Ahead of these decisions, we are working with key stakeholders including gas networks, wider industry, and regulatory organisations to deliver a programme of testing, trialling, research and development to help assess the feasibility, costs and benefits of widespread use of hydrogen 251 Energy Research Partnership (2016), ’Potential Role of Hydrogen in the UK Energy System’, p. 7 ( 252 CCC (2018), ‘Hydrogen in a low-carbon economy’, p. 19 ( 253 BEIS (2021), ‘UK hydrogen strategy’ (

The scale of carbon capture, usage, and storage (CCUS) needed is dependent on the balance of hydrogen production methods and ongoing research regarding using hydrogen as a heat In the UK, CCUS is likely to play an essential role in meeting our Net Zero target. This was outlined recently by the CCC, who described carbon capture and storage as “a necessity, not an option”.254 It may also play a vital role in levelling up the economy by supporting the low- carbon economic transformation of our industrial regions by creating new high-value jobs. The UK CCUS Deployment An Action Plan, published in November 2018, sets out the government’s ambition to have the option to deploy CCUS at scale during the 2030s.255 This was reinforced by further commitments in the Energy White Paper256 (2020). In the Prime Minister’s Ten Point Plan257 • committed to support the establishment of CCUS in four industrial clusters by 2030, and to establish CCUS in two of these clusters by the mid 2020s • announced the £1 billion CCUS Infrastructure Fund, which will provide industry with the certainty required to deploy large-scale CCUS at pace As many sectors are looking to decarbonise through electrification (including heat), the importance of building a smart, flexible and secure electricity network is paramount. Peak electricity demand in Great Britain was approximately 59GW in 2020.258 BEIS analysis suggests this could increase by over 10% by 2030, and could more than double by 2050 if large parts of transport, heating and industry decarbonise by switching from fossil fuels to low- Electric heating appliances, such as heat pumps, are only low-carbon if the electricity used to run them is generated from low-carbon sources. 254 CCC (2020), ‘Reducing UK Progress Report to Parliament’, p. 54 ( Report-to-Parliament-Committee-on-Cli.._-002-1.pdf). 255 BEIS (2018), ‘The UK carbon capture, usage and storage (CCUS) deployment an action plan’ ( 256 BEIS (2020), ‘Energy white Powering our net zero future’ ( 257 BEIS (2020), ‘The ten point plan for a green industrial revolution’ ( 258 National Grid ESO (2020), ‘Electricity Capacity Report’ (

If electrolysis is used to produce low-carbon hydrogen, this could further add to electricity demand, and its ability to reduce emissions will depend on the type of power generation used. A low-carbon system that meets future electricity demand at low cost will likely be composed predominantly of wind and solar, complemented by less weather-dependent technologies (such as nuclear power, interconnectors, and gas with carbon capture and storage). We have made recent commitments to continue decarbonising electricity generation. The Prime Minister’s commitments in his Ten Point Plan259 included investing in offshore wind, building on the strengths of the North Sea. However, it is not practical or cost-effective to meet daily and seasonal peak demand solely by increasing low-carbon electricity generation. Therefore, it is important that we consider flexible technologies and storage solutions to reduce and accommodate peak electricity demand. A flexible energy system is essential for meeting Net Zero by 2050. Smart technologies (such as storage and smart heating systems) help match energy supply and energy demand, which enables us to maximise the amount of intermittent renewable electricity (from the sun and wind) used to power our homes and businesses (and electric vehicles). For example, a household might store energy during the daytime (when there is lower demand and more solar power being generated) for use during the evening peak (when there is higher national demand and less solar power being generated). As electricity is more costly during peak periods, this will also help reduce energy bills. This technique can also reduce greenhouse gas emissions by moving demand to where there is an abundance of renewable electricity Flexibility reduces the cost of balancing the system and the need to build generation and network capacity. This benefits all consumers by reducing overall system costs – we estimate that a flexible energy system could cost as much as £10 billion less per year by 2050.260 The government and Ofgem are working with industry to facilitate a smart energy system through the Smart Systems and Flexibility Plan.261 Hybrid systems (including individual hybrid systems and heat networks using multiple heat sources) offer flexibility by switching between fuels to avoid adding to electricity demand at peak times. However, our evidence base is not conclusive regarding how they should be best deployed. For this reason, it is still unclear how significant a role they will 259 BEIS (2020), ‘The ten point plan for a green industrial revolution’ ( 260 BEIS and Ofgem (2021), ‘Transitioning to a net zero energy smart systems and flexibility plan 2021’ ( 261 BEIS and Ofgem (2021), ‘Transitioning to a net zero energy smart systems and flexibility plan 2021’ (

In addition to making buildings smarter, flexibility can be built-into a network • intra-day electrical storage systems such as lithium ion batteries • inter-seasonal storage systems such as power-to-gas-to-power systems currently in • interconnection between the UK energy system and our continental neighbours • dispatchable renewable generation such as burning biomass instead of fossil fuels • back-up generation (with carbon capture) Flexible demand and supply (from technologies such as grid energy storage and interconnection) will mean that less network and generation capacity is needed to decarbonise our energy system than would otherwise be the case.
However, even with a smart and flexible building stock and grid, any path to Net Zero will require significant additional network capacity, in particular on the lower-voltage electricity We have been engaging with distribution network operators (DNOs) and the Energy Networks Association to understand the potential scale of the need for local network reinforcement and preparations for electrification of heat. For these reinforcements to be carried out effectively, we need to ensure that DNOs can make strategic investments that reduce the need for network upgrades, investing ahead of need, where possible and useful. DNOs will submit their final business plans to Ofgem in December 2021, setting out their proposed projects and actions for the 2023-2028 price control, RIIO-ED2. Ofgem has confirmed RIIO-ED2 will support strategic investment to deliver Net Zero emissions targets, including through the use of uncertainty mechanisms. Ofgem’s Business Plan Guidance sets out clear expectations that DNO’s “will need to plan to accommodate increasing demand that will come from the electrification of heating and transport, while accounting for and maximising the potential of these and other new technologies to provide system flexibility and limit the need for network upgrades.”262 We are supportive of Ofgem in their work to ensure network regulation enables low-carbon technologies to join the system, and that networks consider flexibility. We are facilitating improved visibility of heat pump installations on the network and will encourage collaboration between ourselves, Ofgem, DNOs and industry to establish asset data requirements and ensure data is being collected and shared effectively. We appreciate that any need to reinforce the electricity system needs to be co-ordinated with other planned reinforcements, such as those responding to increased requirements from other sectors such as transport and renewable generation. 262 Ofgem (2021), ‘RIIO ED2 Business Plan Guidance’ (

