Every day a greener day

Just over a week after the UN Secretary General called for countries to “massively fast-track climate efforts”, the UK government is expected to publish its updated strategy on energy security and net zero. This is being billed as “Green Day”.

The truth is that every day needs to be a greener day. Just look at decarbonising heat and buildings. That requires new heating systems and / or energy efficiency measures in more than 300 homes every hour every working day for the next 27 years.

It is welcome that the current government appears to be diligently working its way through the in-tray left by the previous two Conservative prime ministers. There is a clear need to move beyond target-setting to a relentless focus on enabling delivery. The government wants to harness the innovation and investment of the private sector. That requires a regulatory and policy framework that removes uncertainty, actively supports the transition and gets out of the way of delivery.

Removing uncertainty

It is unhelpful for businesses if the government starts policy work and then pauses it, possibly indefinitely. After the tumult of recent years, the list of delayed decisions is increasingly long. In relation to heat and buildings decarbonisation alone, businesses are awaiting decisions on:

• the UK Energy-Related Products framework (last statement on this was November 2021)
• rebalancing electricity and gas policy costs (first promised in early 2021 but no action since)
• updating the Reduced Data Standard Assessment Procedure (rdSAP) so that Energy Performance Certificates reflect current power generation rather than the generation mix of 10 years ago.

We are also waiting to see the Energy Security Bill enter law and progress on the secondary legislation, as well as the (unknown) consequences of the Retained EU Law Bill.

Ending or reducing the policy uncertainty will facilitate deployment of capital, investment in plant and machinery and ultimately speed up decarbonisation.

Actively supporting the transition

In other areas of heat decarbonisation, there is a role for government and regulators to actively facilitate the transition. This is about proactive regulation with a clear long-term vision. These interventions are needed where the market will deliver too slowly or the change is too large for the market to facilitate on its own. Such areas include:

• ensuring new buildings are energy efficient through the Future Homes Standard
• deciding as soon as possible on whether the role for hydrogen in heating is partial, very limited or non-existent
• working out how to decommission or repurpose at least some parts of the existing gas infrastructure
• establishing the Future Systems Operator
• ensuring high quality standards for Energy Smart Appliances

These require the government and regulator to take action, to develop new frameworks. This is very much in the vein of the Electricity Market Review 10 years ago that culminated in the Contracts for Difference regime and a boost of investment into renewable generation.

They also require the government to work with companies to ensure that the workforce can build enough new energy efficient homes, that the electricity network infrastructure can support additional demand and that financing mechanisms for decommissioning are fair.

Getting out of the way of delivery

There are areas where the regulatory framework gets in the way of delivery. While this is most obviously seen with planning and the deployment of onshore wind, there are similar issues with heat decarbonisation. For instance:

• The list of energy saving materials eligible for zero-rated VAT was last updated in 15 years ago. This list does not include products such as batteries, thermal stores or EV chargers that use smart technology to maximise the use of renewables, reducing carbon emissions.
• Building regulations refer to “hot water cylinders”, even though thermal stores no longer need to be cylinders or use hot water as the storage medium.
• The permitted development rules for the siting of air-source heat pumps are more stringent than the siting of oil tanks or boiler flues.

Ensuring that regulation remains up-to-date and does not inadvertently prevent delivery of low carbon solutions. It is welcome that the government is consulting on the scope of products captured as energy saving materials. An expanded list will increase the deployment of products that support energy efficiency and decarbonisation.

Political bravery

Decarbonising homes is a tough challenge and there are no silver bullets. It will involve removing heating choices that cause the most pollution inside and outside the home. For instance, it is no doubt politically challenging to make it harder for people and businesses off-the-gas-grid to install new fossil fuel systems. That requires political bravery with a long-term view, coupled with a generous support framework. We need to help people make this transition and it is welcome the government is providing at least some funding for these off-gas grid homes to decarbonise.

Ultimately it is all the small things that add up. And the government needs to speed up delivery through all the levers at its disposal. So, over the coming months, let’s see more action on a regulatory and policy framework that removes uncertainty, actively supports the transition and gets out of the way of delivery.

Tom Lowe is an energy consultant and the founding director of Thermal Storage UK