Written evidence submitted by National Energy Action (NEA) (DHH0038)

  1. About National Energy Action (NEA)

1.1                 NEA[1] works across England, Wales and Northern Ireland to ensure that everyone in the UK[2] can afford to live in a warm, dry home. To achieve this, we champion and deliver energy efficiency programmes, aim to improve access to energy and debt advice, provide training and co-ordinate other related services which can help change lives[3].

  1. Summary of our evidence

2.1                 On the 27th June 2019, the UK became the first major economy in the world to legally commit to ending its contribution to global warming by 2050, meaning that emissions from domestic households will need to be almost entirely eliminated by 2050 or even sooner. All scenarios for meeting this challenge require:

a)   A significant proportion of homes to increase the thermal efficiency of their building fabric; and

b)   A significant number of homes to make the switch to using lower carbon fuels to heat the home.

2.2                 The technologies required to meet many of these challenges already exist or are being developed. The real difficulty lies with what the changes means for people. Making the required changes is a material challenge for all households, and for many it will be substantial. 2.4 million households In England are estimated to be living in fuel poverty[4]. This means that they are on a lower income, living in a home that cannot be kept warm at a reasonable cost. They already face stark choices as to where to spend their limited resources, with many living on negative budgets, where their income does not even cover basic costs[5]. Poorer homes are more likely to choose to ration their energy usage, heating their homes to an inadequate, unsafe standard, in order to save money and make ends meet.[6] Simply reducing usage below these levels without physical changes to their homes would be significantly detrimental to health.

2.3                 In contrast to the more centralised approaches used in the decarbonisation of power, heat decarbonisation requires a decentralised approach that focuses on people and the way they heat their homes. This task is by no means insignificant, and the UK needs to install more than 21,000 measures every week up to 2035[7]. The Committee on Climate Change has said that 19 million heat pumps are expected to be needed by 2050[8]. A straight-line trajectory from 2020 implies around 630,000 heat pumps a year.

2.4                 This challenge is currently in part being addressed by the UK Government through three policies that contribute to the decarbonisation of heat in domestic homes but not at the pace and scale required to meet the aforementioned targets:

2.5                 The Energy Company Obligation (ECO), which is an energy efficiency scheme working across Great Britain, provides grant funding to cover some, or all of the costs of energy efficiency or heating measures and is notionally targeted at fuel poor households. It is paid for through a levy on electricity bills, and contributes £640m/year towards measures across England, Wales and Scotland.

2.6                 The Renewable Heating Incentive (RHI) provides a subsidy, based on the amount of renewable heat made by a qualifying heating system for households across England, Wales and Scotland. It is funded through general taxation. This scheme ends in 2022 and is due to be replaced by a grant scheme that would cover at least a portion of the upfront costs of primarily heat pumps. It is not expected to be targeted at any particular demographic.

2.7                 The recent Green Homes Grant which is providing £2bn into energy efficiency and renewable heat for homes in England. Approximately £500m will fund vouchers for low income households and a further £500m is directed through local authorities (£200m this financial year and £300m next financial year) to help low income households install energy efficiency and low carbon heat improvements to their homes.

2.8                 For fuel poor, and other financially vulnerable households, many still find it difficult to afford new low carbon technologies to heat their homes. There is currently both a lack of support to move away from high polluting technologies (e.g. solid fuels) and low carbon but expensive ones (e.g. direct electric heating) to new, technologies such as heat pumps. This support is especially needed for electrically heated properties, where the prevalence of fuel poverty is twice than that for gas users.

2.9                 Beyond the upfront costs, the barriers that NEA perceive to be greatest to fuel poor households decarbonising their heating are:

2.10             In addition to these hurdles, others will be created due to the high projected cost of reaching net zero. How this is done will be of material importance to the poorest households living in the leakiest homes and costs must be recovered in an equitable way.

2.11             NEA therefore believes that there are 13 actions that must be taken in order to ensure a successful, fair and equitable decarbonisation of heating in homes:

Provide adequate and long-term funding mechanisms

    1. Government should prioritise reducing space heating demand with insulation measures and ensure that fuel poor homes are treated first. This requires a long-term plan for funding energy efficiency. The UK Government and Local Authorities should prioritise reducing space heating demand with insulation measures and ensure this activity prioritises fuel poor homes. The UK Government must also set out a long-term plan for funding energy efficiency and prioritise the rollout of alternative low carbon heating technologies off the gas network until 2025, especially to offset the use of high carbon solid fuels. This in part should include continuing to support the delivery of the Fuel Poverty Network Extension Scheme (FPNES) during this period with the installation of First Time Central Heating (FTCH), where it replaces high carbon fuels.
    2. Support must be given for moving to low carbon heating, in terms of both upfront and ongoing costs, targeting the poorest households. In order for fuel poor households to fully benefit from decarbonising heat, they will need financial assistance to a) adopt the new technology and b) to use it, if it is more expensive than gas. Doing so will not only ensure that poorer households benefit first, but also will help to move the market, building the supply chain and increasing the number of installers.
    3. Government must create new funding mechanisms to help low income households to move away from inefficient electric heating. New policies are required to tackle higher proportion of low-income households using older, inefficient electric heating in high-rise dwellings, where necessary funding should be provided for developing comprehensive technical and economic feasibility studies to allow social landlords, freeholders and/or leaseholders to understand which alternative heating technologies could be deployed. 

