Sector Color
dd2b48

Improve District Heating: Buildings

Sector
Buildings & Electricity
Mode
Cut Emissions
Cluster
Enhance Efficiency
Image
District heating facility
Coming Soon
On

Key Takeaways

  • District heating systems use centralized heat sources to provide space and water heating to a large number of buildings.
  • District heating systems largely depend on fossil fuels to generate heat; low GHG–emission alternatives include electric boilers, industrial heat pumps, and waste heat.
  • An estimated 0.06–0.12 Gt CO₂‑eq/yr of GHG emissions could be avoided by shifting existing district heating to low-emission heat sources. 
  • Low-emission district heating is currently concentrated in regions with low-cost options and policy support. 
  • Shifting existing district heating systems to low-emission alternatives can require major upgrades.
Summary

District heating systems provide space and water heating to a large number of buildings through an underground distribution system. Improving district heating for buildings reduces GHG emissions from district heating systems for residential and commercial buildings by replacing high-emission heat sources such as fossil fuels and waste-to-energy systems with low-emission sources, including electric boilers, air- or water-source heat pumps, and heat pumps for waste heat. 

Income & work,Health
Air quality
Description for Social and Search
Shifting from burning fossil fuels to using heat pumps and electric boilers for district heating systems can reduce the emissions from hundreds or even thousands of buildings in one go.
Overview

District heating systems use an underground distribution system to supply space and water heating to a large number of buildings from centralized sources. They are typically found in dense urban areas where heat demand is concentrated in a small area. Although historically reliant on fossil fuels, modern district heating systems can source heat from a variety of alternative sources with lower GHG emissions, including industrial heat pumps, electric boilers, solar heat, deep geothermal heat, and even waste heat from industry, municipal wastewater, and data centers.

This solution targets the integration of low-emission heat sources into existing and new district heating systems. A single low-emission district heating project can cut emissions from hundreds to thousands of buildings at once and tap into low-cost heat sources not otherwise available to individual buildings (International Energy Agency [IEA], 2026). However, the large size of such projects and the need for extensive underground supporting infrastructure can be major barriers to such upgrades.

Changing energy sources can be challenging when low-emission options, especially those that rely on waste heat, supply lower-temperature hot water than the system was designed for. These cases may require upgrades to the distribution system (Guelpa et al., 2023) and buildings (Li & Nord, 2018; Lund et al., 2021), adding cost and complexity to the project. That said, new district heating systems can integrate low-emission sources from the outset and existing systems can be modernized to accept low temperature heat when the infrastructure reaches its end of life or when the roads they are under are also being renewed (IEA, 2026; South West Energy Hub, 2023).

Globally, district heating supplied around 10% of the heating needs of buildings and industry in 2024, with fossil fuels providing nearly 90% of the heat (IEA, 2026). Low-emissions heat from heat recovery, geothermal, solar thermal, electricity and heat pumps accounted for 7% of the heat supplied to district heating systems in 2024 (IEA, 2026). Of all district heat energy, 41% is used for space and water heating in residential and commercial buildings, with the remainder supplying heat to industry and agriculture (see Improve District Heating: Industry) (IEA, 2022a). 

The optimal heat source or combination of low emission heat sources for a district heating system depends on a variety of factors, including availability and cost of heat sources, distribution temperature requirements, distance from waste heat sources, and feasibility of accessing deep geothermal heat or waste heat (IEA, 2026; International Renewable Energy Association [IRENA] et al., 2020). This solution focuses on electric boilers, air- or water-source heat pumps, and heat pumps that concentrate waste heat, all of which are mature technologies that are not geographically restricted. It does not include combined heat and power projects that rely on fossil fuels. We also exclude biomass boilers and municipal waste to heat because these can have GHG emissions comparable to burning fossil fuels (Eriksson & Finnveden, 2009; Gomez et al., 2006) (see Deploy Waste to Energy). 

References

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European Bank of Reconstruction and Development. (2022). Karlovac district heating project. Link to source: https://www.ebrd.com/content/dam/ebrd_dxp/documents/project/52899/grcf2-w2-e2--karlovac-district-heating-project-board-report.pdf

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Guelpa, E., Capone, M., Sciacovelli, A., Vasset, N., Baviere, R., & Verda, V. (2023). Reduction of supply temperature in existing district heating: A review of strategies and implementations. Energy, 262, Article 125363. Link to source: https://doi.org/10.1016/j.energy.2022.125363 

Hanna, R., Heptonstall, P., & Gross, R. (2024). Job creation in a low carbon transition to renewables and energy efficiency: A review of international evidence. Sustainability Science, 19(1), 125–150. Link to source: https://doi.org/10.1007/s11625-023-01440-y 

Henneman, L., Choirat, C., Dedoussi, I., Dominici, F., Roberts, J., & Zigler, C. (2023). Mortality risk from United States coal electricity generation. Science, 382, 941-946. Link to source: https://science.org/doi/10.1126/science.adf4915 

HOFOR. (n.d.). District heating. HOFOR. Retrieved July 30, 2025, from Link to source: https://www.hofor.dk/english/hofor-utilities/district-heating/ 

