Policy Context and Climate Objectives:

Sweden has been a leader in climate action for decades, with ambitious environmental and climate policies driving a 50-year transition to a low-carbon economy. The 1970s oil crises resulted in a broad shift away from oil use in buildings, in favor of cheap and abundant electricity generated by hydropower and nuclear energy. In the 1990s, a series of ambitious federal policies, including a first-of- its-kind CO2 tax, marked another shift in energy production, resulting in a nearly decarbonized electric grid and space heating system through increased use of biofuels and biogenic waste incineration. Unlike the US, Sweden has very little natural gas infrastructure, with natural gas accounting for 2% of total energy supply in 2021.

Sweden has successfully coupled decarbonization with energy efficiency by setting national energy intensity targets among their many energy policy objectives. Accordingly, energy consumption peaked in the late twentieth century, while gross domestic product and population have continued to grow.

On the local level, Stockholm has set aggressive city-wide goals, with “fossil-free and climate-positive by 2040” being the highest priority—more ambitious than Sweden’s national goal of net-zero GHG emissions by 2045. Stockholm’s city government has committed to an even stricter timeline, phasing out fossil fuel use from government operations by 2030 and prioritizing energy efficiency work in buildings. These efforts have been successful. Between 1990 and 2023, city-wide GHG emissions have fallen by two-thirds.

District Thermal Networks

The success of Stockholm’s building decarbonization efforts hinges on their robust open district heating and cooling network, which serves 12,000 buildings in the greater metropolitan area using 99% renewable and recovered energy. With 1,740 miles of district heating piping and 186 miles of district cooling piping, the network not only supplies heating and cooling, but also allows for the recovery and redistribution of thermal energy that would otherwise be wasted.

In New York, space heating is powered by a diverse mix of sources, including natural gas and oil boilers, electric sources (both resistance and heat pumps), and district heating, such as Con Edison’s steam system. In contrast, all the sites visited during our study tour in Stockholm—commercial, mixed-use, and residential developments— relied on district heating for some, or all, of their needs, with geothermal energy as an alternative or supplemental source.

Stockholm Exergi, the city’s district heating and cooling provider, is owned in equal parts by the City of Stockholm and Ankhiale, a consortium of European pension fund providers. The company’s environmental commitments mirror those of the City’s, focusing on both carbon reductions and resource efficiency. A model of success, heating in Stockholm generates 0.8 tCO2 per resident per year, over 70% reduction from the 2.9 tCO2 emitted per resident in 1990—attributable to both energy efficiency improvements and the widespread replacement of fossil fuel-powered boilers for district heating connections.

Reducing Emissions: Renewable Sources
Since the closure of Stockholm’s last coal-fired plant in April 2020, the city’s district heating system has been based on renewable energy sources, primarily residual products from the forestry sector. Biogenic waste is used to a lesser extent. As such, organic waste has not been allowed in landfills since 2005. To limit the burning of non-biogenic sources, Stockholm Exergi launched a waste sorting plant in 2023, applying novel infrared technology to automatically sort out plastics from household waste.

Both biomass and biogenic waste is burned to generate heat and electricity via Combined Heat and Power (CHP) plants. Using CHP, or cogeneration, waste incineration and biofuel power turbines to generate electricity, while excess heat is used for district heating.

Resource Efficiency: Heat Recovery
Unlike NYC’s district thermal network—Con Edison’s district steam system—which provides heat to users unidirectionally, Stockholm’s open network allows users to sell excess heat back into the system. Building owners can transfer heat, either directly, or using a heat pump, to the district heating return line through a heat exchanger. Stockholm Exergi builds the connection to the distribution system, with the supplier paying back the costs of connection over 15 years. Payments are determined by the temperature of return lines in relation to Exergi’s desired 68° C temperature.

With heat recovery, buildings move from consumer to prosumer. Buildings connected to the district heating network become energy assets by deploying waste heat that would typically be rejected into the atmosphere. The market for recovered heat incentivizes heat recovery strategies, particularly for facilities with significant excess heat, like data centers and supermarkets. For example, the Stockholm Data Parks initiative, launched in 2014, recovers over 100 GWh yearly from 20 suppliers through open district heating, equivalent to the annual heating needs of 30,000 modern apartments and 1.5% of Exergi’s total customer demand. Early successes, like the Stockholm Data Parks initiative, have laid the foundation for a growing market, while the EU’s European Energy Efficiency Directive, updated in 2023 to include targets for data center heat reuse, will likely contribute to additional growth in this area.

