This would require a 12-fold increase in installations over five years when compared with the last five years, resulting in the installation of 3 million more heat pumps and similar systems, and a national programme to electrify home heating in the UK.
Without this, the UK is unlikely to meet its legally binding carbon budgets. The UK installed just an estimated 250,000 heat pumps between 2020 and 2024, while 25.5 million UK homes still use oil or gas boilers.
The findings form part of a new report, published today by the innovation charity Nesta, that outlines how a new Government can get back on track with net-zero targets by decarbonising home heating.
The UK has had significant success decarbonising transport and industrial emissions, but is significantly off track in tackling the huge contribution of home heating to the UK’s environmental footprint. Home heating is currently responsible for 14% of the UK’s carbon emissions. Home heating emissions are not far below their 1990s peak.
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.
Designed as an immediate plan for the new Government, Delivering clean heat: a policy plan sets out the most comprehensive roadmap to date to decarbonise the UK’s housing stock.
The detailed plan sets out the priorities the new Government should start working on in its first 100 days:
Rebalancing energy bills to stop outdated taxes and levies driving up electricity prices relative to gas, so that the lifetime cost of heat pumps is equal to that of gas boilers;
Creating a new national agency to administer government heat and efficiency schemes and support local authorities with the heat transition;
Providing certainty by swiftly ruling out hydrogen for home heating and clarifying goals for phasing out new boilers;
Launching new pilots of neighbourhood delivery schemes which help many homes in an area switch to low-carbon heat at the same time.
Coordinated neighbourhood switching 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. This could mean lower upfront costs and a significant uptick in the pace and volume of switches.
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, director of sustainable future at Nesta, said: “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.
“The good news is that it is possible to change course on the current approach and much can be accomplished rapidly, including setting out proposals to rebalance energy bills to reduce the relatively high cost of electricity. This would stop people paying an unnecessary premium for going green.
“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.”
Marcus Shepheard, co-author, sustainable future policy manager at Nesta and former lead analyst on buildings at the Climate Change Committee, said: “Delivery has to be the top priority for this Government. We need to rapidly scale up the heat transition to get the UK back on track. If we get this right the prize is huge and transformative. It means energy security for the country as a whole, and better, warmer homes that are cheaper to run for millions of people. The new Government should grasp the opportunity – there is consensus on what needs to be done but there is no time for delay.”
Charles Wood, deputy director at Energy UK, said: “A coordinated approach under the new Government is essential to accelerate progress towards the goal of decarbonising our homes and businesses. Bold and decisive action is required to give both consumers and industry the confidence to invest. Nesta has rightly highlighted some of the most important elements needed for rapid delivery of low carbon heat in collaboration with the wider sector.”
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 will incentivise consumers and reduce barriers for people who want to switch to a heat pump.
As well as coordinated approaches the plan sets out how to tackle the key barrier to the rapid installation of low-carbon home heating technologies: the cost to consumers relative to gas boilers.
The plan sets out a series of measures to achieve lifetime cost parity between boilers and low-carbon heating, primarily heat pumps (the most energy-efficient alternative). 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 innovative financing. It says the Government should partner much more closely 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.
To tackle a task as urgent as decarbonisation, at a coordinated national scale, at tight timelines, the plan argues for the establishment of a new national agency to lead the mass electrification of home heating in the UK. The agency would support local authorities to develop local heat and energy plans and provide a centralised source of expertise to help with heat planning, finance, procurement and engineering challenges.