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The Policy Ask with Lucy Yu: “It shouldn’t cost more for a household to run a heat pump than a boiler”

The CEO of the Centre for Net Zero on the UK’s approach to AI, scrapping the heat pump tax, and meeting Al Gore.

By Spotlight

Lucy Yu is CEO of the Centre for Net Zero, an independent research unit based within the company Octopus Energy which focuses on advancing the global energy transition to combat climate change. She is also a non-executive director at the UK’s innovation accelerator Connected Places Catapult, and has nearly 20 years’ experience building tech ventures and developing tech policy and regulation for governments around the world. She has worked in operations, policy and research for several global tech start-ups.

How do you start your working day?  

I make a coffee, clear my head and write down my priorities for the day. They’re not often the same things as the meetings in my diary! I learnt this from a very effective CEO and it’s stayed with me. I don’t tend to check my emails first thing, because they can be a distraction from the most important tasks. You can’t build a brilliant organisation if you’re stuck in a day-to-day mindset. 

What has been your career high?    

I’m lucky because I’ve had so many: debating at the Cambridge Union, building a global number one mobile app, running Cabinet Office Briefing Rooms (COBR), or “Cobra” meetings, cruising around London in a self-driving car, hosting a global top 20 podcast – there have been lots of giddy moments and I’ve rarely been bored! But I still pinch myself when my career puts me in the same orbit as people I’ve admired for years. I met Garry Kasparov at a tech summit a few years ago, and Norman Foster more recently. And Al Gore – his investment firm is one of Octopus Energy Group’s investors. All three of them were extremely nice!

What has been the most challenging moment of your career?  

I’ve worked on emerging technologies a lot. Tech transforms business models, industries, systems and societies, creating challenges and opposition. You either have the appetite to work through it, or you don’t. Starting up the Centre for Net Zero was pretty challenging too. I was building a research unit from scratch and simultaneously learning my way around a new sector, during a Covid lockdown. Some people assume there was a lot of assistance from Octopus Energy Group, our parent company, but we were deliberately established as an autonomous organisation to have credibility from day one. 

If you could give your younger self career advice, what would it be?   

Don’t be afraid of change. And people can’t know what you don’t tell or show them. If you want your work to have the highest global impact, it’s not enough to just do it – you need to tell people about it too. I’ve spent a lot of my career communicating my work to others.

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Which political figure inspires you?  

A diplomat not a politician, but Kofi Annan was very influential for me in my early career. I started off working in the UK Civil Service and then moved to the UN while he was secretary general. He didn’t get everything right, but he was dedicated to public service and worked hard to make the UN a more effective organisation. 

What UK policy or fund is the government getting right?  

Our approach towards general purpose technologies such as artificial intelligence. These technologies will have important applications in many domains including energy, such as helping model demand and optimise consumption, but we should be mindful to develop them responsibly and safely. There’s lots of work to do here, but the UK Government has taken a promising lead on these issues.

And what policy should the UK government scrap?  

The “heat pump tax”. Current levies on electricity bills mean it costs more for a household to run a heat pump than a gas boiler. A targeted tax exemption for homes using electric heating would reduce the cost of clean heat and help fuel-poor homes. It’s a model that has been successfully adopted by Denmark, which now boasts a thriving heat pump market. 

What upcoming UK policy or law are you most looking forward to? 

I’m looking forward to the modernising of Energy Performance Certificates (EPCs) and how they are used. It might not be the most exciting area, but it has outsized potential for impact because of the scale of emissions generated from heating and cooling buildings. We can reduce some of these emissions through energy efficiency, and others through energy flexibility – consuming from the grid at times when energy is cleanest, and avoiding “dirtier” times. Updating the EPC alongside new buildings-related measures to incentivise energy flexibility could transform the energy system. Consumers can become prosumers, houses can become tech-enabled, grid-interactive energy assets, and so much more. 

What piece of international government policy could the UK learn from?  

We can’t match the scale of the Inflation Reduction Act (IRA) but we can learn from it. Its focus on investment and subsidies (rather than taxation and prohibition) has stimulated important markets, driving costs down through learning and innovation and increasing consumer adoption of low-carbon technologies. Whilst we’ve done something similar before in the UK with offshore wind, where costs have fallen by around two-thirds in a decade, the comprehensiveness of the IRA is so much more powerful than our piecemeal approach. 

If you could pass one law this year, what would it be?  

I’d make environmentally- and socially responsible funds the default option for pension funds invested through auto-enrolment schemes. We’ve already done the hard bit by introducing auto-enrolment. This would be a relatively simple change that could move the dial for net zero significantly. People would still be able to switch away from these investments, leaving agency with the individual.

[See also: Five solutions to the council finance crisis]

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