REPORT

SUMMARY UK

2014

Warm homes, not warm words: How the UK can move to a low-carbon heat system

About WWF-UK WWF was established in 1961 and is at the heart of global efforts to address the world’s most important challenges. We work with communities, businesses and governments in over 100 countries to help people and nature thrive. Together, we’re safeguarding the natural world, tackling climate change and enabling people to use only their fair share of natural resources. This brochure shows how the UK can reduce greenhouse-gas emissions from the use of heat, in order to meet our climate change commitments. It outlines the technologies and policies that will enable a transition toward an efficient, low-carbon heat system.

wwf.org.uk/warmhomes

COVER IMAGE: © RIVERSIDE ONE, MIDDLESBROUGH, UK. THIS GREEN BUILDING IS HEATED BY A BIOFUEL BOILER AND POWERED BY RENEWABLE ELECTRICITY, GIVING IT A LOW CARBON FOOTPRINT.

Warm homes, not warm words 2014 page 2

CONTENTS THE HEATING CHALLENGE

4

© GLOBAL WARMING IMAGES / WWF-CANON

WHAT NEEDS TO BE DONE High levels of energy efficiency Low-carbon heating systems

6 7

WHAT IS LOW CARBON HEAT?

8

WHAT IS STOPPING US?

11

OUR POLICY RECOMMENDATIONS FOR THE NEXT GOVERNMENT

12

CASE STUDY: DENMARK

14

THE HEATING CHALLENGE

Heat is part of all our lives – from the way we keep warm in our homes and offices, to the production of many items we use every day. Most of this heat is produced through the burning of fossil fuels. Because of this, it’s responsible for around a third of the UK’s greenhouse-gas emissions. To protect our environment from severe climate change impacts, we must reduce our emissions by at least 80% by 2050 – so decarbonising our heat system will be critical.

44%

HEAT IS THE MAIN ENERGY DEMAND IN THE UK, ACCOUNTING FOR 44% OF ALL END-USE ENERGY CONSUMPTION

The Committee on Climate Change (CCC) has suggested that by 2030 renewable heat sources could cost-effectively provide a quarter of the heating needed for our homes and almost two-thirds (63%) of the heating needed for commercial buildings. This could be achieved by improving the energy efficiency of buildings and installing low-carbon heat technologies. The government’s 2013 low-carbon heat strategy acknowledges the need to reduce emissions from heat and suggests a general direction for 2030. However, it does not set any clear targets for the deployment of technologies or supporting policies that could drive action on low-carbon heat. Without these, we risk missing out on one of the most important – and readily achievable – things we can do to limit climate change and improve our energy security.

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DECARBONISING HEAT WHY WHY LOW LOW CARBON CARBON HEAT HEAT IS IS URGENT URGENT © CREDIT HERE

CLIMATE CLIMATE CHANGE CHANGE ACT ACT

EMISSIONS EMISSIONS

80%

Heat Heat generation generation

32% Other Other

The The climate climate change change act act requires requires UK UK to to reduce reduce greenhouse greenhouse gas gas emissions emissions by by at at least least 80% 80% by by 2050 2050 (from (from aa 1990 1990 base) base)

32% 32% of of UK UK greenhouse greenhouse emissions emissions come come from from heating heating ENERGY ENERGY SECURITY SECURITY

OVER OVER RELIANCE RELIANCE ON ON GAS GAS

70%

UK UK has has an an over over reliance reliance on on gas gas for for heating. heating. Gas Gas is is 70% 70% of of fuel fuel used used for for heat heat and and aa major major driver driver of of energy energy bill bill increases increases

Diminishing Diminishing North North Sea Sea reserves reserves and and domination domination of of global global oil oil and and gas gas reserves reserves in in just just aa few few countries countries means means increasing increasing energy energy security security issues issues

WHERE WHERE WE WE NEED NEED TO TO BE BE BY BY 2030 2030 ENERGY ENERGY EFFICIENCY EFFICIENCY

© PAUL WESTON / WWF-UK

A A

B B C C D D E E

HEAT HEAT NETWORKS NETWORKS

HEAT HEAT PUMPS PUMPS

C

Caption to go here

FF G G

Retrofitted Retrofitted buildings buildings have have improved improved energy energy performance performance

Heat Heat networks networks increasingly increasingly serve serve high high density density urban urban areas areas

Heat Heat pumps pumps becoming becoming heat heat technology technology of of in choice in lower lower density Warm homes, notchoice warm words 2014 density page 5 suburban suburban areas areas

CLIMATE CHANGE ACT

EMISSIONS

80%

Heat generation

32% Other

The climate change act requires UK to reduce greenhouse gas emissions by at least 80% by 2050 (from a 1990 base)