Chapter 4: Planning for Net Zero When taking action to decarbonise buildings and continue our trajectory to Net Zero, we have a responsibility to ensure that we take into account the impacts from and to the wider energy system, and that decisions are informed by the latest research and evidence, and are taken at the right level. • system-level interdependencies • the types of decisions that need to be made at different levels • the progress made against national-level decisions and some of the key • how local actors have a crucial role in delivering buildings decarbonisation • our ongoing portfolio of research and development to inform decisions and Research and development are essential to drive innovation, improve options and inform policies and decisions. Improving our evidence base will help to inform the strategic decisions and individual policies that keep us on track to deliver our emission reduction targets. Technology and supply chain innovation and smart solutions can improve performance and drive down costs, giving greater value for money and making the transition more affordable. 4.1. Planning for strategic decisions There are a number of key strategic decisions that need to be made in the next decade to drive transformative change. This section • the decisions that will be needed over the next few years • how we can ensure decisions are taken at the right level and in a joined-up, • the progress that has already been made to inform these decisions What Net Zero means for buildings We know that meeting Net Zero will require almost all buildings to fully decarbonise. Many buildings will benefit from similar solutions to reduce their energy use (through improved

product and thermal efficiency, and increased use of smart technologies). However, homes, businesses and public buildings around the UK will also need to use low-carbon heat sources To meet the needs of our diverse housing stock, any path to Net Zero will require a mix of technologies. We know that some technologies (such as heat pumps and heat networks) will have a key role and we already know which types of buildings these technologies are most effective in. Therefore, over the next decade, we want to address these areas of greater There are certain areas of the building stock in which the solution is New We remain committed to building around 300,000 new homes a year by the mid-2020s in England.263 As we look to end new connections to the gas grid, heat pumps and heat networks will play a key role in heating new buildings, which have much lower heating demand and far fewer barriers to installation.264 Building low-carbon heat into new-builds from the outset will ensure these buildings do not need to be retrofitted later. Off-gas-grid There are over 4 million homes in Great Britain265 and around 278,000 non-domestic buildings in England and Wales that are in areas off the gas grid.266 Broadly, these fall into a few • Homes with oil, LPG and coal boilers are generally located in rural areas, small towns and valleys. Our Clean Growth Strategy267 sets out our commitment to phase out the installation of high-carbon fossil fuel heating in new and existing off-gas-grid homes during the 2020s, which we have consulted on in parallel to this strategy268, and our policy paper on Sustainable protecting vulnerable households in England269 stated our intention to remove support for new LPG and oil heating systems from 2022. Therefore, most homes with oil, LPG and coal boilers will need to transition to heat pumps. Homes that cannot reasonably practicably install a heat pump will have a viable choice of high-performing, commercially available alternative heating technologies that are consistent with Net Zero, such as high temperature heat pumps or solid biomass. • Homes which are electrically heated are typically flats which are highly suitable for communal heating via a heat network or, where appropriate, heat pumps (which can dramatically decrease bills for these households). 263 HM Treasury (2017), ‘Building the homes the country needs’ ( g_the_homes_the_country_needs.pdf). 264 We anticipate approximately 200,000 of our 2028 heat pump target – to deploy 600,000 heat pumps annually – to be installed in new build domestic properties.
265 BEIS (2020), ‘Sub-national estimates of properties not connected to the gas network’ ( network), local authority estimates for the number of properties without mains gas. 266 BEIS (2021), ‘Non-domestic National Energy Efficiency Data-Framework (ND-NEED), 2020’ ( 2020), geographical annex data tables. 267 BEIS (2017), ‘Clean Growth Strategy’ ( 268 BEIS (2021), ‘Phasing out fossil fuel heating in homes off the gas grid’ ( 269 BEIS (2021), ‘Sustainable protecting vulnerable households in England’ (

• Non-domestic buildings which are heated using oil, LPG or coal. Our Clean Growth Strategy270 sets out our commitment to phase out the installation of high-carbon fossil fuel heating in off-gas-grid buildings during the 2020s, which we have consulted on in parallel to this strategy.271 Many of these buildings will transition to heat pumps for their heat and hot water use, but we expect other technologies to play a role for some harder to treat buildings, such as limited use of bioenergy, accompanied by solar, energy • Non-domestic buildings which use direct electric heating may also be well-suited for However, for most buildings (including those connected to the gas grid) the most suitable technology is less clear-cut and depends on a combination of factors. Ahead of strategic decisions on the role of hydrogen for heating in 2026, we are prioritising action on building UK markets and supply chains and testing options, while ensuring support is available to households on the gas grid who want to make the switch to low-carbon heat now. The national gas transmission and distribution network is an important asset that provides homes and businesses with gas heating. However, meeting Net Zero means we will need to stop unabated burning of natural gas to heat our homes and places of work. Hydrogen offers the potential to repurpose the gas network to a low-carbon alternative. This, in combination with hydrogen-compatible appliances, could offer a virtually like-for-like replacement for the natural gas appliances that we use today. However, further work is required to assess the cost and feasibility of converting to a hydrogen system. We are working with industry to deliver a programme of research, development, testing and trialling projects. This will include assessing any requirements for new large-scale infrastructure. Even if this work proves that using hydrogen to heat buildings connected to the gas grid is safe, feasible and cost-effective, some building types and locations are likely to be better suited to alternative heat technologies such as heat pumps and heat networks. A potential conversion of the natural gas grid to become hydrogen-compatible could therefore take a variety of forms – including a full gas grid conversion, or a more regional approach, i.e. with hydrogen use centred in regions where there are assets that could assist the transition, such as existing natural gas import terminals, salt caverns for hydrogen storage, or proximity to offshore carbon storage sites. 270 BEIS (2017), ‘Clean Growth Strategy’ ( 271 BEIS (2021), ‘Phasing out fossil fuel heating systems in businesses off the gas grid’ (

Decisions to be made – an illustrative overview Many decisions will need to be taken to deliver affordable low-carbon heating with high levels of comfort and convenience. We will make the most of local expertise while retaining an overarching strategic framework for the transition as a whole. We recognise that there are three interdependent levels where these decisions can be Below we provide illustrative examples of the types of decisions which might be appropriate to National decisions Sub-national decisions Local decisions We also recognise that building owners and users will need to decide for themselves which of the available options are most suitable for their own needs and preferences. Progress on national-level decisions We know that we need to make national decisions in a coordinated way, so we are undertaking a programme of work to build our evidence base to inform those decisions and are working to establish a long-term framework for transformation. Is it feasible and cost-effective to use hydrogen for heating? Since Clean Transforming Heating272 was published in 2018, we have substantially improved our understanding of hydrogen production, distribution and heating technology costs and performance. These findings hydrogen supply chain, logistical transitional challenges, atmospheric impacts and domestic hydrogen appliances, but further work is needed to build the evidence base around hydrogen for heat.273 We are working with key stakeholders, including gas networks, wider industry, and regulatory organisations, to deliver a programme of testing, trials, research and development, planning work and policy development on markets and regulation. The findings from this work will inform national strategic decisions in 2026 regarding the role of hydrogen in heat decarbonisation, including whether to proceed with a hydrogen heated town by the end of the decade. What scale of carbon capture and storage is required to support production of Low-carbon hydrogen could bring down emissions and provide flexible energy for a range of sectors (such as power, transport and potentially heat), as stated in our Net Zero Strategy.274 The role and requirements for CCUS-enabled hydrogen production is detailed in our UK hydrogen strategy275 and will be further addressed in the forthcoming hydrogen production Widespread use of hydrogen in heat decarbonisation would necessitate an increase in hydrogen production and could also require an increase in our CCUS infrastructure. What are the major infrastructure requirements of using hydrogen? We are working with industry and other stakeholders to assess potential new infrastructure requirements to enable a transition of parts or all of our gas network to hydrogen, • reinforcements or additions needed to our natural gas networks • gas storage needs (possible location, capacity, type and technology) 272 BEIS (2018), ‘Heat overview of current evidence base’ ( 273 These findings can be found on BEIS (2018): ‘Hydrogen supply evidence base’ ( ‘Logistics of domestic hydrogen conversion’ ( conversion), ‘Atmospheric impacts of literature review’ ( and ‘Appraisal of domestic hydrogen appliances’ ( domestic-hydrogen-appliances). 274 BEIS (2021), ‘Net Zero Strategy’ ( 275 BEIS (2021), ‘UK hydrogen strategy’ (

