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Ministers call for ideas in drive to promote green heat for buildings

The UK Government is rethinking its subsidy for green energy in the form of heat and calling for ideas on what to replace it with.

The lockdown is proving expensive and there are more calls than normal on public money. So it’s no surprise ministers wish to drop another subsidy after ending the Feed-in Tariff for green electricity sources such as solar PV. 

Attempts to limit greenhouse gas emissions often focus on transport but it’s worth remembering you don’t have to move to pump out CO2.

Heating homes, businesses and industry is responsible for a third of the UK’s greenhouse gas emissions, and decarbonisation of heat is a big challenge in meeting UK climate targets.

Buildings contribute some 40% of the UK’s total carbon footprint, according to the Green Building Council. Heating alone accounts for 10% of the UK’s carbon footprint and homes are more significant than all other building types put together.

The Department for Business, Energy & Industrial Strategy is seeking views on options for the future support for low carbon heat, beyond the Renewable Heat Incentive (RHI). 

RHI is due to end for non-domestic use on 31 March 2021 while the subsidy for householders has been extended a further year. 

A BEIS consultation sets out proposals for (a) a Green Gas Support Scheme (GGSS) – increasing the proportion of green gas in the grid through support for biomethane injection, (b) a Clean Heat Grant – support for heat pumps and biomass through an upfront capital grant to help address the barrier of upfront cost and (c) budget control and financial management of the spending proposals for green gas and buildings technologies. 

The ministry has also published consultations on non-domestic RHI to ensuring a sustainable scheme and an outline of changes to RHI schemes. BEIS is working with devolved administrations to implement the proposals across Great Britain.

The Government has traditionally adopted a carrot and stick approach, e.g. combining subsidies encouraging investment in decarbonising technologies with prohibitive rules such as banning the installation of non-condensing boilers from 2005 and indeed the Chancellor’s recent announcement to ban gas heating in new build homes by 2025. 

Electricity generation has been cleaned up substantially in recent years with the move from coal to renewable energy such as on- and offshore wind and the continued use of nuclear. 

But the decarbonisation of heat has stalled badly. The take-up on carbonising technologies, namely biomass boilers, has been much greater than the response for non-carbonising heat pumps methods such as air-source and ground-source heat pumps and solar thermal. 

Galbraith maintains a watchful eye on the correlation between energy efficiency and value in relation to domestic property and the relationship continues to be more opaque than common sense would dictate.

The firm commissioned research on this topic over a decade ago and at that time we appeared to be on the cusp of energy efficiency being a measurable factor impacting upon value. However, despite the driver of Energy Performance Certificates, other factors appear to maintain a higher weighting. Government needs to take more radical action in both ‘carrots’ and ‘sticks’.

As noted, we have seen a significant uptake in small scale biomass boilers; however, heat pumps, which offer vastly better green credentials, appear to remain the favoured technology of the environmentally conscious rather than the masses. The Government must act to change this position and actively encourage renewable heat if it is to have any prospect of fulfilling its climate change aspirations.

Removing the RHI for domestic and commercial heating, without a similar or better replacement, can only discourage investment in clean heat, whatever the rules say. 

This consultation closes on 7 July 2020.