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Government's green heating scheme is ‘failing to deliver’, Lords say

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The Lords' Environment and Climate Change Committee has concluded that the government’s £450m 'Boiler Upgrade Scheme' is failing to deliver on its objectives, following a disappointingly low take-up of grants.

The Boiler Upgrade Scheme, which grants households in England and Wales £5,000 to help switch from a gas boiler to a low-carbon heat pump, has been described as "seriously failing" by a Lords inquiry.

The enquiry found that only a third of the low-carbon heating scheme’s annual budget has been used since its launch in May 2022. 

The Committee said that by the end of January this year, £49.7m in vouchers had been issued, equating to 7,641 installations, according to Ofgem figures. The scheme has been allocated £150m a year in funds for three years.

As a result, the Committee has written to Parliament warning that if the current take-up rate continues, only half of the allocated budget will be used to help households switch to low-carbon heating systems. 

Currently, heating in UK homes is responsible for nearly 17 per cent of the country's greenhouse gas emissions.

To address this issue, the government launched its Boiler Upgrade Scheme in May 2022. The scheme aims to install 90,000 heat pumps over three years by offering the £5,000 grant for air source heat pumps and £6,000 for ground source heat pumps.

Heat pumps run on electricity and are three times more efficient than a gas boiler, so they have often been considered an affordable solution to reduce heating-related emissions. 

The scheme was meant to kickstart the heat pump industry in England and Wales and reduce the cost of installation for homeowners. It is scheduled to run until April 2025.

However, due to the low uptake, the Committee has concluded that the target is "very unlikely to be met".

The Committee said that public awareness of low-carbon heating systems was “very limited” and promotion of the scheme had been “inadequate”. It also blamed a shortage of heat pump installers and “insufficient independent advice for homeowners” for the lack of take-up.

The government's efforts to present hydrogen as a solution for home heating were also said to contribute to the low uptake. 

In September last year, then-business secretary Jacob Rees-Mogg, told the House of Commons that hydrogen was a “silver bullet” that could be used as a way to store excess renewable power and “with some adjustments piped through to people’s houses to heat them during the winter.” 

The Committee wrote: “Hydrogen is not a serious option for home heating for the short to medium-term and misleading messages, including from the government, are negatively affecting take-up of established low-carbon home heating technologies like heat pumps”.

Their statement echoed the findings of a peer-reviewed analysis of 32 independent studies, published in the academic journal Joule. The research found that using hydrogen in domestic heating is less economic; less efficient; more resource intensive, and has a bigger environmental impact than many alternatives, including heat pumps, solar thermal panels and district heating. 

Dr Matthew Trewhella, CEO of The Kensa Group also called on the government to reconsider the subsidies offered by the Boiler Upgrade Scheme which is currently failing to incentivise ground source heat pumps fairly. 

“We propose that grant levels should be related to carbon savings as ground source heat pumps are the most energy-efficient heating and cooling technology," he said. "They should also be reflective of the impact on the grid and the longevity of the infrastructure - both of which are more beneficial with ground source technology."

Meanwhile, Mike Foster, CEO of the not-for-profit trade association the Energy and Utilities Alliance (EUA) said the scheme should be "scrapped" altogether. 

“This report confirms just how far removed this committee is from the average member of the public," Foster added. “Giving a £5,000 taxpayer handout to the well-off is immoral and simply cannot be justified when millions are living in fuel poverty and we all face a 20 per cent increase in our bills from April.

“This sum may be pocket change to the committee members but to most British households, it is simply eye-watering; they can’t afford it with or without a £5,000 bung.”

In response to the news, a government spokesperson told the BBC: "We've recently launched a marketing campaign to further increase public awareness and will consider options to ensure our targets are met."

Although heat pump installation has a higher upfront cost than hydrogen-based solutions, a report by the Tony Blair Institute claimed that government investment in this and similar low-carbon heating technologies could halve average heating bills by 2035. 

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