Economic if resources are scarce (e.g.
biomass and potentially hydrogen), where are they needed most? • Bioenergy has potential to address some hard-to-treat buildings • Biomass gasification could produce significant quantities of hydrogen with carbon • Biomethane can play a significant interim role in decarbonising the gas grid through However, we recognise the CCC’s proposal of a strict hierarchy of biomass use in the UK.276 Low-carbon hydrogen has the potential to decarbonise several UK sectors, including heavy industry, heavy transport, power and potentially heating. Therefore, we will continue to consider the cross-sectoral role of different technologies, especially those with issues of scarcity, security or sustainability of supply to ensure that their use is consistent with our wider objectives on Net Zero, affordability, environmental sustainability and air quality. Government will seek to prioritise sectors which have no alternatives to decarbonisation other than biofuels. Further detail on the role of hydrogen can be found in our UK hydrogen strategy277, published in August 2021, and in our Net Zero Strategy278. We will communicate our latest thinking on the role of hydrogen and bioenergy in our Biomass Strategy. Is it technically and economically feasible to operate a dual-fuel (hydrogen- The high diversity and regional difference in the UK building stock means that one type of low- carbon heat source will not be most suitable for all buildings. However, in any scenario where hydrogen is proven to be a cost-effective, safe and feasible heat source, there will continue to be a significant role for electric heat pumps, which will be the most suitable heat source for many buildings (including off-gas-grid buildings and new-builds). We currently have a multi-fuel energy system. However, the costs, complexity and feasibility of operating an energy system that supplies considerable amount of both low-carbon electricity and hydrogen may be significant. Based on the current evidence, we acknowledge that hybrids could play a transitional role in the 2020s and 2030s, but it is too early to determine the Net Zero energy system composition and whether to rule hybrid systems in or out of the 2050 energy mix. 276 CCC (2018), ‘Biomass in a low-carbon economy’ ( 277 BEIS (2021), ‘UK hydrogen strategy’ ( 278 BEIS (2021), ‘Net Zero Strategy’ (

What are the national electricity system needs? The extent to which heat is electrified, and the way in which electrification of heat is deployed, will have implications for the timing and cost of requirements for new electricity generation capacity and transmission network reinforcements. The UK electricity market is already set up to bring forward investment in generation to meet demand. For example, the Contracts for Difference scheme supports significant investment in low-carbon generation, while the Capacity Market is our main tool for ensuring security of supply, and we are confident it will enable us to meet electricity demand into the future. Network investment is regulated by Ofgem through the price control process. At a national level, we need to ensure that transmission owners, the electricity system operator, and Ofgem have the information they need to make the appropriate plans for transmission network • the prevalence of heat pump use • increased electrical demand from other sectors and existing plans for additional low- • changes to consumer behaviour to reduce typical energy use • improvements to building and product efficiency • the role of flexible technologies We are working to improve the collection and use of this data to inform our approach to investing in and reinforcing our national electricity transmission network. How do we create a regulatory framework to support heat decarbonisation? We recognise that our regulatory framework • not be unnecessarily burdensome or restrictive • evolve over time, using the latest evidence and feedback Communicating upcoming mandatory requirements in advance is essential to provide market certainty and stability, give individuals enough time to prepare and maximise compliance. By building-in consumer choice and flexibility regarding how requirements are met, businesses and residents can decarbonise in a way that is easiest and most effective for their As stated in our principles in Chapter 1, our regulatory framework will embed flexibility and minimise disruption by using natural trigger points to affect change. What consumer protection is needed and how should it be implemented? We continue to review and refine our approach to consumer protection. This is explored in more detail in section 6.3 Consumer protection. What market mechanisms and product standards do we need and how can we best ensure the preservation of the internal UK market? Government has a role in providing a framework within which the market can operate to ensure that the UK meets emission reduction milestones and keeps on track for Net Zero in a socially responsible way. In the 2020s we plan to establish a number of these mechanisms, including the market-based mechanism for low-carbon heat (a consultation on which was published in parallel to this strategy)279, which we will review and refine on our path to Net Zero. Minimum energy performance standards, displayed through energy labels, are one of the most cost-effective ways to improve the energy efficiency of products, reduce energy bills, and make significant energy and carbon savings. We will continue • explore how existing standards can be improved • identify any currently unregulated energy-using products, where we could apply minimum standards and energy labels to deliver significant carbon savings How do we ensure that costs of mass decarbonisation are distributed fairly? We know that decarbonising the building stock needs to be accessible and affordable to all, which is why we are tailoring policies to support those less able to pay, and reviewing the cost distribution of this transformation. Some decisions regarding different types of costs will need to be made at a national level, including policy costs, network costs and • Policy – Cost of programmes to save energy, reduce emissions and encourage and enable uptake of low-carbon technologies.
• Network – The cost of building, maintaining and operating the system within which the individual technology operates, for example a gas pipe network for delivering hydrogen or transformers and cabling for delivering electricity. • Fiscal Policy – Targeted fiscal policy can be used to fund particular activities or influence consumer behaviour. Currently households pay a reduced VAT rate of 5% on all gas and electricity used, which businesses do not. • set out our plans to distribute costs in a socially and economically responsible way • highlight the funding already provided by government • explain the important role of private green finance 279 BEIS (2021), ‘Market-based mechanism for low carbon heat’ (

How do we ensure that support is distributed fairly? We need to deliver a comprehensive framework which drives change and provides the necessary support and advice to enable and encourage uptake. We need to provide a level of support, be that advice or funding, that is available to all. However, we also appreciate the need for and benefits of targeted additional support for the fuel poor and for people in deprived Balancing national, regional and local decision-making We understand that to deliver buildings decarbonisation there needs to be a process or mechanism for clearer decision-making at each level, and a co-ordinated approach across all three levels. If we fail to keep strategic oversight of these decisions, we run the risk of a taking sub-optimal path to Net Zero. If national decisions are made without input from local actors, they will not adequately reflect the local landscape. Similarly, if local decisions precede or are made in isolation to a national approach, this could cause greater regional difference and inequality, and possibly result in higher costs for consumers. Additionally, we need to ensure that all areas are able to meet their own legally-binding targets, which may differ across To make these decisions on buildings decarbonisation in a co-ordinated way across these levels, we may need to rely on or increase the responsibilities of existing bodies and groups of organisations (such as local authorities, cities, Ofgem, system operators, network owners and operators, and markets). We will need to consider what type of decisions and responsibilities will be held (whether that be planning, co-ordinating or delivery). We also need to consider how best to ensure impartiality is maintained, local expertise is used, and impacts of and to the wider energy system are taken into account. We will review the suitability of our current institutional arrangements required to meet this challenge as part of our work on strategic decisions. This links to our broader commitment, made in the Energy White Paper280, to ensure the institutional arrangements governing the energy system are fit for purpose for the long- term. Our work in this area will be informed by consultations we held this year on proposals for a Future System Operator and its new and enhanced roles281, and energy code governance. Using data to deliver an informed and co-ordinated approach Data on the current capacity and constraints of existing gas and electricity networks is an essential component to inform strategic choices about the future of heat decarbonisation. Data is also essential for effectively integrating flexibility into our heat decarbonisation pathways. Data constitutes a key element of our strategy. We will continue to build our evidence base and collect and use new data to inform and refine our approach. We will continue to ensure that data is collected and used in line with the latest data protection regulations. Data about the capacity and performance of our energy networks and the energy assets (such as heat pumps) connected to them is currently difficult to find and use. In some cases, the required data is not currently collected or, when it is collected, is not of the desired quality. The data problem is further complicated in the context of heat decarbonisation because of the 280 BEIS (2020), ‘Energy white Powering our net zero future’ ( 281 BEIS and Ofgem (2021), ‘Proposals for a Future System Operator role’

