The strategy paves the way for a gradual transition to low carbon heating solutions, driven by incentivisation of consumers, and reveals how the government intends to meet its carbon targets, deliver its Ten Point Plan and remain on track for net zero carbon emissions by 2050.
1. Why does the Strategy focus on heat?
With over 30 million homes, workplaces and public buildings in the UK, heating contributes to nearly a quarter of all UK emissions. It is anticipated that tackling heat and power sources will reduce energy bills for consumers, improve energy efficiency and build the markets needed to support the transition, providing up to 240,000 skilled green jobs by 2035 and thereby boosting economic recovery and levelling up across the country.
2. What are the main planned activities?
2.1 In April 2022, the government is set to launch a new £450 million Boiler Upgrade Scheme to support a switch to the use of low-carbon heat pumps. The scheme provides households and small businesses with £5,000 grants when switching to an air-source heat pump or £6,000 grants when switching to ground-source.
2.2 There is also a £60m Heat Pump Ready innovation programme, providing funding for innovation activities geared towards making heat pumps smaller, easier to install and cheaper to run.
2.3 The government aims generally to reduce the cost of installing and running heat pumps to increase uptake. The target set is a reduction in the costs of installing a heat pump by 25-50% by 2025 to ensure heat pumps cost the same to purchase and run as gas boilers by 2030.
2.4 The current pricing of electricity and gas does not incentivise consumers to switch. The government intends to explore shifting levies away from electricity to gas to rebalance energy prices. A strategic decision will be made in 2022.
2.5 Whilst homeowners will not be required to remove existing gas boilers, no new gas boilers are to be installed from 2035 to reduce dependency on fossil fuels.
2.6 The government pledges to invest £338 million into a broader Heat Network Transformation Programme to increase low-carbon heat network deployment and allow local areas to arrange heat network zoning. It is intended that heat networks will play a key role in high-density areas, ensuring certain types of buildings are required to connect within a specific timeframe.
3. What about hydrogen?
3.1 The role of hydrogen as a potential clean source of fuel for households, transport and industry was emphasised in the government’s Ten Point Plan, despite mixed views on its true environmental cost.
3.2 In the strategy, the government intends to continue research in this area and undertake a series of hydrogen trials. A decision on the blending of hydrogen into the gas grid has been outlined for 2023 and the government has pledged to conduct a consultation on the conversion of gas boilers to use hydrogen by 2026 (‘hydrogen-ready boilers’).
3.3 Carl Arntzen, CEO of Worcester Bosch, which are in the process of trialling a 100% hydrogen boiler prototype, has criticised the strategy for delaying the decision on how to integrate hydrogen heating into homes.
4. Is it affordable for lower income households?
4.1 Around 60% of homes in England were below EPC band C in 2019. Accordingly, the strategy has a specific focus on the need for additional support for the fuel poor and lower income consumers.
4.2 The government is boosting funding for both the Social Housing Decarbonisation Fund (“SHDF”) and Home Upgrade Grant (“HUG”), by £800 million and £950 million respectively. The SHDF offers the potential for registered providers of social housing to apply retrofit solutions. The HUG is designed to tackle fuel poverty and support lower income households to achieve energy efficiency upgrades, focusing on helping households living in off-gas-grid homes rated EPC bands D-G to reach band C.
5. What is the role of the public sector?
5.1 The strategy has a particular focus on the public sector to lead the way in decarbonising buildings and thereby encourage action in other sectors.
5.2 Additional benefits of the scheme to date have included supporting skilled jobs in the low-carbon and energy efficiency sectors, helping develop the supply chains to support the decarbonisation of commercial and industrial sectors and building support and acceptance for a transformation in the way we heat buildings.
5.3 As a result, the government are extending the Public Sector Decarbonisation Scheme by investing a further £1.425 billion over 2022/23 to 2024/25. The scheme provides grants to fund energy efficiency and heat decarbonisation measures in public sector buildings in England.
6. What has been the reaction to the Heat and Buildings Strategy?
6.1 Julie Hirigoyen, chief executive at UKGBC, argues that the phasing out of gas boilers from 2035 onwards does not go far enough to guarantee net zero targets are met. Moreover, Mike Childs, head of science at Friends of the Earth, claims that the new Boiler Upgrade Scheme reflects less than half the current rate of installation and therefore will not be sufficient to meet the Government’s installation target of 600,000 per year by 2028. At £5,000 per installation, the funding will account for only 30,000 heat pumps per year.
6.2 The climate change charity, Ashden, has emphasised the shortage of skilled workers in this area, revealing there are just 1,000 heat pump installers in the UK (compared with 96,000 gas engineers). Ashden have therefore called on the Government to invest more in the educator sector to train instructors and provide capital investment in new energy efficiency training facilities to avoid potential skill shortages.
6.3 Further concerns have been raised in relation to the government’s failure to introduce a national retrofitting strategy. Whilst confirming that insulation would be improved in social housing to upgrade as many homes as possible to achieve a minimum EPC band C by 2035, the strategy does not introduce any specific plan to improve existing buildings’ thermal efficiency and reduce energy demand. Overall, therefore, the benefits of installing heat pumps risk being lost and UKGBC warns of the risk of overloading the electricity grid.
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