WHAT NEEDS 70% TO BE DONE

32% of UK greenhouse emissions come from heating ENERGY SECURITY

OVER RELIANCE ON GAS

UK has an over reliance on gas for heating. Gas

Diminishing North Sea reserves and domination of High is 70% of levels fuel used forof energy efficiency global oil and gas reserves in just a few countries heat and a major driver

Energy efficiency is critical to heat affordability for UK homes

means increasing energy security issues

of energy bill increases As a rule, the buildings we are paying to heat in the UK are very inefficient. BecauseWHERE so much heat is lost, we need a large amount of WE NEED TO BE BY 2030 energy just to provide an adequate temperature. This means that families and businessesHEAT areNETWORKS wasting huge amounts of energy, ENERGY EFFICIENCY HEAT PUMPS and money. A

C

B Big improvements to the energy efficiency of the UK building stock C D are a prerequisite to delivering sustainable and affordable lowE F Currently, the average home in the UK has an energy carbon heat. Heat pumps becoming Heat networks G performance rating in band D (on with ofA being the heatG, technology increasingly serve a scale of A to Retrofitted buildings have choice in lower density high density most efficient). Raising this to band B would substantially reduce improved energy performance suburban areas urban areas the heat demand of a home. This would have the additional benefit OTHER TECHNOLOGIES PERFORMANCE IMPROVEMENTS of protecting present, and future, occupants from fuel poverty.

As shown in the diagram below, there is still huge potential to improve the energy efficiency of UK homes. Up to 4.5 million cavity walls and 10.3 million lofts still need to be insulated. Less than 3% of theBiomass, UK’sbiogas, 7.5 million solid-wall homes have been insulated. energy-from-waste and other technologies also contributing

High performing low carbon heat technologies due

The latest analysis of actual installed energy-efficiency measures low carbon heat to design and operational improvements highlights that we are falling far short of what is needed to meet the 1 targets of the ClimateSCALE Change OF Act. THE CHALLENGE

CAVITY WALLS & LOFT INSULATION

SOLID WALLS

13.5m walls 18m walls 13m lofts 23.5m lofts 2013 Target 2030

0.2m 2013

3.5m

Target 2030

HEAT PUMPS

0.2m 2013

4m

HEAT NETWORKS

Target 2030

0.2m 2013

1m

Target 2030

SOLUTIONS AND DRIVING STEP CHANGE POLICY FRAMEWORK

n tio

En

Inc

tives en

Warm homes, not warm words 2014 page 6

POLICY CLARITY

Regu la

POLICY FOCUS

a b li n g

© PAUL WESTON / WWF-UK

HEATING FOR HOMES CURRENT AND REQUIRED FOR 2030

Low-carbon heating systems The table below outlines the low-carbon technologies that need to be installed in homes and commercial buildings by 2030, according to CCC figures.



NO. OF DOMESTIC BUILDINGS WITH LOW- CARBON HEAT IN 2030

NO. OF NON-DOMESTIC BUILDINGS WITH LOW- CARBON HEAT IN 2030

HEAT PUMPS (including storage)

4,078,000

621,000

BIOMASS BOILERS

300,000

124,000

SOLAR THERMAL

910,000

11,000

BIOGAS

866,000

58,000

LOW-CARBON HEAT NETWORKS

1,000,000

321,000

Currently, there are 406,000 heat pumps installed in buildings in the UK with around 20,000 new ones installed every year. This compares with 1.6 million gas boilers fitted each year. In addition, in the last 13 years around 25,000 homes have been connected to heat networks.

1 ACE (2014) ECO and Green Deal Briefing http://www.energybillrevolution.org/wp-content/ uploads/2014/07/ACE-and-EBR-fact-file-2014-06-ECO-and-the-Green-Deal.pdf

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WHAT IS LOW CARBON HEAT?

A broad range of low-carbon heat solutions already exists. These span primary energy sources such as biomass, generation technologies such as solar water heating, and delivery infrastructure such as heat networks. The main short- and medium-term solutions for low-carbon heat provision in buildings include:

Solar water heating Provides supplementary hot water to homes or commercial buildings and can typically provide 50-60% of annual hot water demand. Air-source heat pumps Provide heat by absorbing heat energy from the air outside. Run on electricity, but for every unit of electricity put in they deliver 2-3 times more heat. Ground-source heat pumps Supply heat to buildings by absorbing heat energy from the ground below. Typically more efficient than air-source heat pumps. Hybrid heat pumps A hybrid system integrates an air-source heat pump with another non-renewable source such as a condensing boiler, enabling installation in a wider range of circumstances. Gas absorption heat pumps These are essentially air-source heat pumps but driven by gas rather than electricity.

