The Heat Transition must be local, energy-efficient, and rapid – the UK’s new Heat and Buildings Strategy is light on all three
By Calum Harvey-Scholes, Energy Policy Group, 16th of November 2021
It is widely accepted that delivering a zero carbon heat system will need to be both decentralised and designed for the locality, implying an important role for local governance. Prioritising energy efficiency will lead to both lower capital and operational costs at all levels, and bring myriad co-benefits. It is also clear that the decarbonisation of the UK’s buildings, one of the largest contributors to greenhouse gas emissions, must be rapid in order to achieve the legally binding target to reduce emissions by 78% by the year 2035.
At the end of October, the UK Government published their long-awaited Heat and Buildings Strategy (H&B Strategy). The publication brought clarity to some areas, adding a greater sense of direction than was previously the case and, to a degree, it should be capable of accelerating the speed of progress. Of particular interest here is that the strategy speaks of the potentially “critical role” of local authorities in directing action at the local level, and is enthusiastic about the need to accelerate energy efficiency measures:
“Improving energy efficiency by adopting a fabric-first approach is key in ensuring the transition to low-carbon heating is cost-effective and resilient.” (BEIS, 2021: p12)
All in all, the need for faster progress to decarbonise heat and buildings is underlined. However, there is limited detail on how local government will be resourced or how the deployment of energy efficiency measures will be accelerated which raises questions about the extent to which this will drive decarbonisation at the speed required and desired.
Local action and governance
The H&B Strategy acknowledges many of the strengths which local governments bring to heat decarbonisation and outlines the four key ways in which they can already contribute. Table 1 summarises these and provides analysis appraising the detail in the strategy on how these actions may be realised.
Table 1 – Priority actions for local governments
|Planning for decarbonisation through gathering data and mapping local energy infrastructure.||✓ This is essential for delivering locally appropriate and joined-up solutions.
X There is no indication of additional resource to carry out this work.
|Decarbonising their own stock, focusing on fuel poverty and homes with low energy performance.||✓ This is important and there is some funding outlined in the form of the Social Housing Decarbonisation Fund and the Sustainable Warmth competition.
X Funding is insufficient and patchy – more on this below.
|Awareness raising of support available for voluntary measures.||✓ With close connections to residents and organisations in the area, this is a sensible task.
X Support for voluntary measures is extremely limited, incentivising heat pumps and little else. The scale of support will account for only 5% of the annual heat pump deployment goal for 2028.
|Continuing to prioritise tackling climate change.||✓ Prioritising climate as an issue is necessary.
X This is expressed in fairly vague terms and local government will need funding and capacity to deliver material change.
The Association for Decentralised Energy has called for an approach to governing the heat transition which is “decided at a national level but directed at a local level” (ADE 2020, p8). This is echoed in our experience on the SHIFFT project as city governments are exploring what it means to be a local ‘heat director’ capable of steering and facilitating a broad coalition of actors to work synergistically on the heat transition. Whilst the H&B Strategy recognises a role for local government it is not clear that this role is envisaged as including directing local delivery or that the statutory powers or resources to deliver large-scale programmes in localities are forthcoming – both of which will be needed if the transition is to be successful (Britton & Webb, 2021). As Jess Britton and Jan Webb (2021) point out with regard to the Net Zero Strategy, we must also think more comprehensively about the role of local governments with a need for new powers, a review of funding and a net zero statutory duty. As outlined in detail in the UK100 Power Shift report (2021), powers are needed across the full range of local government competences. In particular, new planning powers will be required to drive and enforce change in building development and energy infrastructure, including heat. With heat networks, for instance, whilst overarching regulation and consumer protection can be applied nationally, zoning and connection requirements are inherently applied locally; so local government must be empowered to designate heat zones and enforce connection requirements where appropriate. For local authorities in the UK the resourcing is also especially important after a 49% cut in real terms funding from central government since 2010 had devastated their capacity to deliver programmes beyond essential services even before Covid-19.
Energy efficiency first
The H&B Strategy is assertive about energy efficiency measures being a priority ‘no-/low-regrets’ action in achieving climate goals. The ambitious deadlines (reiterated from the Clean Growth Strategy) to improve energy efficiency in social housing by 2030 and all UK homes by 2035. However, the precise number of homes addressed in both targets is nebulously worded; as many fuel poor homes will be treated as “reasonably practicable”, whilst the rest of the housing stock will be addressed “where practical, cost-effective and affordable”. This leaves the targets with a substantial scope for subjective interpretation as to whether they have been achieved, failing at the first step of policy implementation – the setting of meaningful targets, meaning that we must look to the plans to deliver the targets in order to judge their plausibility and sincerity.
In terms of active policy there are a number of funding channels for fuel poor homes but limited action to drive the wider market. For poorer households there are a series of schemes now open, some of them very recently: ECO3, the three phases of the Green Homes Grant ‘Local Authority Delivery’ (LAD), the Home Upgrade Grant (HUG), and the Social Housing Decarbonisation Fund (SHDF). 137,000 homes were addressed under ECO3 in 2020 but the rate of deployment of measures has fallen from the previous ECO phases (overall, around 40% of measures have been for energy efficiency (BEIS, 2021)). So far, the LAD scheme has allocated funding for approximately 50,000 homes and, together, the competitions now running could fund another 36,000-50,000 homes. Looking more widely, a total of £6.3bn has been pledged to the SHDF and HUG schemes over the next ten years which, assuming similar eligibility and caps, could treat something like 325,000-630,000 homes – just over 15% of the UK’s social housing stock. In addition, this money is being allocated through competitions; whilst this may enable the government to fulfil its goal to address the ‘worst first’, it leads to lumpy, unpredictable and unevenly distributed funding. This is suboptimal for a work programme which ultimately all local governments will need to begin and operate on a multi-year basis. Consistent funding will be required for all local government to fully engage with the challenge.
With regard to the wider market, the H&B strategy specifies even less in terms of concrete measures. The 2019 Minimum Energy Efficiency Standards (MEES) oblige private landlords to raise the energy performance of their properties to meet EPC level E by 2023, unless it costs more than £3,500 (less than 6 months’ rent for most properties). This represents both a low energy efficiency target and a low spending threshold for the individual dwellings and, with the exception of some local initiatives, there is no other public assistance for insulation or other energy efficiency measures available for renters or householders.
Finally, the targets are arguably flawed in their reliance on EPC ratings as a metric. The methodology behind EPCs is designed to reflect modelled energy performance rather than any real measurements. It also primarily measures running costs, not energy use, which is appropriate in some cases but not others and, as the gas price spike has shown, are liable to volatility. Criticisms of EPCs have come from a range of actors and the Scottish Government has recently consulted on updating their methodology.
Rapid emissions reduction
The UK has committed to cutting emissions by 78% over 1990 levels by 2035 (a 63% reduction from 2019) and buildings must contribute to this. The energy efficiency targets set out in the H&B Strategy – 2030 for fuel poor households and 2035 for the rest – appear well calibrated with the broader emissions goals but, without a more explicitly defined ambition, it is impossible to know how much might be achieved by these dates.
It is widely accepted that local government is crucial to delivering the heat transition. The H&B Strategy recognises this and emphasises the need for local area energy planning and leading by example through retrofitting social housing. However, without the required powers, devolved responsibilities and financial support it is likely that delivery from local authorities will be patchy at best and the transition will not proceed at the speed we need.
Reposted with permission from SHIFFT.