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Government needs to inspire 12x increase in heat pumps

UK: Over three million homes need to install heat pumps or other low-carbon heating over the course of this parliament, a 12-fold increase over the last parliament, new analysis finds.

Without this switch, which would involve one in ten households, the UK is unlikely to meet its legally binding carbon budgets, says sustainable innovation charity Nesta in a new report.

The UK installed only 250,000 heat pumps between 2020 and 2024, while 25.5 million UK homes still use oil or gas boilers.

The Nesta report, published today, outlines how the new Labour government could get the UK back on track with net-zero targets by decarbonising home heating.

Nesta estimates that key policy u-turns and delays by the previous government have left the UK around 15% short of the emissions savings from homes needed to meet future carbon budgets. This major gap comes from changes including scrapping higher energy efficiency standards for landlords and delaying the phase out of boilers in off-gas grid homes from 2026 to 2035.

“The new UK Government will need to reverse the drift away from energy policies that ensured we would meet the UK’s net zero targets. It has inherited a big problem on home heating and will need to take urgent action,” said Nesta’s director of sustainable future Madeleine Gabriel.

Delivering clean heat: a policy plan sets out a detailed list of priorities the new government should start working on in its first 100 days.

These include rebalancing energy bills to stop outdated taxes and levies driving up electricity prices relative to gas and by providing certainty by swiftly ruling out hydrogen for home heating and clarifying goals for phasing out new boilers. 

It also calls for the creation of a new national agency to administer government heat and efficiency schemes and support local authorities, as well as neighbourhood delivery schemes, to help switch to low-carbon heat. Schemes could involve installing shared infrastructure, such as heat networks or heat arrays under streets, or could offer other collective schemes that would enable entire neighbourhoods to switch to low-carbon heating together. 

Overall, Nesta’s analysis finds that if the policy changes outlined in the report were all put in place, a typical household switching to a heat pump would see their energy bills fall by around £400 per year.

Nesta’s plan also highlights the importance of reforming fuel poverty schemes to make them protect the most vulnerable better, including by speeding up and broadening delivery of ECO by late 2026.

Madeleine Gabriel, insisted that it is possible to change course on the current approach and much could be accomplished rapidly, “But it will require a major switching of gears to accelerate the transition away from fossil fuels. We know that rapidly transforming home heating is possible – we did it in the 60s and 70s and we can do it again now,” she said.

Alongside the key actions that could be taken in the first 100 days, Nesta’s plan recommends a combination of demand-led policies, such as better incentives to encourage individual household switching, and system level, coordinated approaches. The demand-led policies outlined would incentivise consumers and reduce barriers for people wishing  to switch to a heat pump.

A major barrier is recognised as the cost of heat pumps relative to gas boilers. It recommends rebalancing green levies towards gas and other fossil fuels instead of electricity to slash the running costs of electrified home heating such as heat pumps.

It also spells out how the new government can work with industry to reduce installation costs and make upfront costs easier for consumers to manage through a combination of subsidies, zero-interest loans and other types of financing. It recommends the government partnering with industry to improve the quality of installations and reform consumer protection, so that households feel confident to make the switch. Social housing and fuel-poor households should have fully-funded low carbon heating installation, it says.

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