Path dependency in heating

09 May 2019

In a recent paper published in Nature Energy, Rob Gross and I use case studies of Sweden and the UK to demonstrate how the history of heating systems evolution helps us understand why some technologies go on to dominate heating supply in buildings.

By comparing case studies of heat transitions in the UK and Sweden, we address the question: can path dependency help to understand why these countries have followed different paths in terms of change to their heating infrastructure?

What is path dependency?

The purpose of this study is to explore path dependency in heat transitions. Path dependence is an economic phenomenon where technologies or systems are subject to increasing returns. As a particular technology gains an initial lead in adoption relative to competing technologies, its cost or performance advantages accelerate, leading to further uptake.

Through a variety of increasing returns effects, path dependence can create systems that are highly cost effective or convenient, such as gas boilers in the UK, but which are suboptimal in terms of meeting carbon targets. This is because path dependence and increasing returns may also create outcomes such as ‘lock-in’ to systems based on fossil fuels that are not easy to change in the short term. Early effects become greater over time so that it becomes more difficult to change to a different path of technological development later on.

Heat-system evolution can be country specific and heating technologies can be locally optimized such that what works in one country or region is quite different from what works in another. In both Sweden and the UK, the development of heating technologies can be understood as path-dependent processes, in that particular fuel sources, infrastructures and end-use technologies are increasingly adopted as their overall performance increases. 

Implications for heat policy in gas dependent nations

Our paper sets out a range of policies that have played a central role in helping to improve technology performance, adaptation to supporting infrastructures and consumer confidence, leading to the evolution of very different heating technologies and systems in the UK and Sweden.

In the UK, natural gas has dominated heat supply to buildings since the late 1970s. State ownership of gas networks and national efforts to coordinate the replacement of coal-manufactured town gas with natural gas helped to drive increasing returns to adoption of gas central heating. In Sweden, oil heating has been largely replaced by heat networks and heat pumps. The oil crises of the 1970s and climate change policy in the 1990s helped to drive increasing returns, improving technologies and reducing costs and consumer uncertainty.

The challenge for policymakers aiming to decarbonize heating in gas dependent countries and achieve carbon targets, is to consider how to create the conditions to encourage increasing returns to adoption of low-carbon heating solutions. The historical evidence reviewed in our study suggests that technologies that are initially unfamiliar can become mainstream options over a period of several decades.

In the UK, more coordinated policies to improve technical standards and enhance the marketing and promotion of heat pumps and heat networks could help to address low consumer awareness and raise the credibility of these technologies.

The spatial scale of heat/energy-system governance may also need to be revisited in the UK - the transition to gas heating took place through a largely centralized administration, whereas in Sweden local government has been a key agent in the deployment of heat networks.

View the article online at: https://doi.org/10.1038/s41560-019-0383-5 
Download a pdf copy of the paper here: https://rdcu.be/bzuE2