Warm homes, not warm words 2014 page 8

Biomass boilers These burn wood pellets, chips or logs to heat a single room, or as a central boiler for heating and hot water. Heat networks (or district heating) Heat generated at a central source is supplied directly to buildings through a network of pipes that carry hot water. More efficient than individual boilers, they can run off the excess heat produced by power plants or factories, for example. Biogas Gases generated from organic matter or waste such as manure, sewage, food waste and plant material. Waste-to-energy (or energy-from-waste) plants Heat generated from municipal waste by combustion or an advanced conversion process that produces gas/biogas.

To maximise affordability and effectiveness, these systems should only be installed in buildings that are energy efficient. Heat systems need to be supported by a range of other measures and infrastructure. These include smart systems, which ensure heating is only used when and where it’s needed, and storage solutions that mean heat can be stored and used later. Reducing waste and optimising energy use in this way benefits both the energy network and the user. Policy interventions Achieving the necessary number of low-carbon heat installations by 2030 will require a range of policy interventions to provide incentives, regulations and awareness-raising to drive action.

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ROADMAP FOR FOR LOW CARBON ROADMAP CARBON HEAT HEAT TIMELINE AND AND POLICY POLICY FRAMEWORK TIMELINE FRAMEWORK

2020 2020

2030 2030 © CREDIT HERE

2014 2014

GOVERNMENT LEADERSHIP GOVERNMENT LEADERSHIP CONSENSUS ON GOALS CONSENSUS ON GOALS PILOTS PILOTS COMMUNICATION AND AWARENESS COMMUNICATION AND AWARENESS MASS ROLL-OUT MASS ROLL-OUT 2015-20 2015-20 LEADERSHIP LEADERSHIP Government vision Government vision and clarity on low and clarityheat on low carbon objectives carbon heat objectives

2015-30 2015-30 COMMS COMMS Clear and loud Clear and loud messaging about messaging about the Great British heat refurbishment the Great British heat refurbishment

INCENTIVES

TARGETS TARGETS

2016-20 2018-22 2016-20 2018-22 CONSENSUS PILOTS CONSENSUS PILOTS Agreement across Early movers/ pilots Agreement acrosson (e.g. Earlymotivated movers/ pilots key stakeholders key stakeholders (e.g. motivated & goals and policy on owner-occupiers framework social housing) goals and policy owner-occupiers & framework social housing) POLICY FRAMEWORK POLICY FRAMEWORK

REGULATION

ENABLING

INCENTIVES Enable building owners to meet improving minimum Enable building owners to standards through fiscal meetsupport improving minimum and reduced standards through fiscal implementation costs support and reduced implementation costs

ENABLING Marketing and supply side support that ensures all relevant Marketing and supply sideofsupport stakeholders are aware the that ensures all relevant transition to low carbon heat and stakeholders areofaware the have the means gettingofthere transition to low carbon heat and have the means of getting there

2022-30 2022-30 MASS ROLL-OUT MASS ROLL-OUT Greater project Greater project development development resources allocated to heat networkallocated roll-out to resources heat network roll-out

REGULATION Minimum standards for low carbon heat that improve Minimum for low over time tostandards provide market carbon heat that improve confidence and drive over time to provide market adoption confidence and drive adoption

UPTAKE OF LOW CARBON HEAT TECHNOLOGIES

UPTAKE UPTAKE

2014

2020

PHASE 3 MAINSTREAM PHASE 3 MAINSTREAM Heat networks supplied with low carbon heat Heat networks andsupplied heat pumps with powered by low low carbon heat carbon electricity and heat pumps powered by low carbon electricity

2030

© PAUL WESTON / WWF-UK

1 -CARBON HEAT PHASE 2UPTAKEPHASE OF LOW TECHNOLOGIES DEVELOPMENT GROWTH PHASE 1 PHASE 2 DEVELOPMENT GROWTH First million Caption to go here domestic heat pumps installed First million Early adopters domestic heat stimulate market pumps installed Core of heat Early adopters network schemes stimulate market established across Core of heat main UK cities network schemes Warm homes, not warm words 2014 page 10 established across main UK cities

WHAT IS STOPPING US?

WWF engaged a group of 12 stakeholders in the heat sector in two roundtables to see what can be done to accelerate the transition to a low-carbon heat system.

They identified three main barriers to progress: The government has failed to put in place policies that will drive the deployment of low-carbon heat at the necessary scale. Historically, energy policy has focused on the electricity sector rather than the heat sector. Aside from building regulation requirements, there have been relatively few policies and regulations that directly target the environmental performance of heating technologies. The importance of a transition to an energyefficient and low-carbon heating system must be recognised and become a key government priority. There is insufficient consumer demand for low-carbon heat technologies. Both consumers and installers are unfamiliar with low-carbon heat technologies, and there is little awareness and incentive to install them. Consumers often lack confidence in new and unfamiliar technologies, and the lack of advice available exacerbates this. There is insufficient governance and planning support for the deployment of low-carbon heat networks. The construction of heat networks at the scale needed is a long-term infrastructure project requiring a strong governance system. Heat networks require upfront investment and an adequate customer base to underwrite the investment and overcome competition from existing gas and electricity networks.

