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European Geothermal Energy Council

Making the EU number one in renewable heating and cooling

15. júní 2016

Ladies and Gentlemen.

It is a great pleasure for me to be here today, to discuss opportunities in the field of renewable heating and cooling. I will speak of my countries experience – and raise the geothermal flag.

Lets start with the facts.

Heating and cooling in buildings and industry accounts for half of the EU's energy consumption. Only 16% of heating and cooling in the EU is generated from renewable energy, while 84% is generated from fossil fuel. It is evident that in order to fulfil EU's climate and energy goals, the heating and cooling sector must sharply reduce its energy consumption and cut its use of fossil fuels.

The positive side is that there is general recognition today that the EU will not achieve its climate and energy objectives unless renewable heating and cooling becomes more widely used. It is always important to first recognize the problem and then find ways to fix it.

The key question remains; how can we make renewable heating and cooling a priority in our decision making? The technologies as such are mature and readily available but require adequate targets, market conditions and accompanying policy measures.

In February 2016, the Commission proposed an EU heating and cooling strategy. Plans for this EU strategy were launched in 2015 as part of the Energy Union strategy. This is an important first step in exploring the issues and challenges in this sector.

The overarching question at this conference today is „How to Make the EU Number One in Renewable Heating and Cooling?“ This is a target we should and can achieve. There is a long way to go but I believe there is every reason for us to be optimistic in reaching this target, through combined systematic efforts.

Today we will be discussing strategies and sharing best practices and national views in order to try to shape the right policy framework across Europe, towards increased share of renewables, with a special focus on heating and cooling.

In this context Iceland has a story to tell which I hope can be inspiring. In many ways Iceland can be regarded as a model in terms of secure, sustainable and affordable heat supply to its citizens.

Here today I will focus on geothermal energy, and especially it‘s possibilities for district heating.

So what is geothermal energy and where does it come from? Geothermal energy is essentially the heat of the earth from its core. It sometimes happens that we have quite a visual display of this powerfull source, as we witness on a regular base in Iceland. When you think of it, it is in fact amazing that this source is used for heating 90% of houses in Iceland and producing 25% of our electricity, along with various other usage.

We have a long history of geothermal utilization in Iceland and this is one of the cornerstones of our energy sector.

The use of geothermal water for house heating already started in Reykjavik in 1930, but the main drive came in 1973 when the oil crises struck and crude oil prices on the world market increased by 70%.

At that time about half of all houses in Iceland were heated with fossil fuel, but concentrated efforts and a long-term political vision, and support mechanism, led to Iceland being transformed into a clean-energy economy within two decades. Today more than 99% of houses in Iceland are heated with renewable energy. Nine out of ten are heated directly with geothermal heat, through district heating systems, and the remaining 10% with renewable electricity (in areas where there are no geothermal resources).

The social and economical benefits of this development have been substantial. The macro economical benefits of the geothermal district heating system annually amounts to around 7% of our GDP, or equivalent to 3.000$ per capita per year. For a family of four this adds up to 12.000 per year.

It goes without saying that this development, switching from imported fossil fuel to a renewable domestic resource, has benefitted the environment and reduced CO2 emissions. For example in Reykjavík, the capital, CO2 emissions due to space heating have gone from 250.000 tonnes per year down to 0 in 50 years.

To put this into EU context - total CO2 savings by using domestic renewable energy instead of imported fossil fuel, from 1914 to 2014, have been calculated at 350 million tonnes of CO2. This equals to 175 billion trees in CO2 binding, or 800.000 square kilometers of forrest. Which so happens is the same size as France and the UK combined.

I believe this example serves as a contribution and input in any discussion on climate change mitigation, in order to meet our common targets under the COP21 agreement.

Mind you, there are various other benefits from utilising geothermal energy beside district house heating and electricity production and I could stand here all day and give you a lecture on that. For example we use geothermal energy to heat our swimming pools all year round, both indoor and outdoor. We also use it for various industrial purposes, greenhouses, agriculture, geothermal resource parks, snow melting and so on. The social, economical and environmental benefits are manyfolded and visible.

But, ladies and gentlemen,

What are then the challenges for further geothermal utilisation and what can we learn from our 50 years of experience in Iceland?

One important thing is financing. Financing geothermal projects has always been a challenge, and still is. Some claim they are not bankable. I want to mention that in Iceland we addressed this issue already in the sixties by establishing a National Energy Fund which offers loans to fund the initial cost of drilling and exploration. If this initial drilling turns out to be unsuccessful, the loan defaults to the state.

