Written evidence submitted by Canetis Technologies (DHH0097)

To: Business, Energy, and Industrial Strategy (BEIS) Committee

Decarbonising Heat in Homes

House of Commons

London

SW1A 0AA

Dear Members of the Committee,

Your call for evidence asked eight questions and we have answered below:

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?

The past and current policies have been ineffective because consumers do not find the current line-up of low carbon heating technologies attractive or affordable. With only 5% of homes currently having a low carbon heating system it can be seen that many consumers do not find technologies such as heat pumps desirable or practical especially in the repair, maintenance, and improvement market. For example, a heat pump costs over five times the price of a gas boiler and in some cases increases energy bill costs. Also heat pumps typically sit on the garden patio which is very unsightly, has space issues and some models emit up to 60 decibels when in use, which is also unattractive.

For many, the cost and simplicity, along with the familiar comfort of the gas combustion boiler is far more appealing.

Furthermore, for the Heating Installer it is significantly more straightforward to install a gas boiler than a heat pump. For most Installers greater complexity results in a decrease of profits via a combination of time spent fitting & supporting, and expenditure on accreditation and training programs. Installers are far more inclined to continue to promote the gas boiler in the repair, maintenance, and improvement market.

The introduction of the ‘Boiler Plus’ policy in 2017 introduced technologies that potentially could make a substantial impact on reducing carbon emissions. However, the policy failed to counter the market efficiencies which usually dictate that the cheapest measure, and in this case the poorest carbon reduction measure, would secure the vast majority of the installations.

Nonetheless in Scotland the devolved administration introduced a successful regulation in 2017 - the Aspect Silver & Gold Level 3 for the energy used in heating hot water. This required new builds to generate at least 5% (to reach Silver) and 50% (to reach Gold) of the dwelling’s annual energy demand for water heating must be from heat recovery and/or renewable sources. This helped the local Councils promote better energy efficiency through building regulations.

In summary, the impact of past and current policies has mostly failed to support technologies that the installer community find easy to install and are low cost, representing fair value to the consumer, with minimal change to the current heating system.

Consumers have been so far unconvinced that the Government’s direction on home heating is in-line with the available budgets for home improvements and represent an attractive change to current systems.

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)?

The future key policies should balance consumer acceptance with net zero targets. It is clear that a top-down “blanket” solution such as all-electric or all-hydrogen is projected to cost twice or 3.5 times as much respectively compared to a bottom-up approach that chooses the best heating solutions on a place by place basis[1].

The initial priority should be in new homes, where immediate changes to Building Regulations can be executed promptly, perhaps as early as 2023 or even earlier given the Government is motivated to make early progress. Changes already proposed in Part L of the Building Regulations within the Standard Assessment Procedure (SAP) should focus on a carbon reduction of 31% (Option 1), and furthermore Housing Developers should be required to submit to the new regulations within six to nine months following the confirmation of the changes, so that the journey to Net Zero can begin sooner rather than later.

In the repair, maintenance, and improvement market, revisions to the weak ‘Boiler Plus’ policy should focus on accelerating implementations of the existing measures but going forward place an understandable emphasis on those measures that are proven to be the best performing carbon reduction devices. Therefore the next version of Boiler Plus should be a regular extension and upgrade to addresses the accepted shortfalls of the current policy and would be an ideal announcement to make at COP 26 in November for implementation in 2022 or 2023.

It is widely believed that the UK’s transition to low carbon heating will take at least ten years to achieve. In that time up to 16 million gas boilers will be installed[2] and this projection itself reveals a significant short-term problem. Therefore Government policy must be enhanced as soon as possible to reflect new and established technologies that improve gas boiler efficiency. Even a moderate increase of boiler efficiency can have significant carbon reduction potential, in the UK approximately 3,000GWh of gas is saved per 1% improvement, equating to 612MtCO2 per annum: a significant low cost saving on the way to net zero carbon.[3]

Between now and 2024 Government policy for the next decade should focus on home heating being aligned and harmonious with consumer behaviour and the Installer community.

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?

One of the simplest and most cost-effective ways to meet the goals of the Paris Agreement and decarbonise five times faster in the next decade than the UK has in the last twenty years is to encourage the use of a British invention called Stored Flue Gas Heat Recovery (S-FGHR). This is an energy saving device that can be used on domestic gas combustion boilers and can be paralleled to a motor vehicle’s turbo charger that is a now common addition to our cars to meet the more demanding European vehicle efficiency requirements.

For home heating it works by using the significant amount of the energy that is produced by a gas combustion boiler but inopportunely lost in emitted exhaust gasses through the boiler flue. S-FGHR devices recover this excess heat from a boilers flue and put this recovered energy to use. This device can reduce domestic hot water fuel requirements by 25-30%[4] and increase the boiler efficiency by 5%[5]. SFGHR devices require no maintenance or consumer intervention and have a long-life operation.

Consequently SFGHR should be the short-term solution to decarbonise home heating.

In the longer-term Hydrogen is the most sensible and astute technology for heating in the UK. Hydrogen enabled boilers are already available from most major boiler manufacturers however there is clearly a need for investment in efficient hydrogen production technology with any associated carbon capture.

