Written evidence submitted by UK Heating Matters (DHH0032)
Please find attached our evidence on “Decarbonising heat in homes” inquiry.
Over the past 25 years, I have been at the “chalk face” of finance, energy efficiency and district heating – collaborating with stakeholders from the “boiler room” to the boardroom. This is the first time I have submitted evidence and would welcome feedback.
Collaboration is key, particularly with international partners, not just those within Europe, and I would be absolutely delighted if you could please pass my congratulations to BEIS - for their success, drive and ambition towards our Net Zero future.
With very best wishes,
Mr S Moore.
UK Heating Matters.
1) What has been the impact of past and current policies for low carbon heat, and what lessons can be learnt, including examples from devolved administrations and international comparators?
1.1 The Committee on Climate Change has been an outstanding feature of UK climate policy. Having an independent body to hold government to account is critical for any country being serious about meeting its net zero emissions targets.
1.2 If I may be so bold as to suggest that fossil fuels – particularly for heating – should eventually have “almost no place” in a net zero emissions economy. The challenge is huge but so is the opportunity.
1.3 “Electrification” will be an important component of net zero, and from a low carbon heat perspective, there has been herculean success within BEIS, those in the team should be applauded in helping to decarbonise homes with success stories such as:
• £320m HNIP
• Announcement of a £270 Green Heat Network Fund
• A new green gas levy
• Continued LA support by the HNDU
• Long term market frameworks for Heat Networks
• Low Carbon Heat Network consultation
• Salix Finance
1.4 Extending the green homes grant until 2030 is a great idea and exactly the sort of long term signal the market needs: https://www.bbc.co.uk/news/uk-politics-54795208
1.5 At present, there is no clear ownership of ‘retrofit’ policy across and within government departments – and speaking frankly - this has had a massive impact on why policy has been so slow to come about. Unless a home is going through a major refurbishment, decarbonising heat will not happen. Planning policy alone is insufficient and I applaud the work that the ADE has made in this area, specifically with their proposal, consultation and papers for a Heat and Energy Efficiency Zoning Framework, and also paper “Getting retrofit for net zero and approach for existing homes”.
1.6 Other trigger points are not yet realised in policy, such as the lack of policy around sales of property, as proposed in Scotland. From my limited understanding, there are regulations in the Private Rental Sector (PRS), but they’re scratching the surface and are poorly enforced. The works the ACE Research (Association for the Conservation of Energy), in collaboration with the ADE are consulting in this space and there is great potential for both HHSRS and MEES to be effectively implemented:
1.7 Having “devolved responsibilities” to Local Authorities for controlling heat, the Government would succeed with giving Local Authorities the necessary powers. For instance, if I make the analogy with Air Pollution, the Greater London Authority currently has no control over emissions from diesel-powered boats, ships and cruise liners on the Thames – and equally from a heat perspective – devolved Councils currently have no control over heat wasted from homes or buildings. This has to stop.
1.8 Councils cannot issue on the spot fines for heavily polluting vehicles, heavy polluting homes or even reward homes that have become ‘heating champions’. The police would certainly not regard it as their responsibility to report smoky vehicles to the DVLA, nor would they see it as their responsibility to report ‘leaky, energy efficient homes’. Even if this were the case, the maximum fine for traffic idling outside schools is £20, hardly a significant deterrent. Perhaps there is some learning we can apply to energy inefficient homes?
1.9 Lessons can be learnt from the RMR (Retail Market Reform) with the enforced simplification of tariffs (limiting suppliers to providing four core tariffs). At its time, the RMR sounded restrictive but more than 70% customers did not understand their domestic energy contracts (https://www.cornwall-insight.com) .
1.9.1 Implementation of the RMR was contentious but “fast forward” to 2020 and apply the learnings to heat networks (where suppliers are not selling a homogenised product), with different heat sources, run by a small to large operator/ESCOs/Local Authority etc – and the result is that rules need to be tested for very new, different models and very new concepts.