IEA. (2022a). Global annual heat deliveries to end-use sectors through district heating networks, 2002-2021. Link to source: https://www.iea.org/data-and-statistics/charts/global-annual-heat-deliveries-to-end-use-sectors-through-district-heating-networks-2000-2021 

IEA. (2022b). 350 million building units connected to district energy networks by 2030, provide about 20% of space heating needs. Link to source: https://www.iea.org/reports/350-million-building-units-connected-to-district-energy-networks-by-2030-provide-about-20-of-space-heating-needs 

IEA. (2023). Electricity grids and secure energy transitions. Link to source: https://iea.blob.core.windows.net/assets/ea2ff609-8180-4312-8de9-494bcf21696d/ElectricityGridsandSecureEnergyTransitions.pdf 

IEA. (2025). Electricity 2025. Link to source: https://www.iea.org/reports/electricity-2025  

IEA. (2026). Renewables in district energy [report]. Link to source: https://iea.blob.core.windows.net/assets/af971612-a456-495e-8c55-5d13bc281962/RenewablesinDistrictEnergy.pdf 

IEA Technology Collaboration Programme. (2025). Guidebook for the integration of renewable energy sources into existing district heating and cooling systems. Link to source: https://www.iea-dhc.org/fileadmin/documents/Annex_TS5/Final_Draft_Version/Guidbook_TS5.pdf 

Interreg Central Europe. (n.d.). Heat 35. Link to source: https://www.interreg-central.eu/projects/heat-35/ 

IRENA, IEA, & REN21. (2020). Renewable energy policies in a time of transition: Heating and cooling. Link to source: https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2020/Nov/IRENA_IEA_REN21_Policies_Heating_Cooling_2020.pdf 

Jodeiri, A. M., Goldsworthy, M. J., Buffa, S., & Cozzini, M. (2022). Role of sustainable heat sources in transition towards fourth generation district heating – A review. Renewable and Sustainable Energy Reviews, 158, Article 112156. Link to source: https://doi.org/10.1016/j.rser.2022.112156 

Kauko, H., Delgado, B. M., Backe, S., & Sartori, I. (2025). Reducing electricity demand and enhancing heat supply flexibility through energy efficiency and district heating. Energy, 322, Article 135310. Link to source: https://doi.org/10.1016/j.energy.2025.135310 

Kontu, K., Vimpari, J., Penttinen, P., & Junnila, S. (2020). Individual ground source heat pumps: Can district heating compete with real estate owners’ return expectations? Sustainable Cities and Society, 53, Article 101982. Link to source: https://doi.org/10.1016/j.scs.2019.101982 

Li, H., & Nord, N. (2018). Transition to the 4th generation district heating—Possibilities, bottlenecks, and challenges. Energy Procedia, 149, 483–498. Link to source: https://doi.org/10.1016/j.egypro.2018.08.213 

Liu, S., Guo, Y., Wagner, F., Liu, H., Cui, R. Y., & Mauzerall, D. L. (2024). Diversifying heat sources in China’s urban district heating systems will reduce risk of carbon lock-in. Nature Energy, 9(8), 1021–1031. Link to source: https://doi.org/10.1038/s41560-024-01560-4  

Lund, H., Østergaard, P. A., Nielsen, T. B., Werner, S., Thorsen, J. E., Gudmundsson, O., Arabkoohsar, A., & Mathiesen, B. V. (2021). Perspectives on fourth and fifth generation district heating. Energy, 227, Article 120520. Link to source: https://doi.org/10.1016/j.energy.2021.120520 

Lygnerud, K. (2018). Challenges for business change in district heating. Energy, Sustainability and Society, 8, Article 20. Link to source: https://doi.org/10.1186/s13705-018-0161-4 

Malcher, X., Tenorio-Rodriguez, F. C., Finkbeiner, M., & Gonzalez-Salazar, M. (2025). Decarbonization of district heating: A systematic review of carbon footprint and key mitigation strategies. Renewable and Sustainable Energy Reviews, 215, Article 115602. Link to source: https://doi.org/10.1016/j.rser.2025.115602  

Mastrucci, A., Van Ruijven, B., Byers, E., Poblete-Cazenave, M., & Pachauri, S. (2021). Global scenarios of residential heating and cooling energy demand and CO2 emissions. Climatic Change, 168(3–4), Article 14. Link to source: https://doi.org/10.1007/s10584-021-03229-3 

Paardekooper, S., Lund, H., Chang, M., Nielsen, S., Moreno, D., & Thellufsen, J. Z. (2020). Heat Roadmap Chile: A national district heating plan for air pollution decontamination and decarbonisation. Journal of Cleaner Production, 272, Article 122744. Link to source: https://doi.org/10.1016/j.jclepro.2020.122744

Piel, E., Mata, C., Lucas, P., & Pesce, G. (2023). DHC market outlook insights & trends. Euroheat & Power. Link to source: https://api.euroheat.org/uploads/DHC_Market_Outlook_Insights_Trends_2023_36d6fe8924.pdf 

Popovski, E., Ragwitz, M., & Brugger, H. (2023). Decarbonization of district heating and deep retrofits of buildings as competing or synergetic strategies for the implementation of the efficiency first principle. Smart Energy, 10, Article 100096. Link to source: https://doi.org/10.1016/j.segy.2023.100096 

