Heat and Buildings Strategy Summary

20/10/2021

Overview

Yesterday the UK Government published the long-awaited Heat and Buildings Strategy, setting out how the UK will decarbonise homes as well as commercial, industrial, and public sector buildings to meet its target of net zero by 2050. The strategy is also supported by the Net Zero Strategy, with the Treasury publishing the accompanying Net Zero Review. AC has summarised the Net Zero Strategy separately here.

The strategy has faced several delays as debates continued about the best way to decarbonise 30 million buildings in the UK. In 2019, 23% of the UK’s emissions were from heating buildings, with 17% of emissions stemming from heating homes alone. This strategy sets out the Government’s plans to decarbonise gradually, beginning with incentivising consumers and driving down the cost of technology. This summary includes an overview of the core principles guiding the strategy, the key announcements within the strategy and an overview of initial stakeholder reaction.

Policy approach

The Government says five core principles guide the strategy and will inform future action in the 2020s and longer-term transformation to Net Zero:

  • A whole-buildings and whole-system approach to minimise the costs of decarbonisation.

  • Viewing innovation as essential to driving down costs, improving options and informing future decisions

  • “No and low regrets” action – prioritising action to improve buildings with low energy performance and high emissions and future proofing new builds to avoid the need for later retrofitting

  • Balancing certainty and flexibility to provide stability for investment while enabling different approaches to be taken for different buildings.

  • Targeted government support to enable action for those most in need

Key announcements

The key announcements within the Heat and Buildings Strategy included: 

  • £5,000 government grants for households through £450 million Boiler Upgrade Scheme to help install low-carbon heating systems

  • The scheme will last an initial three years from next year and applies to England and Wales

  • The £450 million Boiler Upgrade Scheme is part of more than £3.9 billion of new funding including: 

    • Social Housing Decarbonisation Fund
    • Home Upgrade Grant Scheme
    • Heat Networks Transformation Scheme  
    • Public Sector Decarbonisation Scheme

  • £60 million innovation fund launched with the ambition that heat pumps will be no more expensive to buy and run than gas boilers

  • The plan could support up to 240,000 skilled green jobs by 2035

The most headline grabbing announcement has been the £5,000 grants, which have been both welcomed and criticised. Environmental groups have warned that the strategy is “inadequate” to encourage the shift away from gas boilers. Friends of the Earth found that the funding provided with only cover around 30,000 heat pumps a year, a far cry the Government’s target of 600,000 a year by 2028 as set out in the Prime Minister’s 10 Point Plan.

Whole-building and whole-system approach

  • Emphasises that technologies cannot deliver results in isolation, and across a whole building, considerations include:

o   The fabric and thermal efficiency of the building

o   Internal heat distribution systems (such as radiators and pipework)

o   Heat sources and heating appliances

o   energy-related products that directly or indirectly affect energy consumption (such as lighting, appliances, and electronics)

o   Energy storage (such as hot water tanks or batteries)

o   Meters to measure energy use

o   Controls to modify energy use, including smart technologies

  • To achieve a whole building approach, the strategy includes the following technologies:

o   Heat pumps

o   Heat networks

o   Hydrogen

o   Hybrid heat pump

o   Bioenergy

Heat pumps vs hydrogen

Given the provision of £5,000 grants to homeowners to replace boilers with heat pumps and the publication of the heat pump ready programme, it would appear that, in the debate between decarbonising through heat pumps vs hydrogen, the former is winning.

Speaking just two weeks before the publication of the strategy, Lord Callanan, Climate Change and Corporate Responsibility Minister, seemed to indicate that heat pumps would trump hydrogen and voiced scepticism that hydrogen is an effective solution. Research from the International Council on Clean Transportation has found that heat pumps would be half the price of hydrogen boilers for heating homes, and three to six times more efficient.

While the Government is pursuing measures in the short-term to incentivise heat pump installation and innovation, they continue to look at the role of hydrogen in future heating systems. In the strategy, the Government reveal that the decision on hydrogen will be made by 2026, after the learnings from the hydrogen village pilot.

Reaction

The strategy has received a mixed initial reaction from stakeholders.

Political

  • Shadow Energy Secretary Ed Miliband was highly critical of the strategy, describing it as a “meagre, unambitious and wholly inadequate response” to the energy crisis and concerns over the cost of living. He said Labour would provide £6 billion a year for home insulation and zero carbon heating to cut bills by £400 per year

  • Wera Hobhouse, Liberal Democrat spokesperson for energy and climate change, had similar criticisms of the Government’s ability to tackle fuel poverty, adding that the strategy would make no significant reduction in the emissions produced by homes, and would help only one in 300 homes

  • Environmental Audit Committee Chairman, Philip Dunne, said the strategy is a positive start but did not meet the ambition with heat pump installations, in particular for owner occupiers. He added there was little acknowledgment that effective use of heat pumps requires buildings to be properly insulated

Sector

  • E3G welcomed the strategy but called on the Treasury to back the plan with a comprehensive investment package through the spending review to help build a substantial green industry and lower the costs of the clean heat transition

  • The Renewable Energy Association welcomed the strategy but continues to call for a holistic, multi-technology approach to heat decarbonisation

  • Bright Blue warned that the strategy does not meet the scale of the challenge and noted the heat pump funding fell short. The think tank added that 19 million homes in the UK currently have EPC ratings below C, meaning a great many homes will also require vital energy efficiency upgrades

Business

  • The CBI described the strategy as a “golden opportunity” for the public and private sector to increase the pace of the move to net zero. It called on the Government to follow the strategy with a clear delivery plan for consumers, businesses, and local authorities