Written evidence submitted by Green Alliance
Introduction
Green Alliance is a charity and independent think tank focused on ambitious leadership for the environment. Since 1979, we have been working with a growing network of influential leaders in business, NGOs and politics to stimulate new thinking and dialogue on environmental policy, and increase political action and support for environmental solutions in the UK.
Green Alliance welcomes the Public Accounts Committee inquiry into the Renewable Heat Incentive (RHI) and has provided answers to some of the questions from the Committee below.
Executive summary
Detailed comments
Has BEIS done enough to address the barriers to uptake for the Non-domestic and Domestic RHI?
1. A major reason that people don’t install renewable heating systems is because they don’t know anything about them. Generally people change their boiler at a point of distress (when their current boiler breaks) and so want to get a new heating system quickly. They therefore usually act off the advice of a plumber or gas engineer. There is a lack of training and knowledge of renewable heat options amongst installers, meaning that they are likely to recommend a replacement gas boiler rather than a renewable solution. Heat policy needs to do more for installers and assessors in this sector in order to encourage people to install renewable heating.
2. Normal houses within the UK are also not very air-tight. This means that there innovative technologies like heat pumps may not be as effective as conventional heating methods. This is linked to the previous point, as with the addition of experienced home assessors households could be adapted to be ‘leak-proof’, therefore increasing the effectiveness of these renewable heating technologies.
3. Another barrier to uptake is the lack of geographic specificity within RHI. Different solutions and different areas are able to implement different forms of renewable heat. For example, houses in London might be heated through waste heat from tube lines, while houses in rural areas instead might benefit from other solutions as heat pumps. Also, for technologies such as district heat there needs to be collective action along whole streets or even neighbourhoods, but without specific location targeting this is unlikely to happen of its own accord.
4. A large barrier is still the cost of these renewable systems. The RHI is not structured in a way that will encourage innovation and therefore reduce the cost of these technologies. The result has been an excessive focus on biomass boilers, as they are an easy drop-in alternative to a regular boiler, especially for properties with oil fired heating. Biomass boilers are already a mature technology and therefore unlikely to dramatically reduce in price with more investment. If the scheme was supported with policy to drive adaptation of heat pumps, and if it enabled innovation in installation, then it could support a reduction of price over time, removing the financial barrier for more people.
Has the RHI been effective at preparing the low-carbon heating supply chain for the future?
5. As mentioned above, the low carbon heating supply chain has received a modest, though positive, benefit. However, aside from biomass boilers, other technologies, namely heat pumps, district heating and hydrogen, have not received as much benefit. This is problematic as these technologies are scalable and will play an important role in the transition to renewable heat on a larger scale than biomass can. A healthy supply chain will contain a more diverse set of technologies as that will give customers genuine choice as well as help drive down prices.
What lessons can be learnt from the RHI?
6. The first positive lesson that can be learned from the RHI is the fact that it is funded from general taxation rather than from an energy bill levy. This is a more progressive policy than other renewable incentives. Furthermore, RHI policy and funding has been provided steadily, and without the cliff edges which renewable electricity policy has seen. Over the seven years that it has been in place, it has not been subject to changing political winds. This means that renewable heating businesses can be confident in investing in starting up and expanding as they can be certain that government backing will not disappear. This consistency is essential for the health of small businesses and the growth of the supply chain.
What role place should the RHI play in the Department’s long-term strategy for eliminating carbon emissions from heating homes and businesses?
7. BEIS has no current long term strategy on heating, other than the very welcome commitment to transition off-gas grid properties off high carbon fuels. In the past when the RHI was linked to the Green Deal, there was the beginning of a strategy which would have increased home efficiency and substituted renewable for fossil fuelled heat, but since the Green Deal was scrapped the RHI has been a bit of a policy orphan. The RHI could be integral to a long term strategy as it is successful in lowering carbon emissions. In the clean growth strategy it is mentioned that there is the need to get off-gas areas to stop using high carbon heat. RHI could be used to address this issue, if it was geographically targeted to off-gas rural areas. But this would not count as a whole strategy for low carbon heat. Such a strategy needs to be based on running very large scale trials of scalable low carbon heating technologies – heat pumps, hydrogen heat, and district heating – which are designed to identify opportunities to lower cost and test how people feel about these new heating technologies.