South West Energy Hub. (2023). Local energy guide [report]. Link to source: https://www.swnetzerohub.org.uk/wp-content/uploads/2023/03/Local-Energy-Guide_inc-app-and-CSs-1.pdf

Spinoni, J., Barbosa, P., Füssel, H., McCormick, N., Vogt, J. V., & Dosio, A. (2021). Global population‐weighted degree‐day projections for a combination of climate and socio‐economic scenarios. International Journal of Climatology, 41(11), 5447–5464. Link to source: https://doi.org/10.1002/joc.7328  

Stanford University. (2013). Global district energy award 2013 submittal. Link to source: https://www.districtenergyaward.org/wp-content/uploads/2013/07/USA_Standford-University_Summary.pdf

 Suhonen, J., Lindholm, J., Verbeck, M., Ju, Y., Jokisalo, J., Kosonen, R., Janßen, P., & Schäfers, H. (2023). Energy, cost and emission saving potential of demand response and peak power limiting in the German district heating system. International Journal of Sustainable Energy, 42(1), 1092–1127. Link to source: https://doi.org/10.1080/14786451.2023.2251601 

United Nations Environment Programme. (n.d.). Kigali amendment. Link to source: https://ozone.unep.org/news/kigali-story

U.S. Environmental Protection Agency. (2025). Power sector programs—Progress report. https://www.epa.gov/power-sector/progress-report 

Voswinkel, F., Delmastro, C., Reidenbach, B., & Kwarnstrom, O. (2025). Opportunities for district heating in the changing energy landscape. IEA. Link to source: https://www.iea.org/commentaries/opportunities-for-district-heating-in-the-changing-energy-landscape 

Wang, Z., Li, H., Zhang, B., Wang, B., Li, H., Tian, X., Lin, J., & Feng, W. (2023). Unequal residential heating burden caused by combined heat and power phase-out under climate goals. Nature Energy, 8(8), 881–890. Link to source: https://doi.org/10.1038/s41560-023-01308-6 

Yuan, M., Vad Mathiesen, B., Schneider, N., Xia, J., Zheng, W., Sorknæs, P., Lund, H., & Zhang, L. (2024). Renewable energy and waste heat recovery in district heating systems in China: A systematic review. Energy, 294, Article 130788.  Link to source: https://doi.org/10.1016/j.energy.2024.130788 

Credits

Lead Fellow

  • Heather McDiarmid, Ph.D

Contributors

  • Ruthie Burrows, Ph.D.

  • James Gerber, Ph.D.

  • Daniel Jasper

  • Alex Sweeney

Internal Reviewers

  • Henry Igugu, Ph.D. 

  • Amanda D. Smith, Ph.D.

  • Christina Swanson, Ph.D.

Effectiveness

Shifting district heating systems to low-carbon heat sources can reduce GHG emissions by an average of 0.16 t CO₂‑eq /MWh (20-year and 100-year basis) of heat energy supplied to buildings (Table 1). This is a roughly one-third reduction in emissions from our estimated emissions of current district heating systems (0.45 t CO₂‑eq /MWh 20-year and 100-year basis). 

The emissions reductions are achieved by replacing the combustion of fossil fuels or biomass (including from combined heat and power) with electric boilers and heat pumps (air- or water-source and with waste heat) that generate fewer emissions. The analysis includes the emissions from the electricity used to power heat pumps and electric boilers using a regionally weighted average emissions for electricity. Electricity emissions intensities have been trending downward globally as renewables and low-emission generation are added to power grids (IEA, 2025). If this trend continues, the emissions reductions achievable when switching district heating systems to low-emission alternatives will increase. 

We did not quantify the reduction in pollutants such as nitrogen oxides, sulfur oxides, and particulate matter, which are released when fossil fuels are burned. 

Table 1. Effectiveness at reducing emissions.

Unit: t CO₂‑eq /MWh low-emission heat delivered, 100-year basis

Mean 0.16
Left Text Column Width
Cost

We did not calculate the net cost or net cost/t CO₂‑eq avoided because costs vary considerably. The capital cost of installing or retrofitting a district heating system can vary substantially due to factors such as heat output needed; available low-emission heat sources; distribution system size, design, and age; building density; labor costs and workforce capacity; and financing structures (Ceruti et al., 2026; IEA, 2026; Popovski et al., 2023). For example, Copenhagen recently decarbonized the district heating system that serves most of the buildings in the city at a cost of US$$0.830 million) (HOFOR, n.d.), while Stanford University budgeted US$570 million to convert a district heating system serving more than 1,000 buildings to centralized heat pumps (Stanford University, 2013). Karlovac, Croatia, budgeted US$20.32 million to replace 22 km of underground distribution infrastructure to support future integration of renewable heat sources (European Bank for Reconstruction and Development, 2022). Subsidies or public-private partnerships are often needed to finance these investments (IEA Technology Collaboration Programme, 2025). 

Operational costs are based on the fuel used and system efficiencies. Our estimated cost for operating existing district heating systems is US$66/MWh of heating delivered (US$27–175/MWh). This includes a weighted average fuel cost based on the existing fuel mix and assumed 17% distribution network losses, which is an average for existing systems. 

