Decarbonisation update: Policy announcement overload!

At the beginning of December, the UK Climate Change Committee (CCC), published its latest report on which steps the UK must take to achieve its net zero decarbonisation target.

The report, and associated research ran to over 1,000 pages and contains ideas that, if adopted by government, will transform the heating industry over the next two decades. For example, it would end the installation of fossil fuel heating – gas by 2033 and oil by no later than 2028. Instead, the Committee wants to see one million heat pumps installed each year by 2030. This would be a huge change – there are currently only around 30,000 heat pump installs each year at present, compared to 1.6m gas boilers and 65,000 oil boilers. The research supporting the report proposes that much of the increase in heat pump installation in the 2020s would be in new build or off-gas grid homes, although they also state that up to 900,000 biofuel/heat pump hybrid systems could be needed for hard to treat off-gas grid homes.

Just before this, in late November, the Prime Minister published two important documents. First, the Prime Minister, Boris Johnson, announced a Ten Point Plan for what he called a green industrial revolution. This focused on all areas of the UK economy and, like the CCC’s report, the headline for heating is a massive growth in heat pump deployment although, this time, 600,000 heat pump installations each year by 2028. The Prime Minister’s plan also stated that support would be available for rural households to upgrade their heating systems and that new regulations to support this would be forthcoming.

Alongside the goal of decarbonising energy, the plan also focuses on the need to support a green recovery, create jobs and ensure consumers get a fair deal.

The third point is crucial recognition that the next stage of the decarbonisation process moves beyond infrastructure to impact directly on the way we live. A key policy question will be how costs are distributed across the economy. If there are too many losers, there may be a backlash – you may remember the populist, grassroots, yellow jackets movement seen in France. Cost is certain to be a concern for 65% of oil-heated households, because the cost to upgrade their energy efficiency is expected to be much higher than average, making heat pump deployment extremely expensive. This adds credence to the liquid fuel heating industry’s proposal, which is likely to be a much cheaper option for many households than either heat pumps or a hybrid system.

What does it all mean for the liquid fuel industry?

These documents provide a glimpse of what we can expect from the forthcoming UK Heat in Buildings Strategy. The focus on off-gas grid homes and emphasis on the need to act quickly, means change is coming sooner rather than later – and we will be first in the queue. The Government is expected to deploy a mix of both carrots and sticks – for example grant schemes backed by tighter regulation – to encourage or, if necessary, compel households to install heat pumps.

However, while the most eye-catching headlines are about heat pumps, there is a commitment to open the market to other clean energy alternatives as well. This is a crucial point in what might otherwise have been bleak news for the fossil fuel heating industry. It potentially leaves the door ajar for low carbon liquid fuels such as HVO. The key task for industry is to demonstrate that HVO is a viable, cost-effective solution and work to do this is ongoing.

What does it mean for heating installation businesses?

For anyone working ‘on the tools’ and willing to embrace the changes, it’s happy days basically. There’s likely to be a lot of work around in the next few years, providing the Government’s policies are effective in making the changes happen. This has not always been the case, but the recent announcements suggest the Government is much more serious this time, and the need to take action has also never been greater.