Heat and Building Strategy - 2021

Posted in: nnfcc

On the 19th October, the government published its Heat and Building Strategy outlining the country's path to decarbonising it's heating sector.

On the 19th October, the government published its new Heat and Building Strategy, setting the way in which the country’s 30 million residential and commercial buildings will start being decarbonised during the 2020s. The Strategy focuses on building a system that reduces cost, lowers carbon emissions and increases energy efficiency. The plan aims to build a robust market that will make this possible, as well as tests the viability of hydrogen for heating. The plan can be summarised as follows:

  • On the subject of biomass, biomethane produced from anaerobic digestion will only be used to decarbonise the grid in the short- to medium-term. It is seen as a valuable tool to reach current carbon saving targets but does not seem to be considered a long-term solution. For the time being, it will be supported by the Green Gas Support Scheme (GGSS) until autumn 2025, which will boost investment in the UK biomethane industry by providing financial support for a period of 15 years. Only “new” plants will be eligible, not CHP conversions initially, and the biomethane injection facility will need to be commissioned by the 30th November 2025 at the latest. The GGSS rates are tiered depending on biomethane production capacity. The starting rates are as follows: Tier 1 (up to 60,000 MWh): 5.51 p/KWh; Tier 2 (up to 100,000 MWh): 3.53 p/KWh; Tier 3 (above 100,000 MWh): 1.56 p/KWh. After the first 6 months of the scheme, these rates are expected to undergo quarterly degressions to ensure the scheme remains within the bounds of the planned expenditure thresholds, therefore, preventing overcompensation of biomethane producers and an unfair burden on billpayers. Biomethane injection is expected to deliver 2.8TWh per year from 2030/2031.

  • The Strategy acknowledges that several low-carbon and renewable technologies will need to be used together to decarbonised the grid. The government recognises the potential of hydrogen for heating and aims to support the development of this technology, with the hope that hydrogen will fully replace biomethane on the long-term. The government expects to be taking strategic decisions on hydrogen uses by 2026 after trials are set up in the next five years.

  • Effort will be put into improving the energy efficiency of existing buildings – to bring their EPC grading higher. This is expected to kick-start a green jobs and products market, and to develop a UK green supply chain, all of which will be used as strong foundations for a robust Net Zero future.

  • The Strategy aims to make sustainable solutions more affordable for everyone. Low-income households will receive support for home improvements, and the costs of heat pumps will be lowered with a view of matching the cost of conventional boilers. A £450 million Boiler Upgrade Scheme will be set up to award households up to £5000 to switch to low-carbon heating systems. The government aims to reach boiler/heat pump parity by 2030, pledges to end the installation of new natural gas boilers by 2035, and will start setting up renewable heat solutions in areas where it is already cost-effective now.

  • The government’s plan puts an emphasis on building markets that will make this transition possible. This will imply ramping up UK-based supply chains to allow the replacement of 1.7 million fossil fuel boilers per year by the mid-2030s.

The government believes that this plan will lead to the creation of 240,000 skilled and well-paid jobs by 2035, and that the knowledge that will be developed throughout the years will lead to the UK becoming an international expert in the matter, therefore leading to further economic growth.

The full Heat and Building Strategy is available here.