Residential & Commercial Sector

Main Edition 2025
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Residential and Commercial sector

The residential and commercial sectors are central to Belgium’s decarbonization strategy. While they have achieved the largest emissions reduction among non-ETS sectors since 1990 (−22%), they still emit over 21 MtCO₂ annually, underscoring the need for continued and accelerated action to meet national and European climate targets.

Although these sectors are not yet included in the EU Emissions Trading System (ETS-1), the European Commission has proposed extending carbon pricing through ETS-2, targeting the sector by regulating fuel suppliers starting in 2027.

To ensure consistency and cost-effectiveness across the energy system, the TIMES-BE model applies a gradually increasing carbon price across all sectors. This approach enables the model to identify the least-cost pathway to net-zero emissions by 2050, while anticipating future policy developments and promoting a level playing field across all sectors.

Residential and Commercial Heating

In all scenarios, the transition to net-zero emissions in residential and commercial buildings is guided by three core decarbonization strategies:

  1. Energy savings, enabled by large-scale investments in renovating the existing building stock to improve insulation and reduce heat demand.

  2. Complete replacement of fossil-fuel boilers with electric heat pumps, implemented in both new constructions and as older heating systems reach the end of their lifecycle.

  3. Expansion of district heating networks in densely populated areas, drawing on geothermal energy and waste heat as the primary sources.

The graphs below illustrate space heating demand in terms of useful heat, categorized by energy source. This visualization is particularly valuable, as it reflects the influence of the three key drivers above and emphasizes that space heating remains the most significant challenge in the decarbonization of the buildings sector. While not being a heating source, the graphs also include a component labeled "Insulation", which represents the heat saved thanks to renovations of the building envelopes.

Space Heating Decarbonization

Residential sector

The transition in residential buildings accelerates significantly after 2030, primarily driven by the widespread adoption of heat pumps. These systems are rapidly replacing gas and oil boilers, which are being phased out. By 2030, heat pumps will supply heating to over one-third of residential buildings, with this share rising to 85% by 2050. The remaining heating demand is covered by district heating networks, powered predominantly by geothermal energy and waste heat.

A critical enabler of this transformation is improved building insulation, which alone contributes to a 30% reduction in space heating demand by 2050. Reaching this goal requires a sustained renovation rate ramping up from 1% per year today to approximately 4% per year, underscoring the importance of long-term policy support and investment in the existing building stock.

Commercial sector

Commercial buildings follow a similar decarbonization pathway as the residential sector, driven by the same three pillars: heat pump deployment, district heating, and energy efficiency improvements. By 2030, 25% of commercial buildings will be heated with heat pumps, a share that expands to 80% by 2050.

District heating networks also play a vital role, particularly in urban areas, while insulation measures deliver efficiency gains comparable to those in residential buildings, significantly reducing heating demand and supporting the sector’s transition to net-zero.

KEY TAKEAWAYS

  1. Yearly, around 

    4%
    of existing residential buildings should undergo renovation measures to improve their energy performance
     

  2. From 2030 onwards,

    no new investment on fossil boilers
    is cost-optimal

     

  3. By 2035, more than  

    half
    of the residential buildings are heated with an electric heat pump


     

  4. By 2050, district heating could cover up to 
    13%
    of the space heating demand in buildings, using geothermal and waste heat

     

Final Energy Consumption and Emissions

Final Energy Consumption

The measures outlined above drive a profound transformation in the final energy consumption of Belgium’s residential and commercial sectors. By 2030, fossil fuel use drops by 40% across all scenarios and is almost entirely phased out by 2050.

At the same time, the electrification of heating not only replaces fossil-based systems but also leads to significant efficiency gains, resulting in an overall reduction of final energy consumption by nearly 45% by 2050.

The Electricity component shown below reflects the electricity consumed by heat pumps for heating purposes, but it is not limited to that. Breaking down electricity use in 2050 by end use, we find that:

  • About one third is dedicated to heating, including both space heating and domestic hot water;

  • Roughly half is used for other applications, such as lighting (including public lighting), cooking, refrigeration, and miscellaneous appliances;

  • The remaining 17–18% corresponds to the rapidly growing electricity demand from data centers, which is projected to increase six-fold (up to 12 TWh) by 2050 compared to today.

Emissions

These shifts lead to a substantial reduction in emissions from the residential and commercial sectors. By 2030, emissions fall to 10.5 MtCO₂, marking a 40% decrease compared to current levels and a 63% reduction relative to 1990.

The downward trend continues through the following decade. By 2040, emissions are projected to decline further, reaching 4.4 to 4.7 MtCO₂ across all scenarios—reflecting sustained progress in building decarbonization.