geographical context and variety of different stakeholders involved. These stakeholders have different levels of access and capabilities to gather and analyse the information for their The Energy Digitalisation Strategy282, developed by the government, Ofgem and Innovate UK in coordination with the energy sector, sets out a vision and suite of policies to digitalise the energy system. Digitalisation will enable millions of low-carbon assets, including solar PV, electric vehicles and heat pumps, to be optimised across our energy system by providing the necessary data to significant stakeholders in a timely, safe and secure way. We will work with stakeholders to improve access to transparent, accessible, interoperable and accurate data, which will be used to inform our planning for the required infrastructure and any market-led interventions. This improved data will help network operators and Ofgem to plan for strategic investment through Ofgem’s RIIO process. In the 2020s, investment analysis to accommodate greater demand for heating is likely to be focused • electricity networks in areas not connected to the gas grid • electricity networks with significant low-carbon heat network opportunities in areas with A key activity to be undertaken in the next few years is to get a better understanding of the local constraints and opportunities for different low-carbon heating technologies. We will work with many stakeholders – including local authorities, Ofgem and gas and electricity distribution network operators – to understand the potential for different technologies and the infrastructure that those solutions would require, including network reinforcement or gas pipe replacement. This will help inform our action in the 2020s, including measures to facilitate heat network growth, promote new and innovative business models, and help plan for greater numbers of people switching to low-carbon heating. Interoperable data will allow us to combine our assessment of heating demand and the associated flexibility, with analysis of other requirements for network capacity – such as electrification of transport.
This combined view is very important, because, once shared with local actors, it can provide a clearer view of the impacts and trade-offs of action across different sectors and in different locations. For example, data on network capacity could help inform decisions on optimum siting of heat networks and EV charge points. Though some areas require national-level direction and decisions, we recognise the important role of local action • make progress towards Net Zero • deliver the regional benefits discussed in Chapter 2 • collect evidence to inform national decisions 282 BEIS, Ofgem and Innovate UK (2021), Digitalising our energy system for net strategy and action plan’ (

Local and devolved governments across the UK283 have a combination of democratic accountability, powers, assets, local knowledge and relationships with key stakeholders, and so can drive and co-ordinate local progress towards Net Zero in a way that maximises the benefits to the communities they serve. Across the UK, local areas have already made great strides towards our Net Zero future. Both the National Audit Office and the Climate Change Committee have identified the need for action at local, as well as national, level to achieve Net Zero. The ‘Local Climate Action’ chapter in the Net Zero Strategy284 outlines the specific action that Government is taking to enable local actors to deliver Net Zero. Local authorities already play a key role • developing and delivering heat network connections • implementing and enforcing national regulations and policy (such as enforcing minimum • carrying out key statutory duties such as planning and controls for new-builds • piloting innovative low-carbon heating and energy efficiency measures • engaging with businesses and constituents Local authorities can also play a critical role in targeting support where it is most needed, and where the opportunities are greatest, to ensure a green economic recovery from the impacts of COVID-19. We are committed to supporting all local areas and communities, ensuring that none are left behind, and creating Net Zero solutions which work for all of them. Further details on how we will do this can be found in the Net Zero Strategy. We will also publish a Levelling Up White Paper in due course, which will build on actions the government is already taking to level up across the country, and set out bold new policy interventions to improve livelihoods, spread opportunity, and drive economic growth in all parts of the UK. The BEIS-funded Local Net Zero Programme established in 2017 supports local authorities, local partners, and communities across England to play a leading role in delivering Net Zero and clean growth. To date, almost £22 million has been invested in the programme, which has funded a range of measures designed to build local capacity and capability, and encourage joined-up working between local areas, investors and central government. Part of the programme has been used to establish and run five Local Net Zero Hubs (previously referred to as Local Energy Hubs) across England – which provide access to expertise to help develop and secure investment in low-carbon projects. These Hubs work with local partners and local authorities in their region to identify a pipeline of low-carbon projects and provide practical support for the initial stages of project development through a range of good practice guidance, tools and resources. The Net Zero Strategy announced the continuation the Local Net Zero Programme to support all local areas with their capability and capacity to meet Net Zero. 283 We will work with devolved administrations to further consider how to best align our work on devolved policy areas including local-level decarbonisation and energy planning. 284 BEIS (2021), ‘Net Zero Strategy’ (

DIT and BEIS are working together with local enterprise partnerships (LEPs) to stimulate the development of a low-carbon heat cluster in the North East of England and Tees Valley. This DIT high potential opportunity is promoting inward investment into district heat networks and capturing mine heat, with a view to stimulating investment across the value chain, including consulting, pipe manufacturing, construction services and training. In the North East, Yorkshire, and Humber region, the Local Energy Hub piloted the ‘OnGen’ project, using a web-based software tool to model the energy performance of public sector buildings and assess the feasibility of installing renewable and low-carbon energy technologies to reduce energy use and produce financial models for investment. The Hub partnered with Durham County Council in 2020 to test the software tool to ensure the accuracy of the outputs, before commencing a larger pilot with 12 local and combined authorities across all 6 LEP areas. This delivered 76 individual assessments across a range of buildings, adult learning and children’s centres, care homes, transport hubs, town halls, vehicle depots, leisure centres, crematoriums, museums and libraries, and demonstrated a very positive response to the tool’s effectiveness in assisting local authorities in prioritising low-carbon investment. As a result, investable decarbonisation and energy generation projects with sound financial models (on which to base investment decisions) have been identified. These were unlikely to have been realised without using the tool and its support service. We recognise the work that many local authorities are already doing to decarbonise heat and buildings, and understand that there are barriers to local action, including limited resources and ability to access relevant technical expertise. We acknowledge there is further work to do to understand these constraints and identify how government can best support and work with local authorities to decarbonise heat and buildings. Local actors can play a crucial role in decarbonising their local area and informing our national approach. We will continue to use local expertise to deliver solutions that are Although there is still work to be done to inform national decisions that deliver affordable low- carbon heating and energy efficient UK buildings, there are actions that local authorities and other local actors can take now to decarbonise buildings.
These • planning for decarbonisation including gathering and mapping data on local energy • decarbonising their own stock (including their own non-domestic buildings), focusing support to help tackle homes with low energy performance and address fuel poverty • providing information and raising awareness of the support available to increase voluntary uptake of low-carbon sources of heat and energy efficiency measures • continuing to make tackling climate change a priority

