The apartment buildings where half of Europeans live have cleaner heating options than is generally acknowledged.
EUUSEW Digital Ambassador Thomas Nowak talks about these options and why multifamily housing should be an investment.
half of europe is waiting
According to Eurostat, almost half of all EU citizens (about 200 million people) live in apartment buildings, with the highest levels in Spain and Latvia (about 65%). Most city dwellers in Central and Eastern Europe live in apartment blocks, large prefabricated houses from the 1950s to the 1980s, often with minimal insulation, aging district heating or central gas boilers, and where utility bills too often dominate household budgets.
The scale of the challenge is clear. Buildings account for 40% of the EU’s total energy consumption. Approximately 80% of household energy is used for heating, cooling, and hot water. Approximately 85% of the building stock is pre-2000, and three-quarters of it is classified as energy poor. The annual renovation rate is only 1%. At this pace, the essential contribution of decarbonized building stock to the EU’s climate goals will not be achieved.
The parliamentarians also understood.
The revised Energy Performance of Buildings Directive (EPBD) covers all types of buildings. The scheme has been in force since May 2024 and sets out a binding housing trajectory. This means that the worst-performing 16% of the stock must be retrofitted by 2030, the worst 20-22% by 2035, and all fossil fuel boilers phased out by 2040. Incentives for stand-alone fossil boilers had to be abolished by January 1, 2025.
The revised Energy Efficiency Directive (EED) calls for, inter alia, transparent cost allocation rules for multifamily buildings with collective heating systems, a direct tool to solve the incentive split problem between landlords and tenants.
And from 2028, the EU’s Building Emissions Trading System (ETS2) will impose a direct carbon price on fossil fuel heating, making the continued operation of gas boilers structurally more expensive each year.
“There is no solution in multifamily housing” – a myth worth dismantling
In the debate surrounding the transition to heating, there is a stubborn insistence that frames multifamily housing as a special problem that cannot be solved with current technology. The usual prescription is to stick with gas, wait for green hydrogen or biomethane, or if you’re lucky, connect to district heating. This story is factually incorrect.
Solutions exist for investors who need change
There are currently five categories of clean heating solutions on the market, with proven implementation experience and applicable to the entire range of European multifamily housing stock. These create the basis for a large number of alternatives, considering that they can be used as standalone or hybrid solutions combining multiple technologies to cover all energy needs. As a result, free-standing fossil boilers can be removed from all types of buildings.
Table 1 compares the options.
Table 1: Options for decarbonizing multifamily buildings. Source: myself
District heating with central heat pumps. If a network exists or is being built, connecting a building to that network is often the least complex path for building owners. Greening existing and new grids can be achieved by deploying large heat pumps that extract heat with high efficiency from rivers, groundwater, sewage systems, or industrial waste heat. Building level factory room upgrades are not required. Electrical loads are at the grid level, not at the building level. Central building heat pump (air or ground source). Directly replaces the central boiler on a one-to-one basis and powers the existing hot water supply system. This often requires upgrades to factory rooms, space for outdoor air units or boreholes in the ground, and upgrades to electrical connections at the building level. If outdoor space is available, you can also set up a plant room inside a separate heated container. Depending on the energy performance of the building, radiator replacement or thermal envelope updating may be required to achieve lower flow temperatures (approximately 55°C or less). Building a perimeter loop with an apartment heat pump – 1-2-3 solution (see diagram). A shared cold loop circulates water throughout the building. Individual compact heat pumps in each apartment extract or pump heat into a loop for heating, cooling, and hot water. The base temperature of the loop is maintained by central heat pumps, solar photovoltaic heat collectors, or shallow geothermal heat. The incentive splitting problem is solved structurally because each tenant controls and meters its own unit. This is a very promising solution for apartments with a separate gas boiler. Heat loss is minimized as energy circulates at ambient level. A completely decentralized heat pump for apartments. Air-to-air splits, small air-to-water units, exhaust heat pumps and window heat pumps allow individual apartments to operate independently. No adjustments to the entire building are required. In most Member States, installation does not require building permits and can be completed in one day. It is especially suitable for condominiums where ownership is divided. However, uncoordinated deployment can create an unsightly appearance on the facade, lead to increased noise emissions, and stress the building’s power grid. Direct electric heating. For mostly passive or well-insulated buildings, electric infrared panel heaters, immersion storage or instantaneous hot water heaters combined with on-site PV and batteries offer an easy path to decarbonisation. It is also valuable as a peak load supplement for the above systems, reducing required heat pump capacity and capital costs.
Beyond decarbonization: clean air and grid services
Replacing gas and oil boilers with heat pumps eliminates on-site combustion and directly reduces NOₓ and particulate emissions that cause urban air pollution and respiratory diseases. For ambient temperature thermal networks, heat island reduction is an additional benefit as waste heat from summer cooling is collected and made available to other users.
Thermal networks and thermal buffer tanks act as virtual batteries for the power system, serving as a reservoir from which consumption can be shifted to times when renewable electricity is abundant and cheap. This demand-side flexibility is already being rewarded through dynamic tariff systems in several Member States, and will become even more valuable as Europe’s electricity systems embrace variable renewable energy.
Economic framework for decarbonizing multifamily housing
Solutions for decarbonizing multifamily buildings are commercially available, technically proven, and can be deployed across Europe’s diverse building stock today.
What is still missing is an economic framework that makes investment attractive. Rapid and ambitious implementation of EPBD retrofit obligations, EED split incentive rules, and ETS2 carbon price signals at the national level is what will transform the technologies available today into the retrofitted buildings of tomorrow.
This opinion editorial was produced in collaboration with European Sustainable Energy Week (EUSEW), the largest annual event dedicated to renewable energy and efficient energy use in Europe. #EUSW2026 is in its 20th year, once again bringing together a community of people interested in building a safe and clean energy future for generations to come.
Check out current calls and join.
About the author
Thomas Nowak is Vice President of Government Relations at Qvantum Industries, a Swedish scale-up company providing heat pump-based urban solutions, and former Secretary General of the European Heat Pump Association.
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