Heating our homes – a word in the business chairperson’s ear

What a pleasure to read the pitches from all three candidates vying for our votes to become chair of the business, energy and industrial strategy select committee. All agree that the two big challenges facing the country beyond lockdown are rescuing our economy and meeting our net-zero emissions target. If I could whisper one thing in the new chairperson’s ear, it would be this: “Both these challenges can be tackled by changing the way we heat our homes.”

Heat from buildings currently represents around one third of the UK’s total greenhouse gas emissions. If the UK is ever going to wean itself off fossil fuel, the 21 million of our homes that currently use natural gas is a pretty good place to start.

Infrastructure projects don’t come much bigger or employ more people. Cost estimates vary, but £120bn is reckoned to be at the conservative end of the spectrum.

Low-carbon heating is amongst the toughest challenges facing climate policy. Essentially, you are dealing with three variables:

  1. The energy efficiency of the building.
  2. The most appropriate energy supply. 
  3. British weather. Or put another way, the capacity of the energy network as a whole to cope with extremes of demand, so the system functions for everyone even during the worst winter conditions.

Any inquiry would have to be clear about the existing housing stock. About four million homes are not currently connected to the mains gas network at all. Most of these burn oil. We need to identify which might be connected up to a district heating network and which require a heat pump solution coupled with additional insulation. 

For the 21 million on the gas grid, alternative options are needed. Greening the gas network is possible – by tweaking boilers to accept low-carbon hydrogen delivered through the existing network – but the costs of hydrogen production are high. Air, water and ground source heat pumps together with new generation storage heaters are all part of the mix that the select committee should investigate – as are hybrid heat pump solutions, where peak demand is met by hydrogen or biomethane. 

In 2017, a total of 20,000 heat pumps were sold in the UK. The government says we must install 20,000 every week for 25 years just to achieve our old 80% emission reduction target. To achieve net-zero emissions will require more of the order of 50,000 a week. That’s a lot of high skilled jobs, and the going rate for installation technicians is around £40,000 a year.

These are the key issues for the BEIS select committee to investigate.

Scale. The scale of tackling 25 million households’ heat systems at the same time – as all the other power, transport, land use, waste and recycling issues around climate change – is enormous. It will require a huge, sustained national effort.

Cost. The cost of the transformation is substantial. The issue for parliament is who pays and how? Ultimately, of course, it is always you and me. But do we pay as the consumer, or do we pay as the taxpayer? My view is that this transformation is about public policy and therefore the public purse needs to foot the bill. To put the onus on the bill payer would almost certainly be regressive. But the balance here is desperately political and the select committee will take its own view. Governments do not like to raise taxes, so what would each individual bill payer have to stump up? This is linked to the next issue.

Inertia. The public is resistant to change, especially when they think it is going to cost them. Incentives and pricing are going to be critical to acceptability. Lord Duncan acknowledged that there may need to be carbon taxes to shift consumers away from burning gas. But there are other inertia factors as well. People are familiar with their gas boilers, they like cooking on gas, they like the ease of gas and they do not want the disruption to their homes that a new system of heat pumps or solar panels will bring.

Speed. The fact is that we have been moving too slowly and the window is shrinking for action to meet our net-zero target by 2050. Doing anything at this scale is difficult enough, but doing it quickly where you are not able to assimilate and learn the lessons from earlier phases of the project creates added complication.

Skills. In order to roll out a programme like this, you need highly skilled teams. That is not just a matter of having plumbers and electricians able to install the pipes and wiring, it is about generic teams who can go into a community and persuade people, specialist trainers who can help people feel comfortable with the new system. It also means clean up specialists who ensure that as the team leaves the community there is not a residual mess in people’s homes or a lingering resentment that this was “done to them” that could infect other people and make them reluctant to engage in their turn.

Coordination. This all requires extraordinary levels of coordination – between central and local actors; local government, energy suppliers, central government, industry, business, the regulator, residents’ associations, LEPs. We are looking to a major disruption of people’s lives, and the coordination needs to be there to ensure that things run smoothly.

We have to design a regulatory framework that can address all of these issues. Fail, and it will be a political disaster. Succeed, and we boost our economy and tackle climate change at the same time. Now if that’s not a job for the select committee, I don’t know what is.

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