Our estimated cost for operating district heating systems with low-emission heating sources is US$75/MWh of heating delivered (US$38–143/MWh). This is the average outcome for electric boilers, air- or water-source heat pumps, and heat pumps paired with waste heat. We assumed waste heat is produced as a by-product of another process and incurs no additional cost to district heating operators. We assumed the distribution network losses to be 13% based on the average value for newer or energy efficient systems. 

We did not include maintenance costs and the operating costs of the distribution systems, such as pumps and substations, in this analysis.

District heating systems can generate revenues by selling heat to building owners (Liu et al., 2024) and selling electricity from combined heat and power to the grid (Boldrini et al., 2022). Revenue data are typically proprietary, we did not quantify them here due to lack of data. 

Methods and Supporting Data

Methods and Supporting Data

Learning Curve

As noted above, the cost of retrofitting a district heating system to use low-emission heating sources is not generalizable due to a variety of factors such as geography and system characteristics. We do not anticipate a significant learning curve for such projects.

Speed of Action

Speed of action refers to how quickly a climate solution physically affects the atmosphere after it is deployed. This is different from speed of deployment, which is the pace at which solutions are adopted.

At Project Drawdown, we define the speed of action for each climate solution as emergency brake, gradual, or delayed.

Improve District Heating: Buildings is a GRADUAL climate solution. It has a steady, linear impact on the atmosphere. 

Caveats

We did not include the up-front cost of installing low-emission district heating sources and upgrading distribution networks in this analysis due to the complexity of the projects. We also assume waste heat is free, which is likely for some sources such as wastewater but not others such as waste heat from industry. 

While some existing networks can add low-emission heating without upgrades to the supporting infrastructure, most will require such investments (IEA, 2026). For example, the entire underground distribution network may need modernization to accept lower temperature water and heat inputs from smaller, distributed sources such as data centers (IEA Technology Collaboration Programme, 2025). Electricity network investments may also be required to support electrified district heating, including new generation, transmission, and distribution infrastructure, plus demand management to minimize peaks (IEA, 2023).

Current Adoption

In 2024, an estimated 130 million MWh of heat from heat recovery, geothermal, solar thermal, electricity, and heat pumps was delivered to district heating for buildings (IEA, 2026; IEA, 2022a) (Table 2). This assumes 41% of all heat delivered to district heating is delivered to buildings, with the rest supplying industry, agriculture and other sectors (IEA, 2022a).

This current adoption value overestimates district heating as we have defined it because it also includes geothermal and solar thermal heat. We did not include these heat sources in our analysis because insufficient data exist to estimate their potential contribution to effectiveness and future adoption globally but IEA (2026) reports district heating from heat recovery, geothermal, solar thermal, electricity, and heat pumps together. 

Current adoption is concentrated in countries that have invested in policies, planning, and other support for low-emission heat for district heating (IEA, 2026). This includes many European countries (IEA, 2026). Economics and regulation are often the main barriers to greater adoption (IEA, 2026).

Iceland is a notable leader in the adoption of low-emissions district heating systems, with geothermal heat originating from deep in the Earth providing more than 90% of the heat (Piel et al., 2023). China and Russia, where nearly 75% of global district heating energy is used, still rely heavily on coal and natural gas (IEA, 2026). 

Table 2. Current adoption level (2024), estimated from IEA (2026).

Unit: MWh low-emission district heat delivered/yr

Estimate 130,000,000
Left Text Column Width
Adoption Trend

We estimate that 5.3 million MWh/yr of heat delivered from low-emissions district heating sources are added per year based on IEA (2026) values (Table 3). Because total demand for district heating varies with weather (Dahl et al., 2017), we used a wide range of years, 2000–2024, to estimate the trend in heat delivered from low-emissions district heating sources. We used adoption trend data from IEA (2026), which includes district energy supplied by heat recovery, geothermal, solar thermal, electricity, and heat pumps, and adjusted for the percentage supplied to buildings (IEA, 2022a). 

This estimate includes both new district heating systems designed to use low-emission heat from the outset and district heating systems that have converted from fossil fuels or biomass to low-emissions sources of heat. The value overestimates the solution as we have defined it because it includes geothermal and solar thermal heat. 

Historical rates of adoption may not be indicative of future rates. The 2018 Renewable Energy Directive for the EU (European Union) set a target of increasing the share of renewable or waste heat for district heating by an average of 2.3%/yr until 2030 (European Commission, 2022). Although this target has not been achieved, many projects are already underway (Interreg Central Europe, n.d.). Furthermore, nearly half of district heat energy is used in China (IEA, 2026), where the government has set aggressive targets for the adoption of renewables, including for district heating (Yuan et al., 2024), and where geothermal district heating has already grown 2.5-fold over five years (IEA, 2026). In these plans, renewable district heating includes biomass, which releases GHG emissions comparable to fossil fuels (Eriksson & Finnveden, 2009; Gomez et al., 2006). 

Table 3. Adoption trend.

