The Intergovernmental Panel on Climate Change (IPCC), the United Nations body for assessing the science related to climate change, has recently warned that ‘global warming of 1.5°C and 2°C will be exceeded during the 21st century unless deep reductions in carbon dioxide (CO2) and other greenhouse gas emissions occur in the coming decades.’ Failing to act will result in natural catastrophes and changing weather patterns, as well as significant economic damage, supply chain disruption and displacement of populations. The pressure is on to reduce UK emissions as soon as possible and this means major changes for the heating industry.
There’s been a lot of scrutiny in the media about a ban on gas boilers in recent months but everyone in the industry knows that we can’t keep on burning gas. A ban on natural gas boilers is inevitable and some combination of electrified heating, predominately via heat pumps, and hydrogen, in certain areas or industrial clusters, seems the most likely direction of travel. Ahead of COP26, I expect that many of these questions will be answered by the dual release of the Hydrogen Strategy and the Heat & Buildings Strategy. Although publication of both documents has been serially delayed by the Government, COP is forcing them to the top of the Prime Minister’s agenda. I understand that this most recent delay is attributable to Number 10 and the Treasury’s Net Zero Review, but the countdown to November continues. Given the amount of time in Whitehall that has been spent on these strategies, it would be remarkable for the Prime Minister to delay further and miss the chance to make a big splash at COP.
Some from the incumbent industry are seizing this opportunity to lobby against the inevitable changes, hailing Hydrogen as the lone solution, but decarbonising heat is a complex issue. In truth, until findings are reported from government funded hydrogen feasibility studies, no one should suggest that hydrogen heating will replace every gas boiler in existing homes. In fact, even in Scotland, the centre of Britain’s North Sea oil industry, the Government has committed to replacing gas boilers with heat pumps in a million existing homes that are connected to the gas grid by 2030 in their Heat in Buildings Strategy.
But what would a rollout of heat pumps mean in terms of consumer cost? One recent article in the Times led with the headline that bills could rise by £400 a year by 2050. However, by 2050, annual incomes are also predicted to be £15,000 higher than at present. Furthermore, this £400 figure applies only to the richest ten percent of the population, with bills for the least well off predicted to rise by only £80 a year by 2050.
Much of the recent coverage has also failed to take into account the potential impact of flexibility and time of use tariffs. This has the potential to revolutionise how consumers utilise and pay for their energy whilst helping National Grid balance intermittent generation of renewable power with demand. Last month, the Government published its Smart systems & Flexibility Plan, which laid out how flexibility and smart technologies will be incorporated into heat policies, including regulations, assessment methodologies, subsidy schemes and market mechanisms. In particular, the Government will work with industry to incorporate flexibility and smart technologies in the Standard Assessment Procedure (SAP) and, for non-domestic premises, Simplified Building Energy Model (SBEM). SAP underpins many regulations and funding programmes from Minimum Energy Efficiency Standards to the Energy Company Obligation, so rewarding flexibility in this way could have a transformative impact on how it grows in the built environment. As smart-enabled products continue to grow in the market, so will the returns for consumers looking to reduce heating running costs, if they are open to these new products and services.
Whatever the outcome of the elusive strategies, it seems very clear that the cost of inaction will be far more costly to us all in the long run.