ASHRAE’s European Policy Update – March 25, 2026

March 25, 2026

Welcome to ASHRAE's European Policy and Funding Update! This monthly publication features information on policy and funding-related activities of interest to ASHRAE members in Europe. Archives of previous updates are available from the ASHRAE European Policy and Funding Updates webpage.

EU Regulatory Updates
EU National Updates
Events
Glossary

EU Regulatory Updates

EU Industrial Accelerator Act Introduces EU Origin Requirement for Hydronic Heat Pumps

On March 4, the European Commission published its proposal for an Industrial Accelerator Act (IAA), a horizontal regulation aimed at strengthening EU manufacturing capacity and strategic value chains. Among other measures, the draft introduces new Union origin requirements for selected net-zero technologies, including hydronic heat pumps. Under the proposal, three years after entry into force, public procurement procedures that include hydronic heat pumps would be required to source units originating in the European Union.

Similarly, national or regional support schemes benefiting households or companies would only be able to grant support to hydronic heat pumps that originate in the Union.

The proposal does not introduce new technical performance standards for heat pumps, nor does it amend existing ecodesign, energy labeling, or refrigerant rules. Instead, it conditions access to public procurement and public support on compliance with EU origin criteria, as determined under EU customs rules. Private market sales remain unaffected under the current draft. If adopted as proposed, the measure would therefore primarily influence market structure and supply chain decisions, particularly in Member States where heat pump deployment is strongly driven by public incentives.

As for the next steps, as a Regulation, the IAA will follow the ordinary legislative procedure (co-decision) and requires agreement between the European Parliament and the EU Member States in the Council of the EU. Negotiations are likely to take 12–18 months, with final adoption expected in 2027. As the proposal moves through the legislative process, amendments to sector coverage, thresholds, and the geographical scope of Union-origin rules are expected.

European Commission Approves €1.1 Billion French Tax Credit for Clean Technology Manufacturing Capacity Under CISAF

On February 27, the European Commission approved a €1.1 billion French tax credit scheme to support new manufacturing capacity for clean technologies. The measure, adopted under the EU’s Clean Industrial Deal State Aid Framework (CISAF), is designed to expand domestic production of key net-zero technologies and reduce reliance on imports.

The scheme explicitly covers heat pumps, alongside solar, wind, and battery technologies. It supports investments in new production lines, equipment, and facilities, as well as essential components used in manufacturing these technologies. The tax credit will be available across France until 31 December 2028 and aims to strengthen Europe’s clean technology supply chains rather than fund deployment or consumer incentives.

Council of the EU Finalizes 90% EU 2040 Climate Target with Biennial Review Mechanism

On March 5, the Council of the EU formally adopted the amended European Climate Law, introducing a binding intermediate target of reducing net greenhouse gas emissions by 90% by 2040 compared to 1990 levels. The target strengthens the EU’s pathway to climate neutrality by 2050 and applies across all sectors of the economy. From 2036, international credits may be used for up to 5% of 1990 EU net emissions, meaning at least 85% of reductions must be achieved within the EU. Credits must be based on credible emission-reduction activities in partner countries and aligned with the Paris Agreement.

The amended law also sets parameters for the Commission’s post-2030 legislative proposals, requiring consideration of competitiveness, simplification, social fairness, energy security, and affordability. It foresees the use of EU-based permanent carbon removals to compensate for residual hard-to-abate emissions under the EU Emissions Trading System (ETS) and introduces enhanced flexibility across sectors and instruments. The regulation also provides for a review of the European Climate Law every two years, under which the Commission will assess the framework in light of science and technological developments, EU competitiveness, energy prices, net removals, and the use of high-quality international credits, and may propose revisions or additional measures where needed. In addition, the start date of the separate emissions trading system for road transport, buildings, and other sectors (ETS2) is postponed by one year, from 2027 to 2028.

European Commission Adopts Clean Energy Investment Strategy to Mobilize Private Capital for the Energy Transition

On March 10, the European Commission published its Clean Energy Investment Strategy, setting out measures to mobilize private capital for the energy transition and estimating annual energy-sector investment needs of around €660 billion between 2026 and 2030, rising to €695 billion between 2031 and 2040. The Strategy focuses on crowding in institutional investors through de-risking instruments, expanded use of InvestEU, targeted support from the European Investment Bank (EIB) Group, and new facilities to strengthen grid operator balance sheets. It also foresees enhanced support for energy infrastructure, long-duration storage, innovative clean technologies, and energy efficiency, including aggregation of smaller projects to improve access to capital markets.