Wastewater is handled similarly, with heat recovered and sent back into the district system. At the utility scale, Hammarbyverket, the world’s largest heat pump plant, extracts district heating from wastewater sent from Henriksdal’s wastewater treatment plant. At the building scale, heat recovery coils over wastewater lines recover and transfer heat back into the building or district system.

Resource Efficiency: District Cooling
Exergi’s growing district cooling system, while currently only 5% of the sales of their district heating system, is the largest in the world. Unlike New York, Sweden’s climate requires little cooling in most residential and commercial spaces—although demand is growing as the global climate warms. Cooling demand is primarily supplied by one of the world’s largest sea water-based cooling facilities. Depending on the season, cold seawater is used directly, or with industrial-scale heat pumps, which extract heat to generate cold water.

Success Through Scale
A chief driver of success for Stockholm’s district heating and cooling networks is scale. The greater number of buildings served in a network, especially given diverse loads, increases heat sharing opportunities, improving overall system efficiency and reducing costs. As the network grows, so does the opportunity for energy recovery and sharing via the processes described above.

Geothermal Energy:

While Stockholm’ Exergi’s district heating and cooling systems dominate the market, geothermal energy, or ground source heat pumps (GSHP), are also used (in addition to, or in place of the district system) for buildings at all scales. Sweden has been a leader in geothermal energy since the oil crises of the 1970s, with more than 500,000 shallow geothermal energy systems installed for space heating and domestic hot water.

In Stockholm, geothermal energy is a practical choice given the prevalence of low-temperature water-based heating and cooling systems. GSHPs are well suited to provide heating and cooling in buildings designed for district heating, as the required infrastructure is the same—the main difference is that heat is pulled from the ground, rather than the district network.

Sustainability and economics are also core drivers. Geothermal energy is a relatively low-maintenance, high-efficiency energy source, relying on GSHPs to extract heating and cooling from the ground, rather than the outdoor air (which is colder than groundwater in winter, and warmer during the summer). While the upfront costs are significant relative to other systems, involved Swedish developers cited GSHPs as a way to increase self-sufficiency and reduce risk, insulate companies from district system price fluctuations, and put downward pressure on district heating and cooling prices. For many of Sweden’s largest developers, ownership structure (e.g., pension funds, direct government ownership), justify these investments due to longer acceptable payback horizons and institutionalized environmental goals.

Centralized Controls and Demand Management:

Sweden was one of the first European countries to roll out smart meters, with national-level regulations requiring monthly metering for small consumers and hourly metering for larger consumers by 2009. During our study visit, advanced building controls were often cited as a core strategy for building retrofits in residential, commercial, and institutional settings.

SISAB, a publicly owned property management firm overseeing 600 schools, centralized and digitized building system monitoring and operation to optimize energy use and indoor air quality across all schools. Using 15-minute-increment data, and centralized controls informed in part by artificial intelligence and digital twins, SISAB has seen meaningful reductions in energy use (4%), electricity use (15%), and yearly costs ($270,000), while maintaining target indoor temperature and quality conditions for students and staff.

On the utility side, Stockholm Exergi’s Intelligy Solutions targets system optimization through advanced controls for both small and large residential customers. Through 2,000 service agreements, Intelligy Solutions automates climate control and energy optimization services for individual customers, while providing thermal demand side management and peak shaving services to ensure for system reliability—a key function in a district system where coordination between participants is needed during peak conditions.

These strategies are common to electricity providers, like Con Edison, but not typically deployed for heating and cooling services in the United States. In contrast to New York utilities, frequency and transparency of data is prioritized, with residents collecting easily accessible per-minute usage data through utility-installed sensors. Secondary services, as described above, are opt-in. These services continue to grow, with Intelligy Solutions aspiring to fill the role of “decarbonization concierge,” facilitating connections to solar, EV charging, and batteries.

