The Government has proposed new ways to encourage low carbon heating with support schemes for green gas, heat pumps and biomass for heating. We responded with our views last month, which will be available on the gov.uk website soon. In the meantime, we’ve summarised it here. Our views are in keeping with our mission, which is to help members lower their bills and carbon emissions. Achieving net zero heating in an affordable way is a challenge, but we think it’s possible.
We're big fans of green gas - in 2019, we bought more of the stuff than any other supplier. We're keen for this great green technology to succeed, so we focussed on what we can do to encourage the UK to produce more of it in our response. But we used the proposals as an opportunity to share our other ideas on how the UK should ‘decarbonise’ heat, too. Cutting CO2 emissions caused by the gas we use to heat our homes is central to reaching net zero by 2050.
Our view of decarbonising heat
More incentives for energy efficiency
It was great to see the Green Homes Grant announced last month, which will provide £5,000 vouchers for UK homes to install new energy efficiency measures like insulation. But we think the Government needs to go further with more tax rewards. Energy efficiency is a triple win: lowering bills, lowering emissions, and encouraging a green recovery with new jobs. Efficiency measures can reduce the energy used in homes by 25%, saving 4.6% of UK emissions.
Tax electricity and gas more fairly
We’d like to see the Government change the way energy is priced. Today, renewable electricity is more expensive than heating from fossil fuels, because electricity bills include more policy costs compared to gas. These costs come from government schemes like the Feed-in Tariff, Renewables Obligation and Contracts for Difference. And higher charges should be put on gas meters with the Warm Home Discount and Energy Companies Obligation, costs that are currently included in electricity and gas bills. Bills should rebalance the cost of electricity and gas to reflect their carbon impact. This would encourage more electrification of heating, which could save more than 30 million tonnes of CO2 a year in 2050, equivalent to 9.4% of UK emissions.
Implement a carbon tax for heating
The Government should price carbon emissions from heating effectively. We welcome the announcement of a UK Emissions Trading Scheme (ETS). But the Government should go further by expanding it to cover natural gas for heating. Accurately pricing carbon emissions through the UK ETS could help accelerate the development of technologies like green gas to reach net zero heating.
More support for green gas and hydrogen
Low carbon gases like biomethane and hydrogen are an important part of decarbonising heat. Together, they could save 19 million tonnes of CO2 a year, equivalent to 5.5% UK emissions. As well as more funding for green gas generators, we’d like to see the Government create a clear strategy to develop hydrogen. Specifically, we think there should be incentives to produce ‘green’ hydrogen from water to feed into the gas grid.
All businesses should measure and report on their emissions
All British businesses need to be required to report on their emissions and make a commitment to reducing them. Energy supply is responsible for 26% of UK emissions, and businesses are responsible for 18%. You can’t reduce emissions you can’t measure.
What we said in the consultation on green gas
The proposed tariffs are too low to encourage new green gas plants
Green gas generators rely on government funding for around 80% of their revenue. The sites we work with have told us there would be no incentive to build a new plant at the proposed tariff.
The Government should increase the tariff level closer to historic rates offered in the Renewable Heat Incentive (RHI).
There’s a gap between the ambition on green gas and what we need to reach net zero
Today, there is 3.3TWh of green gas in the UK. The Government’s plan sets out another 2.9TWh of renewable heating by 2030. Yet the UK has potential to produce 20TWh by 2030.
As a minimum, the Government should aim to achieve the same volume of green gas that the RHI supported. This will help increase the amount of green gas that energy suppliers can provide to UK homes.
The Government should help create a proper marketplace for green gas certificates
Our research shows that green gas certificates provide up to 10% of a plant’s revenue. And that value is growing.
The Government needs to help create a proper marketplace for green gas certificates, which could help stabilise prices.
More stable prices will mean more energy suppliers committing to buy green gas, helping to provide a stronger investment case for new plants to be built.
Read more about the proposals on the gov.uk website.
We’d love to hear your views on decarbonising heat. Join the conversation in the Community.