In the case of Iceland, this policy promoted the expansion of geothermal energy more than anything else. With every new well drilled, scientific understanding of the geological systems has further improved. The details of this National Energy Fund programme is something which we are willing to provide you more information on.

I also want to mention that building a geothermal district heating system is not only a way to establish a domestic and secure energy source, with the economic and environmental benefits included; it is also a way to establish industry knowledge, create new jobs and increase innovation.

In Iceland we have an active geothermal industry which participates in various geothermal projects around the world; including research, consulting, design and construction. The cumulative knowledge of our experts in this field for the last 50 years has become and important export product for Iceland.

There are many places in the world that have huge geothermal resources and in Europe geothermal district heating has great potentials of replacing a significant part of EU's demand for imported energy and fossil fuel.

There are over 240 geothermal district heating systems operated around Europe today and in addition there are about 5,000 district heating systems using other energy sources, mainly fossil fuel.

I was for example not aware that one of the largest geothermal district heating systems in the world is in Paris, and that there is still huge potential to extend that system.

There are clear opportunities and potentials to expand the use of geothermal, both for new district systems as well as the use of geothermal instead of fossil fuel in systems that are already in operation today in Europe.

In this context I want to mention that in cooperation with Norway and Liechtenstein, Iceland operates a funding facility named EEA Grants. This financial mechanism has been operated since 1994 and we recently concluded an agreement with the EU on a new operating period until 2021.

The EEA Grants, with the future funding of 1.5 billion euros, is intended to reduce economic and social disparities in the European Economic Area and the beneficiary states are the same as benefiting from the EU Cohesion Fund.

Under the current Grant Scheme, Iceland has emphasized supporting projects in the field of renewable energy, focusing on geothermal energy. The support has been used for various activities, ranging from feasibility studies, mapping of potentials, research and concrete projects. Project examples include a geothermal power plant in the Azores and drilling activities in Hungary and Romania.

Presently we are negotiating with our partner countries on how to use the funding until 2021 and Iceland's clear priority is to continue supporting geothermal activities, hopefully to even larger extent than until now.

I encourage those interested to explore the possibilities provided by the EEA Grants; your cooperation and participation would be highly appreciated.

In this regard I would also like to mention the United Nations University Geothermal Training Programme, which we have had in Iceland since 1979. Around 600 students from 58 countries have graduated from this programme as experts in the field of geothermal utilisation and this has had a very positive impact world wide as regards the promotion of geothermal energy and it‘s possibilities.

Ladies and gentlemen,

In short the lessons learned from Icelandic geothermal district heating policy can be summarized as follows. Geothermal energy utilisation has allowed us to:

1.        Harness a domestic natural resource in a sustainable manner

2.        Gain economic advantage and savings

3.        Improve energy security (reducing dependency on fossil fuels for energy use)

4.        Reduce greenhouse gas emissions

5.        Establish new industries and employment opportunities

6.        Increase innovation and export of knowledge

7.        Improve quality of life

This is all quite clear in my mind, and no further evidence is needed.

Why is it then, that geothermal energy has not been promoted or utilised to a greater extent  in Europe, as a means to making the EU number one in renewable heating and cooling?

I believe that there should be a stronger policy towards the promotion of renewable heating and cooling in Europe, and that such policy should not just focus on biomass, wind and solar energy, as we sometimes see in official documents and disucssions, but also on geothermal energy.

We need to develop innovative financial incentives that are right for renewable heating and cooling, including geothermal expansion. Furthermore, it is important that funds are available to train and support technicians and decision makers of regional and local authorities in order to provide the technical background necessary to approve and support projects.

The main point that I wish to make is that the benefits of harnessing geothermal energy for district heating are undeniable and fit well with the EU's goals of promoting secure and clean energy and environmental long term policies.

The promotion and development of geothermal energy for district heating will require concentrated and combined efforts. New geothermal heat plants are competing with well-established district heating systems, that by nature are monopolies, fuelled by gas, coal or wood. A level playing field is needed. This is one of the main challenges we need to dicuss and work on.

Ladies and Gentlemen,

I look forward to the discussions we will have here today at this conference on renewable heating and cooling. I would like to thank the European Geothermal Energy Council for arranging this event. This week in Brussels is the EU Sustainable Energy Week and this conference today is certainly at the core in any disucssion on sustainable energy utilization.

I hope todays disucssions will bring us one step closer to „Making the EU number one in renewable heating and cooling“. It is definitely worth trying.

I wish you a fruitful day and good sharing of experience.

Thank you !