Home is where the heat is

The UK and the Scottish Governments both have achieving net-zero emissions at the top of their agendas in Parliament and beyond.

What will the impact be for those engaged in the housing sector?

Heat pumps

As the UK’s second largest source of emissions, decarbonising heating and hot water in buildings is critical and can only be achieved with a successful shift towards using heat pumps, heat networks and alternative fuels.

Heat pumps work by extracting energy from the ground, air, or water, and transferring this energy from one area to another. Designed for both installation in new properties and for retrofitting, heat pumps can be installed in most property types and are scalable. Although the technology is not new, up take has been slow due to factors such as a lack of awareness of their benefits (including lower energy costs), cost of fitting, and disruption during installation.

The UK Government’s ambition is to implement at least 600,000 heat pump installations per year by 2028. In Scotland, the Heat in Buildings Strategy sets out Scotland’s ambitions to increase its zero emissions heat installations.

For existing residential buildings, incentivising heat pumps relies on:

• boiler phase out;
• heat pump market growth;
• government grants; and
• rebalancing running costs.

For traditional and heritage buildings, it is recognised that bespoke approaches will likely be necessary.

There has been a recent surge in heat pump installations, but overall numbers remain low. A major barrier is cost of installation; the average installation cost is currently around £10,000, compared with a cost of around £2,500 for replacing a fossil fuel boiler.

Energy efficiency

The UK Government introduced a Boiler Upgrade Scheme in England and Wales which subsidises heat-pump installation costs in domestic and small non-domestic properties by providing grants of £5,000 - £6,000. Although a welcome step, the grant is only available to a limited number of homes until 2025. Greater financial investment is required to accelerate installation.

Amongst other schemes, the Scottish Government also provides (1) domestic support, by way of its Home Energy Scotland scheme; and (2) business support, by way of its SME Loan and Cashback scheme. Such schemes provide interest free loans and cashback (grant) for the installation of eligible energy efficiency measures and renewable heating systems.

The Energy Bill

A significant piece of legislation covering a wide range of matters, including the provision of low-carbon heat reform; regulation of ‘smart appliances’; and amendments to EPC regulations is currently making its way through the UK Parliament. The Energy Bill contains comprehensive measures to build a more secure and affordable energy system, and to strengthen investment in clean technologies.

The Bill legislates to set targets for boiler manufacturers and suppliers to sell a certain number of heat pumps, as a proportion of their total sales, through the introduction of a ‘low-carbon heat scheme’ across the UK.

In England and Wales, the Bill gives the Secretary of State the power to make changes to the Energy Performance of buildings in relation to the assessment, certification, and publication of energy performance certificates.

Most of the provisions in the Bill apply across the UK but certain provisions apply to England and Wales or England only and certain provisions apply to Scotland only (e.g., heat network enforcement in Scotland). The UK Government will seek the legislative consent of the Scottish Government for any provisions which fall within devolved competence. The Bill should be passed later this year and will undoubtedly have a considerable impact.

Transformational change

Achieving net-zero emissions will require changes in our homes, workplaces and public buildings that will impact the lives of almost everyone.

Sweeping legislative proposals are being implemented by the UK and Scottish Governments which, in theory, will have a significant impact. The success of such proposals will largely depend on how capable the delivery programmes are in supporting deployment at an unprecedented scale. It is clear there is no silver bullet when it comes to reducing emissions in our buildings and a range of policy measures and investment is required.

Public awareness is also an integral part of any transformational change. Governments may lead the way with legislative changes and policies, but we must all understand and embrace the necessary changes.

If you wish to discuss the impact of any of the legal changes being made, please get in touch.