Call for white paper on energy efficiency and heat

The UK Energy Research Centre (UKERC) has called on the government to produce a white paper to address a gap in policy on energy efficiency and heat.

Progress on emissions reductions “will not last into the 2020s” unless policies are “significantly strengthened” during the current parliament.

Energy efficiency is “crucial, but neglected,” UKERC said in a policy review. The impact of policy on energy efficiency has “substantially weakened” in recent years; the failure of the Green Deal energy efficiency programme has “left a policy vacuum behind” and the Energy Companies Obligation (ECO) – “the only remaining significant programme” for households –  does not address the main uses of electricity.

An integrated heat strategy is also “urgently needed” to keep total costs down and avoid stranded assets. The report identified three main technical solutions for the decarbonisation of heat: repurposing of the gas grid for hydrogen; heat networks; and electric heat pumps. “In principle there are complementarities between these, but interdependencies and trade-offs are complex and need to be understood and addressed,” it said.

The repurposing of the gas grid for hydrogen has recently gained traction as a potential solution as “enthusiasm for electric heat pumps to deliver low carbon heat has waned”. However, the review warned of the “danger of a swing to this alternative vision” before sufficient evidence has been gathered: “We argue that multiple demonstrations are required, with adequate attention to learning about ‘what works’ in which contexts.”

The government is due to publish its new emissions reductions plan later this year, outlining how it intends to meet the fifth carbon budget which it approved in June. There will need to be “far greater buy in and cooperation across government” if it is to succeed.

“The Department for Business, Energy and Industrial Strategy (BEIS) is, in principle, better placed than Decc to deliver this: a bigger department with more clout,” the report said. “But the role of the Treasury, Number Ten and the Cabinet Office will also be crucial.”

A new white paper would help to achieve the “necessary cross-departmental focus on low carbon heat” and could address an important regulatory gap – “the absence of a public body with specific responsibility for heat”. The report suggested that such a body could be part of a restructured Ofgem. It said the white paper should also set out how the take up of “low-regret” options can be accelerated over the next fifteen years.

The call for a new white paper was one of eight recommendations outlined by UKERC ahead of the chancellor’s autumn budget statement next week and the publication of the new emissions reductions plan. They also included:

• An integrated, evidence based approach to the new industrial strategy and emissions reductions plan. The industrial strategy should identify “a portfolio of technologies and infrastructures where the UK’s future energy needs, scientific strengths and industrial capabilities could overlap” and acknowledge “the vital role the UK’s financial, legal and consultancy sectors are already playing”.
• A new ‘gas by design’ approach to the future of the fuel which is compatible with carbon budgets and targets. Its role in the in the power sector is currently “shaped by problems elsewhere in the power generation system”.
• A new approach to the commercialisation and deployment of carbon capture and storage (CCS) in response to Lord Oxburgh’s report. “Whilst there are significant uncertainties about the economic viability of CCS, it could provide an important low carbon generation option and have a key role in decarbonising industrial processes. It could also enable manufacturing of novel fuels for heat and transport and, when combined with bioenergy, ‘negative emissions’. The UK remains well-placed in terms of engineering expertise and geological resources to be a CCS leader.”
• An extension of the Levy Control Framework beyond 2020 and a timetable for future Contracts for Difference auctions. All mature technologies, including demand reduction, should be eligible to compete in the auctions on a level playing field so the lowest cost projects are supported. “First of a kind and immature technologies will continue to need dedicated arrangements”.
• Reform of the capacity market so it gives equal treatment to all flexibility options, including demand-side response and storage. “To date, capacity auctions have largely supported existing generation, with limited support for demand-side options.”
• A comprehensive programme of public engagement at national and local levels. “This should include mechanisms for the outcomes to influence policy decisions, incentives for bottom-up initiatives such as community energy, and measures to support shifts to more sustainable patterns of consumption.”

The think tank Policy Exchange has previously urged the government to “completely re-think” its most recent strategy for the decarbonisation of heating which it outlined in 2013. With a price of £300 billion, it said plans to install electric heat pumps in four out of five homes by 2050 are a “colossal waste of money”.

The Committee on Climate Change warned in October that progress on heating has stalled and that emissions targets will not be met unless the government puts in place “a credible new strategy and a much stronger policy framework”.