970. The Review has heard multiple calls for government to deliver its Heat and Buildings Strategy, but also to take a more holistic approach by packaging these measures into an ambitious National Retrofit Strategy.
971. Investors respond best to a long-term, predictable policy framework and positive evidence of this has already emerged. Major insulation manufacturers (such as Rockwool and Saint-Gobain) operate several factories across the UK and companies such as Octopus Energy are investing £10 million in a new training centre to train 1,000 heat pump installers per year in addition to existing UK manufacturing facilities owned by organisations such as Kensa Heat Pumps Ltd (ground source manufacturer pumps). Some government capital schemes such as the Public Sector Decarbonisation Scheme have received significant uptake and could be expanded if the right signals are given to industry.
972. Views from E.ON, Energy Efficiency Infrastructure Group (EEIG) and the Heat Pump Association are captured below:
"The supply chain remains blighted by short term certainty (1-3 year scheme lengths). Funding and scheme certainty of ten years in length are required to deliver the scale of energy efficiency measures and retrofitting required in the UK housing stock."696
.." the recent Heat and Buildings Strategy left unclarity regarding the government's intended direction of travel for owner occupier households, which represent the majority of the building stock and the highest emissions."697
"The government presently has only an "ambition" to end new fossil fuel boiler sales by 2035. That is insufficiently certain for the major investments necessary if we are to switch from 1.8 million gas boiler installations per year to similar numbers of heat pumps."698
973. Government must implement the Heat and Buildings Strategy without delay, bringing together a programmatic approach to its various support schemes enabling a whole-house plan for every home.
974. In particular, the Review notes the importance of delivering on the below measures, included in the Heat and Buildings Strategy:
• Government should implement the Clean Heat Market Mechanism to increase heat pump deployment, as envisaged by the Energy Security Bill.
• Government should shape the market for cooking appliances through product standards and financial incentives towards electric solutions, which will be cheaper for consumers and reduce our dependency on gas.
• Government should retain energy-related products standards and look to strengthen these, as they can save consumers hundreds of pounds off their energy bills while delivering net zero.
• Government should deliver a new regulatory framework for heat networks and implement heat network zoning, both of which are in the Energy Security Bill. Government should also continue to deliver the Green Heat Network Fund, extend GHNF to 2028 and scale it up over time.
• Government should ensure support for biomethane beyond the current Green Gas Support Scheme which ends in 2025.
CASE STUDY: Future Homes Standard The Government's Future Homes Standard will mandate greater energy efficiency measures in homes built after 2025, but new houses built before then will not need to meet these standards. Retrofitting a new home to meet high energy efficiency standards - including replacing its gas boiler with a heat pump - could cost a household an average of £26,000, according to Climate Change Committee (CCC) data. That is over five times more than the £4,800 it would have cost to meet the standard when a property was first built.xxxviii The Zero Carbon Homes Standard was supposed to be implemented from 2016 onwards but was scrapped in 2015 - this led to over a million homes being built to poor standards, which will ultimately cost the thousands of people who bought those homes millions of pounds. Government is still committed to a manifesto pledge of building 300,000 homes every year by the mid-2020s, the delay to 2025 to enforce the Future Homes Standard will create a missed opportunity in making new builds more efficient and require costly retrofits. Loopholes could also allow developers to continue selling homes with gas boilers until 2026. The home building sector generates £38 billion in economic activity each year and is uniquely placed to support the government and consumers to achieve economic growth in the transition to net zero.699 The latest ONS figures show two-thirds of new homes in England are still being connected to the gas grid.700 |
Government should bring forward all consultations and work to mandate the Future Homes Standards by 2025 to prevent further delays by ensuring the standard applies to all developments. This should include a consultation on mandating new homes to be built with solar and deliver the Net Zero Homes Standard, ensuring that the planning system (discussed in Pillar 4) is flexible enough to enable this. |
975. A Net Zero Homes Standard could serve as the benchmark for all homes. By combining fabric and low carbon heating measures, homes that have taken the appropriate steps to be as efficient as possible will save their occupants money on their bills and be more financially desirable to future buyers, as stated above. Establishing a Net Zero Homes Standard will ensure that as time goes on, more and more homes will reach this standard, and more occupiers will reside in homes that benefit both their health and their finances.
976. Lessons can and should be learnt from the past and other countries. For example, the National Audit Office (NAO) found in its review of the Green Homes Grant Voucher scheme that the "the scheme did not deliver the expectations of number of home energy efficiency installations or support the expected number of jobs."701 The scheme came in parallel with three other schemes, limited resourcing in BEIS and with a short timescale, which left installers and consumers frustrated. In its recommendations to government, the NAO said that the department should, by the end of 2021, set out how its various home efficiency schemes fit with its overall plans for decarbonisation, setting out timescales in a more detailed and longer-term plan - to help promote interest in future schemes.
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xxxviii Future Homes Standard case study - the Part L 2021 standard came into force in June 2022. Homes built under the new standard will be better insulated and will have heating systems designed to run at 55 degrees Celsius - so heat pump ready if a heat pump is not already fitted.