Thank you for the invitation to this evening’s event.
HEAT AS A STRATEGIC GAP: THE SCALE OF THE CHALLENGE
Heat is a subject that’s been off the radar for far too long. It’s the single biggest driver of energy demand in the country. We spend £33 billion a year on heating - more than we spend on primary healthcare or military equipment. And it accounts for around a third of our greenhouse gas emissions.
We must get the UK on a path consistent with avoiding the damage to our economy, society and public health that would be caused by a global temperature rise above 2oC.
We cannot meet our targets for emissions reductions or those for renewable energy without changing the way we produce and consume heat. Most heat - for space heating and for industrial processes - currently comes from burning natural gas, which is a fossil fuel.
We believe that, to meet our climate change goal, emissions from buildings must be near zero-carbon, and emissions from industry nearly halved. To get there, we’re going to have to change the way we generate, distribute, and use heat.
So in March we published a Strategic Framework for Heat, to look at the changes we’ll need to make across the economy when it comes to heating. The scale of effort can seem daunting, but we do not need to make the transition overnight. We need a sensible plan, focussed on building a market for low carbon heat, supporting economic growth and taking cost effective measures.
The heat strategy sets out how we might do that - by managing demand, changing the way we heat buildings, setting up heat networks, and realising the potential for efficient, low carbon industrial heat.
Let me emphasise the point: this does not need to be a threat. We should see this as a great opportunity for the UK; an opportunity to diversify our sources of heat, make our processes more efficient and our companies more competitive, to develop our cities and towns in sustainable ways that prepare us for a low carbon future. And it will bring renewable heat into the mainstream alongside gas boilers, a market which currently sees around 1.6 million new boilers put into homes every year.
WHERE SHOULD WE START?
Demand reduction is where we must focus our efforts now - the Green Deal offers a new way of financing energy saving improvements to our building stock, supporting a whole new market in energy efficiency. A successful, vibrant, effective Green Deal will help save money, save carbon - and make a real contribution to economic growth. It is also be an important precursor to the roll-out of renewable heating solutions for homes.
And we need to prime the renewable heat market if we are to have a supply chain that can meet the challenge. We are not beginning from a standing start: the world’s first Renewable Heat Incentive for non-domestic heat is already up and running, as is our Renewable Heat Premium Payment scheme. We are currently consulting on the RHI for homes.
HEAT STRATEGY RESPONSES
The Heat Strategy posed a number of questions and we are grateful to the E.N.A. and its members for their responses to the publication.
There were some common themes on building-level heat that we picked up from the 170 responses we received.
- Overwhelming support for our approach - that we start with energy efficiency, encourage low carbon networks in urban areas, renewable heating in rural off grid areas, and move more slowly in the on-grid suburban areas;
- The consumer angle came through very strongly. Understanding consumer attitudes to the way people manage their heat use and understanding the triggers and influences for change will be central to any new policy proposals. And so will protecting the most vulnerable.
- Questions about the future of the natural gas grid, and the challenges of relying so heavily on electricity for our heat in the future.
In this respect as in many others, we should not look at heat as separate from the wider energy security and electricity market questions we are tackling. We have to consider the entire energy system. And we have to look at local decentralised approaches so that markets do not remain dominated by a small number of very large players.
ENERGY NETWORKS ASSOCIATION REPORT
We have been fortunate to receive many case studies and reports to supplement our evidence base. Clearly the report being launched today is a very welcome addition.
I am struck by many of the common challenges identified by the E.N.A. Like us, you have highlighted the importance of reducing our demand for heat, expanding district heating networks, the need for technology, product and supply chain development, the decarbonisation of the electricity grid, and the importance of the customer.
But there are points of difference. About the challenge of meeting the peak winter demand for heat and whether there is a role for biomethane for domestic heating. We will need to continue to engage closely with the E.N.A. and its members to share analysis and to work through these points.
What we do know is that we need to achieve the 80% emissions reduction target, we need to drive economic growth by encouraging new low carbon investment, and we need to protect the security and affordability of our energy supplies. The interactive 2050 Pathways model is a stark reminder of the trade-offs and the scale of transition required.
THE WORK UNDERWAY TO TAKE THE HEAT STRATEGY FORWARD
The Strategy was published in March, since then we have been:
- Supporting cities in developing their plans for district heating
- Working collaboratively with UK Green Investment, the Greater London Authority and others on models for funding new heat networks
- Using our contact groups on Community Energy and Decentralised Energy to push those agendas forward
- Creating a national heat model
- Commissioning social research to learn more about consumer issues
- Learning from the RHI, Renewable Heat Premium Payments scheme and the Green Deal
…and much more besides. My officials have been out and about visiting industrial sites, city centres, new housing developments, technology test-beds and anything else that can help us plan for the low carbon future.
This will all be pulled together over the next few months, and published in the New Year as a policy document for consultation. We look forward to continue working closely with the E.N.A. and its members as these proposals start to take shape.
Let me finish by thanking you all for coming, to the E.N.A. for commissioning this timely report, and for inviting me here today.
- END -