Heating Sector Decarbonization with Renewable Gas and Power-to-Heat

Deep decarbonization, which comprehends activities whose aim is to reduce carbon dioxide emissions in all economic sectors, is necessary to reach the goals of the Paris agreement. Consumption of fossil fuels in individual buildings is an important source of emissions. In this paper we study the economic feasibility of decarbonizing heat generation in natural gas heated buildings in two European countries. Heat pumps and substitution of fossil natural gas by synthetic natural gas (SNG) are studied as solutions for decarbonization in both Finnish and German conditions. We find that in both countries the SNG solution substantially increases the consumer’s heating costs. Heat pump turned out to be economically viable in Finland while in Germany the high surcharges on green electricity made the heat pump solution unattractive.