As such the technologies and timelines that are the most practical to deliver the decarbonisation of heating are as follows:

      January 2021 – Government releases Part L of the Building Regulations for SAP: Developers must reduce carbon emissions by 31%

      October 2021 – New Building Regulations (Part L) come in force

      November 2021 (COP 26) – Government announces an upgrade to the Boiler Plus policy that reorders the emphasis and priority to the existing measures by the contributions those measures make towards Net Zero, such as SFGHR

      November 2021 (COP 26) – Government announces that due to the success of the H21 trial in Leeds the UK’s gas grid will start to be decarbonised beginning 2023

What are the barriers to scaling up low carbon heating technologies? What is needed to overcome these barriers?

Government has traditionally guided the HVAC industry towards innovation and development. The 2005 introduction of the condensing boiler is a good example of successful government intervention. The path to scaling up low carbon heating technologies is no different. Government should support agile and innovative Small & Medium Enterprises (SME’s) that have the flexible and entrepreneurial cultures that are often missing from many of the large multinational heating appliance manufacturers. The current barriers of entry to introduce an innovative attachment to heating appliances is extremely high, and often too high for small companies to justify the time and investment. Government therefore should focus on championing technologies that are developed from outside the conventional group of companies and endorse devices that greatly reduce any risks of missing the carbon reduction targets.

In addition the standards for heating appliance efficiency need to be urgently updated to adequately reflect today’s use of heating appliances as a significant number of homes are now primarily using the heating appliance for Domestic Hot Water (DHW) production i.e. hot water for showers, baths etc, given the increased levels of home insulation.

A review was already initiated by the European Union before Brexit[6] and so the UK should also modernise standards by introducing an efficiency metric for DHW in order for boiler manufactures to innovate or work with SME’s to incorporate devices such as SFGHR to  meet or exceed the new targets.

Energy Performance Labels, which publicise a products efficiency, are widely understood by the UK consumer, and consequently Government efforts in this area will have the dual benefit of decreasing carbon emissions whilst creating support for decarbonisation amongst the public.

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?

Supporting a nationwide roll-out of SFGHR devices will deliver a Net Present Value (NPV) to the UK Economy of nearly £9.9 Billion[7]. For consumers there is an upfront cost of the device but this is followed by long term reductions in the gas and water usage. This milestone policy will not need any funding from Treasury as the additional upfront cost of the device will be borne by the consumer given its relatively low cost of installation, or financed by green financing schemes that many banks are beginning to promote. Moreover, given the low cost of the technology and the number of gas boilers forecasted to be installed over the next decade, SFGHR also bestows the carbon reduction device to the equivalent of ten homes versus just the one home in comparison to an expensive low carbon technologies such as heat pumps. This is ideal given the increased number of homes that are in fuel poverty due to the pandemic.

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?

Mandation of SFGHR (or similar devices achieving a 5% improvement on boiler efficiency) in the repair, maintenance, and improvement market would deliver a significant boost to the Governments campaign to reach Net Zero.

For example, CB5 requires an approximate 11.5% carbon reduction from CB4. Therefore, mandating that all new boilers sold in the UK be fitted with S-FGHR devices would achieve approximately 45% of the reductions from domestic dwellings required under CB5. SFGHR delivers a carbon reduction of 3,060 MtCO2 per annum.[8]

SFGHR devices currently increase the gas boiler cost by 30-40% (although this could reduce through increased volumes of sales and further innovations) however, and perhaps most importantly given the general public’s view on low carbon heating today, the technology provides £1.45 Billion in energy bill savings to the billpayer[9].

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?

In comparison of the technologies available today Stored Flue Gas Heat Recovery (SFGHR) or similar passive devices cause the least disruption to homes and engages the consumer in a way which is clearly acceptable. Significant carbon savings are achieved without the need for unaffordable costs to be considered by households, and there is no required disruption to a property’s basic infrastructure. Unlike heat pumps, this carbon saving device does not need the property to achieve certain insulation minimums or require radiators to be increased in size.

It is clear that consumers are already aware of the challenges with heat pumps and have consequently largely rejected the technology. Hence the Government should use COP 26 as a stage to declare a world leading plan for decarbonisation that is both realistic and consumer friendly.

The communication to engage and inform households could look like the following:

Government sets out new energy reforms for home heating

The plan to decarbonise heating, as per the commitments to Net Zero, will focus on stimulating households to invest in cost efficient, easy to install devices that reduce carbon emissions whilst upgrading the national infrastructure to burn hydrogen instead of fossil fuel gas.

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?

The Governance of home energy use should continue to sit within BEIS. However to successfully deliver Net Zero BEIS should issue a tender to ascertain if other organisations or companies can take UK Government into the 21st century by updating the excessively underperforming and archaic system that is currently deployed by the BRE to measure the UK’s energy performance in homes. A new system that serves useful and accurate data for a home’s EPC certificate will ultimately result in actionable data for BEIS to further decarbonise our homes beyond what is known today.

About Canetis

Canetis is a UK company established approximately four years ago with a focus on investing in carbon reduction technologies to help combat climate change and assist governments in meeting their carbon reduction targets as part of the obligations within the Paris Accord Agreement. Canetis is a patent holder in energy efficiency technologies which are primarily manufactured in the UK today and intended to help create hundreds of manufacturing jobs in the Northern Powerhouse of the UK whilst improving the balance of payments by lowering imports of energy (e.g. natural gas) via improved efficiency and therein reducing the consumption (and reliance) on these finite resources.

We are submitting evidence because Canetis can extensively assist the UK Government in meeting its obligations under Paris Accord Carbon Budget 5 (CB5) due in 2030.

December 2020