For the heating and cooling sector, the Strategy is primarily relevant through its emphasis on electrification, grid reinforcement, and scaling up energy efficiency financing. The Commission signals increased support for decarbonization of buildings, energy efficiency for SMEs, and ‘energy efficiency as a service’ models, alongside measures to unlock private investment in clean heating solutions. While the Strategy does not introduce new technical requirements, it aims to accelerate the deployment of electrified and efficient technologies by improving financing conditions and reducing investment risk across the energy system.

European Commission Presents Citizens Energy Package Focused on Electrification, Flexibility, and Energy Poverty

On March 10, the European Commission adopted the Citizens Energy Package, structured around four pillars: lowering energy bills, protecting and empowering consumers, tackling energy poverty, and improving the implementation of existing EU law. The Package highlights that retail electricity prices for households remain 36% above their 2014-2020 average and that heating accounts for 62.5% of residential final energy consumption. It calls on Member States to lower electricity taxes and levies where possible, reduce network costs through improved tariff design, and promote flexible retail contracts that could deliver savings of up to 40% where consumers shift demand to lower-price periods.

The Package places a strong emphasis on electrification and access to clean, energy-efficient technologies, urging Member States and companies to move beyond grant-only schemes and develop innovative financing models such as social leasing, heat-as-a-service, and flexible tariffs for heat pumps. It also promotes energy communities, energy sharing, and improved protection for vulnerable consumers, including measures to prevent disconnections and address energy poverty. No new binding legislative proposals are introduced at this stage, but the Communication sets out guidance, recommendations, and upcoming implementing measures intended to accelerate uptake of electrified heating and improve consumer access to affordable clean energy.

European Commission Recommendation on Unlocking Private Investment in Energy Efficiency

On March 10, the European Commission adopted a recommendation setting out guidance for Member States and financial market actors on how to scale up long-term financing for building renovation and energy efficiency improvements. The non-binding measure calls on governments to establish or strengthen national energy efficiency funds, expand public guarantees and revolving facilities, and develop blended financing models that combine grants, low-interest loans, and risk-sharing instruments. The objective is to create predictable and stable financing frameworks capable of mobilizing private capital at scale.

The recommendation promotes wider use of energy efficiency mortgages, renovation loans, on-bill and on-tax financing schemes, and encourages the development of energy service companies and energy performance contracting models. It also calls for project aggregation, refinancing mechanisms, and the creation of secondary markets for energy efficiency investments. Although it does not introduce new legal obligations, the Recommendation provides detailed policy guidance intended to accelerate private investment in building upgrades and low-carbon technologies, including heating and cooling systems.

LIFE ENABLE DHC Opens Call to Support Transition to “Efficient” District Heating

On March 3, the European Climate, Infrastructure and Environment Executive Agency announced that the LIFE ENABLE DHC project has opened a call for “followers” who are external public authorities, district heating and cooling (DHC) operators, and investors that are not part of the project consortium but wish to apply and replicate its methodologies. Funded under the LIFE Clean Energy Transition program, ENABLE DHC supports the transformation of existing DHC systems into “efficient district heating and cooling” as defined in the Energy Efficiency Directive, including infrastructure modernization, integration of renewable and waste heat sources, and development of investment plans capable of attracting public and private finance.

The project is currently developing nine investment case studies across Austria, Croatia, Ireland, Italy, Latvia, Slovenia, and Ukraine, reflecting different regulatory, economic, and technical contexts. Selected followers will gain access to the project’s analyses and tools, participate in European networking activities, and receive peer-to-peer coaching to strengthen financing approaches for their own DHC networks. Applications are open until 15 April 2026 at 18:00 CET.

