Written evidence submitted by Weal Energy Policy Group (DHH0104)
Common Weal is a Scottish ‘think and do tank’ which promotes thinking, practice and campaigning on social and economic equality, participative democracy, environmental sustainability, wellbeing, quality of life, peace, justice, culture and the arts.
Amongst our publications is our Common Home Plan which sets out a costed plan for Scotland to fully decarbonise - see https://commonweal.scot/policy-library/common-home-plan
The Common Weal Energy Policy Group welcomes the chance to engage with the BEIS in submitting this response to their consultation.
Common Weal is concerned that both the UK and Scottish Government’s policies for targeting energy efficiency largely rely on Energy Performance Certificates and a Standard Assessment Procedure which groups properties to assess their efficiency rather than using actual energy use, for example from fuel bills. We hope that the Future Homes Standard will reverse this policy.
More generally one of the most severe housing policy failures over decades has been the creation of a deeply unbalanced housing and construction sector which has created a housing landscape in which far too few have the chance to live affordably in a house that is fit for purpose in the 21st century. The dominant policy of the past several decades has been one which has pushed personal ownership of housing, of “climbing the housing ladder” and of sinking ever increasing amounts of capital into buildings with the unquestioned assumption that future prices will increase. This has led to segregated and divided communities, unaffordable housing, rising rents and an unsustainable transfer of wealth from those who cannot afford to own property to those who can or already do (often in the form of a portfolio of many houses). The generational divide is growing with a 30 year old in 2017 being only half as likely to own a home than someone who was 30 years old in 1990.
Many people live in privately rented homes which have poor energy efficiency and they also live in fuel poverty. There does not seem a willingness to force landlords to address the deficiencies. Maintaining a property to minimum standards is a reasonable condition of ownership. If a private landlord, who is gaining an income by renting a property, cannot afford to maintain it to a minimum standard then the rental is simply not viable as a business, and so the business should be liquidated and the asset sold off. This would benefit both the environment and the housing market by releasing poorly maintained stock at lower market values to new owners able to invest in the necessary upgrades.
Fuel poverty is known to be more prevalent in rural areas. This is complicated by association with additional inter-related deprivation factors, a diversity of housing and heating types. Policy solutions have focused on deliverability at scale and therefore addressed urban fuel poverty. Without a focus on policy solutions to address the specific issues of rural fuel poverty the vulnerable households, which may exceed 50% of the households, will continue to be largely failed.
Clearly fuel poor households cannot afford to upgrade their heating systems to reduce their carbon use.
The capital and fuel costs to fully decarbonise heat in houses, according to the most recent National Grid Future Energy Strategies amounts to between £580B and £880B from 2020 and 2045. Assuming meaningful expenditure only starts in 2022 that is between £25B and £38B per year over 23 years.
As yet these costs, let alone the full energy only costs of Net Zero, as estimated by National Grid, of around £3,000B have not been fully addressed by the Government.
Common Weal believes the majority of this cost must be socialised. We cannot expect certainly those living in rented or social accommodation to pay the costs, nor those in rural communities, nor the majority of homeowners caught out buying substandard properties.
We believe that it is incumbent on the Government to take the bulk of the cost of decarbonising properties and indeed meeting the full Net Zero task into general taxation, and set out a roadmap this year.
Before 2022 the programme to decarbonise heat must start and at minimum each year £25B must be allocated to this. Given the Barnett formula we would expect around £2.4B to be Scotland’s initial share each year.
The detailed programme post 2022 should await some of the technical trials of the various technologies, however, we already know we do not have enough joiners, plumbers and electricians let alone engineers for this task. Schools and colleges must commit from this autumn to increase the intake of pupils and apprentices to meet the need. Ideally targets should be set and funding redirected towards this. Similarly Universities should reappraise some courses to ensure adequate numbers of building and engineering specialists graduate.
Insulation programmes are the one area which has made some progress, however, that progress has stalled. Over the next 2-5 years a new programme should be established, tied to local authority funding and targets set to coincide with other decarbonisation programmes so that most houses are decarbonised once only.
The various technology trials and associated costings should be completed by 2022 and an evaluation produced with recommended technologies for various house types and locations.
