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UK bets on costly heat pumps in net-zero heating and buildings strategy

22 October 2021 Cristina Brooks

The UK plans on phasing out new fossil-fuel-fired boilers in favor of new heat pumps, biomass boilers, and, perhaps, hydrogen-enabled boilers to heat the country's buildings as it reaches for net zero.

In 2019, the UK pledged a 2050 net-zero GHG emissions target and, despite a stubborn lack of progress on heating, it has already made strides by preparing to slash industrial emissions with a strategy for that sector as well as for the transport sector in July.

This week, Boris Johnson's government said the UK would be tackling carbon in the buildings sector with a promise of £3.9 billion ($5.4 billion) in funding, of which £450 million in grants will go towards replacing natural gas-fired boilers in homes and small businesses ahead of phasing out their sale in 2035.

It will instead rely upon air- or ground-source heat pumps and biomass boilers, as laid out in the Heat and Buildings Strategy released on 18 October. However, industrial bodies have criticized the low level of funding available.

In addition, it plans to "end new connections to the gas grid" as new buildings will use heat pumps and heat networks. In a 2020 white paper, the government set out how local authorities will introduce network "zoning" in England by 2025 to heat new buildings.

This is an early step in the government's plan to "gradually, but completely, [move] away from burning fossil fuels for heating." The plan builds on Prime Minister Johnson's 2020 Ten Point Plan pledging that the government would install 600,000 heat pumps every year by 2028, reinforced by a new energy efficiency standard and an energy efficiency target connected to mortgages. Under the heating strategy published this week, heating systems will be replaced rather than more insulation added, to do the heavy lifting of saving on fuel and emissions.

Greening buildings in the UK has been a tough nut to crack. The UK's 2020 Green Homes Grant, a £1.5-billion scheme offering up to £10,000 to install insulation or low-carbon heating, closed after six months after suppliers complained about too much red tape. The government similarly abandoned a 2012 scheme called the Green Deal.

While the heating strategy was delayed after being expected in May and then in July 2021, it has arrived in time for the UK to play host to Paris Agreement parties at the UN's Conference of Parties in November.

"Recent volatile gas prices across the world have demonstrated the need for the UK to…. reduce [its] reliance on fossils fuels such as using gas boilers," the government said as it justified the strategy.

Despite the pressing need to replace gas, green heating technologies are still not widely and cheaply available. "The answer to soaring gas prices lies in renewable heating, a technology that is ready to replace gas boilers but only affordable in eight EU countries," according to environmental NGO coalition Cool Products.

Certain EU countries have taken the lead on greener heating. Sweden, Finland, Denmark, France, Austria, Belgium, and the Netherlands have pledged to phase out all types of fossil-fuel heating systems, with Denmark banning fossil fuel-fired boilers and gas heating in new buildings in 2013. Swedish heating is nearly fully decarbonized. A total of 13 countries have already laid out a strategy to decarbonize heating in their EU-mandated National Energy and Climate Plans, Cool Products found.

Heat pumps face cost hurdle

The UK plans to roll out heat pumps for some buildings in 2024 when regulations will require commercial buildings that aren't connected to the gas grid to use heat pumps, and then the same rules will apply to residencies and on-grid commercial buildings two years later.

IHS Markit Senior Director, Gas, Power, and Energy Futures Deborah Mann praised support for electric heat pumps and research into the potential of combined fuel/electric hybrid heat pumps. "This will help to expand experience and familiarity with heat pumps, speed up their adoption, and drive their cost down, as well as offering whole-system flexibility if given the correct price signals," she said.

"It is encouraging that hybrid heat pump systems are being given serious consideration in this strategy. The [energy efficiency-focused] approach has often been difficult and expensive to achieve in practice with so many of the UK's old buildings, and hybrid systems can allow heat pumps to be installed in less-than-ideal buildings, giving confidence that households will be adequately heated," said Mann.

But the UK lacks a domestic market for the supply of heat pumps, which are more abundant in Germany and the Nordic countries.

Not only this, but the cost of installing a heat pump can be at least three times higher than a boiler in places like Denmark, and doing so may require costly renovation of buildings, for example, to add radiators. Many buildings are not currently able to use heat pumps. Air source heat pumps require temperatures that are not much below freezing to efficiently operate. They work best in buildings with enough energy efficiency and internal fuse limit electrical connections, according to the strategy.

