_{CO2 Emissions}

The CO₂-reduction costs for end users were calculated in 3 consecutive steps. First, the CO₂ emissions of the investigated systems and the reference systems were calculated using a Life Cycle Assessment (LCA) approach. Then the levelized cost of heat (LCOH) in €/kWh was calculated for all systems. Finally, the cost savings or additional costs of replacing the heating system were divided by the CO₂ emission savings. The results of the LCA carried out for the systems studied were as follows: 

• Wood chip boilers for multi-family homes offer the highest amount of CO₂ saved per installation over an assumed 20-year lifetime when used to replace natural gas or oil-fired heating systems. 
   
• Of the analyzed single-family home sized heating systems, pellet boilers offer on average the highest CO₂ savings per installation compared to natural gas and oil systems. While in specific cases, heat pumps have the lowest CO₂-emissions, they are greatly dependent on the country’s electricity mix. 

The calculation of the levelized cost of heat (LCOH), which reflects the investment and operating costs over the lifetime of a system, showed the following results:

• 1 Megawatt (MW) industrial wood chip heating systems have the lowest overall cost per kWh of heat produced of the large systems studied.
   
• For household sized systems, the 9 kW heat pumps have the lowest overall cost for single-family homes, while the 25 kW wood chip boilers have the lowest LCOH for multi-family homes.

Based on the CO₂ emissions and the LCOH, the CO₂ reduction costs were calculated to provide an unbiased evaluation method to compare the heating systems studied. The calculations gave the following results:

• For multi-family and industrial systems, the 25 kW and 1 MW wood chip systems have the lowest CO₂ reduction costs when compared to natural gas systems.
   
• Looking at domestic systems, 9 kW heat pumps have the lowest CO₂ reduction costs, but also the highest range of values, as electricity prices and the given country’s electricity mix strongly influence the CO₂ reduction costs. On the other hand, 9 kW pellet boilers have higher CO₂ reduction costs but a lower overall range when replacing natural gas and oil systems.
   
• In the EU average, the substitution of oil-fired heating systems with the investigated renewable systems leads to negative CO₂-reduction costs based on the current costs and CO₂-emissions calculated in the life cycle analysis.
   
• In EU-average, the substitution of gas-fired heating systems with the renewable systems studied does not necessarily lead to negative CO₂-reduction costs based on current CO₂-emissions and costs.

In accordance with the findings of the present study, the following recommendations for decision-makers can be deduced: 

• To accelerate their deployment and maximize CO₂ savings, financial support mechanisms are essential, particularly for biomass heating systems, which offer a cost-efficient and dispatchable renewable alternative to fossil fuels. 
   
• The use of renewable heating systems instead of fossil ones will always lead to lower CO₂-emissions. Increasing their use by subsidising the installation of these systems will help to achieve the EU's climate targets. Which heating systems need to be subsidised to achieve this in the cheapest way can be seen from the results of the public CO₂-reduction costs. These indicate that wood chip or pellet boilers for multi-family houses are the lowest-hanging fruit, as they have the lowest public costs to save one ton of CO₂ ranging from 30,8-42,3 € per ton of CO₂ saved. 
   
• Subsidies are relevant for two reasons: they can ensure that the systems are profitable, and they are necessary as an incentive to encourage the phasing out of fossil fuel heating systems. There are several barriers to replacing a functioning heating system, such as individual effort, a construction site, high initial costs. These barriers can be overcome by financial incentives.

Client / Funding organisation	Bioenergy Europe
Project management	Alex Bergamo
Project team	Benedikt Jaros Lorenz Strimitzer
Project duration	March 2024 to February 2025