Unit: annual change in MWh low-emission heat delivered/yr

Estimate 5,300,000
Left Text Column Width
Adoption Ceiling

If all of the current district heating systems for buildings were to switch to low-emission sources of heat, that would amount to 2.2 billion MWh/yr of low-emission heat (Table 4). This assumes no new district heating systems are added and that the annual heating needs of currently connected buildings do not change. In fact, annual building heating needs are expected to decrease as a consequence of global warming (Spinoni et al., 2021) and improvements to the insulation and air sealing of buildings (Mastrucci et al., 2021).

Table 4. Adoption ceiling.

Unit: MWh low-emission heat delivered/yr

Estimate 2,200,000,000
Left Text Column Width
Achievable Adoption

We estimated that by 2050, low-emission heat sources could account for 360–720 million MWh/yr of the heat supplied to district heating systems (Table 5).

For the high achievable adoption outcome, we assumed the European Union’s RePowerEU goal of increasing renewables in its district heating and cooling systems by 2.3%/yr until 2030 (European Commission, 2022) is achieved and also extended to 2050. Further, we assumed only half of this goal is achievable globally when biomass is excluded. This would result in 720 million MWh/yr of low-emission heat being delivered to buildings in district heating systems, or 32% of today’s district heating demand for buildings. IRENA et al. (2020) projected that renewables will make up 77% of district heat energy in 2050 under the Transforming Energy Scenario, much of which is likely to be from biomass.

We assumed half of the high achievable outcome is feasible for the low achievable outcome, which results in 360 million MWh/yr of low-emission heat delivered, 16% of today’s district heating demand for buildings.

Retrofitting a district heating system to use low-emission heating sources can have big wins for emissions because a single system can serve hundreds to hundreds of thousands of buildings. However, it can take many years to plan and implement changes to a district heating system. 

Table 5. Range of achievable adoption levels.

Unit: MWh low-emission district heating delivered to buildings/yr

Current adoption 130,000,000
Achievable – low 360,000,000
Achievable – high 720,000,000
Adoption ceiling 2,200,000,000
Left Text Column Width

Currently deployed low-emission heating in district heating systems for buildings reduces GHG emissions 0.02 Gt CO₂‑eq /year (100- and 20-year basis) (Table 6).

If all current district heating systems for buildings were to adopt low-emission heat sources, emissions would be reduced by 0.36 Gt CO₂‑eq /year (100- and 20-year basis).

We estimate the achievable range to be 0.06–0.12 Gt CO₂ eq/yr (100- and 20-year basis). These values are based on RePowerEU’s target of 2.3%/yr increase in adoption of renewable energy for district heating (European Commission, 2022) with an assumed half of this coming from electric boilers, air- or water-source heat pumps, and waste heat.

Future climate impacts may be higher than estimated here because GHG emissions from the electricity used to power electric boilers and heat pumps are expected to decrease as more renewables are added to electricity grids worldwide (IEA, 2025). Furthermore, climate impacts shown here are based only on converting existing systems to low-emission district heating. 

Table 6. Climate impact at different levels of adoption.

Unit: Gt CO₂‑eq/yr, 100-yr basis

Current adoption 0.02
Achievable – low 0.06
Achievable – high 0.12
Adoption ceiling 0.36
Left Text Column Width
Additional Benefits

Income and Work

Research on the direct benefits of district heating using low-emission sources is very limited. In general, systematic reviews have found that energy systems with a greater share of renewable fuels are associated with more jobs than those based on fossil fuels (Hanna et al., 2024). Lower-carbon heating systems tend to create more demand for local employment (Cavillo et al., 2025). Employment sectors like construction, installation, and manufacturing are associated with more job-years per megawatts thermal for lower-carbon heating technologies and fuels (such as district heating) compared with gas or oil heating (Hanna et al., 2024).

Health

Integrating low-emission sources decreases exposure to air pollutants such as mercury and fine particulate matter generated by fossil fuel–based power plants, thereby improving the health of nearby communities (U.S. Environmental Protection Agency [EPA], 2025). These pollutants have been linked to increased morbidity from cardiovascular and respiratory disease, asthma, infections, and cancer (Gasparotto & Martinello, 2021) and to increased risk of mortality (Henneman et al., 2023).

Air Quality

Reducing GHG emission sources will reduce the amount of air pollution associated with burning higher carbon sources such as CO₂, nitrogen oxides, methane, mercury, and fine particulate matter (Paardekooper et al., 2020; U.S. EPA, 2025). Strategies that reduce GHG emissions from district heating, such as thermal storage, can lower peak power demand (Kauko et al., 2025). Reducing this demand lowers the number of hours required to run boilers, which can further reduce air pollution from these heating systems (Suhoenen et al., 2023).

Risks

District heating systems are often very large, serving whole communities and sometimes entire cities. Adding low-emission heating sources can be a major undertaking involving years of planning and implementation (IEA, 2022), which risks cost overruns and delays, especially for larger systems. Lack of skilled personnel is another barrier (IEA Technology Collaboration Programme, 2025).

Many low-emission district heat options rely on heat pumps to move and concentrate heat. Heat pump refrigerants often have high global warming potential and can contribute to climate change when they leak. Most countries have signed on to the Kigali Amendment, which commits them to phase out the production and use of these refrigerants and replace them with alternatives with lower global warming potentials (United Nations Environment Programme [UNEP], n.d.).

