The Thermal Opportunity
Energy used for heating and cooling comprises approximately 50 percent of total global final energy demand and 39 percent of energy-related carbon dioxide emissions. In the United States, heating and cooling account for more than 25 percent of total energy use across residential, commercial, and industrial sectors at a cost of $270 billion annually. Additionally, global heat production is responsible for a 39% of energy-related carbon dioxide emissions.
Despite its large energy and carbon footprint and its significant potential to reduce carbon emissions, the use of renewable energy for heating and cooling applications, including beneficial electrification, biomass, biogas, geothermal, green hydrogen, renewable natural gas (RNG), and solar thermal, has received relatively little attention compared with renewable electricity.
The Thermal Challenge
Energy used for heating and cooling is responsible for 39% of global energy-related greenhouse gas emissions.
The industrial sector emits about 1/3 of all greenhouse gas emissions.
Energy used to produce heat is responsible for 2/3 of all energy demand in the industrial sector and 1/5 of all global energy demand.
Eight manufacturing sectors emit more than 77% of industrial emissions.
Space and water heating constitute 39% of total energy consumption in buildings.
Renewable thermal energy is growing only 2.3% annually.
The Renewable Thermal Collaborative is comprised of a group of renewable thermal energy buyers who aim to tackle the long-neglected challenge of reducing greenhouse gas (GHG) emissions from energy used for heating and cooling, currently responsible for 39 percent of global energy-related GHG emissions.
Inventing new thermal solutions is critical to meet corporate and institutional buyers’ own ambitious climate and renewable energy goals and to stabilize global emissions in line with what the best available climate science says is required.
The RTC’s strategy is to replicate the success that has occurred in renewable electricity markets, where corporate and other institutional buyers have used their market demand and influence to drive down prices, simplify access, and scale deployment of renewable technologies. The RTC has already become the leading coalition for organizations that are committed to scaling up renewable heating and cooling.
Two of the largest users of renewable thermal energy are the industrial and buildings sectors. Today the industrial sector emits about one-third of GHG emissions, but the sector’s emissions are rising at twice the rate of average global emissions. Energy used to produce heat is responsible for two-thirds of all energy demand in the sector and one-fifth of all global energy demand. Emissions in the sector are also highly concentrated: eight energy-intensive basic material manufacturing sectors—steel, chemicals, cement, pulp and paper, aluminum, glass, food, and oil refining—emit more than 77% of industrial emissions. These manufacturing sectors also demand a wide range of heat temperatures, including very high heat levels.
Buildings are responsible for nearly one-quarter (23%) of global energy related CO2 emissions, with one-third of those from direct fossil fuel consumption, according to the Intergovernmental Panel on Climate Change. In the U.S., space and water heating, along with cooking—often powered by natural gas—constitute 39% of total energy consumption in buildings, according to the Energy Information Administration. In 2018, the Rhodium Group reported emissions from residential and commercial buildings increased by 10%—their highest level since 2004.
Despite this clear need, renewable thermal solutions are not being developed or adopted at the pace and scale required to meet the growing demand of large energy buyers in the market for renewable thermal solutions, let alone the climate goals of the Paris Agreement. Globally, renewable thermal energy is growing only 2.3% annually, in contrast to renewable electricity which is growing 6% per year. This large disparity exposes the many technology, supply, market, and policy barriers facing thermal energy. Inexpensive natural gas, especially in the U.S., makes it hard for these technologies to compete.
Inadequate policy is another clear barrier. According to the IEA, more than 120 countries in all world regions have policies designed to promote renewable electricity, but only 40 have specific policies for renewable heat, most of which are within the European Union. In addition, renewable electricity solutions, including Power Purchase Agreements and utility offerings, have developed much more quickly and are enabling buyers to rapidly scale up the market, while these tools do not exist for renewable thermal energy.
The RTC’s own analysis shows significant opportunities to deploy solar thermal and electrification at low- to medium-temperatures. Yet, market and policy barriers prevent progress. For high-temperature applications, research and development, and policies to support them are needed. Both are likely areas of future RTC policy engagement.
To drive the market toward more cost competitive thermal solutions, the RTC has issued the industry’s first Renewable Thermal Buyers’ Statement. This statement demonstrates buyers’ demand for market ready, sustainable, renewable thermal solutions, sending a strong signal to the marketplace. This broad representation across corporate sectors and geographies includes autos, biotech, consumer products, food and agriculture, IT, pharmaceuticals, as well as a city, healthcare system and a university. To build impact and market influence, it is critical for the RTC to continue to grow its membership and the number of signatories on the Buyers’ Statement.