Sunday, January 16, 2022

Without addressing emissions from the UK’s 25 million gas boilers, we will miss our climate targets

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There is increasing reason to believe that the costs for households can be quite manageable

Of course, none of these changes to our homes come for free, but there is increasing reason to believe that the cost to homes can be completely manageable, especially if the government plays their cards right.

Our homes are now at the center of the net zero debate. Without addressing emissions from Britain’s 25 million gas boilers or insulating homes across the country, we will fall short of our world-best climate targets.

First up is the notion that households will be forced to ‘rip out’ gas boilers and replace them with low-carbon heat pumps, apparently at great cost. Energy regulator Ofgem has found that high initial costs are the main factor limiting the use of heat pumps, a top concern for 70 per cent of Brits who are currently uninterested in switching to low-carbon heating. Getting this right is key. Fortunately, there is a clear downward trend in upfront costs.

Energy retailer Octopus has announced plans to reduce the cost of an installed heat pump to £5,500 over 18 months, from the current £8,000 to £10,000. Add to this the government support that will be available from April 2022 via the Clean Heat Grant and the upfront cost could be as low as £1,500, cheaper than a new gas boiler.

Other manufacturers will recognize and respond to this challenge, likely leading to rapid innovation and cost reduction seen in renewable energy, batteries and electric vehicles.

Scientific research has shown that the cost of heat pumps drops by a third every time the (currently small) industry doubles. With large parts of Europe also eyeing a rapid switch to clean heat, the size of the market will soon increase.

Making the cheaper, cleaner option an easy choice when a boiler fails is vital to ensuring we can stay warm at home without warming the planet. For the time being, the higher operating costs of electric heating are also causing problems – but here, too, change is underway.

Carbon taxes and levies that help alleviate energy poverty and remove carbon from our power grid are all paid for through utility bills. Either spreading this on gas bills as well (which currently bypasses carbon taxes despite being a more polluting fuel) or paying for it through general taxation will result in an immediate and dramatic drop in electricity prices and utility bills.

In the longer term, building more renewable energy to make the most of Britain’s stormy weather will ensure there is more than enough clean and cheap electricity to keep our homes warm, power cars and turn on lights. The enthusiasm for heat pumps cannot ignore an unavoidable problem: a large number of homes in the UK are losing too much heat through walls, windows and roofs.

The recently drawn Green Homes Grant showed a big appetite for home efficiency improvements, despite being unable to deliver results due to flaws in the program. However, this increasing demand will surely inspire Whitehall to deliver an ambitious replacement, backed by the long-term support needed to improve millions of homes.

Replacing this is a clear priority for the government’s forthcoming strategy to decarbonize homes and buildings.

However, scholarships are only one option. Changes to the tax system, such as Stamp duty rebates if energy upgrades are made within a few years of moving in, reducing VAT on retrofits, or even opting for a wage-waiver scheme – similar to the cycle-to-work scheme – could all find a place.

As do green mortgages, which offer lower interest rates on less wasteful buildings and additional credit for upgrades, interest-free loans, and green bonds. There is no shortage of levers for the government to pull to ensure that UK households finally stop “lagging”, as the Prime Minister once put it.

Decarbonizing our homes isn’t just a climate win. Lower bills, warmer homes, cleaner air and no more gas leaks are just a few of the added benefits. There are answers to all questions about costs. The only real obstacles left for us to tackle our leaky homes are political.

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