Lessons learnt from the Regulated Energy Market are
• Strong Enforcement Actions
• Identification of a breach in standards or licence
• Identing length and size of a breach, and any mitigating actions
• Fines or voluntary redress and publication of outcomes, and importantly for heat:
• A tailored approach to heat networks.
1.10 Heat networks needs a tailored approach and reading the CMA’s outcome (Heat Networks must be regulated – and fully support this move) policy requirements need to be mindful of the appropriate regulation or enforcement action.
1.11 Additional learnings include too little customer engagement and too few supplier constraints - resulting in poor customer relations with their incumbent district heating supplier.
1.12 We need to be able to leverage international case studies, international supply chains, international expertise and international companies – such as those from South Korea - to maximise the advantages for the UK to clean growth –leading the world in the development and use of low carbon technologies and at least halve the energy use of new buildings by 2030.
1.12.1 May I suggest that BEIS completes an international review of retrofit supply chains in the domestic sector, working with organisations such as ACE Research, Salix Finance and academics.
1.12.2 There are quite a few examples of large scale programmes that look at deeper retrofit – such as the joint collaboration in Nottinghamshire with Energiesprong – however, these Whole House Retrofit are still not at the scale required.
1.12.3 I am watching with interest the success of this US pilot:
2) What key policies, priorities and timelines should be included in the Government’s forthcoming ‘Buildings and Heat Strategy’ to ensure that the UK is on track to deliver Net Zero? What are the most urgent decisions and actions that need to be taken over the course of this Parliament (by 2024)?
2.1 In light of the current epidemic, bailing out fossil-fuel dependent industries such as air-lines - or targeted subsidies (eg the £300 million to National Express Group under the COVID-19 Corporate Financing Facility) without imposing any climate change obligations is bad policy, particularly in the run-up to COP 26.
2.2 Funding must come with “net zero” strings attached.
2.2.1 A model very similar to https://www.salixfinance.co.uk/ which has a superb success story, delivering both cash and carbon savings whilst decarbonising the Public Sector.
3) Which technologies are the most viable to deliver the decarbonisation of heating, and what would be the most appropriate mix of technologies across the UK?
3.1 Heat decarbonisation is the next transformation of the energy system. It affects every business in the UK and is one of the central pillars of the Clean Growth Strategy. The beauty of district heating networks is that it is technology agnostic – it can play out in any scenario – be it hydrogen or electronification, renewable or energy from waste.
3.2 A combination of low-carbon heating technologies and energy efficiency improvements is one of the obvious answers to decarbonise heating in homes.
4) What are the barriers to scaling up low carbon heating technologies? What is needed to overcome these barriers?
4.1.1 The conversation needs to be escalated from “yes I care”, to “yes I’m doing something about it”. For example, gas burning from boilers is a major source of local pollution and impacting the Net Zero agenda. Gas burning accounts for 21% of total NOx emissions across Greater London. This will only get worse with more people working from home because of the current epidemic. https://www.bbc.co.uk/news/business-54634166
4.1.2 Regretfully, there has been very limited action or understanding around this issue. Different stakeholders need to raise awareness of low carbon heat with the consumer.
4.1.3 The paper from UKERC highlighted Public Engagement with Energy: broadening evidence, policy and practice and provides a decision solution. Their matrix on Public engagement (actions/issues) and who organises (institution led/ citizen led) is very useful indeed.
4.1.4 Low carbon heating must become more attractive, regulated, and visible to households. The Heat Trust is very well positioned to assist: https://heattrust.org// as is Trustmark: https://www.trustmark.org.uk/aboutus/trades-covered.
4.1.5 The transition to statutory regulation is more than just an environmental issue.
4.2.1 As long as the public see paying for new kitchens, bathrooms and extensions as an "investment" and treat energy renovation as a "cost" we’re in a difficult place. There is a huge opportunity right in front of us to reduce emissions, create jobs and get better buildings.