Energy planning and mapping for decarbonisation Local authorities understand the local context of their built environment and have established relationships with key local stakeholders including utilities, highways, public sector partners, social housing landlords, businesses, industry and developers. This puts them in a good position to undertake local area energy planning and mapping for decarbonisation.285 Local authorities can use this data and information • identify the most appropriate areas for heat networks • support uptake of low-carbon technologies • understand supply chain and economic growth opportunities We know that, in planning for the transformation of the energy system, we need to consider impacts on local energy networks and systems. We need to understand the local infrastructure including local heat networks, gas and electricity distribution network investment and reinforcement needs. We also need to establish how these upgrades align with national planning, co-ordinating and decision making. We are working with Ofgem to ensure that distribution network data is available to help support national and local decision making (for more detail, see section on Using data to deliver an informed and co-ordinated approach). We are keen that any energy planning that happens at a local level considers local needs and constraints to decarbonise and – as a minimum – • provide robust evidence to inform network planning so that network capacity can be increased to accommodate projected changes in demand • take a robust, data-based approach at a local level, which can evolve with national strategic decisions and relevant advancements in technology and innovation • ensure clear and involved engagement between local and national actors, network companies and local authorities to enable a coherent and consistent planning process • harness local knowledge and expertise to inform our thinking on the transformation of • take a joined-up, whole-system approach that considers the decarbonisation action needed in other sectors and how this interrelates with the broader energy system • be long-sighted to provide time to develop and install major infrastructure projects, such as heat networks, before connections need to be made 285 The aim of Scotland’s Local Heat and Energy Efficiency Strategy pilots ( is to establish local priorities and plans for improving building energy performance and using low-carbon heat. Scottish Government ran a consultation on whether to make Local Heat and Energy Efficiency Strategies a statutory duty ( heat-energy-efficiency-strategies-regulation-district-communal-heating/pages/2/). BEIS has work underway with Ofgem to develop a better understanding of the opportunities and challenges presented by local area energy mapping and planning and is considering the most appropriate policy options to take forwards. This work could help to bring together key local stakeholders to explore the impact of decarbonisation choices across sectors and how different technology options may impact on local energy networks. Local authorities have a role to play in identifying and developing heat network opportunities. In addition to using heat network policies and projects (the Heat Networks Delivery Unit, Heat Networks Investment Project, Green Heat Network Fund), the Energy White Paper286 committed us to introduce heat network ‘zoning’ in England287 by 2025 (explored in greater detail in the section on Local approaches to low-carbon heat). We are currently consulting on proposals that would involve central and local government working together with industry and local stakeholders to identify and designate areas within which heat networks are the lowest cost, low-carbon solution for decarbonising heating. This will help heat network developers to accelerate deployment of heat networks where they are most appropriate and help deliver heat networks’ contribution to our Net Zero commitments.288 Tackling the worst performing buildings first and supporting those in fuel poverty Local authorities already play a pivotal role in identifying areas in need of support and targeting and delivering energy efficiency and low-carbon heat measures. Ensuring the effective use of government schemes (such as the Energy Company Obligation, Local Authority Delivery scheme, and the Social Housing Decarbonisation Fund) helps to deliver targeted action to tackle the worst performing buildings and address fuel poverty, and, more broadly, to improve the building stock to help reduce carbon emissions. Support voluntary uptake of low-carbon sources of heat and energy efficiency In addition to raising awareness and increasing uptake of initiatives to help homes and businesses decarbonise, local authorities also have a role to play in engaging with the public on the broader challenge of tackling the contribution to climate change from buildings. Increased engagement and improved understanding will encourage building owners and occupiers to take steps to improve energy efficiency, adopt low-carbon heating and make use of available green financing options. Some of the existing communication channels for information and advice on decarbonising buildings are detailed in section 6.4 Public 286 BEIS (2020), ‘Energy white Powering our net zero future’ ( 287 Heat network policy is devolved to Wales, Scotland, and Northern Ireland. Scotland recently enacted the Heat Networks (Scotland) Act 2021 ( which includes regulation related to heat network zoning, while Wales has introduced heat network policy in the context of the spatial planning document ‘Future The National Plan 2040’ ( 2040-0). We work closely with the devolved administrations in Scotland, Wales and Northern Ireland on heat network policy and regulation in order to secure consistency for the sector across Great Britain. 288 BEIS (2021), ‘Proposals for heat network zoning’ (

Making climate change a priority Local authorities should, and already do, build climate change considerations into their work to ensure that they are prepared to take the necessary actions to meet Net Zero. For example, they should take Net Zero into account in operating their statutory functions and in how they manage their own estate.
We already work closely with local authorities and their representative bodies to discuss their role in delivering Net Zero. For example, BEIS have committed to rolling out Carbon Literacy training to local authority staff across different areas to increase the awareness and ability to reduce emissions across all the policies and programmes local government work on. Further details on how we will work with local authorities to deliver Net Zero and enable them to make climate change a priority is outlined in the Local Chapter of the Net Zero Strategy. Our strategic decisions and policies will continue to be underpinned by the latest research and innovation. This section sets out our approach to research and innovation to tackle barriers to deployment. We will continue to drive research and innovation to inform strategic decisions and improve technologies as well as the application of technology. We have developed a broad understanding of the decarbonisation challenge ahead, building on our publication Clean Transforming Heating289. Further research and evidence relating to heat decarbonisation and energy efficiency is We will continue to dedicate time and resource to drive research and innovation and ensure that evidence is reviewed and considered when developing policies. • Research to improve our evidence base will inform strategic decisions regarding our pathway to Net Zero. By better understanding our building landscape and how heat is used, we can make more accurate projections, close the gap between predicted and actual building performance, and shape policy to best meet consumers’ needs. • Innovation, whether through the creation of new technologies and systems, or the scale- up and refinement of existing ones, can drive improved performance, increase sustainability, improve consumer experience and improve value for money. By enabling the market to explore quicker, cheaper manufacturing and delivery, costs to consumers can be reduced and technologies can be made more affordable. We will continue investing in research and innovation to help us decarbonise in the most efficient and effective way. The Net Zero Innovation Portfolio (NZIP) is a £1 billion fund 289 BEIS (2018), ‘Heat overview of current evidence base’ ( 290 Further technical research and evidence available on GOV.UK relating to heat decarbonisation ( and energy efficiency (

