Boris Johnson’s ministers are preparing to publish a sweeping plan to cut the UK’s carbon emissions by phasing out gas heating in homes. The political headache for the government is that the strategy could hit voters with soaring bills, and announcing it now will be seen as a high risk move at a time when millions of consumers already face paying more for energy.
While the government will make some grants available to help the transition to greener homes, the cost of carbon reduction will be born largely by private consumers and businesses.
The much-delayed heat and buildings strategy is expected to be published within the next two or three weeks, ahead of the COP26 climate change summit which Johnson is hosting in Glasgow at the end of October.
The blueprint, as briefed to The New Statesman, is not yet finalised and discussions between ministers could yet see more painful elements of the package stripped out. When it comes, the strategy will form part of the government’s broader drive to deliver its target for net zero carbon emissions by 2050.
- New regulations will be brought forward requiring homeowners to insulate their properties to higher standards, a proposal likely to be a politically sensitive due to imposing higher costs on consumers, without much help from the government.
- The sale of new gas boilers will also be phased out, with a ban on connecting new-build homes to the mains gas supply potentially from as early as 2025. A ban on the installation of new gas boilers in all homes is set to come into force from 2035. Firm dates may not be included in the final strategy document, though these are the targets being discussed.
- A new levy could be applied to gas, as it is drawn into the UK’s new carbon emissions trading scheme. That plan is designed to make gas more expensive and the levy could raise £3 billion for the Treasury by some estimates. The proposal could be put on hold if it is deemed to be too politically toxic.
- Green levies on electricity bills could be removed, to reduce the cost of electric heating, under the plan.
- Homeowners will be encouraged to swap gas boilers for heat pumps, with grants available from the government to reduce the cost of replacement, which can typically reach £10,000.
- The grants would be £5,000 for an air source heat pump and £6,000 for a ground source heat pump. This is likely to be labelled as a boiler upgrade scheme and will come into force in 2022.
- Incentives will be offered to encourage building of heat networks, sometimes known as district heating, in which heat is pumped from a central source through insulated pipes to a number of buildings in an area.
Johnson is in a political bind, caught between his green obligations and the prospect of telling the public they will have to pay the price. At the end of this month, he hosts the COP26 climate summit, an event that he wants to use to showcase the UK’s influence on the world stage after Brexit and deliver decisive action to protect the environment.
He is trying to persuade other nations to adopt ambitious targets for carbon reduction and will be under pressure to prove he has a detailed plan for turning Britain into a net zero carbon economy by 2050. The heat and buildings strategy is a vital part of that plan — with heating and powering buildings accounting for 40 per cent of the UK’s total energy usage.
At the same time, however, British consumers and businesses are facing a crisis in the cost of energy. Wholesale gas prices were 10 times higher this week than a year ago and officials have warned that average energy bills could exceed £2,000 if prices continue to increase. News that ministers are choosing policies to make gas even more expensive is unlikely to be welcomed by the public in the short term.
That’s why some in government expect the final strategy to be less punishing for consumers when it is eventually published. The aim will be to present the reforms as making electricity cheaper, while gas costs increase.
The government calculates that households pay an average of £159 in green surcharges on their electricity bills. These levies are then directed to help boost the renewable energy industry, as well as schemes to help poorer households lower their bills.
Officials argue that electricity production is now greener than ever but taxed more, while gas pollutes far more but is taxed far less. This is being described as a “price distortion” in Whitehall, which ministers aim to address in the plans. Any changes to the levies are unlikely to be implemented for a number of years.