Insert image (Send backwards until image appears Heat Decarbonisation behind title. Do not cover the footer banner.) Facing the challenge Future of Heat, May 2019 9 May, 2019
Why does decarbonising heat matter? • Heating has impacts across our economy. In our homes, we rely on it for comfort, cooking and washing. Businesses need heating and cooling for productive workplaces and heat is integral to many industrial processes. • Meeting our existing Climate Change Act commitment to reduce greenhouse emissions by 80% by 2050, or more stretching future targets, will require decarbonising nearly all heat in buildings and most industrial processes. • The Clean Growth Strategy (CGS) identifies heat as the most difficult decarbonisation challenge facing the country. It will involve large-scale transformation, including disruption to consumers and wide-ranging change to energy systems and markets. Delivering it will require coordination beyond the scale of most public policy programmes. 2 Future of Heat, May 2019
What is the heat challenge? • Heating is the single biggest reason we consume energy in our society and is responsible for over a third of our emissions • Heat demand is highly seasonally variable and can be several times electricity demand during winter peaks 3 Future of Heat, May 2019
Heat decarbonisation in the 2020s To meet carbon budgets, action is needed to drive uptake of low carbon heating at scale, throughout the 2020s. Commitments include: Phase out fossil fuel Reduce emissions from Buildings Mission, to at heating off the gas grid the public sector by 50%, least halve the energy use during the 2020s including by reducing the of new buildings by 2030 (territorial extent energy use of buildings, (England only) depends on policy levers) by 2032 Improve the EPC of fuel Commitment to bring the Reduce business energy poor and private rented EPC rating for all homes use by at least 20% by households to Band C by to Band C by 2035 2030 2030 (England only) (England) 4 Future of Heat, May 2019
Reducing heat demand: domestic The Clean Growth Strategy set out our aspiration to strengthen the PRS standards and replicate an EPC led approach across other tenures. To this end we have: Owner occupiers • Oct 2017 published a Call for Evidence on ‘Building a Market for Energy Efficiency’ Private rented sector • Strengthened regulations to require landlords to contribute up to £3500 in place from April 2019 • A consultation on increasing standards in the domestic PRS to take place in the autumn • A non-domestic consultation to be published shortly Supply chain and consumers • Summer 2018 published a call for evidence on improvements to EPCs • Each Home Counts review – quality mark and industry standards • 6 supply chain demonstration projects - to improve supply chain coordination • Sustainable Energy Advice – a new digital tool for trusted consumer advice 5 Future of Heat, May 2019
Reducing heat demand: non-domestic The Clean Growth Strategy sets an ambition to improve business productivity by enabling businesses to improve energy efficiency by at least 20 per cent by 2030. • This will deliver: • Up to £6bn in cost savings for businesses • Carbon savings of up to 22 MtCO2 e • Call for Evidence (Jul 2018) sought views on how to deliver the 20% ambition – the Government response was published in March 2019 • We sought views on a number of proposals and approaches to make buildings more energy efficient e.g.: • Improving energy efficiency requirements for new & existing buildings • use of more sustainable technologies, benchmarking building performance and tools to monitor and evaluate building energy use and performance. 6 Future of Heat, May 2019
Reducing heat demand: industry Industrial Energy Efficiency Accelerator - A £9.2M competition which will identify and accelerate deployment of new energy efficient technologies and processes to UK industry / manufacturing sectors Innovations with large cross-sector energy and carbon reduction impact, either from novel technologies or known technologies in new sectors Climate Change Agreements - Now in Final Target Period (2019 and 2020) – evaluating to inform decisions on future schemes Industrial Energy Transformation Fund - As part of the Industrial Strategy, the government will establish an Industrial Energy Transformation Fund, backed by up to £315 million of investment, to support businesses with high energy use to transition to a low carbon future and to cut their bills through increased energy efficiency. Industrial decarbonisation challenge - Establish the world’s first net -zero carbon industrial cluster by 2040 and at least 1 low-carbon cluster by 2030 Industrial heat recovery support - Phase 1: Support for Feasibility Studies - £6m; Phase 2: Capital funding - £12m to provide direct financial support for projects that would otherwise not have gone ahead and to encourage the deployment of recoverable heat technologies in industrial clusters 7 Future of Heat, May 2019
Supporting low carbon heat: off gas grid The Clean Growth Strategy set out our ambition to phase out the installation of fossil fuel heating in new and existing buildings off the gas grid in the 2020s. • In 2018 we ran an extensive programme of engagement to seek views on how industry, government and consumers could work together. • Responses were clear that Government should set a long-term framework that would enable industry to play their part in the decarbonisation of off gas grid areas. • We are now looking to develop a comprehensive policy framework to support this transition. It will aim to take forward the gains made by the Renewable Heat Incentive (RHI) and continue to build the market, backed by standards. This year, Government will consult on regulations; skills and training; and Part L of the Building Regulations for England to continue developing this policy framework. 8 Future of Heat, May 2019
Supporting low carbon heat: new build • By 2025 the government will introduce a Future Homes Standard for new build homes to be future-proofed with low carbon heating and world leading levels of energy efficiency. • This will create healthy homes that are fit for the future, have low energy bills, and are better for the environment. • This will be implemented through an uplift to the Building Regulations, subject to consultation. We will expand on the technical detail of these proposals during the 2019 Part L consultation. • The Buildings Mission, announced by the PM in May 2018, is the first mission designed to meet the aims of the Clean Growth Grand Challenge. It aims to halve the energy use of all new builds by 2030, and to halve the cost of retrofitting existing buildings to a similar standard 9 Future of Heat, May 2019
Supporting low carbon heat: green gas • To meet our climate targets, we need to reduce our dependence on burning natural gas to heat our homes. • “we will publish proposals to require an increased proportion of green gas in the grid, advancing decarbonisation of our mains gas supply” • The Government will consult on the appropriate mechanism to deliver this commitment later this year. 10 Future of Heat, May 2019
Supporting growth in low carbon heating We are spending £4.5bn between We are investing £320m of capital funding 2016 and 2021 to support in heat network projects through grants innovative low carbon heat and loans, to leverage around £1bn of technologies in homes and private and other investment. We are businesses, such as heat pumps, developing a market framework for self- biomass boilers and solar water supporting heat networks in future heaters. We are developing options for phasing out fossil fuel heating in properties off the gas grid and in We are supporting innovation for a range of new builds and will consult on potential heat technologies, including electric these later this year and low-carbon gas technologies 11 Future of Heat, May 2019
Furthering our understanding of heat technologies • No clear consensus on the best approaches to decarbonising heat at scale • We have come a long way in developing our understanding of the options in the past few years • But, as set out in Clean Growth: Transforming Heating , evidence gaps remain and we have a ‘common agenda’ to plug them. E.g.: Hydrogen - testing the costs, practical delivery challenges and public perception and experience of hydrogen technologies; Electrification - improving understanding of potential future requirements for electricity generation and network reinforcement under different circumstances,; Bioenergy – improving understanding of the potential for expanding feedstocks and the competition for limited bioenergy resources in the future 12 Future of Heat, May 2019
Developing a policy framework for decarbonising heat • As well as continuing to plug the gaps in the evidence, further work is needed to develop a long-term policy framework for heat to enable strategic decisions in the mid-2020s on the future of heat • We have committed to develop a roadmap for policy on heat decarbonisation , which we aim to publish by mid-2020, to get us to the policy framework • It is an open question as to what form the framework will take, but we will be looking to set this out in the roadmap and to work closely with you to do so: the scale of the challenge to decarbonise heat will need all of us to work together to tackle it 13 Future of Heat, May 2019
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