Struggling rural households could face major costs for green heat under government plans

Jul 15, 2020, 14:18 PM by OFTEC
UK homeowners, especially those living in rural, off-gas grid areas, could face huge costs to install green heating systems if government plans go ahead, warns an industry trade association.

As part of the UK's strategy to tackle climate change, consumers will be encouraged to replace fossil fuel heating systems with electric heat pumps at an average cost of over £10,0001 to install.

Oil heated households2 (1.5 million) will be among those targeted first under the plans.

Government is currently consulting on proposals to offer £4,000 'Clean Heat Grants' to help supplement the cost of heat pumps, and in limited cases, biomass heating systems.

However, this still leaves a £6,000 shortfall for installation alone which many consumers will not be able to afford, especially during a post pandemic recession with a recent report suggesting the UK economy will be the worst hit of any developed country3.

OFTEC, which represents the liquid fuel heating industry, says that while it's vital to push ahead with decarbonisation plans, promoting technical solutions that are financially out of reach for most consumers risks stalling climate change progress and will keep financially stretched households trapped living in homes they struggle to affordably heat.

Paul Rose, OFTEC CEOChief executive of OFTEC, Paul Rose says: "We know that rural households are already more likely to be in fuel poverty and face the largest fuel poverty gap4.

"We also know that many fall into the low to middle income bracket with little or no savings at all5. Many are struggling to pay their existing bills, so there is no way these homeowners will be able to fund expensive green heating such as heat pumps, particularly post Covid-19.

"We urgently need to drive down the cost of renewable heating, so it makes no sense for the government to support expensive solutions that only a minority can afford.

"Government should instead prioritise creating a more competitive, inclusive market for renewable heating by encouraging innovation and a broader range of choice for consumers."

Extensive independent research, backed by successful trials across a number of European countries, shows renewable liquid fuels can provide a simple, drop-in replacement for heating oil. With the right regulatory approach, a 100% fossil free fuel could be in use by 2035 or even sooner - at least 15 years ahead of the UK's net zero target.

OFTEC has written to the Department of Business, Energy and Industrial Strategy (BEIS) Select Committee, relevant cross party groups, and rural MPs to highlight the flaws in current policy direction and the potential social consequences of pursuing this agenda.

Paul Rose concludes: "The current technology approach isn't working. Something has to be done to bring down the cost of green heating, otherwise rural households in particular will continue to suffer financial hardship and heat decarbonisation will continue to falter.

"With crucial policy decisions expected soon, we urge government to think hard about the facts and consider backing clean heat solutions that will not penalise already hard up consumers and instead win their support which is crucial to success."

To read more, please go to our Future Heating web pages

Affordable green heating for rural homes campaign
BEIS Domestic Renewable Heat Incentive monthly deployment data January 2020

2 BEIS Minister Written Answer 29/10/2018

3 Office for Economic Cooperation and Development's (OECD) June 2020

4 BEIS Annual Fuel Poverty Statistics Report April 2020

5 Savings and investments (nominal) of adults in low to middle income households (UK). Resolution Foundation 2020.

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