Simon Clarke is a former Minister at the Ministry of Housing, Communities and Local Government, and is MP for Middlesbrough South and East Cleveland.
Last year, when the Prime Minister stood on the steps of Downing Street, he made it clear that his Government would champion the fight against climate change with more gusto and fervour than any other.
During the Coronavirus pandemic, while so much attention has necessarily been diverted elsewhere, it is greatly to his credit that he has not only stayed true to his word, but has found a way – rightly – to place the green agenda at the heart of our plan for national recovery.
In just over a year, he has cemented the UK’s status as the world-leader on the path to net zero carbon emissions, with real policy action and ambitious targets. Huge progress has been made in decarbonising our electricity supply. Renewable energy made up 47 per cent of the UK’s electricity generation during the first three months of this year. Likewise, clear policy direction in transport means that sales of electric vehicles are surging, while diesel cars decline.
The big outstanding question is how best to solve our remaining core challenge: decarbonising heat. We know that gas boilers are one of the biggest contributors to carbon emissions, and I am encouraged to hear more people talking about how we address this. The truth is that the action that has been taken on decarbonising heat so far is not nearly sufficient to meet our ambitious 2050 net zero target.
What is the solution? In a very welcome move, the Business, Energy and Industrial Strategy Select Committee has an inquiry underway on precisely this subject. But I want to offer my thoughts.
The first is that we shouldn’t put all our eggs in the basket of hydrogen – and thereby overlook some more immediately deployable technologies. The development of new hydrogen technology is hugely exciting, and it will undoubtedly play a key role in a net zero economy, but it won’t, for example, tackle the millions of gas boilers that need to be replaced by the 2030s. The fact is that low-carbon hydrogen is still in development, and we need to act now to have a realistic prospect of meeting our ambitious targets.
This is not just a question of speed. Hydrogen needs to be stored under high pressure, creating cost; it is more complex and energy intensive to produce than using renewable energy directly across our economy. Hydrogen has huge potential to help unlock the net zero challenge, but I am doubtful it should represent the standard source of home heating.
So what is the solution? For households, the answer seems more likely to be electric heat, in the form of the existing technology of heat pumps. Electricity is a cheaper fuel than low-carbon hydrogen, while being more efficient. For every kWh you put into a heat pump, you get 3 kWhs of heat; for every kWh of energy you put into a hydrogen boiler, you get less than one kWh of heat. Studies show that 99 per cent of heat demand could be met by electricity, using technologies already in existence.
To be clear, I’m not against hydrogen. Indeed, with Teesside the centre of the hydrogen industry, I have a keen constituency interest in maximising hydrogen in the right places in our economy.
But as hydrogen is going to be needed for sectors like steel manufacturing and shipping, it’s imperative that we don’t make these industries uncompetitive by using scarce hydrogen for household heating as well, thus driving up the price of energy.
The Government has made fantastic strides on encouraging more people to switch to heat pumps as a renewable heating source. It’s announced a new Clean Heat Grant, which will build on the Renewable Heat Incentive. There is an enormous amount of Government commitment to continuing these consumer incentives with the Green Homes Grant, for example, which the Chancellor announced this summer. These grants could be extended and scaled up significantly so that we can begin deploying heat pumps at the pace that we need to get on track to net zero.
By introducing these measures, the Government has also completed the first necessary steps to electrifying heat. Now it also needs to ensure that electric heat is competitive with gas so that companies can start rolling out heat pumps.
Our electricity bills currently include a sizeable carbon price, and social and environmental levies, whereas gas bills have neither – despite the fact gas is now significantly more carbon-intensive. This creates a perverse incentive for people to opt for gas over electricity when picking a new heating system.
I’d like to see Government add a carbon charge to gas heating – phased in gradually, so people have time to plan, and accompanied by a mitigation scheme for people in fuel poverty and a cut in VAT on electricity to minimise the overall impact on people’s dual fuel bill.
This isn’t just about getting to net zero. Rolling out heat pumps has the potential to create tens of thousands of jobs all over the country, not just directly, but through the associated industries such as electric vehicles and vertical farming that it will support. We need to support Great British EnTech pioneers like Octopus Energy to develop the technologies that use electric heat to create new industries we can’t even imagine yet.
What else needs to be done to unleash the potential of electric heat? Ultimately, the decarbonisation of heat won’t be achieved without the right structural incentives. We need clear regulatory signals about when the sale of polluting fossil fuel technologies, like gas boilers, will be phased out. This sort of policy will help galvanize the market for electric heat and the industries it supports – just as it has done with electric vehicles.
There is no silver bullet in the race to net zero. But as we focus on the development of exciting new technologies, we mustn’t overlook the option that is right under our nose. There is a light at the end of the tunnel, and it can be powered by good old-fashioned electricity.