Coming in from the Cold

District heating is a critical energy source for countries in transition as it covers 60% of heating and hot water needs in transition economies currently. It can provide a cost-effective, environmentally friendly source of heat and power for cities and also play a significant role in reducing or stabilising carbon emissions. Successfully reforming district heating in major energy producer or transit nations like the Russian Federation and Ukraine can have broad benefits for energy security in the region and Western Europe. Yet many district heating systems in transition economies face difficulties: inefficient heat production, costs that exceed revenue and declining sales.