Individual buildings may disconnect from the district heating system if alternatives, such as heat pumps located within the building, prove to be more cost effective (Kontu et al., 2020). When multiple buildings leave, it can put the long term economic viability of the district heating system at risk (Lygnerud, 2018). 

Replacing coal-based combined heat and power plants in China with low-emission alternatives also has the potential to increase heating costs, especially for low-income households (Wang et al., 2023). 

Interactions with Other Solutions

Competing

As district heating systems shift to low-emission heat sources, the emissions impacts of building upgrades that affect heating and cooling loads will decrease.

Dashboard

Solution Basics

MWh of low-emission heat delivered to buildings

t CO₂-eq (100-yr)/unit
0.16
units/yr
Current 1.3×10⁸ 03.6×10⁸7.2×10⁸
Achievable (Low to High)

Climate Impact

Gt CO₂-eq (100-yr)/yr
Current 0.02 0.060.12
Gradual

CO₂ , CH₄, N₂O

Trade-offs

Embodied carbon emissions associated with retrofitting a district heating system to use low-carbon heating sources could be significant, especially if upgrades to buildings and distribution systems are needed (Butters et al., 2024).

Action Word
Improve
Solution Title
District Heating: Buildings
Classification
Highly Recommended

Lawmakers and Policymakers
  • Set ambitious renewable energy and fossil fuel phaseout goals at the national level; set ambitious targets for improving district heating systems at the municipal level where relevant. 
  • Coordinate and develop national and local plans to transition to improved district heating systems and align incentives and regulations; integrate district heating into resource planning, especially in the electricity sector; use extensive national planning and high-quality heat maps to determine where improved district heating is feasible; identify other solutions where it is not feasible.
  • Explore ways to add cooling to district heating networks while transitioning to low-emission heat sources. 
  • When possible, coordinate municipal construction such as infrastructure development with improving district heating systems.
  • Provide financial incentives, including subsidies, grants, blended finance, green bonds, and/or tax credits, for district heating providers based on emissions reductions; extend financial incentives to thermal storage and supportive infrastructure; gradually phase out incentives as the market matures to stabilize markets.
  • Offer grants and technical support to local governments to conduct feasibility and heat map studies for improving local district heating systems.
  • Institute carbon taxes in district heating networks.
  • Invest in heat storage strategies and systems.
  • Use financial incentives such as subsidies, tax credits, feed-in-tariffs, and auctions to support low-emission heating technologies such as heat pumps; ensure incentives and grant programs are timely and streamlined for applicants; gradually reduce these incentives to stabilize markets.
  • Apply or require uniform and transparent cost and tariff structures for customers, relying mainly on consumption-based billing; ensure cost-coverage is reached, raising tariffs gradually if necessary.
  • If relevant, consider policies to regulate the natural monopolies for improved district heating systems, such as third-party access to distribution pipes or those that incentivize public or nonprofit ownership; ensure regulations allow for other models such as thermal communities and co-ownership. 
  • Require improved district heating companies to provide customers notices of their rights in a clear and transparent manner.
  • Deploy digital tools to manage improved district heating systems, including the physical network, internet of things, and intelligent decision systems.
  • Co-design improved district heating projects with the local community; ensure community engagement starts early and is transparent, inclusive, and ongoing; solicit feedback from the local community – including from opposition groups – on location, design, finance, and mitigation; ensure finalized projects address relevant sociological, agriculture, and ecological considerations; at the national level, consider mandating thorough and ongoing community engagement for district heating systems.
  • Join, create, or participate in public-private partnerships dedicated to de-risking markets, deployment, technology transfers, education, and other relevant areas.

Further information:

Practitioners
  • Take advantage of government incentives such as subsidies, grants, guarantees, concessional loans, public investments, and tax credits as the market matures and becomes competitive; gradually reduce your reliance on these incentives to create long-term market stability.
  • Consider using green bonds to finance public projects or derisk markets.
  • Ensure customer service is high quality and allows for quick access to human support specialists; respect customer rights and clearly and transparently inform customers of their rights.
  • Use digital monitoring and operating systems to improve efficiency; invest in R&D to improve digital systems if needed; integrate customer data while protecting privacy to optimize operations.
  • Consider alternative models to ownership, such as thermal communities and allowing consumers to co-own and co-finance operations.
  • Help develop national and local plans to transition to improved district heating systems and to align incentives and regulations; help integrate district heating into resource planning, especially, in the electricity sector; build capacity in digital automation, particularly at the local level, to facilitate transitions; support national plans in determining where improving district heating is feasible using extensive planning and high-quality heat maps.
  • When possible, coordinate municipal construction such as infrastructure development with construction to improve district heating systems.
  • Take advantage of grants and technical support to local governments to conduct feasibility and heat map studies to assess improving district heating systems.
  • Invest in heat storage strategies and systems.
  • Apply uniform and transparent cost and tariff structures for customers, relying mainly on consumption-based billing; ensure that costs are covered, raising tariffs gradually if necessary.
  • Provide customers notices of their rights in a clear and transparent manner.
  • Deploy digital tools to manage improved district heating systems, including the physical network, internet of things, and intelligent decision systems.
  • Create and promote technical workforce and professional development programs; develop the full range of capacity building that addresses every step of the value chain, including engineering, construction, operations, maintenance, and business management.
  • Integrate tools such as AI to manage operations; educate stakeholders on the role of digitalization, especially, at the local level; invest in R&D to improve digital management systems if necessary.
  • Co-design improved district heating projects with the local community; ensure community engagement starts early and is transparent, inclusive, and ongoing; solicit feedback from the local community, including from opposition groups, on location, design, finance, and mitigation; ensure finalized projects address relevant sociological, agriculture, and ecological considerations.
  • Join, create, or participate in public-private partnerships dedicated to de-risking markets, deployment, technology transfers, education, and other relevant areas.

