Written evidence submitted by Anonymous [PNZ 039]
We would be concerned about any proposals under which the technology solution in certain geographies could be mandated through local planning requirements.
The market will only invest in the products, skills and jobs required to address the available market. Specifying acceptable technology solutions legally enforceable planning requirements will foreclose parts of the country to alternative products and services; this limits the case for investment in those technologies and will stifle the supply chains (innovations, skills and jobs) necessary to support them. This is likely to be counterproductive to the overall net zero ambition, even if it might attract investors to technologies receiving preferential treatment in the ringfenced geographies.
We agree that heat pumps are most likely to be deployed in the short-term, as they are presently the most energy-efficient, tested and cost-effective solutions to have been deployed at commercial scale.
Although we consider it important to recognise this reality, there is a risk that designing the Standards (or indeed any other aspect of the net zero transition) around these technologies will stifle the development and deployment of others.
In particular, there is a risk that if the Standards specify outcomes too narrowly, the Standards will effectively mandate solutions. We consider that a systematic preference for some technologies over others (especially if implemented directly or indirectly through law or regulation) will inevitably reduce the investment case for the less-favoured technologies. A balance must therefore be struck between stipulating the right outcomes and allowing markets to do their work in selecting the most innovative and cost-effective solutions over the longer-term.
In particular, we consider that the investment case for hydrogen transformation (which is longer-range than many other technologies) is likely to be materially reduced if a preference for other technologies is reflected in local or national regulatory requirements.
We disagree that the new Standards should apply to the individual buildings on which work has commenced, rather than on a site-wide basis – both in the case of domestic and non-domestic dwellings.
Whereas the buildings on smaller sites will typically undergo one simultaneous consenting journey (so the position for the whole site is clear at any given time) larger sites are likely to have different phases at different stages. Larger sites have longer build programmes and tend to evolve over time as needs change. A certain amount of flexibility is therefore built into the funding structures for these sites, but this is usually at the level of design detail: the overall energy strategy for the site will usually have been procured at the outset as a condition of funding, and will not easily accommodate wholesale substitution of (say) air source heat pumps for a gas network.
It is therefore critical that sufficient certainty is given to allow people and businesses to plan and phase investments and work pipelines, as uncertainty can slow down progress. We consider it highly likely that if the transitional arrangements apply at the level of individual buildings, developers and their supply chains will slow investments in larger sites that might cross the transition point so that they are able to procure a single clear energy strategy.
April 2021