Combined Heat & Power, District Heating & Cooling, Demand Side Services, Energy Efficiency

Business and civil society groups demand fair heat deal to make clean heating affordable for all

16 June 2021

Over twenty businesses, energy suppliers, green and anti-poverty groups have called for the Government to back a Fair Heat Deal to make the transition away from fossil fuel boilers attractive, easy, and fair for all.

The groups want the Government to ensure it is affordable for every household to install and run a heat pump. This would help households benefit from cheaper energy bills and warmer, healthier homes, while slashing carbon emissions.

Buildings in the UK are responsible for nearly a quarter of climate emissions. Moving away from polluting fossil fuel boilers is necessary to decarbonise Britain’s buildings and to get on track to net-zero.

The UK’s scientific advisors, the Climate Change Committee, say heat pumps will play the largest role in decarbonising Britain’s heat supply. Air source heat pumps work like fridges in reverse, extracting the warmth in the air outside and compressing it to heat the building inside.

The Fair Heat Deal would stimulate the heat pump market, helping to accelerate a reduction in technology and installation costs [2] as economies of scale are achieved. This means the costs of subsidising the programme could rapidly fall over time.

By boosting economic activity, the Fair Heat Deal could generate as much growth as any infrastructure programme but would have the extra benefits of creating good jobs in every part of the UK while slashing energy bills. The UK has a world-leading heat appliance manufacturing industry. This means accelerating the deployment of heat pumps could create a massive inward investment and global export opportunity as other countries look to decarbonise heat.

The groups urged Government to provide comprehensive support for households moving to heat pumps. The Fair Heat Deal would include:

  • Moving environmental levies off electricity bills to ensure it is always cheaper to run a heat pump than a boiler.
  • Free heat pumps and insulation for fuel poor and low-income households.
  • Grants for everyone else to equalise the cost of a new heat pump with a fossil gas boiler.
  • Financial incentives including zero VAT on green home products and installation and green Stamp Duty to reduce the cost of low carbon homes.
  • Strong consumer protections.
  •  A Warm Homes Agency to train installers, create quality green jobs in every part of the country and maintain high standards.

Signatories to the Fair Heat Deal CPRE-

The Countryside Charity, End Fuel Poverty Coalition, E.ON, E3G, Federation of Master Builders, Energy Saving Trust, Energy UK, Friends of the Earth, Good Energy, Green Alliance, Green Finance Institute, Greenpeace UK, Heat Pump Federation, Kensa Contracting, MCS Foundation, New Economics Foundation, OVO, Possible, The Association for Decentralised Energy, UK Green Buildings Council, WWF

Juliet Phillips, Senior Policy Advisor at E3G said:

“Moving from a gas boiler to a heat pump is one of the biggest carbon savings a household can make to fight climate change. But it must be affordable and we urge the Government to support our Fair Heat Deal to ensure no one is left behind in the green industrial revolution. If done right the UK can lead the world in reducing carbon emissions from heat while slashing energy bills, boosting the economy and protecting the fuel poor.”

Principles of the Fair Heat Deal in full:

  1. Offer up-front financial support for households to buy heat pumps. This is essential to make the transition fair, while pump-priming the market to drive costs down. Grants should cover the entire cost of heat pumps for low-income 6 households. For everyone else, grants should be offered at a level which aims to make the upfront costs of installing a heat pump and complementary energy efficiency measures the same as replacing a gas boiler, with subsidies reducing over time as costs fall. Incentives and subsidies can support the roll-out of attractive financial solutions to bring in private capital, or blend public and private capital, to further support households and communities.
  2. Seek to ensure lower running costs for heat pumps compared to gas boilers – for example by removing environmental levies from electricity bills – while protecting the most vulnerable who live in or are at risk of fuel poverty.
  3. Introduce incentives that encourage households to make green heat choices, such as Green Stamp Duty that is lower for buyers of low carbon, energy efficient homes, and zero VAT on green products and renovation works that decarbonise homes.
  4. Set up a Warm Homes Agency to oversee the scaling of existing initiatives and programmes to protect consumers and, through skills and training, help to create thousands of secure, well-paid green jobs across the country, and ensure these opportunities are just as attractive as equivalent roles in gas heating installation and maintenance today.
  5. Ensure that there are impartial energy advice and support services for consumers.
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