4.2.2 This is about selling comfort, healthier warmer homes. The bill savings exist but, regretfully, carbon is at the bottom of the pile….to quote Adam Smith, Wealth of Nations, 1776:
“It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest”.
4.2.3 Translating carbon savings into consumers own interest will deliver net zero.
4.2.4 Costs have to be socialised across all sectors of the economy. There’s a recognised need to spend c£65bn on retrofitting in this decade alone. The key themes emerging from the APPG Net Zero report is a golden thread in overcoming the Net Zero barrier: https://netzeroappg.org.uk/wp-content/uploads/2020/11/Decarbonisation-Report-Putting-Net-Zero-at-the-heart-of-the-UK-policy.pdf
4.2.5 Current investments are encouraging steps in the right direction. However, they fall short of what is required to put the UK on track for net zero. Regretfully the investment is modest in comparison to the green recovery packages announced by France (€38 billion) and Germany (€40 billion).
4.2.6 So let’s make 2020 the decade of delivery.
4.2.7 The Energy Rev report (Net zero localities: ambition & value in UK local authority investment) demonstrates that decarbonising homes represents prudent use of public funds: every €1 in grant aid delivers about €37 investment. To illustrate the potential, under a 1:37 investment basis, £1 million technical assistance funding to every UK local authority could lead to over £15 billion in local energy investment https://www.energyrev.org.uk/media/1440/energyrev_net-zero-localities_202009.pdf
4.3.1 There is a significant performance gap amongst new homes, resulting in heating costs being passed onto the customer. Most homes built today will need to be retrofitted in the next 10-15 years. Substantial resources are needed for energy efficiency programmes to retrofit existing, inefficient homes.
4.3.2 HRH The Prince of Wales: Green Horizon Summit (10/11/20) emphasised the importance of the urgency required:
“The window for action is rapidly closing. With the urgency required, I hope you will join me to drive a new Marshall-like plan for nature, people and planet, led by the private sector to align our collective efforts and resources for the highest possible impact. Our children and grandchildren deserve nothing less.”
5) How can the costs of decarbonising heat be distributed fairly across consumers, taxpayers, business and government, taking account of the fuel poor and communities affected by the transition? What is the impact of the existing distribution of environmental levies across electricity, gas and fuel bills on drivers for switching to low carbon heating, and should this distribution be reviewed?
5.1 Costs of decarbonising heat need to be socialised across every sector of the economy. Policies should not be regressive in nature (eg levies on bills).
5.2 National Energy Action have stated that over the last five winters the number of excess winter deaths due to living in a cold home is estimated at approximately 10,000 per year. In 2017/18, the number of excess winter deaths (EWDs) across England and Wales exceeded 50,000, the highest recorded for over 40 years. While the causes of EWDs vary, one of the largest contributors to these needless deaths is vulnerable people, often struggling with existing ill-health, being unable to heat their homes adequately, if at all. As well as an unacceptably high number of preventable winter deaths, millions more people are struggling significantly to afford to adequately heat and power their homes and are suffering with poor physical and mental health due to cold homes.
5.2.1 The resulting impact on health services is acute; costing the NHS between £1.4bn and £2bn every year, in England alone and creating huge needless strain on our stretched health and social care services.
5.2.2 Lower income households, beyond social housing, should be able to access and benefit from low energy bills and the transition to net zero. https://www.nea.org.uk/
5.2.3 Some estimates suggest that energy bills will rise on average £32 a month through home working, but the recovery from the epidemic should serve as a springboard for delivering net zero through building back better.
6) What incentives and regulatory measures should be employed to encourage and ensure households take up low carbon heat, and how will these need to vary for different household types?
6.1 Grant funding for low income, some grant funding for higher cost measures such as SWI for the able to pay and good finance.
6.2 Major investments in infrastructure should not be directed at roads but at public transport, cycle lanes, pedestrianisation of high streets, district heating and energy efficiency. This represents a real opportunity for these newly-established work patterns to continue after the epidemic and future lockdowns.
