The report has been prepared by The Coalition for the Energy Efficiency of Buildings (CEEB) – a cross-sectoral collaboration of over 200 individuals, established by the Green Finance Institute with support from E3G in 2019.
In the UK, heating the built environment is one of the largest contributors to emissions and accounts for 21% of the national total. Housing alone is responsible for two-thirds of these emissions, and a near complete decarbonisation of heat is essential to achieve the government’s net-zero target by 2050. The Prime Minister’s 10-point plan for a green industrial revolution set an ambitious vision for 600,000 heat pump installations per year by 2028, and a widescale programme for zero carbon heating could also support the UK’s green economic recovery.
In Autumn 2020, the CEEB assembled the action-focussed Zero Carbon Heating Taskforce, an expert group of over 50 member organisations from the finance, energy and construction sectors, as well as local and national government. The Taskforce collaboratively designed a portfolio of financial mechanisms and enabling policies, informed by in-depth analysis of the challenges that individual, social and institutional residential owners experience on their heat decarbonisation journey. In the next phase, the CEEB and its members will bring these scalable solutions to market.
Dr Rhian-Mari Thomas, chief executive of the Green Finance Institute, said: “The finance sector has a critical role to play in enabling the decarbonisation of our heating: it must offer products that make the decision affordable. The Zero Carbon Heating Taskforce’s solutions are practical, scalable, and focused on presenting homeowners, landlords and institutional investors with attractive ways to access funding and new savings options. They’re also backed by recommendations for the fiscal and policy incentives required to support their roll-out.”
The report assesses the investment barriers to zero carbon heating across the UK housing market – including on and off gas grid homes, new builds and district heating networks – and presents a portfolio of 12 ‘demonstration projects’ that were collaboratively designed by the Taskforce members to directly address the challenges identified. The portfolio includes financial mechanisms for consumers and institutional investors, energy service products and capacity building tools, supported by fiscal and policy incentives to bolster the commerciality and scalability. The demonstration projects include:
Green Home Salary Sacrifice Scheme- A tax-efficient mechanism for employees to pay for a heat pump via a loan from their employer, similar to the ‘Cycle to Work’ scheme.
Green REITs- Embeds environmental criteria into a popular asset class and provides a scalable mechanism to attract significant volumes of institutional investment into zero carbon heating systems.
National District Heating Fund- A specialist investment fund focused on investing in district heating networks across the UK, that could sit independently or as part of a new National Infrastructure Bank.
The Green Finance Institute and its supporters will bring to market the portfolio of demonstration projects in 2021 and beyond.
Members of the Zero Carbon Heating Taskforce commented as follows:
Dr Howard Porter, chief executive of BEAMA said: 'The availability of private finance from trusted providers, in combination with quality products and installers, has a vital role to play in the transformation of the UK’s heating systems. There are a number of technical solutions, with electrification of heating key amongst these, and our industry is ready to work with the Green Finance Institute’s members to deliver affordable, reliable and low to zero carbon heating systems for UK households.'
Bean Beanland, chair of the Heat Pump Federation and Ground Source Heat Pump Association, said: “The Heat Pump Federation and Ground Source Heat Pump Association have been delighted to contribute to the work of the GFI in coordination the Zero Carbon Heating Taskforce report. The funding of the decarbonisation of the built environment in the UK in pursuit of Net Zero 2050 will require bold and imaginative solutions. The challenge is so great that no one organisation can possibly solve the problem alone, so collaboration, the fruits of which will be seen in this report, is crucial to success. Congratulations to the GFI and to all involved.'
Matthew Trewhella, managing director, The Kensa Group, said: 'The Kensa Group welcomed the opportunity to contribute to the Zero Carbon Heating taskforce and recognise the important part that finance will play in the decarbonisation of heating. We are already seeing ground source heat pumps and 5th generation district heating being treated as an infrastructure investment. The economies of scale achieved with mass deployment in concentrated areas unlocks new finance mechanisms that allow larger investors and 'slow money' to accelerate the decarbonisation of heating.'