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Industry unease over PM's Net Zero row back

Prime Minister Rish Sunak's decision to change the government's approach to Net Zero has been met with some concern from members of the industry who have called for stability to encourage investors.

Commenting on the announcements Stephen Phipson, chief executive of Make UK, said: “The announcement that the Government will be watering down its Net Zero policies is a huge setback for manufacturers who require stability and confidence in order to invest.

Many companies will have spent time and money planning on the basis of firm targets and we now run the risk of falling behind our international counterparts as a home for green technologies if we persist in frequently altering policies that impact businesses directly. This will hit SME businesses in the automotive supply chain particularly hard.

This is a timely reminder that the UK also needs a long-term industrial strategy which encourages innovation in advanced, high value technologies such as net zero and AI to stimulate growth and skilled employment. This announcement sends entirely the wrong signal and suggests if we aren’t looking forward, we are simply going backwards.”

Charlotte Lee, chief executive of the Heat Pump Association, said: “The Government has once again moved the goalposts for heat decarbonisation in the UK, and this risks damaging investor, installer and consumer confidence in this space unless this re-confirmed end date for fossil fuel boilers is strengthened from being an “ambition” to being a firm commitment.

The delay is yet another blow to the heating industry’s confidence in Government policy as Industry – including boiler manufacturers, has invested in good faith in manufacturing facilities, training and innovation to support heat pump deployment in keeping with the Government’s election manifesto and Heat and Buildings Strategy Commitments – particularly in line with the now abandoned end-date of 2026 for fossil fuel boilers off the gas grid.

Moreover, introducing and justifying possible exemptions by suggesting that many homes are not suitable for a heat pump is not supported by the most recent findings of Government-funded heat pump field trials. Consumers and installers may now adopt a damaging “wait and see” approach based on incorrect information, thereby delaying the inevitable transition to decarbonising heat.

Whilst we are pleased that the Boiler Upgrade Scheme grant has been increased, the current budget will now only support 20,000 heat pumps per year, just 3% of the 600,000 ambition for 2028. We urge the Government to take steps to increase this budget to allow all those who wish to install a heat pump to benefit from the grant.

We call upon the government to take swift action to reassure the heat pump market– by making the 2035 end date for fossil fuel boilers a firm commitment, by introducing the Future Homes and Buildings Standards in 2025 for new build, by increasing the budget available for the Boiler Upgrade Scheme and to take urgent action to reduce the price of electricity relative to fossil fuels.”

Mark McManus, Stiebel Eltron UK managing director said: “The Government’s decision to renege on its pledges weakens the UK’s opportunity to be a global leader in the renewable energy sector with the UK falling further behind its Net Zero targets and those of other countries, while also bringing increased costs as we lose control of climate change.

“However, informed consumers still want to move away from gas boilers and know there are other options available, with heat pumps representing a reliable, fully-functioning, renewable heating system which people can be confident will perform just as well as a traditional boiler.   

“The Government should therefore listen to the majority people who support the phasing out of fossil fuel boilers.

Dr Matthew Trewhella, chief executive of The Kensa Group commented: “This is extremely concerning news, at a time when we should be scaling up to reach our Net Zero commitments by injecting investment and stability into green businesses and proven sustainable solutions, our planet's future is being cynically used as a political bargaining tool.

“British businesses have been innovating, investing, building supply chains and creating green jobs based on the UK’s Net Zero transition strategy. As recently as May 2023 the Kensa Group announced a £70 million investment into ground source heat pumps by Octopus Energy and Legal and General and we are already scaling up our business development, operations and R&D efforts to help drive the transition to low carbon heating and cooling. We are stimulating the economy and improving the UK’s energy sovereignty using the energy that is right under our feet.”

“We are making excellent progress towards our vision of a subsidy-free, low carbon heating and cooling future that is greener, cheaper and safer than fossil fuel heating. Stalling this progress would be shortsighted, regressive and deprive the British economy of the billions of pounds of benefits that transitioning to net zero would bring.”

Griff Thomas, from renewables training provider, GTEC said: 'When the Prime Minister expressed a desire to roll-back carbon reduction targets I was alarmed. I stated that the UK needs to ‘hold its nerve when it comes to Net Zero', and it still does.

'Now the reality of his position has been communicated following last night's press-conference (20/09/23), it seems that his proposals are bumps in the road, which, if navigated properly could still see Britain leading the way when it comes to combatting climate change.

'I am saddened that we are here… historic failures in the green policy of both parties have led us to this point, and with better plans in place initially, we would not be in this position of backtracking. I do, however see that some of Mr. Sunak's suggestions have been put forward to avoid further failure.