Further information:

Business Leaders
  • Help develop business models for district heating systems that can be repeated and scaled in different environments.
  • Invest directly in district heating systems; seek to provide long-term support; communicate to employees, customers, and other stakeholders how improved district heating supports corporate net zero strategies.
  • Participate in community engagement processes and co-design improved district heating projects with the local community; help educate the public and highlight the local economic benefits of improved district heating systems.
  • Offer pro bono business advice or general support for district heating systems.
  • Join, create, or participate in public-private partnerships dedicated to de-risking markets, deployment, technology transfers, education, and other relevant areas.

Further information:

Nonprofit Leaders
  • Operate improved district heating systems and/or help form thermal communities in relevant areas.
  • Advocate for ambitious renewable energy and fossil fuel phaseout goals at the national level; advocate ambitious targets for improving district heating systems at the municipal level where relevant. 
  • Help coordinate and develop national and local plans to transition to low-carbon district heating systems and align incentives and regulations; help integrate district heating into resource planning, especially in the electricity sector; help with the national process of planning and help build high-quality heat maps.
  • When possible, help coordinate municipal construction such as infrastructure development with construction to improve district heating systems to save costs and mitigate disruptions.
  • Advocate for financial incentives, including subsidies, grants, blended finance, green bonds, and/or tax credits for district heating providers based on emissions reductions; advocate for extending financial incentives to thermal storage and supportive infrastructure; suggest gradually phasing out incentives as the market matures to stabilize markets.
  • Offer technical support to local governments to conduct feasibility and heat map studies for improving local district heating systems.
  • Advocate for carbon taxes in district heating networks.
  • Support efforts to develop heat storage strategies and systems. Help inform customers of their rights in a clear and transparent manner; advocate for requirements to provide customers with a clear description of their rights.
  • Advocate for phasing out the use of fossil fuels in districting heating, starting with coal-fired plants.
  • Help co-design improved district heating projects with the local community; ensure community engagement starts early and is transparent, inclusive, and ongoing; solicit feedback from the local community, including from opposition groups, on location, design, finance, and mitigation; ensure finalized projects address relevant sociological, agriculture, and ecological considerations; advocate for regulatory requirements for thorough and ongoing community engagement when improving district heating systems.
  • Join, create, or participate in public-private partnerships dedicated to de-risking markets, deployment, technology transfers, education, and other relevant areas.

Further information:

Investors
  • Invest in companies improving district heating systems where relevant; ensure projects include thorough community engagement. 
  • Offer low-interest loans and concessional financing for companies improving district heating systems.
  • Shift energy and broader investment portfolios toward renewable energy and other supportive technologies, particularly heat pumps. 
  • Invest in green bonds and/or explore blended finance structures to mobilize capital for companies improving district heating systems or supporting infrastructure.
  • Invest in R&D for related technology such as improving heat storage technologies.
  • Align investments with existing public-private partnerships, voluntary agreements, or voluntary guidance that may apply in the location of the investment (including those that apply to biodiversity).

Further information:

Philanthropists and International Aid Agencies
  • Award grants to companies improving district heating systems where relevant; ensure projects include thorough community engagement. 
  • Offer low-interest loans and concessional financing for companies improving district heating systems.
  • Issue or invest in green bonds and/or explore blended finance structures to mobilize capital for companies improving district heating systems or supporting infrastructure.
  • Offer grants for R&D on related technology, such as improving heat storage technologies.
  • Help create nonprofits or thermal communities to administer improved district heating systems in relevant areas.
  • Advocate for ambitious renewable energy and fossil-fuel phaseout goals at the national level; advocate for ambitious targets for improving district heating systems at the municipal level where relevant. 
  • Help coordinate and develop national and local plans to transition to improved district heating systems and align incentives and regulations; help integrate district heating into resource planning, especially, in the electricity sector; help in the national process of planning and help build high-quality heat atlases; help identify other solutions for areas where it is not feasible.
  • When possible, help coordinate municipal construction such as infrastructure development with construction to improve district heating systems to save costs and mitigate disruptions.
  • Advocate for financial incentives, including subsidies, grants, blended finance, green bonds, and/or tax credits for district heating providers based on emissions reductions; extend financial incentives to thermal storage and supportive infrastructure; suggest gradually phasing out incentives as the market matures to stabilize markets.
  • Offer grants and technical support to local governments to conduct feasibility and heat map studies for improving local district heating systems.
  • Advocate for carbon taxes in district heating networks.
  • Help inform customers of their rights in a clear and transparent manner.
  • Advocate for phasing out the use of fossil fuels in districting heating, starting with coal-fired plants.
  • Help co-design improved district heating projects with the local community; ensure community engagement starts early and is transparent, inclusive, and ongoing; solicit feedback from the local community, including from opposition groups, on location, design, finance, and mitigation; ensure finalized projects address relevant sociological, agriculture, and ecological considerations; advocate for regulatory requirements for thorough and ongoing community engagement when improving district heating systems.
  • Join, create, or participate in public-private partnerships dedicated to de-risking markets, deployment, technology transfers, education, and other relevant areas.

