The Chancellor’s Budget statement confirmed the following funding commitments for Low Carbon Heat:

• To introduce a levy on gas suppliers to support green gas injection to the grid. This will accelerate the decarbonisation of the UK’s gas supply, by increasing the proportion of biomethane in the grid. This is expected to be implemented in autumn 2021. The Government expects these costs to be passed onto gas bill payers. The expected impact is relatively small; around £1 a year on the average household energy bill, rising to around £5 by 2025; that’s around 0.5 per cent of an average household’s dual fuel bill. The Government will implement a robust cost control framework, which includes an annual budget cap to ensure impacts on bills do not rise unexpectedly.

• £100 million of exchequer funding in total for 2022/23 and 2023/24 for grant-funding for households and small non-domestic buildings, to install heat pumps, or biomass in limited circumstances, to replace fossil fuel heating. This will form part of government action to help build supply chains ahead of future measures to phase out high carbon heating.

• £270m for a Green Heat Network Fund to run from 2022 to 2025, to follow on from the Heat Network Investment Project. This new targeted fund will ensure that heat networks adopt the most cost-effective low carbon heat sources and will avoid locking in gas generation in the sector

Ahead of these schemes being established, the Budget announcement has confirmed that the Government will:

• Extend the Domestic Renewable Heat Incentive (DRHI) for a year in 2021/22, maintaining support for heat pumps, biomass and solar thermal; and

• Introduce a third allocation of Tariff Guarantees under the Non-domestic RHI (NDRHI). These will be available for all technologies that have been eligible for the previous two allocations.

The Heat Pump Association (HPA) has welcomed the Chancellor’s Budget which sets out solid plans to fund the replacement of fossil fuel heating and invest in low carbon heating, but warns there is still much work to do in order to meet the net zero carbon emissions target.

Graham Wright, chairman of the HPA, said: “This is exactly the type of pro-active investment we need to see from government if we are serious about meeting the aim for net zero carbon emissions by 2050. We have frequently stated that the low carbon heating technology is there and available, but only with the right policies, investment and awareness will we see the major uptake required. However, this is just the beginning.

“Industry must also fulfil its commitment to producing sufficient heat pumps, in both quality and quantity, and working with government to ensure the installer base has the necessary skills to install them correctly.”

Responding to the Budget, OFTEC chief executive, Paul Rose, said: “Whilst yesterday’s Budget contained a package of measures relating to low carbon heat, the lack of support for home energy efficiency improvements such as insulation and double glazing is concerning. This is an urgent national infrastructure priority which should be placed ahead of further funding commitments for roads and rail.

“The result of this omission is that government’s regressive approach to heat policy will continue, meaning many low-income households carry on facing unnecessarily high heating bills. There is already a significant danger that poorer households will be left behind in the race to net zero and this Budget only increases the chances of this happening.

“On a more positive note, this was a Budget for small businesses and the self-employed which includes the majority of OFTEC’s 9,000 registered technicians. We welcome the measures of support during the COVID-19 situation, along with an increase in the National Insurance threshold to reduce employment costs.”

Anthony Coates-Smith, managing director of Insite Energy, a London-based heat network metering and billing payment specialist, which manages approximately 250 UK heat network schemes, said: “The announcement of a new Green Heat Network Fund is a positive reinforcement of the role that well designed and operated heat networks can play in achieving the UK’s ‘net zero’ 2050 challenge.

“However, we believe the biggest opportunity to reduce carbon emissions and importantly, to reduce fuel poverty, is to radically improve underperforming heat networks at existing sites which have had no access to improvement funds under the current Heat Network Investment Project. These sites include single building heat networks, such as those owned and/or operated by housing associations.

“We urge the government to address the energy efficiency of existing housing stock, 80% of which will still be around in 2050.”

The Building Engineering Services Association (BESA) has welcomed the additional £175 billion infrastructure investment over the next five years and SME support measures as part of the government’s response to the Coronavirus crisis announced today by Chancellor of the Exchequer Rishi Sunak in his 2020 Budget Speech.

BESA director of legal and commercial, Debbie Petford, said: “These measures go a long way towards easing the financial pressures on members in this extraordinary situation and ensures they are not penalised for doing the right thing by their employees.”

Nathan Wood, chair of BESA’s health and well-being in Buildings Group said these were positive developments, but more was needed on indoor air quality: “Anything that helps make the outside air we breathe cleaner is welcome, but most of us spend 90 per cent of our time indoors. The government could improve indoor air quality by boosting funding to upgrade public buildings such as schools and hospitals to ensure they are safe havens from pollution.”

NIBE fully supports and welcomes the decision to accelerate the much-needed deployment of heat pumps in homes and small businesses. The announcement of a new Low Carbon Heat Support Scheme is particularly promising given that this will see £100 million delivered through grant-funding in 2022 - 2024; this will make low carbon heating much more accessible for consumers.

The IGM has also welcomed the budget with Ian McCluskey, IGEM’s head of technical services and policy, saying: “IGEM welcomes the announcement in today’s government budget of a doubling of investment in energy innovation, to support the UK’s journey towards net zero carbon emissions.  We also welcome the government’s acknowledgement that the UK needs reliable low carbon power from technologies such as gas, with CCS and hydrogen.

“Natural gas continues to have an important role in providing power and heat across the UK and, as we transition to a decarbonised energy sector, the scaling up of biomethane, hydrogen and CCS will underpin a successful transition. As such, it is promising to see £800 million being committed to establishing two carbon capture clusters, one by the mid-2020s and one by 2030. We would urge that immediate action is taken to get these projects off the ground.”

The Construction Products Association’s Economics Director, Noble Francis, said: “Rishi Sunak’s first Budget rightly focused on measures to steer the UK economy through the impacts from the COVID-19 (Coronavirus) outbreak. It was nevertheless encouraging to hear the Government’s continued commitment to infrastructure and to ‘get Britain building’. As ever with such announcements, however, clear and precise detail on where specifically spending will be allocated, how it will be funded and who will do the work will be critical for industry.”

Steve Richmond, head of marketing and technical at REHAU, commented: “At REHAU, we believe that the Government’s ongoing commitment to supporting low-carbon initiatives with its 2020 Budget is a promising stride in the right direction towards net zero. It is essential that investment and development of low carbon heating technologies continues to grow to ensure that our buildings are efficiently supplied with sustainable, environmentally friendly heat, with minimal disruption as we switch from fossil fuels.”

It is clear that there is still room for improvement, but the response from industry leaders shows that this Budget is a significant step in the right direction.