Utility Week

12 | 22ND - 28TH MARCH 2019 | UTILITY WEEK Policy & Regulation Analysis T he Spring statement was widely seen as a damp squib, sandwiched as it was between the rolling Brexit votes that consumed the Commons timetable last week. However, the chancellor's half-yearly tax and spending update marks significant progress in one area, which critics say has been char- acterised by nearly as much can-kicking as the UK's fraught withdrawal from the EU – namely, the decarbonisation of heat. "They are taking seriously the compli- ance with the net-zero commitment," says Ryan Shorthouse, director of the Conserva- tive thinktank Bright Blue, referring to the Paris climate change agreement target to eliminate carbon emissions. During his Spring statement speech, Philip Hammond said the government wants to increase the proportion of green gas in the grid. In his next breath, the chancellor announced that fossil fuel heating will be banned in new homes from 2025 under a new future homes standard. That second recommendation goes rather further than the report issued just over a month ago by the Committee on Climate Change (CCC), which advocates stopping any connection of new dwellings to the gas grid. Justin Bowden, national secretary for energy at the GMB union, suspects that Whitehall is hedging its bets following the controversy sparked by the CCC's advice. However CCC chief executive Chris Stark tells Utility Week he is "happy" with the chancellor's announcement, adding that only a small fraction of gas transported through the grid is used for cooking, and that this could come from alternative sources. Paul Blacklock, head of strategy and cor- porate affairs at Calor Gas, points out that new homes may need little fuel for heating anyway if improved energy-efficiency stand- ards are introduced. Referring to the ultra- low energy-efficiency standard developed in Germany, he says: "If you end up with Pas- sivhaus zero-heat demand, there won't be much requirement for heating." Installing grid-style infrastructure may therefore be a moot point even if the standard applies only to fossil fuel heating. Arguing that Hammond's announcement goes "too far" for some, Shorthouse says that the chancellor's statement demonstrates the CCC's clout. Bowden, though, worries about the "tech- nocratic" decision to ban fossil fuels from new homes. "There's been no discussion with the electorate, and it's been in no party manifestos," he says. "You are disenfranchis- ing people from affordable and efficient heat at a stroke." He argues that residents of these new-build properties risk not being able to benefit from the rollout of low-carbon gases such as hydrogen and biomethane if and when this happens. "You will have created islands that are potentially not connected to the grid," he says. Nor will customers in gen- eral benefit from any improved economies of scale from grid expansion, he adds. "The value of a grid is spreading cost. You could have a situation where those le› are paying an increasing amount to maintain the grid through their bills." Added to which, he argues that technolo- gies such as heat pumps are still relatively expensive and not as effective as gas boilers. Stark counters that the CCC has consid- ered the impact of its proposals on house- hold bills, and says it will not be long before low-carbon heat is able to compete on price. "From that point on, the alternatives become cost-effective," he says. "It makes no sense at that point to connect a gas boiler and then disconnect it within 20 years." While acknowledging it is "great" to see the CCC's impact on the Treasury, Stark says he is "very comfortable" that the CCC is not overstepping its statutory advisory role. "It is enormously important that the CCC offers an independent advice view on the appropriate moment for technologies and strategies to come on stream," he says. Greener grid The chancellor's proposal to boost the pro- portion of green gas in the grid has proved less controversial. Ed Gill, head of public affairs at the Energy Networks Association, says: "If you stand aside from the type of gas being delivered, a network of gas pipelines and infrastructure allows people to access large quantities of energy on a very flexible basis. We obviously need to decarbonise to meet climate change targets; green gas is a good way to go about that." As with the future homes standard, details on gas grid decarbonisation are scanty. However, officials have been sound- ing out the industry about a recommenda- tion in a recent Bright Blue report that gas suppliers should be obliged to source a pro- portion of their fuel from renewable sources. The government is "keen" to explore a low- carbon gas obligation, says Shorthouse. "They want to obtain a certain proportion of low gases flowing through the network." Gill thinks a green gas obligation may be the mechanism to replace the renewable heat incentive, which is due to close in 2021. James Court, director of policy and exter- nal affairs at the Renewable Energy Asso- ciation, says: "If there is going to be an obligation on suppliers, it will be a shot in the arm to the industry." The next step could be the incorpora- tion of a renewables obligation into Ofgem's upcoming gas price controls to create a framework for stimulating investment. The technical issues involved in injecting biogases into the grid are "very straightfor- ward", Stark believes. The chancellor has laid down two of three key stepping stones that, alongside improved home energy- efficiency standards, are required in the short term to decarbonise heat, he adds. "They are really the prelude to a bigger deci- sion on what to do about low carbon [heat]." But while this week's announcement offers a breathing space, Stark believes the government needs to rapidly develop a blueprint for the estimated 29 million exist- ing homes that will still make up the vast majority of the built environment in 2050. "We would very much like the government to make a plan for decarbonising heat in the next three years so that the industry has cer- tainty over what frankly will be an enormous infrastructure challenge that will take dec- ades to deliver," he says. "The sooner that plan is put in place, the better." One small no-carbon step Chancellor's ban on fossil fuel heating in new-build homes from 2025 is just the prelude to the bigger decision needed on how to proceed with heat decarbonisation. David Blackman reports.

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