The advocates of heat pumps and hydrogen heating have been at daggers drawn for a long time now.
But a truce appears to have been called in the battle of boilers over the last couple of weeks following the publication of the government’s long-awaited Heat & Buildings Strategy.
For Adam Bell, the former head of energy strategy at the Department for Business, Energy & Industrial Strategy (BEIS), the document is “almost revolutionary”.
“Compared to where we were in 2017 it’s a massive step forward and will make a significant difference to our chances of getting to net zero,” he says.
The greatest angst within government circles appears to have been generated by how to deal with the Climate Change Committee’s recommendation to ban gas boiler sales from 2033.
Bell, who recently left government to become head of policy at consultancy Stonehaven, says: “If you look at the noises coming from Conservative backbenches about added costs on consumers, there was no way there would be any sort of requirement before the next election to mandate heat pumps or make people buy them.”
The strategy’s watered-down statement that the government has an “ambition” to end gas boiler installations from 2035 has left both sides of the electrification and gas debate with something to play for.
Mike Foster, chief executive of the Energy and Utilities Alliance, draws comfort from what he sees as a “shift” in language. “This is a real toning down of the rhetoric,” he says.
Meanwhile Dr Richard Lowes, senior associate at The Regulatory Assistance Project, sees the wording as a “soft ban” on gas boilers.
Energy efficiency is a ‘huge gap’
The “big missing element” in the strategy though is energy efficiency, says Foster: “In the whole heat and buildings strategy, buildings were not really catered for.”
Lowes agrees, describing the lack of support for energy efficiency in the strategy as a “huge gap”.
That vacuum was not filled when the Treasury published its Spending Review, which mapped out government expenditure for the remaining three years of the current Parliamentary term, one week later.
Cash has been earmarked for existing initiatives to decarbonise social housing and public sector buildings, which have been awarded £800 million and £950 million apiece.
A further £950 million has been earmarked for the Home Upgrade Grant, which is targeted via local councils at low-income households living in homes with low energy efficiency.
The other spending commitments in the heat strategy were £450 million allocated for the Boiler Upgrade Scheme, which offers grants worth up to £5,000 for households installing low carbon heating schemes, and £338 million for heat networks.
All of these programmes add up to £3.9 billion for energy efficiency and heat decarbonisation over the next three years to 2025.
However even when the sums spent already on the largely abortive Green Homes Grant scheme are included, approximately £2 billion of the amount pledged for energy efficiency in the 2019 Conservative election manifesto has yet to be allocated.
Foster says: “I don’t think they want to commit to a long-term government funded (energy efficiency) scheme for England. They’ve shown no appetite for it to date and clearly no appetite for the next couple of years.”
In addition, sums pledged in the manifesto for energy efficiency appears to have been rebadged into initiatives for supporting low-carbon heating, says David Blakemore, outgoing chair of the Committee on Fuel Poverty.
Support for energy efficiency should be a greater priority for government spending than low-carbon heat, says Foster: “Going forward, energy efficiency is the obvious thing to address.
“If I had £450 million to spend, I would spend it on energy efficiency for arguably a better payback on carbon and bill savings.”
Making homes more energy efficient is also the best way of tacking fuel poverty and installing heat pumps into poorly rated homes is “pointless”, he says: “It’s like pouring hot water into a cracked tea pot, you’ve got to have the energy efficiency done first.”
Just because this remaining cash has not yet been allocated doesn’t mean it won’t be though, says Bell: “There’s couple of years left in this Parliament for the Conservatives to meet their manifesto commitment. The suspicion would be that if they have something else, it’s not ready for prime time yet.”
Funding remains limited
This shift in spending priorities appears to reflect a broader government faith in technological solutions evident across the wider net zero strategy and exemplified in this case by heat pumps.
But the £450 million earmarked for the Boiler Upgrade Scheme can be expected to support around 90,000 installations over the next three years, which is a fraction of the 600,000 Boris Johnson wants to see being rolled out per annum by 2028.
“In the short term, the funding for heat pumps is still limited,” says Lowes.
However the size of the pot makes more sense if it is viewed as a way of fostering confidence in the heat supply chain rather than direct delivery of the Prime Minister’s target, says Bell: “They want middle class and most well off people to pay higher cost upfront to enable the market to develop and cost to come down so when the least well off buy them.”
The heavy lifting in terms of the 600,000 target looks more likely to be delivered by the government’s idea of mandating boiler manufacturers to ensure that a proportion of the devices they manufacture are heat pumps, proposals for which were outlined in a consultation paper issued alongside the strategy.
“This gives government time to get its longer run plan up and running,” says Bell.
And while the mandate could ramp up supply of heat pumps, it will not necessarily increase demand, which will rely on the cost of buying and running heat pumps coming into line into with those of gas boilers.
It is “difficult to believe” the more optimistic predictions that costs can be reduced by half, says Bell: “You can never rule out technological breakthroughs but these will still be relatively complex devices.”
But a quarter is “eminently doable,” he adds.
However, the 600,000 target remains an “optimistic” one, says Lowes: “It’s a big challenge to get there.”
The key pressure point will be in two years’ time, he says: “In 2023 and 2024 we might get into a period where we are not seeing the growth we need.”
Beyond this date, he envisages the mooted market mandate being the key mechanism for delivering the increased rollout of heat pumps.
However these timetable mean that the heavy lifting in terms of heat has been put off until after the next election, which must happen by the end of 2024, says Bell: “A lot will be happen in the middle of the decade which feels like it is cutting it fine but I suspect that is driven by electoral politics rather than the policy itself.”