Heat pumps and car-free days: How can the UK respond to the energy price crisis without backtracking on net-zero?

Sunak (pictured top left) is being asked to provide more financial support to shield against rising energy prices

With Chancellor Rishi Sunak due to deliver his Spring Statement to Parliament on Wednesday (23 March), he is under mounting pressure to respond to the cost of living crisis.

The Treasury usually likes to keep the Spring Statement as a relatively low-key event – a chance for the Chancellor to provide minor updates in between Budget statements. But the general public, trade bodies, NGOs and all manner of other organisations are calling for more dramatic interventions this time around.

Further support for businesses and households as energy bills continue to rise is something the Treasury is under pressure to announce. The rebate and clawback scheme announced by Sunak last month was branded a “sticking plaster”; citizen’s groups said the amount was insufficient, many green economy experts urged a broader look at renewables and energy efficiency.

All measures announced by the Treasury will tie in with the forthcoming energy security strategy. Prime Minister Boris Johnson has asked for this to be drawn up, not only with rising energy prices in mind, but with the need to transition away from Russian oil and gas imports.

Here, edie summarises some of the last-minute calls to action being made to Sunak by green groups ahead of the Spring Statement.

Heat pumps, please

The Government published its long-awaited Heat and Buildings Strategy last October, but the response was underwhelming, with many organisations pointing out a disconnect between the levels of funding and the longer-term targets on things like electrified heating that had already been announced. The Climate Change Committee recently confirmed that these criticisms were founded.

With this in mind, a coalition of organisations including the Energy Savings Trust, Energy UK, NESTA, EDF, E.ON and ScottishPower have made a renewed call for greater policy support for electrifying heat at scale.

Using a briefing paper, the ‘Electrify Heat’ campaign is calling on the Government to supercharge action on “training, trust and tariffs”.

On the trust piece, it is recommending the creation of a national advice service and website for households, supporting them to choose the right low-carbon heating options. It also wants the Government to launch a new engagement and communications campaign on low-carbon and efficient heating.

As for tariffs, the campaign is arguing that the £450m set aside for the Boiler Upgrade Scheme is likely to not be sufficient and that schemes focused on those at risk of fuel poverty, like the Social Housing Decarbonisation Fund, should be scaled. It is also urging quicker action to move legacy policy costs to general government spending and off of energy bills.

E.ON UK’s head of external affairs Brian Tilley said: “Decisive action now from Government will kick-start our journey to cheaper and more efficient home heating, and the Chancellor has the opportunity on 23 March to do just that. We want Government to address the current imbalance by taking policy costs off the electricity bill and moving them into general taxation, boost the number of trained installers by introducing regional skills boot camps and funnel any additional funding into schemes that we know already work and are delivering, such as ECO.”

Other organisations advocating for heat pump policy support in the UK at present include Friends of the Earth, the Energy and Climate Intelligence Unit (ECIU) and Green Alliance.

The French Government has notably outlined plans this week to scrap subsidies for new gas boiler installations and increase the amount of grant funding available per home installing a heat pump by €1,000.

Energy efficiency improvements at scale

The UK has some of the worst insulated homes in Europe, contributing to issues across the environmental and social spectrum. Given that heat pumps work best in energy-efficient homes, many of the groups advocating for heat pump support are also backing increased funding for retrofitting.

The Conservative Party pledged in its 2019 General Election manifesto to spend £9.2bn on energy efficiency this Parliament and is yet to have launched and delivered successful schemes backed with this level of funding.

A group of 33 environment and civil society groups have written to the Government calling for a national home insulation grant scheme totalling £3.6bn by 2025. This would be in addition to the £950 Home Upgrade Grant scheme (HUG), the failed Green Homes Grant and the Social Housing Decarbonisation Fund.

Supporters include Greenpeace, Friends of the Earth, E3G, Age UK and Save the Children. They believe funding should come from the UK Government’s £16bn sovereign green bond scheme.

E3G has emphasised that, even with small energy efficiency changes, bills could be cut significantly. It is urging an engagement campaign asking homeowners to lower their thermostats slightly and to adjust the flow temperature on condensing boilers. This, the think-tank has stated, should be coupled with more support for low-carbon heat and for insulation.

Separately, organisations including The Association for Renewable Energy and Clean Technology (REA), Octopus Energy, Ecotricity, Good Energy, BEAMA and the Energy Saving Trust are calling to expand the eligibility criteria for HUG and boost its funding, while also removing VAT on retrofitting and small-scale renewable generation. A similar approach has previously been put forward by the MCS Charitable Foundation and the Association for Decentralised Energy (ADE).

Also making a similar call to action is the UK’s built environment sector. A letter signed by 28 businesses and coordinated by the UK Green Building Council (UKGBC) was sent to the Government late last week calling for the scrapping of VAT on retrofitting, combined with changes to stamp duty schemes to help incentivise efficiency improvements. The letter also promotes a successor to the Green Homes Grant that is designed to scale up in the coming years.

A windfall tax on oil and gas majors

Aside from the environmental, business and civil society groups, religious groups are also urging a response to the energy price crisis centred around low-carbon measures.

More than 50 bishops and more than 150 other church leaders have this week written to the Government calling, as the groups mentioned above have done, for large-scale support for energy efficiency. But the letter goes further, asking for the Government to end support for new oil and gas licensing and to implement a windfall tax on oil and gas companies.

The Government has previously rubbished both suggestions. One oilfield – Abigail – has already been approved this year, with a further six projects in the near-term pipeline, despite warnings from the Climate Change Committee. And, on a windfall tax, Johnson has argued that such a move would discourage investment from fossil fuel majors into clean technologies. The windfall tax was put to the Government earlier this year by the Labour Party.

The letter from the religious leaders states: “Now is the time to end our dependence on fossil fuels and fund a fair and fast transition, which will secure our future economic prosperity and protect the livelihoods of vulnerable communities.”

Incentivising public and active transport

While it’s not a direct request of the UK Government, the International Energy Agency (IEA) has this week published a 10-point plan for reducing oil demand and is encouraging all nations which are net importers to take heed. The UK has been a net importer of petroleum products since 2014.

The plan is all about reducing the use of road transport, through avoidance, electrification and increased efficiency measures. It urges governments to:

• Reduce speed limits on motorways by at least 10kmph (6.2mph)
• Permit working from home for three days a week where possible
• Encourage businesses to avoid business trips and, instead, make video calls
• Ban cars from city centres on Sundays
• Reduce ticket costs for public transport
• Incentivise car sharing, walking, cycling and micro-mobility use
• Promote efficiency improvements in logistics
• Incentivise electric vehicle (EV) adoption

There is just one point that is not about road transport; the plan also recommends that trains are used as alternatives to planes wherever possible, for transporting goods and people.  

If all advanced economies followed the plan, the IEA claims, daily oil demand in July would be 2.7 million barrels lower than it is at present. The Agency had previously warned of a decrease in global supply of 2.5 million barrels a day from April, as other nations restrict imports from Russia.

Follow edie on Wednesday and we will bring you all the latest news from, reaction to, and analysis of, the Spring Statement.

Sarah George