6.3 Communities from black, Asian and minority ethnicity (BAME) are more likely to live in overcrowded and densely built accommodation which reduces social distancing, increases indoor air pollution and have leakier energy inefficient homes.
6.4 It has become apparent that during this epidemic, mortality is closely linked to levels of air pollution, particularly to levels of PM 2.5. This is hardly surprising. Risk factors for the epidemic include cardiovascular disease, pre-existing lung disease, diabetes, obesity and dementia; but these conditions are all strongly associated with air pollution. Further regulatory measures are needed to reduce air pollution and thus by result, promote the decarbonisation of heat.
7) What action is required to ensure that households are engaged, informed, supported and protected during the transition to low carbon heat, including measures to minimise disruption in homes and to maintain consumer choice?
7.1 There is very limited public awareness of new policies despite (some) press engagement.
7.2 The EST’s energy advisory service has closed and been replaced with www.simpleenergyadvice.org.uk Whilst no experience of this particular service, I note with a certain degree of despair, that the EST offer no telephone support (other than tech support). If the overarching plan is to reach vulnerable customers, may I suggest that this decision is reviewed?
7.3 ACE has a move valuable resource by enabling B2C users to build packages/bundles of measures. Based on c20yrs experience, this solution deliver substantial cash and carbon savings (eg Energy Performance Contracting and the success of Re:FIT). Some suppliers are using the ACE model for their B2C customers - so rather sensibly, energy data is included in the calculations.
7.4 Press engagement with this “stinging nettle” of decarbonisation remains limited, but awareness and “socialisation of this issue” needs to continue: https://www.thetimes.co.uk/edition/news/a-million-gas-boilers-a-year-must-be-replaced-to-reach-climate-target-86b66mqmj
7.5 UK homes are primarily heated by fossil fuels and contribute 13% of UK’s carbon footprint (equivalent to all the UK’s 38.4m cars). The wonderful report “Uncomfortable Home Truths: Why Britain urgently needs a low carbon heat strategy” by the team at Policy Connect and Carbon Connect says that this is incompatible with UK climate legislation targeting net-zero economy by 2050.
7.5.1 The report found that consumers are open to cleaner greener ways to heat their homes but that they are “still in the dark about smarter, greener heating solutions and lack access to independent advice to help them make better decisions for their homes, pockets and the planet”.
7.5.2 UK Heating Matters would agree with the report and call for an urgent Green Heat Roadmap by 2020 to scale low carbon heating technologies and help Britain’s homeowners access the advice they need to take smarter greener choices on heating their homes.
8) Where should responsibility lie for the governance, coordination and delivery of low carbon heating? What will these organisations need in order to deliver such responsibilities?
8.1.1 One central recommendation of the Policy Connect report, which UK Heating Matters fully support, is the creation of an Olympic-style delivery body to catalyse and coordinate regional innovation and local leadership, tailored to different parts of the UK and the nation’s diverse housing stock. https://www.policyconnect.org.uk/cc/research/uncomfortable-home-truths-future-gas-series-part-3
8.1.2 This report – the third in the Future Gas Series – explored the opportunities and challenges associated with using low carbon gas in the energy system.
8.2 Internationally – there needs to be more co-ordination and co-operation, sharing/learning of best practice, with organisations outside Europe, such as KDHC, the Korean District Heating Corp. The DTI (Department of Trade and Industry) are experts in encouraging partnerships in this space and further support is required to encourage collaboration within the DTI and BEIS departments whilst bolstering SME innovation.
8.3 Organisations such as The Heat Trust and The ADE need to continue to deliver free seminars – to help bridge the skills gap/ train workforces/ foster company collaborations.
8.4 Finally, there needs to be specific tax exemptions or benefits for investors willing to devote time and money to local (and smart) energy projects aiming to benefit localities or communities via local employment, local integrated/cross-vector energy services and decarbonisation of a specific sector or area.
8.5 Establishing policy support for investment in local energy services businesses that provide innovative energy services – ideally with an international collaborative flavour - to foster green growth whilst ensuring we build back better.