could support heat pump deployment by increasing the relative price of fossil fuels compared to electricity. The possibility, however, for Member States to exempt households where there are energy poverty concerns could stymie innovation, particularly if exemptions are applied loosely. Instead of removing environmental costs from energy prices, revenues can be used to offset costs for vulnerable groups and subsidize investments in clean technologies. • Proposals in the Recast Directive on Energy Efficiency to disallow energy savings from fossil fuel boiler installations from counting towards Member States’ energy savings obligations are well aligned with the goals of the Fit for 55 package and would shift support to heat pumps. The primary energy savings target, however, could go further, particularly in the context of current gas prices. Furthermore, safeguards need to be introduced so that district heat networks promoted under the directive cannot combust fossil fuels or unsustainable biomass, and choose heat pumps instead. • Similarly, while the proposed revisions to the Renewable Energy Directive and stronger targets on heating could stimulate heat pump deployment, there is a concern that these modifications could inadvertently lead to the use of unsustainable bioenergy in heating. As such, caps on the level of biomass allowed under RED and targeted measures to support heat pumps – including a possible uplift for ambient heat – should be included.PDF Image | RAP Perfect Fit Heat Pump
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