Addressing cost issues, the strategy provides a £60-million Heat Pump Ready innovation program, part of a £1-billion Net Zero Innovation Portfolio fund announced in March, "to make clean heat systems smaller and easier to install and cheaper to run." This is how the government plans on working with industry to ensure heat pumps become "as cheap to buy and run as fossil fuel boilers" by 2030.

The government's fund this week partnered on matching funding with Bill Gates' Breakthrough Energy Catalyst financing program to obtain £200 million of private sector development cash for green hydrogen, among other things.

The government also plans to make electric heat pumps cheaper to run by shifting more green taxes from electricity bills to gas bills, it said.

But these cost hurdles mean heat pumps are not necessarily a "no regrets" option. "Heat pumps will not always be cheaper to run, [and] unless electricity is made cheaper … they will not always make a building warmer, at least not without the need for other changes, such as installing bigger radiators, and will not always lead to a more effective heating system—improving insulation has to be done first to achieve that," Ran Boydell, the architecture and sustainable development consultant behind architecture firm Ecohus, told Net-Zero Business Daily.

However, "the purpose of this strategy is to help meet our net-zero target and tackle climate change, not to reduce consumer energy bills," said Boydell.

The government found that in all future heat scenarios—including in the case that hydrogen is used for heating some buildings—it must roll out 600,000 hydronic heat pump installations per year minimum by 2028 to be on track to deliver net zero.

Another issue for the planned rollout is that many heat pumps use refrigerant hydrofluorocarbons (HFCs), which are potent GHGs; the UK has urged manufacturers to use alternative refrigerants.

Hydrogen boilers progress slowly

The UK pushed back until 2026 a decision on whether to require residences to install hybrid boilers— capable of running not just on gas, but also hydrogen—as it conducts related tests, consultations, and ramps up its hydrogen production.

This is another technology that remains expensive, but manufacturers Baxi, Worcester Bosch, and Vaillant recently agreed to ensure new boilers capable of converting to hydrogen would cost no more than the equivalent systems running on gas. Each boiler currently costs about £100 more than a gas-fired boiler.

But to run hydrogen-fired boilers, hydrogen production in the UK also needs to move beyond its infancy, helped along by this week's pledge to mobilize between £20 billion and £30 billion in public and private investment as part of the UK's Net-Zero Strategy.

The delay to a roll-out of hydrogen-enabled boilers is not necessary, Mann said. "A partial solution adopted early is likely to be better than waiting longer for a perfect solution," she added.

The UK gave itself until 2023 to decide on a proposal to start blending up to 20% hydrogen into the existing gas network, which it says will deliver up to a 7% emissions reduction. If the UK does go down the hydrogen-enabled boiler route, then once hydrogen production reaches a higher level, streets or districts could switch to hydrogen in an hour, and earlier bans on boilers not equipped for hydrogen would prevent the need for rushed retrofitting, Mann said.

Hesitancy on heating with hydrogen followed a 2018 report from the UK's arms-length advisor on climate targets, the Committee on Climate Change (CCC), that found using 100% hydrogen in gas grids for heating is "impractical" given the expense of retrofitting gas networks. It noted that the lower-cost option of blending small amounts of hydrogen with gas in existing grids "provided some benefits in the transition phase."

Funding slammed as "insufficient"

Critics have argued that the £5,000 grants to install heat pumps are too small and will be available to too few to hit net-zero targets, and mentioned the German government's warning that the refrigerants in heat pumps were a public health risk.

"The new voucher scheme will only be available to 90,000 households, a mere drop in the ocean compared to the numbers needed if the government wants to hit its already wildly optimistic net-zero targets," wrote Matt Olney of energy market consultancy Dyball Associates in a blog.

Agreeing with this idea, heat pump trade body Energy and Utilities Alliance said the funding was "insufficient for the scale of the challenge we face." CEO Mike Foster said: "The £5,000 grant only pays half the cost of a heat pump, so those in fuel poverty will see no warmth from the government's generosity; instead, it is middle-class bung for people who were probably going to fit a heat pump anyway."

Even the Ground Source Heat Pump Association said in a statement that the strategy seemed like history repeating itself, with the funds available "too little, too late" and demanded "a much greater sense of urgency."

Government-backed energy efficiency initiative Energy Savings Trust said the plan was "a good start but we still need more clarity about the detail."

Property agent trade body Propertymark's Policy and Campaigns Manager Timothy Douglas slammed the strategy, saying it had "missed a vital opportunity." He said that £3.9 billion for buildings is a substantial investment, but only a fraction would go towards privately owned and rented homes.

Posted 22 October 2021 by Cristina Brooks, Senior Journalist, Climate and Sustainability

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