Common Weal believes the critical factor is the provision of adequate generation capacity to meet the heat requirements of housing through whatever technology is required. It is by no means guaranteed that that goal will be achieved given current plans and the costs could be prohibitive if directly passed to the consumer. We believe the costs of new generation should be socialised and not fully passed on to household bills.
We recognise the limitations of solar, wind and nuclear both in their effect on land use and possibly high cost and risk in nuclear, however, in combination with a decentralised grid and energy storage both through batteries, direct heat stores and hydrogen sufficient energy can be produced to ensure decarbonisation can take place.
The danger is that insufficient projects are started and given the 10 year lead time for off shore wind and nuclear and the prospect of existing nuclear and gas plants being decommissioned, projects should be started now. We do however, feel that the current policy whereby most projects and licenses are awarded to foreign often state owned companies must change. We have advocated a Scottish Energy Development Company to develop such projects in Scotland and believe the UK Government should set up a similar state owned company for the rest of the UK.
Common Weal believes that insufficient use is being planned for district heating schemes which would be suitable for large parts of the country. We would like to see these schemes being developed to planning stage by 2025. The technology of these could vary from geothermal to heat from solar.
New build heat must be electrical except when supplied by district heating. Gas boilers in new build should be banned from 2025.
Ground or air based heat pumps may be the most economic option for existing premises in certain locations as could hydrogen from electrolysers in other locations. A decision on the proportions of these to be deployed and in what locations should be made by 2023.
Common Weal believes the biggest barrier is the lack of Government decisions on a plan and indications of how the roll out of house refurbishment will take place and be paid for.
Hydrogen ready boilers can be produced, indeed are being produced and can replace gas boilers, but can only be installed in properties where hydrogen is likely to be delivered. Air source pumps can similarly be produced however, will not be suitable for all properties.
What is required is a programme integrating insulation, assessment of property type and most suitable heat source for properties in that area. This will need to be developed across all local authorities and devolved administrations with the aim of setting out the likely demand for both hydrogen boilers and different forms of heat pumps and also demand for insulation types. That will provide certainty to manufacturers.
Electrolysers are an essential part of all routes to Net Zero, including for HGVs, shipping and hydrogen storage for backup power stations and hydrogen boilers. Commitments should be given to produce several GW of electrolysers each year.
The lack of a trained workforce to refurbish properties is another major barrier.
Common Weal believes the costs of transition to Net Zero should be socialised and not impact unfairly on fossil fuel workers, households where unit costs of energy may rise and that household has not been refurbished and or the occupiers are fuel poor, or areas of the country which require more investment than others.
The Government must continue to cap the average cost of household energy bills and in part pay for that by increasing the price of carbon. The price of carbon in the UK is 18 Euro per ton CO2 where is has remained since 2013. This price has been sufficient to undermine the justification for generation from Coal, however, it needs to rise in order to facilitate the moves away from Oil and Diesel and particularly Natural Gas.
The Climate Change Committee has suggested a price of £40-80 / ton CO2 for both nuclear and Gas assuming it requires CCS running full time and as much as £115-120 / ton CO2 if gas with CCS is used intermittently. The costs of constructing new gas power stations exceeds the expected cost per MW of both wind and solar when the present cost of carbon is added. The cost of petrol and diesel is largely dictated by Government tax policies including support for the oil and gas industry. Ideally these subsidies should be removed and the true cost of carbon i.e. its air removal cost, should be charged for petrol and diesel.
To meet the Prime Ministers ambitions for a 68% reduction in CO2 emissions by 2030 (compared to 1990) requires the carbon price to rise by between £30 and £50 / ton CO2 by then. Say by £5 / ton CO2 per year. This can only be done by reducing the carbon budgets allocated to industry in line with the ambitions.
The overall cost of decarbonisation may be high, however, that cost is best capped by a national roll out plan linked to a rising carbon price.
A firm cap on the cost to consumers and a plan which minimises disruption should ensure compliance.
Common Weal believes the climate emergency is becoming clear to all and an informed public will innovate to ensure the plan comes to fruition. A major public awareness campaign is essential.
The governance and coordination is a role for UK and devolved Governments with Scotland fully responsible for the Scottish plan. Funding will be across the UK. The delivery of the plan will be a joint action between local and devolved Governments.