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The government has announced grants of £5,000 will be available to households to replace their gas boiler with a low-carbon heat pump – part of Boris Johnson’s ambitious plan to ban new gas-powered central heating systems after 2035.
But while the intention might be good – cutting emissions, reducing the UK’s dependence on fossil fuels and protecting consumers against global price spikes in gas – critics have already called the subsidy package “meagre”.
What’s the policy?
On Tuesday, the government publishes its heat and buildings strategy along with wider plans on cutting UK climate emissions to “net zero” by 2050.
The heat pump grants were heavily trailled ahead of the strategy being launched, and the prime minister claimed he was creating an environment for homeowners where “going green is the better choice” when a boiler needs an upgrade.
The grants to install low-carbon heating systems such as heat pumps, which run on electricity and work like a fridge in reverse to extract energy from the air or ground, will be provided through a £450 million boiler upgrade scheme.
The £5,000 grants will be available from next April, and will mean people installing a heat pump will pay a similar amount to the installation of traditional gas boilers (heat pumps currently cost an average £10,000 to install). The grants for heat pumps will be available for households in England and Wales.
Outlawing new fossil fuel boilers – ministers were clear families are not going to be forced to remove their existing fossil fuel boilers – is a big statement ahead of the UN Cop26 climate talks hosted in Glasgow.
The summit, which begins on October 31, aims to secure more ambitious action from the nearly 200 countries that signed the 2015 Paris Agreement to limit global warming to well below two degrees Celsius above pre-industrial levels.
The scheme forms part of more than £3.9 billion to cut carbon from heating and buildings, including making social housing and public buildings more energy efficient, and sends a signal to the rest of the world that the UK is taking its climate responsibilities seriously.
So what’s the problem?
Experts and campaigners warned the pot of funding for heat pumps was not enough. The £450m being allocated for the subsidies over three years will cover up to 30,000 households a year.
Put in context, 90,000 households converted to low-carbon heating is a fraction of the 22 million homes in the UK running on gas central heating.
“We know that the money isn’t there. Clearly there was a fight between No 10 and the Treasury, and the Treasury has won.”
— BBC Newsnight (@BBCNewsnight) October 18, 2021
Jan Rosenow, Europe director at the Regulatory Assistance Project, which aims to accelerate the shift to “green” energy, welcomed the UK being the first country in the world to ban the installation of new fossil heating systems.
But he said funding for only 30,000 homes a year to benefit would just support current installation levels, and would fall short of the government’s target to install 600,000 heat pumps a year by 2028.
Ed Miliband, shadow business secretary, said: “As millions of families face an energy and cost-of-living crisis, this is a meagre, unambitious and wholly inadequate response.”
Why wouldn’t the government fund more?
Aside from the grants paying for systems to help people now, Johnson is trying to stimulate the market to help bring costs down, reducing the need for subsidies to bridge the affordability gap.
The government said it wanted to make heat pumps cost the same to buy and run as gas boilers by 2030, with big cost reductions of between a quarter and a half by 2025.
There is also a £60 million innovation fund to make clean heat systems smaller and easier to install and cheaper to run.
Greg Jackson, chief executive and founder of Octopus Energy, said that when the grant scheme launches, the company will install heat pumps at about the same cost as gas boilers and had begun training 1,000 engineers a year.
He said it would help kickstart a cheap, clean heating revolution, and scaling up the technology and supply chain in Britain would mean companies such as Octopus would soon be able to install heat pumps without government support.
“Electric heat pumps are more efficient, safer and cleaner than gas boilers and can help make homes more comfortable with less energy.
“Today we’ve crossed a massive milestone in our fight against climate change and to reduce Britain’s reliance on expensive, dirty gas,” he said.