Further information:

Thought Leaders
  • Advocate for ambitious renewable energy and fossil fuel phaseout goals at the national level; advocate for ambitious targets for improving district heating systems at the municipal level where relevant. 
  • Help coordinate and develop national and local plans to transition to improved district heating systems and align incentives and regulations; help integrate district heating into resource planning, especially, in the electricity sector; and help build high-quality heat atlases.
  • Advocate for financial incentives, including subsidies, grants, blended finance, green bonds, and/or tax credits for district heating providers based on emissions reductions; advocate for extending financial incentives to thermal storage and supportive infrastructure; suggest gradual phaseout incentives as the market matures to stabilize markets.
  • Offer technical support to local governments to conduct feasibility and heat map studies for improving local district heating systems.
  • Advocate for carbon taxes in district heating networks.
  • Support R&D and other efforts to develop heat storage strategies and systems.
  • Help inform customers of their rights in a clear and transparent manner; advocate for requirements to provide customers with a clear description of their rights.
  • Advocate for phasing out the use of fossil fuels in districting heating, starting with coal-fired plants. 
  • Help co-design improved district heating projects with the local community; ensure community engagement starts early and is transparent, inclusive, and ongoing; solicit feedback from the local community, including from opposition groups, on location, design, finance, and mitigation; ensure finalized projects address relevant sociological, agriculture, and ecological considerations; advocate for regulatory requirements for thorough and ongoing community engagement when improving district heating systems.

Further information:

Technologists and Researchers
  • Create publicly accessible online databases of heat maps, energy grids, renewable energy access, opportunities for improving district heating systems, and relevant information on infrastructure; identify municipalities suitable for improving district heating and connection opportunities for users, producers, and renewable energy providers.
  • Advance heat storage technologies; compare and test power-to-heat conversions with comparable storage options.
  • Advance digitalization of district heating systems particularly in emerging areas such as the internet of things, artificial intelligence, and automation; seek to build efficient systems while protecting data and privacy.

Further information:

Communities, Households, and Individuals
  • Call on governments and developers to use transparent, inclusive, and ongoing community engagement; participate in these processes when possible to co-design improved district heating systems; provide and help collect feedback on location, design, finance, mitigation, and distribution of benefits; help ensure projects address relevant sociological, agriculture, and ecological considerations.
  • Advocate for ambitious renewable energy and fossil fuel phaseout goals at the national level; advocate for ambitious targets for improving district heating systems at the municipal level where relevant. 
  • Advocate for financial incentives, including subsidies, grants, blended finance, green bonds, and/or tax credits for district heating providers based on emissions reductions; advocate for extending financial incentives to thermal storage and supportive infrastructure; suggest gradual phaseout incentives as the market matures to stabilize markets.
  • Advocate for carbon taxes in district heating networks.
  • Advocate for phasing out the use of fossil fuels in districting heating, starting with coal-fired plants. 
  • Participate in public awareness campaigns focused on improved district heating systems; share information with your community and networks.

Further information:

“Take Action” Sources
Evidence Base

Consensus of effectiveness in reducing GHG emissions from district heating systems that serve buildings: High

The IEA (2026) reviews the role that renewables, including bioenergy, geothermal, solar thermal, waste heat and heat pumps play in district heating systems globally. It notes that the “technologies needed to decarbonise district energy are commercially available and increasingly cost-competitive,” and the main challenges to deployment are economics and regulation. 

Malcher et al (2025) reviewed 42 life-cycle assessment studies and found waste heat and deep geothermal heat had among the lowest life-cycle carbon intensities for district heating, followed by systems that use heat pumps. Biomass carbon intensities were highly variable, ranging from comparable to waste heat at the low end and comparable to gas boilers at the high end. Other factors, such as the use of lower temperature distribution systems, integration of thermal storage, and use of combined heat and power, as well as subsidies, also had the potential to reduce emissions. 

Jodeiri et al (2022) outlined sustainable heat options for lower temperature district heating, highlighting their lower network heat loss and ability to use waste heat from a variety of sources. Challenges for sustainable heat options include temporal mismatches between many sustainable heat supplies and demand (i.e., not dispatchable), uncertain long-term industrial waste heat supply, technical maturity of heat recovery systems, long payback periods, and incentive structures that disadvantage urban waste heat recovery. 

The results presented in this document summarize findings from 16 reports, three original studies, three datasets, and two market reports reflecting current evidence from 10 countries, primarily China, Russia, Europe, and the United States. We recognize this limited geographic scope creates bias, and hope this work inspires research and data sharing on this topic in underrepresented regions.

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