“Spain’s most taxed product after tobacco and alcohol? Electricity.”
With these startling words, Marta Navarrete Moreno of Spanish utility Iberdrola summed up the main message to come out of EHPA’s sessions at the 2025 European Sustainable Energy Week (EUSEW) – electricity prices need to be more competitive than gas to boost heat pump deployment.
Held on 11 June in Brussels and online, EHPA’s two policy sessions captured the urgency and complexity of the transition.
The first session, “Electrifying Heat: How Heat Pumps Fit into the European Integrated Energy System,” moderated by EHPA’s Policy Director Jozefien Vanbecelaere, opened with a frank assessment of the landscape.
The panel gathered experts from the European Commission’s Heat Pump Accelerator Platform – an initiative steered by EHPA, Belgian research centre VITO and Fraunhofer ISE in Germany – to discuss the current barriers to heat pump deployment across Europe. The platform, now comprising over 67 representatives from research, industry, finance, public authorities and civil society, embodies the collaborative effort required to drive change.
Beneath vast opportunities lies a patchy and inconsistent regulatory environment. Start-stop incentive schemes, administrative bottlenecks, and uncoordinated local rules have made heat pump deployment more complex and more expensive than it should be. While the technology is ready, the market is being held back by a fundamental issue: in most of Europe, it is simply still cheaper to heat a home or factory with gas.
Without coordinated policy action to rebalance energy taxes and tariffs, heat pumps will remain economically disadvantaged compared to fossil-fuel systems, argued panellists Marta Navarrete Moreno, Bright Adiyia, Enrique Vilamitjana, Sebastian Herkel, Anja Floetenmeyer-Woltmann, and Niels Ladefoged.
This is especially relevant in light of upcoming EU initiatives like the Emissions Trading System 2, whose revenues must be harnessed strategically. ETS2, which will apply carbon pricing to buildings and road transport from 2027, presents both a challenge and an opportunity. It’s set to drive clean heating adoption, but only if households see the benefits returned in the form of lower energy costs and targeted support.
The session also brought in real-world experiences from across Europe. Bright Adiyia of VITO shared insights from the oPEN Lab project, which is piloting the transformation of urban neighbourhoods into Positive Energy Districts. In cities like Genk in Belgium, Pamplona in Spain and Tartu, Estonia, prefabricated facades and modular “energy boxes” – combining air-water and geothermal heat pumps with solar panels and storage – are turning social housing into low-carbon innovation hubs.
From the social acceptance of heat pumps in Germany amid the country’s heating law to raising awareness on the benefits of energy efficiency, the message was clear: building trust in clean heating and cooling solutions will be just as important as building the systems themselves. And for that, manufacturers, policymakers and energy providers need to not only support the technologies but also tell their story.
The theme of joined-up thinking continued into EHPA’s second session, “Powering up Synergies: Industrial Heat Pumps and District Heating and Cooling for System Integration,” co-organised with Euroheat & Power and moderated by journalist Philippa Nuttall from the Financial Times’ Sustainable Views.
Here, the focus shifted to industry, where over 60% of energy use is tied to process heat, still largely generated by fossil fuels. Industrial-scale heat pumps could replace nearly 40% of this demand if fully deployed, but remain underused.
Chris Rosslowe of energy think tank Ember made a compelling case for accelerating “clean flexibility.” As Europe increases its renewable energy output, the challenge becomes not just producing clean power, but using it smartly. Electrification must go hand-in-hand with the ability to shift, store, and share energy in real time. Rosslowe’s analysis underlined a powerful feedback loop: the smarter and more flexible the system, the more affordable electricity becomes, and the more it supports widespread electrification, including heating and cooling.
As shown by presenters Marco Baresi and Priit Koit, real-life success stories already point the way forward. In Tallinn, Estonia, energy provider Utilitas is building one of Europe’s largest heat pump facilities, designed to recover heat from seawater and treated wastewater. The plant covers 20% of the capital’s district heating demand and is expected to save 100,000 tonnes of CO₂ each year. This is part of a broader Utilitas strategy to phase out fossil fuels almost entirely by 2027.
MEP Anna Stürgkh of the Renew Europe group brought the conversation back to policy. “When we think about policy and politics, we tend to think in silos,” she noted. “The European level does one thing, the national level another, and the local level something entirely different. We must work together – industry, planners, utilities, and regulators – if we’re serious about net zero.” Stürgkh, who’s also rapporteur of the European Parliament’s report on electricity grids, argued that reducing electricity prices is not only a climate imperative, but also a fairness issue. Vienna, her hometown, already benefits from a district heating network that recovers 40% of its heat from waste energy.
Policymakers have a number of levers to pull to boost the deployment of large heat pumps and district heating and cooling systems across Europe: the upcoming update to the EU Heating and Cooling Strategy, as well as the Electrification Action Plan, Grids Package, and the Industrial Decarbonisation Accelerator Act all need to deliver concrete support for the technologies that can slash Europe’s industrial emissions.
Both sessions are expected soon on the EU Sustainable Energy Week’s YouTube channel.
EHPA’s presence at EUSEW extended beyond the sessions themselves, with a joint booth at the Energy Fair alongside Euroheat & Power and the Energy Performance of Buildings Centre.