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RECOMMENDATIONS FOR THE NEXT GOVERNMENT

Our stakeholders identified three key areas for transforming the UK’s heating system. To deliver sustainable and affordable lowcarbon heat, WWF-UK calls upon the government to undertake the following actions:

Improve understanding of the low-carbon heat transition UK consumers and businesses need to embrace the transition to a system of low-carbon heating – and there are compelling economic, social and environmental reasons for them to do so. It’s critical to unite around a common goal, by making the business case for low-carbon heat and creating an aspirational vision of a lowcarbon future. Government should take the lead in highlighting the long-term economic, energy-security and environmental benefits of lowcarbon heat and develop a vision for low-carbon heat in the UK with a clear timeline for action for all stakeholders. Engaging people in the process of developing the vision will help to create a sense of shared ownership for the goals. Industry and government need to work together to showcase lowcarbon heat technologies, engaging with consumers to make the technologies desirable to people. Industry should work to improve knowledge of technologies among national and local installers so they feel confident in recommending them to customers and have the appropriate skills to install them. Drive action on low-carbon heat In the early stages of any transition there is a need to overcome inertia to drive the necessary take-up of new technologies. In the case of moving to a system of low-carbon heat, it is equally important that energy-efficiency policies integrate with heat policies to ensure measures are effective and overall costs for households are kept down. Consumers are a diverse group and a variety of policies is needed to increase demand for both energy efficiency and low-carbon heating.

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Government should work with stakeholders to develop a comprehensive policy framework that both requires, and encourages, the uptake of low-carbon heat technologies through a package of incentives, regulations and awareness-raising. This should include legislation that sets a timeline for regulating improvements in energy efficiency and low-carbon heating. Specific sectors, such as social housing, should act as early movers in retrofitting buildings with energy-efficiency measures and lowcarbon heating technologies. This will help to inspire people by demonstrating what is possible and to kick-start the low-carbon heating industry. Elevate the roll-out of low-carbon heat networks to a national infrastructure priority Heat networks are already being rolled out in urban areas with strong local leadership and vision. However, we need to connect many more homes and businesses to heat networks over the next 15 years. To enable this to happen, we need to support more areas to develop the necessary infrastructure. Government needs to demonstrate strong leadership and commitment, with a coherent national plan for heat networks. It is making progress in this area with the Heat Network Delivery Unit, which should continue and expand over the next 10 years. Government, local government institutions and industry should work together to develop ownership and governance structures that will ensure rapid delivery of quality networks at scale. Mechanisms are also needed to ensure building owners connect to heat networks. To tackle the issue of upfront investment, low-cost finance should be made available to leverage equity and debt funding from public and private sources including the European Investment Bank, Green Investment Bank, funds and private investors.

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CASE STUDY: DENMARK, AN EXAMPLE OF LOW-CARBON HEAT LEADERSHIP When the oil crisis struck in the 1970s, Denmark and the UK reacted very differently. While the UK focused on North Sea oil and privatisation, the Danish government set out to reduce heat consumption and increase efficiency. The Danish model is a decentralised combined heat and power (CHP) system. Nationwide, heat networks provide 60% of Denmark’s space and water heating, rising to 98% in Copenhagen. This requires around 30% less fuel than using separate heat and power plants. The Danish government made a long-term policy commitment with a consistent, coordinated strategy to support its transition to a low-carbon heat system. Policy instruments included regional heat plans, local powers requiring households to connect to heat networks, higher taxes for fossil fuels and a ban on electrical heating in buildings.

© SANDRA BARTOCHA / NATUREPL.COM

Further information: A pdf version of this report is available online at wwf.org.uk/warmhomes Acknowledgements: This document is a summary version of the full report produced by Verco for WWF-UK. Verco: Dan Archard, Max Goodman and Duncan Price

A WWF-UK production WWF-UK Zoe Leader, Nick Molho and Kate Foreshew Edited by Barney Jeffries Design by Zana Clarke [email protected]

Heat in numbers

WARM HOMES, NOT WARM WORDS 2014

100%

RECYCLED

1/3 Heat is responsible for around a third of the UK’s greenhouse-gas emissions

3.6 MILLION The UK needs to install at least 3.6 million new domestic heat pumps to meet our climate targets

Heat networks provide 98% of space and water heating in Copenhagen

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Why we are here To stop the degradation of the planet’s natural environment and to build a future in which humans live in harmony with nature.

UK

98%

Solar water heaters typically provide 50-60% of annual hot water demand

COVER IMAGE: © GLOBAL WARMING IMAGES / WWF-CANON | THIS PAGE: © NATIONAL GEOGRAPHIC STOCK/ MARK THIESSEN / WWF

50-60%