Government delays to net zero targets will hold back the development of the heat pump industry, derailing efforts to lower households’ energy bills, new research from a think tank suggests.
The Social Market Foundation – a cross-party think tank – has warned Rishi Sunak’s rollback of key net zero initiatives will be bad news for British manufacturers, the development of an adequately skilled home heat workforce, and households. Far from saving money, households will remain at the mercy of supply chain shocks and volatile energy markets, the SMF said.
As other countries continue to transition to lower carbon heating, and the UK’s own demand is set to grow with the Government targeting 600,000 heat pump installations by 2028, there is a huge opportunity up for grabs, the SMF highlights. The disruption to supply chains during the pandemic and the volatility of the fuel market due to the Russian invasion of Ukraine has also accelerated the need to move away from the current model for heating our homes.
However, UK heat pump manufacturing – already small and nascent – has suffered a setback from the Government rolling back/delaying key net zero initiatives (with the phase out of oil boilers now delayed from 2026 to 2035, the same as gas boilers). Heat pump bodies are demanding clear commitment from the Government, to avoid further damage to investor, installer and consumer confidence – and undermining the progress of the growing, but fragile heat pump industry. In addition, the home heat workforce already struggles with skill shortages, an aging workforce and crucially, insufficient new entrants.
Domestic manufacturing of heat pumps brings several advantages, particularly in the form of household savings. Prices should come down as the industry reaches scale, either using automation or limiting imports to parts (rather than whole heat pump units). The same goes for having a skilled workforce, where innovation in home assessment can reduce the time it takes to establish a quote, and therefore the overall cost of installing a heat pump.
As well as potentially contributing £5.5bn to the UK economy, domestic manufacturing can lead to job creation and with positive knock-on effects for UK research and development. Beyond this, it could spur innovation such that heat pumps are designed specifically for UK homes.
The savings for households depends on the Government acting urgently to support the heat pump manufacturing industry developing the necessary workforce.
The SMF’s interviews with experts revealed that convincing manufacturers to begin heat pump production at scale in the UK is “the greatest challenge”, but there are range of policy measures that could address the barriers to scaling up production:
- Heat pumps should be named as a minimum requirement in the Future Homes Standard, so that all homes built from 2025 onwards will definitely have heat pumps.
- Policymakers need to improve the business case for heat pumps through energy price restructuring, making heating through electricity a more financially viable option for much of the public.
- Fines from non-compliance with Clean Heat Market Mechanism (which will be playing targets on manufacturers to sell low carbon heat pumps sold each year) need to be fund installer training or to contribute to the pot for the Boiler Upgrade Scheme.
- Consciously develop the heat pump installation workforce by working with industry and training providers to design a strategy for scaling it up.
Niamh O Regan, Researcher at Social Market Foundation, said:
“The Government’s recent delaying of key net zero initiatives will mean that British households’ energy bills will be determined by Putin’s war or supply chain shocks. It will also mean that the British heat pump industry forgoes a chance to grab the growing global demand for low carbon heating.
Unless the Government starts investing today in the technology and the workforce needed to realise savings from transitioning to low carbon heating, British consumers, workers and manufacturers will be worse off.”
- The SMF report, Supply change, will be published at https://www.smf.co.uk/publications/uk-heat-pump-supply-chain/ on Wednesday 18th October 2023.
- The report is supported by the European Climate Foundation. The SMF retains full editorial independence. Responsibility for the information and views set out in this report lie with the author. The European Climate Foundation cannot be held responsible for any use which may be made of the information contained or expressed therein.
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