announced in Point 10 of the Prime Minister’s Ten Point Plan291 - Green Finance and Innovation. The Portfolio provides funding to accelerate the commercialisation of innovative low-carbon technologies, systems and business models, decreasing the costs of decarbonisation and enabling the UK to end its contribution to climate change. The NZIP follows on from government’s successful £505 million Energy Innovation Programme (2016- 2021), which has so far supported 700 organisations and invested approximately £90 million to develop low-carbon heating and energy efficiency options for UK homes and businesses. We are publishing a UK Net Zero Research and Innovation Framework alongside the Government’s overarching Net Zero Strategy, to communicate key aims, activities to be prioritised, and technologies to be developed and improved to keep us on track to deliver Net We work in partnership with many research organisations, such as UK Research and Innovation and Energy Systems Catapult, and are part of a number of the International Energy Agency’s technology collaboration programmes. By advocating for stronger international collaboration, we can share best practice, develop new technologies faster, and bring down the costs of buildings decarbonisation. We will continue to work alongside Ofgem by feeding into and helping identify appropriate innovation challenges that may draw upon the Strategic Innovation Fund. This fund is anticipated to replace the Network Innovation Competition this year for the electricity transmission and gas sectors as well as for the Electricity System Operator. Ofgem will also consider the application of this strategy when assessing bids submitted for innovation funding. We encourage industry, academia, third sector and advisory groups to continue to share evidence. Through early engagement with industry, we will seek to stimulate investment here in the UK to prove technologies and industrialise them for the benefit of UK and overseas • build the energy efficiency market by refining technologies and reducing costs • build the low-carbon heat source market by developing technologies, exploring electricity and gas system impacts, shifting heat demand, and reducing costs • provide evidence to inform strategic decision-making in the 2020s and further policy • review and improve the route to market for new technologies 291 BEIS (2020), ‘The ten point plan for a green industrial revolution’ (

• improve and develop retrofit solutions • reduce the space requirements for energy efficiency solutions • tackle the low levels of awareness • reduce the upfront and running costs • improve installation process and increase consumer satisfaction • increase public awareness and consumer familiarity • improve UK supply chain capacity and capability • bring forward and reduce the cost of different low-carbon heat sources and systems • mechanisms to incentivise voluntary connection of existing buildings and reduce the • explore the role of local and regional networks and the benefits that they can bring to • innovation in delivery models to maximise carbon reduction, expand networks and • work with industry to assess the feasibility and impacts of converting parts or the whole of the existing gas network to full hydrogen.
• encourage innovation in hydrogen-ready appliances • review the appropriate role of bioenergy (solid biomass, biofuels and biomethane) in heat decarbonisation, with appropriate mitigations of environmental impacts • further explore advanced gasification

• increase network visibility of heat pump assets • develop solutions to pre-empt and sustainably manage network capacity, creating a flexible energy system while ensuring security of supply • develop strategies for coordinating network reinforcement that support heat pump installations with the reinforcement required for the installation of other low-carbon technologies, such as electric vehicles • explore how to design and install the most effective heating systems using a combination of technologies, such as rooftop solar, battery storage, smart heating • continue research into how best to engage with consumers, provide information, and raise awareness of energy efficiency and low-carbon heating measures • encourage further research to help tackle barriers to energy performance improvements and the uptake of low-carbon heating • improve our understanding of consumer preferences and identifying opportunities to support and encourage green choices Current research and innovation activities We know that upfront costs, low awareness and a lack of finance options can act as barriers to installation of energy efficiency measures. Funded by the Energy Our Whole House Retrofit competition292, which launched in June 2019, awarded £7.7 million to three projects to demonstrate a cost reduction trajectory for domestic retrofits across a range of building types in the UK through economies of scale and process innovations, including the testing of modular and off-site retrofit and refurbishment solutions. A total of £1.8 million grant funding has been awarded to three organisations through the Green Home Finance Innovation Fund competition293 to test the establishment of green lending products for domestic owner-occupiers. The programme provides funding for the initial development and piloting of green home finance products to overcome barriers posed by development costs, and provide proof-of-concept models for other lenders. 292 BEIS (2020), ‘Whole House Retrofit competition - successful bids’ ( 293 BEIS (2020), ‘Green Home Finance Innovation Fund competition - successful bids’ (

The Boosting Access for SMEs to Energy Efficiency competition294 offered up to £6 million of funding for innovative solutions that encourage the take up of energy efficiency by SMEs. The competition helps address some of the key market failures faced by SMEs such as the lack of economies of scale, high upfront capital costs, high transaction costs and difficulty accessing The Demonstration of Energy Efficiency Potential (DEEP)295 project is investigating taking a system-level approach to retrofit, considering the entire dwelling rather than the performance of individual measures (i.e. a whole house approach). Though primarily a study of the scientific mechanisms for heat loss and airtightness and how they are affected by different measures, the project is also comparing novel methods for testing these parameters and installing measures. There may also be findings related to the costs of undertaking retrofit. The key barriers to heat pump deployment the upfront and running costs, public awareness, current supply chain capacity and capability, and electricity system constraints due to mass use of electric heat pumps. BEIS has conducted research into off-gas-grid installer skills to learn how to grow the heat pump installer base.296 This research demonstrates a willingness of installers to train to install heat pumps in response to falling demand for fossil fuel heating. We are now conducting follow-up research into the wider heating and cooling installer workforce. The £14.6 million Electrification of Heat Demonstration Project, funded by the BEIS Energy Innovation Programme, launched in October 2019. It aims to demonstrate the feasibility of a large-scale transition to electrification of heat by installing innovative heat pump systems in a representative range of homes. As part of the Net Zero Innovation Portfolio, we plan to launch new innovation opportunities later this year. They will be aimed at advancing heat electrification to support the decarbonisation of homes. These new opportunities will build on the Electrification of Heat A Heat Pump Manufacturing Supply Chain project, published in December 2020, concluded that manufacturers could adapt flexibly to the level of demand required and increase supply into the UK market relatively quickly (by a minimum of 25% to 30% year-on-year for the next BEIS is providing funding towards energy innovation activities that will support the development of innovative solutions for deployment, tools, and technologies across the heat pump sector. This includes £60 million investment in the Net Zero Innovation Portfolio (NZIP) ‘Heat Pump Ready’ Programme which will support the development of innovative solutions 294 BEIS (2020), ‘Boosting access for SMEs to energy efficiency (BASEE) winning projects’ ( 295 BEIS (2019) ‘Demonstration of Energy Efficiency Potential (DEEP)’ ( 296 BEIS (2021), ‘Heating systems in off gas grid installers’ experiences and attitudes towards low carbon heating’ ( experiences-and-attitudes-towards-low-carbon-heating). 297 BEIS (2020), ‘Heat pump manufacturing supply chain research project’, p. 14 (

