The Westminster Government yesterday (19th October 2021) published their long-awaited Heat and Buildings Strategy (HaBS). This frames the policy context not just for England but for the whole of the UK. The key take-away points from our analysis include:
The UK Government sets an ‘ambition’ to end new gas boilers from 2035. To progress this there will be grant funding totalling £450m towards heat pump installations over 3 years. This will be used to provide a £5k grant to ‘early adopter’ consumers to offset the price of a technology accredited installation, most likely a heat pump. The hope is that over the term of this 3-year period there will be a significant ramp up in installations, alongside dramatic reductions in technology prices with heat pumps becoming price competitive with gas boilers. The funding, spread evenly, equates to approximately 30,000 installations per year although there would be an expectation of lower numbers in Year 1 and much higher numbers in Year 3. There is a UK Government target of 600,000 installations per year by 2028.
Other commitments include:
- £1.4bn towards helping the public sector to decarbonise its building assets.
- £950m in Home Upgrade Grants for energy efficiency works.
- £800m towards the decarbonisation of heat in social housing.
- £340m for supporting the growth of heat networks.
- £65m investment in innovative ways to help electricity networks manage future demand.
- Outline proposals, once the current energy price ‘spike’ has subsided, to shift environmental levies currently on the electricity bill to the gas bill over the next decade.
- Investigation into the role that hydrogen can play in heating buildings with a decision in 2026 once demonstration projects have generated their findings.
While we are encouraged that the UK Government clearly accepts that action is needed to shift our reliance on burning fossil fuels for heating the majority of UK buildings, our overall concern is that the strategy defers many decisions to a future point, in some cases as far away as the mid-2030s. Its lack of firm commitments will cause significant delays in taking action. Even the £5k grant scheme for domestic installations mirrors the recent Green Homes Grant scheme, which was unexpectedly scrapped after 6 months with take-up being relatively low. The UK Government is also placing considerable faith in significant technological innovation to reduce the current costs of low carbon heat technologies, yet there is a lack of tangible evidence that this is feasible. The levels of public investment stated in the report are also unlikely to be of sufficient magnitude to achieve the scale of transformation that is desperately needed.
In Scotland, the recently published Heat in Buildings Strategy (see our HiBS summary) states: “the delayed UK Heat and Buildings Strategy must set out how the UK will use its regulatory and policy levers to incentivise rapid deployment of zero emissions heat technologies and make zero emissions heat the cost-effective choice. If the UK Government fails to take our recommended actions, there is significant risk to our ability to achieve the necessary emissions reductions from buildings.”
While the UK HaBS recognises the obvious disparity between the high price of low-carbon electricity verses the low price of higher-carbon gas, it makes no hard commitment to shifting environmental levies onto the gas price. Likewise, its Net Zero Strategy states that some form of carbon tax is necessary to make high polluters pay more but it makes no clear commitments on timescales for this. On the issue of re-purposing the gas grid for hydrogen, the HaBS makes no commitments until 2026, when the results of its own ‘hydrogen experimental village’ tests will be available. This effectively means that there can be no clear heat pathway targeting the majority of the UK’s buildings which are currently connected to the mains gas grid. Until this decision is made, the focus must inevitably remain on the small proportion of ‘low regret’ buildings. It is likely, in our view, that overall the Scottish Government will be disappointed but perhaps not surprised with the scale of commitments offered in the HaBS.
This ultimately limits the scale of ambition for heat decarbonisation north of the border.