The government’s Heat and Buildings Strategy “leaves many questions unanswered” the Climate Change Committee (CCC) has said as it called for a “careful, consultative” approach to address the shortcomings.
Some of these questions include uncertainties around how a market-based mechanism for low carbon heat will operate and the governance arrangements for energy planning. Additionally, many of the policies included in the strategy – released in October 2021 – have ambitious timelines, the CCC said.
“These are big, strategic decisions that will be difficult to shift away from,” the CCC said, giving the example of the role of hydrogen in the UK’s future energy mix.
In the strategy, the government committed to making a decision on the potential role for hydrogen in heating buildings by 2026.
Consultations will need to produce decisions, the CCC said, with the government needing to move fast to complete its current engagement and clarify the fine details of how many of its policies and programmes will work in order to enable firms and individuals to start taking action such as raising finance and making spending decisions.
These details include what efficiency standards will apply for existing residential and non-residential buildings, how obligations will apply to boiler manufacturers, mortgage lenders and others and what new powers bodies will have both in central and local government.
The CCC highlighted how a key feature of the government’s approach to heat and buildings is creating new markets for low carbon heat. However, the UK currently doesn’t have enough capacity in its supply chains to install the number of heat pumps or heat networks needed, with the government aiming for 600,000 heat pump installations per year by 2028, up from around 35,000 last year.
While a market-based approach has upsides, such as creating space for innovation, placing less burden on the Exchequer and allowing homeowners, communities and local authorities more flexibility around how when and what technologies they use to improve buildings, new markets also need demand to grow and supply to match it, the CCC said.
It detailed how the government is providing some capital funding and is introducing new regulations to create demand, while also pursuing supply side policies such as obligations on boiler and heat pump manufacturers.
Indeed, the Heat and Buildings Strategy included commitments such as offering grants of £5,000 for the installation of heat pumps from April 2022, working with industry to meet the aim of heat pumps costing the same to buy and run as fossil fuel boilers by 2030 and a scheme to provide funding to drive technological innovation which will make heat pumps smaller, easier to install and cheaper to run.
“But there are risks,” the CCC said, stating that to grow both supply and demand at the same time requires “an extraordinary level of policy coordination”.
There are also barriers in place such as the relative costs of electricity and gas as well as shortages of skilled installers.
The government announced it would be publishing a call to evidence on reducing the price of electricity over the next decade by shifting levies away from electricity to gas in the strategy, with this having been a policy change advocated for by a collection of utilities.
Meanwhile, last summer the Heat Pump Association launched a new training course, with over 40,000 installers each year set to benefit from it and with the intention of helping to solve the issue of ensuring there are sufficient skilled installers available.
The CCC also found there are key areas where there are gaps in policy, including policies needed to drive improvements in energy efficiency in homes that are not fuel poor- which it described as “currently inadequate”.
However, the CCC said that while there is still much to be done, the signs are “encouraging”. The strategy includes what it said are promising new proposals, including specific deadlines for when gas and oil boilers should be phased out, new long-term policies for low-carbon heat and new funding for heat networks, public buildings and the fuel poor.
Overall, there are five areas the government should now focus on. These include filling policy gaps, building on initial proposals for critical enablers such as skills, information, finance and governance and strengthening the coordination of the UK strategy with devolved and local plans.
The government should also take major strategic decisions, in particular addressing the relative costs of electricity and gas, and move forward with the large number of planned consultations and policy papers over the next year, ensuring promising proposals become concrete and timely policy.
