Refining decarbonisation policy

Refining decarbonisation policy

A new reality is emerging but decarbonisation policy is stuck in the past, says Malcolm Farrow, Head of Public Affairs at OFTEC.

In 2017 the UK government set out its Clean Growth Strategy, signalling the direction of travel for off-grid decarbonisation. Today it remains the foundation of the government’s plans to achieve net zero emissions by 2050. Yet so much has changed in these past five years from the pandemic and cost of living crisis to the conflict in Ukraine. If we want decarbonisation to succeed, these policies must evolve to reflect the new reality.

There’s no getting away from the fact that rural homes and businesses need to adopt low carbon heating systems and move away from fossil fuels. The challenge is that household finances are under huge strain and there is very little appetite, let alone the disposable income, for consumers to make significant investments in greener heating.

The government itself recognises this, stating in its Heat and Buildings Strategy: Our ambition is to ensure that the costs of decarbonising heat and buildings falls fairly across society”. The problem is the rhetoric does not match the reality. Under the proposals, from 2026 off-gas grid households will no longer be able to install a new fossil fuel oil boiler. Instead, in most cases, they will be expected to install a heat pump.

For many properties, heat pumps are a sensible choice and they are an important part of the transition to low carbon heating. OFTEC supports their rollout and is equipping technicians with the skills they need to install the technology. We must recognise, however, that off-grid properties typically have poor energy efficiency and pose a range of other practical challenges. These households are likely to face huge costs and disruption to install a heat pump and associated retrofit improvements – in some cases more than £20,000.

This makes it all the more perplexing that rural homes are being targeted first for heat pumps, nine years earlier than consumers on mains gas who are able replace their system like for like until 2035. Even if we park the issue of this policy’s unfairness, the reality is we are likely to see resistance from consumers which will stall decarbonisation efforts.

It’s not just the cost to individual households. The government is facing increased scrutiny over public expenditure post pandemic and the green agenda’s cost to the taxpayer. The government has claimed the cost of heat pumps will fall between 25% and 50% by 2025 but, with rising inflation, it’s hard to see how this can realistically be achieved.

If it isn’t, will the government pick up the bill and set aside more money for the Boiler Upgrade Scheme to help consumers, or will the burden fall on households to fill the gap? For off-grid households facing the 2026 deadline, there isn’t much time to find an answer.

We also need to consider the vital role of heating technicians in supporting the low carbon transition. Small businesses are facing their own pressures in the current economic climate of rising costs. For some technicians, the time may not feel right to diversify into new and uncertain markets, particularly if there isn’t yet the demand from consumers.

A pragmatic approach
So, how can we refine decarbonisation policy to reflect the new reality we are living in? The focus needs to be on delivering low cost, easy to implement solutions which deliver bang for buck for both households and the government. This requires a pragmatic and agile approach where multiple technologies are used, creating a diverse and fair market fuelled by choice.

There is no one size fits all answer to the complex challenge of decarbonisation and we can’t pin all our hopes on one solution. We need to be technology neutral and recognise that every home, particularly off-grid, is different and use all the options at our disposal.

Renewable liquid fuels
Yes, heat pumps should be firmly part of the mix but we need alternatives for buildings that are unsuitable. For oil heated homes, renewable liquid fuels present a genuine solution. Our industry has proven the viability of Hydrotreated Vegetable Oil, a fossil free, sustainably sourced fuel which immediately reduces emissions by 88%. Over 100 oil properties have already successful converted to HVO in the past twelve months as part of a demonstration.

Transitioning to HVO involves a simple conversion and there is an existing installer base and distribution network ready to deliver the fuel at pace. The near drop-in replacement fuel also reduces the need for energy efficiency improvements and can be completed as part of a routine service to keep disruption to a minimum.

Over 98% of oil households out of over 4,000 surveyed want the choice of being able to switch to renewable liquid fuels. Our industry has made significant progress in demonstrating their potential but we need the policy support from government to progress to a wider rollout.

Fundamentally, it should be up to consumers to decide how they want to transition to greener heating, whether it’s a heat pump or renewable liquid fuel. But how can consumers exercise choice if there is only one option on the table?

As we edge closer to the next general election, the cost of living will likely remain a central concern for rural voters. Now is the time for the government to listen and act to ensure rural households have affordable and realistic solutions to decarbonise.

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