The cost-of-living crisis is rightly at the forefront of everyone’s minds and is the biggest policy challenge facing the country today. The UK government has acted to support customers, but the underlying issues causing the price hikes are unlikely to abate anytime soon, outlining the urgency of the need to act to protect consumers and deliver a secure supply of energy.
While some may think now is the time to rethink our net zero commitments, we need to be doubling down on them. Net zero and energy security go hand in hand with one another and green technologies can play a leading role in reducing our dependence on global energy markets to bring down bills.
In the short term, we should be going further and faster on practical measures to reduce the amount of energy customers use and ensure it’s as cheap as possible. That means we need to step up the insulation of homes, to help drive down demand and make them warmer this winter. Elsewhere, more should be done to inject biomethane – a net zero solution made from waste such as food, manure sewage and crops – into our existing gas infrastructure. At SGN, we already inject biomethane into our network to heat 250,000 homes across southern England and Scotland and have ambitions to reach 400,000 homes by 2026. The government should use the ongoing Review of Electricity Market Arrangements to break the link between gas and electricity prices. This is a chance to drive down the long-term electricity price and ensure the cost reductions are passed on to customers.
Aside from these measures, we will only make a success of net zero in the long term if we bring our customers with us on the journey. Governments can’t just impose solutions and expect customers to step up, not least during a cost-of-living crisis.
This challenge is perfectly encapsulated by the changes we all need to make to our homes over the coming years. The decarbonisation of home heating is the biggest challenge we face in achieving net zero. It’s the second biggest-emitting sector with around 30 per cent of our national emissions coming from buildings, which includes around 25 million homes connected to gas networks across the UK. Millions of homes and people will be heavily impacted by this change.
First and foremost, the decarbonisation of homes is a customer challenge. Customers react differently to the shared challenges we face: their own experience informs the choices they make. And when it comes to delivering net zero, that informs our view that we must put our customers’ different needs at the centre of any solution that is offered to them. We need to listen to and understand what our customers actually want from their future home heating solutions. By doing this, we can inform policy development and technological solutions that, by working with customer needs, will help deliver a transition to net zero homes more quickly and at the lowest cost.
Our research tells us that the willingness of customers to move to a zero-carbon heating system is high. Importantly, customers do not want to lose the attributes of heat that they have today. They want the control, flexibility and choice in the way they heat their homes. But when you ask customers what action they will personally take and how much they are prepared to pay, that support for change drops to around a third. We call this the “action gap”.
Cost will naturally have a significant role to play in any decision about future home heating. For most customers, paying high amounts upfront to reduce costs over time is a real challenge household budgets can’t readily accommodate. But for most customers, the technology itself isn’t a relevant consideration for them; it’s what it delivers and how it delivers that concerns them.
Some customers tell us they are worried about being left behind when it comes to adopting new technologies. But on the flip side, many customers are also worried about being the first mover. They see a world of uncertainty and risk, and for many a do-nothing approach represents the least-risk option. Customers expect the government and business to take the lead by providing clarity in what these choices are and a roadmap of how they can be made a reality.
If we are going to make progress on the decarbonisation of our homes in the 2020s, it won’t be by pitting one technology against the other – it’ll be achieved by utilising every tool in the box and based on the needs and expectations of homeowners.
At SGN, we’re determined to help build out that customer offer and one of the areas we’re exploring is how existing infrastructure can be repurposed to supply hydrogen to homes. Backed by policymakers across the UK, the hydrogen industry is making great progress, and opportunities to go further are plentiful.
If we take Scotland, for example, thanks to an abundance of rich, renewable energy resources, the promise of hydrogen could soon be turned into reality. With all of this renewable potential in Scotland, there is a fantastic opportunity to utilise our resources to generate green hydrogen, which can be used to decarbonise a number of sectors.
The crisis in our energy market is unlikely to abate anytime soon, which means we need to take action now to protect customers this winter and beyond. To decarbonise the toughest sectors like home heating, we need to offer net zero solutions that give choice and drive down cost in the long term. If we’re going to ensure the 2020s are not a lost decade, we’ll need to double down on the short- and long-term policy options we have available to make sure a customer-centric approach is the backbone of the pathway we use to reach net zero.
SGN is a British gas distribution company that keeps natural and green gas flowing to 5.9 million homes and businesses across Scotland and the south of England.