District heating systems are central to Europe’s decarbonisation strategy and its 2050 climate-neutrality objective. This paper summarises the work, which was conducted within the LIFE22-CET-SET_HEAT project between October 2023 and September 2026. The project team and external stakeholders jointly identified technological solutions and other measures to help the targeted DH systems in Croatia, Lithuania, Poland and Romania qualify as Efficient District Heating System under the revised Energy Efficiency Directive (EED). This study presents a strategic, system-level assessment of district heating decarbonisation pathways. Based on case studies ranging from small towns to some of the largest district heating networks in Europe, the results revealed that compliance with policy targets at the local level is particularly challenging. Usually, there are unfavourable district heating network operational parameters, scarcity of local resources (e.g. land, renewable energy sources, waste heat, etc.) and heavy dependence on fossil fuels. The expected transition process is characterised by a high degree of complexity and multi-dimensionality, where economic and regulatory factors play a pivotal role. The results show that compliance with the EED criteria for 2028 and 2035 is achievable in principle, but only under restrictive technical and economic conditions. In many cases, the compliance with EED targets is not equivalent to system cost efficiency and may require operational compromises that increase costs or emissions. Dispatchable low-carbon heat sources are essential to ensure security of supply and limit overreliance on electricity-driven technologies. Seasonal thermal energy storage is a key enabler, but its feasible scale is limited in dense urban environments. Modernised CHP plants remain critical transitional assets, supporting flexibility and mitigating electricity market risks. And finally, financial viability cannot be achieved without external support, underscoring the necessity of EU funding, regulatory incentives, and risk-sharing mechanisms. The results also indicate that further progress toward deep decarbonisation in 2050 becomes significantly more challenging. A common feature emerging from the study is the growing emphasis on energy harvesting, systematic recovery of low-grade renewable and waste heat dispersed across the urban environment, which increasingly defines the backbone of long-term district heating decarbonisation pathways.