Heat policy: Mind the gap

News that the Government’s Green Homes Grant scheme has opened to applicants is undeniably welcome.

Even press reports that it looks likely to be heavily over-subscribed feel like a positive tick in the box – underlining the appeal to homeowners of a £5,000 voucher to install energy efficiency measures and low-carbon heating technologies.

But whilst this may trigger a new boom in domestic installations, it doesn’t mean Government has finally got its future heat decarbonisation policy fixed.

The new grant is a short, sharp device, expected to last just six months. A helpful, but limited, sticking plaster that will allow some of the heat sector to weather Covid-19, and hopefully sparking increased uptake in domestic decarbonisation measures in the short term.

Meanwhile, the end of the scheme in March will coincide with the budgetary end of the Non-Domestic Renewable Heat Incentive (ND RHI). Limited proposals so far announced to replace it are, on the whole, narrowly focused and poorly funded.

So, in fact, what we are really seeing is a widening of the heat policy gap, with renewable heat sector players – especially those helping business and industrial heat users – facing an uncertain future.

Earlier this year, Government consulted on two new schemes to replace the ND RHI – the Green Gas Support Scheme with targeted tariff support for new biomethane to grid plants, and, for off gas grid, a new Clean Heat Grant Scheme.

The latter, not due until 2022, would last two years, and command a comparatively small budget of just £100 million. This is 30-times less than the £3 billion currently earmarked for the six-month Green Homes Grant. Focused on small-scale, largely domestic renewable heat installations, it is highly targeted at air source heat pumps, with a very limited number of biomass boilers expected.

It all leaves the broader, non-domestic renewable heat sector scratching its head about where the growth opportunity is going to be come March. As it stands, the majority of businesses or industrial heat users will be left with no incentive to install renewable heating systems.

Yet the UK’s heat challenge cannot be underestimated. Around only 8% of our heat comes from renewable sources, largely bioenergy such as biomass boilers and biomethane to grid from anaerobic digestion.

The Committee on Climate Change has repeatedly stressed that almost all heating of all buildings will need to be low carbon by 2050, requiring a complete range of renewable heat technologies.

Although most heat demand will still come from the domestic sector, about 40% will be from non-domestic properties, such as offices, public buildings and large industrial users.

The ND RHI helped established industries that were starting to address these sectors. Now, with its end in sight, proposed replacement measures are focused on green gas and domestic installations. Whilst innovation funding and demonstration projects build hope for green hydrogen, we remain a long way from bridging the decarbonisation heat gap with this important green gas any time soon.

Sectors such as biomass heat and larger heat pump installations are expecting to contract, threatening jobs, supply chains and the UK’s ability to deliver the level of decarbonised heat we need to reach net zero.

We, at the REA, continue to call for a clear, Government heat strategy setting out longer-term decarbonisation plans, and not forgetting the sectors already delivering heat decarbonisation today.

Now more than ever, much is riding on the Future of Heat in Buildings Strategy. It will be a crucial opportunity for Government to address the policy gap.

Dr Nina Skorupska CBE,
Chief Executive, REA