Stockholm & NY: Differences and Opportunities:

Sweden’s sustained aggressive climate policy, initiated by the oil crises of the 1970s, and deepened by growing concern around climate change in the 1990s, has fueled a transformation of their energy sector and built environment. In the building sector, sustained deployment of geothermal energy, renewable electricity, and low-carbon district heating, has crowded out fossil fuels for heating, driven by a federal- level carbon tax.

In contrast to New York, many of Sweden’s largest real estate actors are partly or wholly owned by government or pension funds, a factor cited by developers as contributing to their commitment to energy efficiency and emissions reductions. In New York, real estate development is largely a private sector activity. Given the lack of publicly owned real estate actors, aggressive public policy, combined with strategic public-private partnerships, will be key to influencing the real estate market and accelerating the deployment of low-carbon building solutions. Stockholm’s cold climate is another key difference. Space heating is the focus of Swedish decarbonization efforts, unlike New York, which has both significant heating and cooling demand across the year. Despite these key differences, New York and Swedish climate objectives are closely aligned, with Sweden aiming for carbon neutrality by 2045, and New York’s Climate Leadership and Community Protection Act (CLCPA) requiring economy-wide carbon neutrality by 2050. Similar to Sweden’s carbon tax, the CLCPA includes the development of a market-based tool (Cap-and-Invest Program) to drive emissions reductions.

With a population almost twice that of Sweden’s, robust natural gas infrastructure, and a largely fossil fuel-based electric grid, New York has a long way to go—but recent policy, utility, and industry developments are providing a glimpse into the state’s low-carbon future. At the state level, the CLCPA has mandated 100% carbon-free electricity by 2040, with two major renewable energy generation and transmission projects in the pipeline: the Champlain Hudson Power Express transmission line, connecting New York to Quebec-based hydropower, and the Clean Path NY, comprised of large-scale in-state solar and on-shore wind projects.

At the district level, policies and programs are driving investigation into low-carbon district thermal networks and geothermal energy, echoing strategies deployed in Stockholm. NYSERDA’s Community Heat Pumps Pilot Program solicited submissions for projects that included thermal energy networks and geothermal heat pumps. The State’s Utility Thermal Energy Network and Jobs Act requires the seven largest gas, electric, or combination gas and electric utilities to pilot thermal energy network projects—a small step towards a repurposing gas utility infrastructure in alignment with New York’s climate objectives. Last year, NYC’s Local Law 2 of 2022 committed the city to a feasibility study of district-scale geothermal projects that connect multiple buildings to shared infrastructure. Meanwhile, Con Edison’s 2022 Clean Energy Commitment includes a vision for a decarbonized district steam system, citing boiler electrification via industrial-scale heat pumps and storage, low-carbon fuels, and carbon capture and sequestration as strategies.

Underpinning these programs and policies are Local Law 154 of 2021—phasing out on-site fossil fuel usage in new construction— and Local Law 97 of 2019—NYC’s building carbon emissions limit law.

While industry transformation takes time, these efforts have had meaningful impacts. Developer Tishman Speyer, as part of a Con Edison Utility Thermal Energy Network pilot, is actively exploring opportunities to deploy geothermal systems, thermal networks, and heat recovery technologies for low-carbon heating and cooling across the 17 million SF Rockefeller Center complex. In early 2023, NYC Mayor Adams announced plans for the 400,000 SF New York Climate Exchange, an all-electric complex using district geothermal system to service the entire campus. Led by Stony Brook University, the project team includes Urbs, a Swedish infrastructure consulting firm and thermal energy networks expert. Urbs has also consulted on two in-progress commercial projects—both retrofit and new construction—for developer Hudson Square Properties in Manhattan, centered around thermal energy networks, heat sharing, and geothermal energy. Across the East River, Leandlease’s 1 Java Street, completed in early 2023, provides heating and cooling via ground source heat pumps to 834 units across five interconnected buildings on a full city block—the largest residential project to be heated entirely by geothermal energy in New York State.

On the heels of these new policies and programs, UpgradeNY, a consortium of unions, climate justice advocates, building industry representatives, and environmental groups, are advocating for thermal energy network projects to reduce local pollution, carbon emissions, and create jobs.