The Chancellor of the Exchequer’s post Covid-19 stimulus announcement earlier this month recognised that the low-carbon agenda is vital.
The two strands linked to energy efficiency, which mostly means better thermal insulation, are £1bn to improve energy efficiency of public buildings and a £2bn “green homes grant” fund, which would provide at least £2 for every £1 homeowners and landlords spend to make their homes more energy efficient, up to £5,000 per household. The first of these included a modest £50m funding package for the social housing sector to pilot new approaches to low-carbon retrofitting of social homes.
Whilst the opportunity around support for the hospitality sector is easy to grasp, that relating to home improvements is more difficult to engage with. At a time when the average house price in the West Midlands fell by 9% in the last 12 months, and the economic downturn, it may be difficult to deliver the scheme given that the first £1 will be harder to come by.
This initiative also misses the need to decarbonise the heat generation not just reduce the amount of heat generated and that the two interventions need ideally to be delivered simultaneously as both will require changes to people’s homes.
The joint CBI and University of Birmingham Policy Commission, chaired by Lord Bilimoria and published yesterday, sets out “The Road to Low Carbon Heat”. The scale is enormous, if the UK is to meet its commitment to decarbonise energy by 2050 then the decarbonisation of heat is the biggest challenge. Heating accounts for around 40% of energy consumption and in large part is delivered through the combustion of natural gas. Heat is generated locally in homes and businesses, meaning that any transition requires over 20 million individual interventions that will need to be coordinated nationally, regionally and locally. This stands in contrast to recent success in decarbonising the power sector, which has relied on comparatively little consumer and business action.
There is a need to scale-up the manufacture of new heat generation technologies, such as heat pumps, the skills to install and service and the national infrastructure, be it electrical or gas, to support that delivery.
The “green homes grant” is a helpful start but needs to be coordinated with other initiatives. The Policy Commission suggests a scheme which would ratchet up the pressures for change, with initial grants being then replaced by loans, followed by a clear end date to the scheme to encourage early public adoption. The priority for this funding should be existing social housing and off-grid homes in order to stimulate the market for low-carbon heating. This would combine the installation of heat generation and thermal insulation. The level of support needs to be much higher than £50m.
However, the scale of intervention required cannot be delivered through consumer incentives alone and needs to be coordinated in order that the local infrastructure can support the increased electricity grid demand, that the switch from gas to greater reliance on electricity is matched by enhanced national generating power and that there are not communities or social groups left behind or disadvantaged. The Commission calls for a National Delivery Body to steward the heat transition which works locally to nationally to deliver a joined up solution.
There is a need to coordinate the skills development, establish the standards to which solutions must be delivered, and coordination of pilot schemes so learning is not lost between demonstration projects and delivery of solutions is accelerated. Here there is a need for a National Centre for Decarbonisation of Heat. This would ideally be based in the Midlands where many of the manufactures of heating solutions are based and the need to re-stimulate the economy post-Covid highest.