BEIS has conducted research that investigates the impact of the future transition away from high-carbon fossil fuel heating systems on non-domestic consumers who are not connected to the gas grid.298 The research suggested that non-domestic consumers are generally more aware of the future transition to low-carbon heating than domestic consumers. It also explored key barriers which must be addressed in order to encourage the uptake of low-carbon heat in non-domestic buildings off the gas grid. To assess heat pump suitability in non-domestic buildings, we are investigating the existing heating, ventilation and air conditioning appliances in non-domestic buildings. We are modelling and analysing the level of generation capacity and network investment and reinforcement that may be required to meet the projected increase in electricity demand and exploring the extent to which flexibility can reduce running costs for consumers, and Priorities for heat networks include tools for identifying those areas that are most suitable for deployment, approaches for improving performance of heat networks, reducing construction costs, and growing a competitive UK supply chain. A pilot programme of six city-scale heat decarbonisation projects is underway in Birmingham, Greater Manchester, Leeds, Nottingham, Bristol and Newcastle.
The outputs of this pilot will contribute to the national and local evidence base, progress the delivery of a project pipeline for key intervention areas (where possible), and identify replicable measures of relevance to other towns and cities. We have commissioned and published the ‘Opportunity Areas for District Heating networks in the UK299’ which provides estimates of the low-carbon heat and waste heat available across the UK as well as geographical information on the areas with highest economic potential for We have recently undertaken work on improving performance across a number of operational heat networks and communal heating systems. This study will provide an evidence base for the development of the Heat Network Efficiency Scheme300 (HNES) which will part-fund operational performance improvements and emission reduction in existing systems, and where possible enable transition of these systems to lower carbon heat sources. We are working with the Heat Networks Industry Council to identify how the costs associated with constructing heat networks can be best reduced. We are undertaking pilots across towns and cities in England over the next 12 months to inform the methodology that will be used to identify potential Heat Network zones. 298 BEIS (2021), ‘Heating non-domestic buildings in off gas grid consumer experiences and attitudes towards low carbon heating’ ( gas-grid-areas-consumer-experiences-and-attitudes-towards-low-carbon-heating). 299 BEIS (2021), ‘Opportunity areas for district heating networks in the second National Comprehensive Assessment ( uk-second-national-comprehensive-assessment). 300 BEIS (2021), ‘Heat Networks Efficiency Scheme Demonstrator’ (

While large-scale nuclear reactors are typically used for electricity generation, there are global examples of using heat from nuclear reactors for district heating systems; countries such as Canada, Finland, Sweden, Japan, Russia, and Switzerland have all used nuclear reactors to heat homes. More recently, designers of new small and advanced modular reactors are focusing on systems with smaller power outputs which could offer ‘beyond the grid’ applications such as low-carbon heat for heat networks, industrial process heat, hydrogen production, flexible power generation and energy storage. The Ten Point Plan announced up to £385 million for an Advanced Nuclear Fund to invest further in these technologies. That includes up to £215 million to develop a domestic Small Modular Reactor (SMR) design and up to £170 million for an ambitious Advanced Modular Reactor (AMR) R&D programme. Some AMR designs have the potential to produce high-quality, high temperature heat up to 950°C which could significantly extend the opportunity for heat use. By the early 2030s, Government’s aim is to have an operational AMR demonstrator and to have the first SMRs commercially Key outstanding uncertainties regarding the use of hydrogen for heat feasibility and cost-effectiveness of safe use; production methods and scalability; and new infrastructure requirements for transmission, distribution and storage. We will work with industry to accelerate work on the evidence base, building on the existing range of relevant R&D for both hydrogen blends and use of 100% hydrogen. The Hy4Heat hydrogen innovation programme (of approximately £22 million) explores the safety and feasibility of using 100% hydrogen for heat in the home and is funded by BEIS’ Energy Innovation Programme. Hy4Heat launched in 2017 and is due to conclude by the end of this year. The programme includes development of hydrogen-compatible heating appliance prototypes including gas fires, cookers and boilers, the development of hydrogen gas meters, a safety assessment for key typical properties (e.g. terraced housing), and technical standards and studies. We are continuing to invest in research and innovation that will help to generate further evidence on the feasibility of safe and efficient use of hydrogen for heating. This includes supporting industry to delivery first-of-a kind hydrogen heating trials. This will begin with a hydrogen neighbourhood trial (H100 project) in Fife, Scotland by 2023, and a village trial by 2025. Earlier this year, BEIS and Ofgem wrote to the gas network operators inviting them to develop proposals for the village trial.301 We also launched a consultation on facilitating a grid conversion hydrogen heating trial302 in August 2021. By 2025, we will also develop plans for a possible hydrogen heated town before the end of the decade. The local trials and planning work, together with the results of our wider research and development and testing programme, will enable strategic decisions by 2026 on the role of hydrogen for heat and whether to proceed with the hydrogen town 301 Ofgem (2021), ‘Hydrogen Consumer Trial - Open Letter to GDNs’ ( 302 BEIS (2021), ‘Hydrogen for facilitating a grid conversion hydrogen heating trial’ (

The £1 billion Net Zero Innovation Portfolio (NZIP) will fund projects over the next 4 years (2021-2025) to accelerate the commercialisation of innovative, low-carbon technologies, systems and business models. One of its aims is to reduce the risks and costs of accelerating the roll out of hydrogen. We are currently assessing applications for the £60 million Low Carbon Hydrogen Supply 2 competition.303 Similar to the first competition in 2018, this is an innovation competition able to support a range of demonstration projects including hydrogen storage technologies, alongside wider hydrogen supply solutions. Further relevant The HyDeploy programme is an industry-led hydrogen blending project, exploring the safety case of up to 20% hydrogen blends in isolated gas networks and thereby building early demand for hydrogen production. HyDeploy trials are exploring up to a 20% hydrogen and 80% natural gas mix, which may be compatible with current distribution networks, in-home heat sources, distribution systems and appliances. We need to improve our understanding of in-situ performance, consumer impacts and suitability of hybrid systems to inform interventions and consumer guidance BEIS is currently exploring the role of hybrid heat pump systems as part of the Electrification of Heat Demonstration Project. The project aims to gather further evidence on how these systems operate in practice, which will provide more in-depth understanding of hybrids’ role in decarbonising heating going forwards. Through the Heat Ventilation and Air Conditioning Project and the Non-Domestic Building Survey, we are reviewing heating and cooling assumptions and the suitability of electric and hybrid heat pumps in non-domestic buildings.
A key strand of Wales' Optimised Retrofit Programme in social housing is trialling around 400 hybrid heat systems across a range of house types to demonstrate the benefits of carbon reduction, maintain affordable fuel bills, stimulate early demand and consumer familiarity with air-source heat-pump technology, and grow installer capability and capacity. Biomethane can be produced via anaerobic digestion or gasification. Biomethane from anaerobic digestion has higher upfront and operating costs compared to natural gas, as well as environmental, sustainability and air quality considerations. Mitigating these environmental impacts is important for government and industry, and as stated in our ‘Future Support for Low Carbon Heat and The Green Gas Government response to consultations’, we expect all anaerobic digestion operators to be doing everything commercially viable to mitigate these environmental impacts.304 Currently there are no UK advanced gasification plants capable of producing biomethane, as commercially available gasification technologies normally generate a low-quality gas that cannot be used to generate biomethane, biohydrogen or other energy products. A £190,000 UK-funded Advanced Gasification Technologies (AGT) project was established in May 2020 to produce an analysis of gasifying biomass and waste to produce methane, hydrogen and liquid fuels, assess the reasons for the failure of previous AGT projects, identify 303 BEIS (2021), ‘Low Carbon Hydrogen Supply 2 Competition’ ( carbon-hydrogen-supply-2-competition). 304 BEIS (2021), ‘Future Support for Low Carbon Heat and The Green Gas Government response to ( gas-levy-future-support-low-carbon-heat-govt-response.pdf). the risks and barriers to successful development of commercial scale AGT projects, and identify existing and emerging technologies that have the potential for commercial development and cost reduction. This project has recently been concluded and will inform future policy and innovation support to help develop AGT technologies for deployment over the Deployment of biofuels for off-gas-grid heating will be limited by constraints on the global availability of sustainable biomass feedstocks, and potential alternative uses to decarbonise other sectors of the economy. Further research on the economics of biomass is required to inform strategic policy decisions to improve value for money and only incentivise deployment of biomass boilers in properties not suitable for hydrogen, heat pumps or heat networks. The research should also take into account the air quality and wider sustainability issues The renewable fuel industry is currently investing in research and development, trialling the use of hydrotreated vegetable oil biodiesel in domestic heating systems, and looking to develop ways to increase production of bioLPG. However, these biofuels are not yet widely available to consumers. With the limited availability of biofuels, hybrid heating systems comprising of a biofuel boiler and air source heat pump may provide a route for limited bio- BEIS is in regular contact with the oil and LPG industries, and other stakeholders to gather more evidence on potential market developments and the sustainability, costs and consumer Key barriers to the deployment of smart technologies for heating a lack of active coordination and joint programmes to trial, test and evaluate smart technologies to aid low-carbon heating; knowledge of how best to encourage consumer participation or the best ways to protect consumers; standardisation of smart technology; and currently available economies of scale. We have minimal evidence demonstrating the best type of storage (fabric, hot water, heat battery, electric battery) to use in different types of home. We are considering smart systems and flexibility across all heat and energy efficiency policies. The Government has sought to support innovation across industry by launching several innovation projects designed to encourage new approaches that aid market development and encourage consumer take-up. The Smarter Tariffs – Smarter Comparisons project305 has developed an open-source, smart- tariff comparison tool306 which, along with supporting research and development findings, is available to consumers and industry. This tool provides an accurate, independently evaluated smart tariff recommendation based on actual usage data recorded by consumers' smart meters, or from information about their household. This gives consumers the information they need to switch to the best deals and, at a system level, integrate new technologies with 305 BEIS (2019), ‘Smart meter-enabled tariffs comparison Smarter Tariffs – Smarter Comparisons’ ( 306 Smart Tariff Comparison (

