Is it too late to decarbonise heat?

April 19, 2018


Energy UK has published a report stating the lack of direction provided so far by the government on heating policy is “concerning”. David Blackman asks whether the UK has left it too late to decarbonise heat.


The government is at least upfront about the problem. The Clean Growth Strategy, published last October, describes the decarbonisation of heat as “our most difficult policy and technology challenge” facing efforts to meet its statutory greenhouse gas reduction targets that look set to become even more stretching following energy minister Claire Perry’s move this week to explore the Paris climate change agreement’s zero emissions goal.


The faster than anticipated switch-over from fossil fuel to low-carbon sources for electricity generation has provided the industry and policymakers with a bit of breathing space to tackle the issue. The government has set itself a mid-2020s target for making key decisions about how it plans to decarbonise heat, which accounts for a third of UK emissions, such as the extent to which it will rely on electric heating or converting the gas grid to hydrogen.


To help provide a road map for the first steps of this transformation, Energy UK published a report last week. It describes as “concerning” the lack of direction provided so far by the government on heating policy.


“Whilst it would be unfair to expect government to know what mixture of low carbon heat solutions will be deployed over the coming decades, it is important to ensure that the policy framework set out delivers long term stability and certainty,” says the report. “Urgent action is needed to lay the groundwork for a regulatory and policy framework that can support the decarbonisation of heat over the next two decades.”


A no-brainer


The study focuses on the actions that should be taken by the end of the 2020s, when the current generation of the UK’s now near ubiquitous gas boilers will have to have been replaced.


The biggest no-brainer or “least regrets” option, the report suggests, is a combination of zero-carbon building standards for new buildings and improved energy efficiency for the country’s existing stock.

Paul Clark, senior policy manager UK and Europe at Centrica, said at the report’s launch earlier that reintroducing zero carbon housing standards made sense because it would avoid the need for costly future retrofit work at a later date. The cost of low-carbon technologies could be integrated into the cost of new dwellings, he added.


On projected build rates, around 7 million new homes will have been developed by 2050, equating to one-fifth of the country’s housing stock by the middle of this mid-century.


The flipside though is that as Mike Hemsley, senior power analyst at the Committee on Climate Change points out “most housing in 2050 is already built”.


However, a combination of upgrading the energy efficiency of existing stock and a zero-carbon standard for new-build properties could reduce energy consumption to the tune of 15 per cent by 2030, he says.


“Drastically underperforming”


Other “low regrets” options could include installation of district heating systems in dense areas and injection bio methane into the gas grid, he adds.


More immediately, the report urges a snap review of the renewable heat incentive (RHI) by the end of this year.


Clark, who led the report in his capacity as chair of Energy UK’s decarbonisation of heat working group, said that the existing scheme is “drastically underperforming”.


A review of the scheme is “vital” this year to ensure that it delivers value for money until 2021 when it is due to be wound up.


Energy UK recommends that the scheme could be improved by allowing third party investors to pay for the upfront cost of installations.


The capital costs of many low-carbon heat installations mean that a “disproportionate number” of higher income businesses and customers apply for the scheme, says the report. Allowing external investors would encourage greater uptake of the scheme amongst lower income businesses and customers.


However, any reform of the scheme should not go down the same route as the recent moves to reform the ECO by targeting households in fuel poverty or off the gas grid. Eligibility for the scheme should be kept as wide as possible in order to foster the development of low-carbon heat technology supply chains.


Clark said: “If we can get that working better we can start to develop a market where customers have a chance of buying a technology and they wouldn’t see a big material change in terms of their bills.”

The key, though, is to build up to big calls that will need to be made by the mid-2020s on how to decarbonise heat, such as demonstrating that hydrogen can be safely injected into the gas grid.

And while the current heating system is dominated by natural gas, the future system will be a mix of different technologies with different solutions working in different areas, says Hemsley: “If you are going to convert to hydrogen have to convert an entire region to be cost effective otherwise you are going to have fewer people paying for the entire cost,”


However, the scale of funding for research into low-carbon shows an ‘apparent lack of commitment to solving the issue’, says the report. The sum allocated in the Clean Growth Strategy to decarbonising heat (£227 million) is dwarfed by the £3.5 billion earmarked for transport.


So, has the UK left it too late to decarbonise its heating system?


Zoe Guijaro, policy manager for renewable heat and community energy at Citizen’s Advice, said that the government was right to take a cautious approach to the issue, given the customer backlash that the introduction of an ill thought through solution could spark.


“It seems like slow progress, but they are being really cautious and testing out different approaches. We’ve seen before that they rushed in to get the Green Deal off the ground.”


Hemsley said the government’s mid 2020s timescale is feasible if existing research and pilot projects bear fruit. “It’s not too late because if you backdate the 2050 target that is the latest you could start. It’s not too late but you wouldn’t want to go much later.”


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