'Green policy gone wrong creates distrust and serves only to damage the reputation of renewables and other sustainability initiatives, feeding into the hands of climate change deniers. Poorly executed policy also leads to disengaged voters, which may be more of the inspiration behind the Prime Minister's current management of expectations…

'We are at a crossroads as a country, we have a real opportunity to change the way we power and heat our homes and businesses. The technology is there and more than ever before, consumer support is there. Highlighting our relatively small contribution to climate change in percentage terms, as Mr. Sunak did last night, is not helpful, it makes people feel powerless, that there's no point. We should strive for excellence and take a position of leading on climate change action.

'We need open conversations and schemes that help smooth the way - the uplift the Boiler Upgrade Scheme funding was a welcome announcement - while protecting the most vulnerable in society who have been hit by rising fuel prices over recent years. Let's not forget the ultimately, greening our grid will lead to reduced energy bills.

'Right now, there are far simpler steps that will make the most inefficient of homes warmer and less costly. Insulation and draft proofing should be a priority - an area that GTEC is moving into to support our low carbon heating installation courses.

'We need a pragmatic and proportionate approach to Net Zero that doesn't abandon targets, but better considers and supports the people that these targets effect. Hopefully this is what our government is now focused on; the important bigger picture that should have nothing to do with winning elections.'

Meanwhile NIBE said: 'We are exasperated by the Prime Minister's decision to delay the phase out of fossil fuel boilers in off grid homes and strongly disagree with the notion that the technology needed isn't ready. Heat pumps represent a viable solution that can help us achieve Net Zero -a target that should be a top priority without hesitation or delay.

Additionally, while the increase in funding for the Boiler Upgrade Scheme aligns with our advocacy efforts, it is just one of many necessary steps. For example, ground source heat pumps are a logical solution in off-grid homes using high carbon fossil fuels, yet the scheme covers a lower percentage of their costs compared to other technologies.

Moreover, policy certainty is crucial not only to industry but installers who need confidence in the direction of the market. The decision to backtrack on targets sends all the wrong signals at a time when we need the green light to pave the way for a net zero future.'

Henk van den Berg, Residential Sales Manager at Daikin UK commented: 'Heat pumps are now more affordable than ever. By increasing the Boiler Upgrade Scheme support to £7,500, the Government has made renewable heating more accessible. However, the overall funding hasn’t been increased which means that there will be fewer installations overall for the remainder of the BUS scheme.

“Continuing to exclude hybrid heat pump systems - the cheapest and fastest way to decarbonise home heating - from the Scheme is a real misstep.

“Moving back the deadline for banning oil/LPG boilers till 2025 and the full cancellation of the landlord’s efficiency targets will have a severe impact in the mid term. This is only going to make hitting the 2050 Net Zero target harder and, most likely, more expensive for households. Especially as our PM failed to address the electricity levy once again, still favouring fossil fuels from a tax perspective.

“The Government has clearly given-up on its commitment to see up to 600,000 heap pumps being installed a year by 2028. This is going to undermine confidence, foreign investments and will have a significant impact on the growth in green jobs.”

BEAMA chief executive Yselkla Farmer said delaying progress to Net Zero will be damaging.

She said: 'Investors need certainty and commitment from Government. UK Net Zero targets represent a huge opportunity for employment and inward investment in the UK energy sector, and this is only possible with ambition. The automotive industry and associated infrastructure providers have already brought forward significant investments to meet the 2030 targets and this is ensuring the UK takes a leading role in this sector. A move by Government to backtrack on these plans will stall investment, and worsen the growing distrust in policy that industry feels today. The recent move by Government to retract UKCA deadlines is another example of a big hit to industry who have invested millions in preparing for a longstanding ambitious government target. What we need is stability and certainty; without it, our economic strength in the energy and climate sectors globally will be depleted.

‘There is a way to reduce the impact Net Zero has on the consumer purse through targeted policies that incentivise deployment of energy efficiency and low carbon heat in the right places. A thorough and well-planned low carbon heat policy would achieve this. A move away from gas and oil can bring financial benefits to consumers’ home energy use if we match this with a robust and world leading flexibility market, something we have been aiming to achieve for a number of years. At a time when energy bills are growing, now is the time to invest in energy efficiency policies that help consumers. The expected government move today will not do this, and the cost of Net Zero to the UK purse will only be greater.

The Government’s own major policy document Powering Up Britain stated just six months ago that it was “setting a clear policy framework on energy security and Net Zero, so businesses can plan and invest with confidence. Smart and agile regulation, including the Zero Emission Vehicles mandate…as well as in areas such as building efficiency and heat pumps, will help drive demand for new products and services and accelerate innovation and investment.” BEAMA hopes Government will remember this and stick to the existing deadlines so all can stop deliberating and get on with the job.'

 

21 September 2023

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