Act on distributional impacts to achieve equity

    1. The UK Government should investigate each policy which seeks to decarbonise heat for any potential distributional impacts. In order to fully understand the consequences of decarbonisation of heat on energy bills, the UK Government conduct a thorough impact analysis of both existing and proposed policies to determine their impact on different sets of consumers, including different income deciles.
    2. Government should help legacy coal users to make the change to lower carbon heating. This should include promotion of alternative uses of the National Concessionary Fuel Scheme to help support the adoption of alternatives to coal for space heating. This activity should include working closely with colleagues across the devolved nations.
    3. In the short term, while energy efficiency upgrades are still being completed, Government should extend and expand the Warm Home Discount to account for inequity. Energy costs are currently fairly inequitable, with a significant amount of costs being loaded onto the fixed part of the energy bill, and therefore spread equally across society. A £140 payment to the poorest pensioners and other vulnerable groups helps to balance this in the short term.

Provide targeted advice and enhance consumer protection

    1. There must be a framework for advice provision, both centrally and through installers and manufacturers. Unless installers can give clear advice on new technologies, and manufacturers can give clear instructions as to how they are used, householders stand little chance of being able to decarbonise in the most cost-effective way. This should include the reintroduction of the Energy Savings Advice Service (ESAS).
    2. Government should work with Ofgem to determine how to regulate heat, not just power and gas. In order to ensure that consumers remain protected and are treated fairly, heat should be regulated instead of the fuels that are used to create it. This would mean that no matter how heat is created, there will be adequate protection and regulation for vulnerable consumers.
    3. The risks of relying on unsafe secondary heating and  the relationship between fuel poverty and carbon monoxide (CO) must be acted on. While gas safe charities and other organisations have helped raised the profile of these areas, there is a need for central Government to help drive awareness of these issues and what households can do to reduce their exposure to these life threatening risks.
    4. Defra and BEIS must work together with rural community groups to raise awareness of upcoming bans on heating fuels. Ahead of the banning of sales of wet wood, bagged traditional house coal and the sale of loose coal a targeted awareness campaign is required to help manage the transition to cleaner alternative
    5. Government and Ofgem should work with industry to assess the likely extent of household infrastructural change and disruption that may accompany the installation of different low carbon heating technologies. This should include an assessment of the installation of different heating technologies (e.g. heat pumps, hydrogen systems) on different property types, and how different vulnerable groups may be disproportionately impacted by household disruption and upheavals

Develop whole systems approaches

    1. Government and Ofgem must ensure that energy networks provide the appropriate support to their customers to help them decarbonise their heating supply. This should include:
    1. Government should undertake a review of the required behaviour change to decarbonise and how to achieve it. We know that behaviours will need to change significantly to achieve net zero, but we do not know exactly what needs to be done, or how to achieve it. A review would help to bring this to focus and accelerate progress.

November 2020




[1] For more information visit: www.nea.org.uk.

[2] NEA also work alongside our sister charity Energy Action Scotland (EAS) to ensure we collectively have a UK wider reach.

[3] A major recent focus for the charity has been NEA’s Health and Innovation Programme (HIP) which was a £26.2 million programme to improve energy efficiency within fuel poor and vulnerable households in England, Scotland and Wales. Launched in April 2015 by NEA as part of an agreement with Ofgem and energy companies to make redress for non-compliance of licence conditions, it remains the biggest GB-wide energy efficiency programme implemented by a charity which puts fuel poverty alleviation at its heart. For more information on HiP visit: https://www.nea.org.uk/hip/

[4] From the latest fuel poverty statistics dataset https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/882404/annual-fuel-poverty-statistics-report-2020-2018-data.pdf

[5] Citizens Advice estimate that 40% of households in debt are living on a negative budget. A negative budget is where a debt adviser assesses that a client cannot meet their living costs.  https://www.citizensadvice.org.uk/Global/CitizensAdvice/Debt%20and%20Money%20Publications/Life%20on%20less%20than%20zero%20(October%202020).pdf

[6] BEIS have found that fuel poor households, on average, use £319 less energy than they are required to in order to reach a comfortable temperature. This is in contrast to a shortfall of £133 for the whole population. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/789775/Comparison_of_theoretical_energy_consumption_with_actual_usage.pdf

[7] The National Infrastructure have said “Improving the insulation of buildings makes sense both now and in a low carbon future. The Commission’s analysis suggests that there are over 21 million individual improvements to buildings in England that together could save billions of pounds. This includes insulating 10 million lofts, 6 million floors and almost 5 million walls. This is equivalent to 21,000 improvements being installed every week between now and 2035. The current rate of progress is around 9,000 improvements installed per week.” https://nic.org.uk/app/uploads/CCS001_CCS0618917350-001_NIC-NIA_Accessible-1.pdf

[8] https://www.theccc.org.uk/wp-content/uploads/2019/05/Net-Zero-The-UKs-contribution-to-stopping-global-warming.pdf