EHPA Data Show Over 80% of Heat Pumps Installed in Europe are Assembled Domestically

On March 4, the European Heat Pump Association (EHPA) published new data showing that more than 80% of heat pumps installed in Europe are assembled within Europe, compared to around 10% produced in China. The figures were released alongside the European Commission’s proposed Industrial Accelerator Act, which aims to strengthen clean tech manufacturing in Europe and includes provisions requiring hydronic heat pumps to originate in the EU three years after the Act enters into force. According to EHPA’s survey of its members, over 80% of air-to-water monobloc units sold in Europe are assembled in Europe (less than 10% in China), while more than 90% of indoor units are assembled in Europe, and around half of outdoor units are assembled domestically. EHPA notes that assembly represents the highest value-added segment of the heat pump supply chain. The association estimates that Europe’s roughly 300 manufacturing facilities currently have the capacity to produce up to 8 million heat pumps annually, compared to approximately 2.5 million units produced today, indicating significant untapped production potential if demand increases.

EHPA Preliminary Data Show 10% Growth in European Heat Pump Sales in 2025

On March 2 (updated March 11), the European Heat Pump Association (EHPA) released preliminary data indicating that residential heat pump sales increased by 10% in 2025 across 16 European countries. Approximately 2.62 million units were sold, up from 2.38 million in 2024, bringing the total number of installed residential heat pumps in Europe to around 28 million. Twelve of the 16 countries recorded year-on-year growth, which EHPA attributes largely to governments stabilizing subsidy schemes and taking steps to address electricity costs, including reducing taxes on power bills, thereby improving the competitiveness of heat pumps relative to fossil fuel boilers. Belgium, for example, saw sales rise by 7% to 111,000 units following new restrictions on fossil fuel heating and a VAT reduction for heat pumps in new buildings, while UK sales increased by 27% to 125,000 units, supported by the Boiler Upgrade Scheme and the Warm Homes Plan. In Germany, heat pumps accounted for nearly half of all heat generators sold in 2025, reflecting stronger consumer confidence and energy security considerations. In contrast, sales declined in Poland and France amid policy uncertainty and shifting support frameworks. Per capita, Norway, Finland, and Sweden remain the most developed markets, with more than 30 units sold per 1,000 households, while Poland and the UK remain below five per 1,000 households, indicating significant growth potential. EHPA also noted that sales of large heat pumps are trending upward, with increasing deployment in industrial facilities and district heating systems.

EU National Updates

France Reopens Main Home Energy Renovation Subsidy After Budget Suspension

On February 23, the French government reopened MaPrimeRénov’, the country’s main national grant program for improving the energy efficiency of existing homes. The scheme provides financial support from the state to homeowners who carry out renovation works to reduce energy consumption, improve comfort, and lower emissions. It had been suspended from 1 January 2026 after allocated funds were depleted. The adoption of the 2026 state budget has restored funding and reopened the online application portal.

MaPrimeRénov’ supports two types of renovation. The first covers comprehensive renovation projects that combine several works, such as insulation and installation of low-carbon heating systems, and must improve the dwelling’s official energy rating by at least two levels. In 2026, this option is available to all income groups but limited to homes with poor energy performance ratings (E, F, or G). Applicants must first consult a government-supported renovation advisor. The second option supports single renovation measures for lower and middle-income households, although certain works, including wall insulation and biomass boiler installation, are no longer eligible under this route.

Greece Preparing New Subsidy for Renovation and Energy Upgrades of Older Homes

The Greek government is preparing a new national subsidy program to support renovation and energy upgrades of older residential buildings. The scheme is currently listed as under design by the Ministry of National Economy and Finance. According to the published outline, the state would cover up to 90% of eligible renovation and energy improvement costs, with a maximum of €36,000 per dwelling. The objective is to bring vacant or outdated homes back into use while improving energy performance and thermal comfort, without requiring new construction.

The program is expected to be financed through Greece’s allocation of EU structural and cohesion funds for the 2021–2027 period. It is intended to support 15,000 to 20,000 beneficiaries and would apply to older homes that are either vacant or in use. Participation would require the renovated property to be used as a primary residence by the owner or rented out on a long-term basis. The measure has not yet been finalized, and applications are not open. Detailed technical requirements, final eligibility criteria, and the official launch date are still to be confirmed, although Greek media outlets report that the program is expected to start in May 2026.

Events

Turn Up the Heat: Leveraging Residential Heating to Secure Europe’s Energy Independence

On March 17, 2026, the Cool Heating Coalition and Clean Heat Europe will organize an event to discuss the upcoming Heating & Cooling Strategy and the Electrification Action Plan amidst Europe’s push for energy independence.