The Smart Meter Enabled Thermal Efficiency Rating (SMETER) programme307 aims to develop, test and demonstrate technologies that measure the thermal performance of homes using smart meter and other data. Funded by the Energy Innovation Programme, the first phase of the competition provided up to £4.1 million for innovation projects to develop SMETER tools, which are being tested in the second phase. SMETER tools could deliver more accurate and reliable energy efficiency ratings, help consumers to save money, reduce emissions and drive innovation to improve performance of building fabric energy efficiency measures. In April 2021, results were released showing that some SMETER products have proven high levels of accuracy. Expert stakeholders discussed how to design and deliver an in- use thermal performance metrics system through a joint SMETER workshop.308 BEIS also funded the Smart Systems and Phase 2309 programme delivered by Energy Systems Catapult in partnership with Newcastle City Council, Greater Manchester Combined Authority and Bridgend County Borough Council. This programme ran consumer trials of smart energy services, explored new business models and market structures and developed local area energy plans with the three local authorities. In September 2020 BEIS commissioned a rapid evidence review to explore the relationships between heat, energy efficiency, smart technology and health in high-income countries (with a BEIS has also undertaken research through the Cost Optimal Domestic Electrification project311 to improve our understanding of the most cost-effective combination of technologies to facilitate smart and flexible heating systems. We will use this analysis to develop policies to Through the Energy Innovation Programme, BEIS also commissioned the participation of low income and vulnerable consumers in a smart energy system (Project InvoLVe) programme312. The findings identified how innovation can help ensure that these consumers are not left behind in the transition to a smarter and more flexible energy system. 307 BEIS (2018), ‘Smart Meter Enabled Thermal Efficiency Ratings (SMETER) Innovation Programme’ ( programme#:~:text=Funding%20programmes- ,Smart%20Meter%20Enabled%20Thermal%20Efficiency%20Ratings%20(SMETER)%20Innovation%20Program me,smart%20meter%20and%20other%20data).
308 UCL (2021), ‘SMETER workshop explores requirements for effective UK system of in-use thermal performance metrics’ ( uk-system-use-thermal-performance). 309 Energy Systems Catapult (2020) ‘Smart Systems and Phase 2’ ( 310 BEIS (2020), ‘Heat, energy efficiency, smart technology and health review’ ( 311 BEIS (2021), ‘Cost Optimal Domestic Electrification (CODE)’ ( 312 BEIS (2021), Participation of low income and vulnerable consumers in a smart energy system (

Research and innovation into development and deployment of key technologies needs to be complemented by research into addressing overarching barriers to uptake and accommodating preferences of consumers. Basis Social and the University of Cambridge led research on ‘Future Homes’313, looking at the public’s needs and preferences around information, support, and advice to aid the future transition to low-carbon homes. There is ambition to extend research in this area to more fully understand the decision-making process involved in transitioning to a low-carbon homes, as well as how best to encourage the BEIS led research to understand how performance metrics based on smart meter data can support the adoption and delivery of low-carbon heat through improved measurement of home thermal performance and new consumer engagement products. (

Chapter 5: Reducing emissions in the While we continue to build our evidence base and make strategic decisions, we need to take action in the 2020s to improve the energy performance of our buildings and prepare for and begin the switch to low-carbon sources of heat. To balance the certainty and stability needed for market growth, ensure we remain on track for Net Zero, and build-in flexibility and consumer choice, in the 2020s we • introduce and improve energy performance standards • develop our policies on smart and flexible technology • begin phasing out use of fossil fuel sources of heat • build and support low-carbon heat markets We need to accelerate ‘no- and low-regrets’ action now – such as improving the efficiency of our buildings (fabric-first), and tackling the most polluting, and most Concentrating efforts on action that we can be certain is required is common-sense. This will mean prioritising action on tackling the worst-performing buildings (with the lowest energy efficiency or responsible for the greatest carbon emissions) and signalling how we will take action where the strategic choices are straightforward (such as phasing out fossil fuel heating in off-gas-grid buildings), and ensuring buildings are energy efficient before a mass transition to low-carbon sources of heat. Alongside this, we need to work with network companies and industry to increase capacity and build up supply chains, so that we are prepared for mass transformation of low-carbon heat sources. In the longer term, we are setting the ambition to phase out the installation of new fossil fuel boilers from 2035, once costs have come down. We will provide long-term signals to investment by setting requirements (e.g. deploying 600,000 heat pumps per year by 2028) and embed flexibility in how they We will begin to set out our plan to deliver a transition which balances consumer choice and grows the UK market, while being underpinned by a regulatory framework that ensures we are on track to deliver Net Zero. We will provide signals to investors when establishing new mandatory requirements to provide market certainty and stability. We will ensure consumers have choices (and are equipped with the relevant information and advice to make those choices), so they can decarbonise in a way that reduces disruption, keeps costs down, and meets individual needs. 5.1. Measuring energy performance The whole-house energy performance can be measured and improved through different interventions. This section sets out • energy labelling and ecodesign policy to improve energy efficiency of products • consideration of integrating smart technologies as part of SAP • continued use of minimum EPC ratings • commitment to move to a performance-based approach for some buildings Investing in energy performance measures to reduce energy demand delivers a wide range of • reducing emissions by minimising heat loss from buildings • mitigating issues with peaks in demand and reducing overall energy demand • preparing buildings for low-carbon heat sources • reducing consumer energy bills Improving the thermal performance of buildings before transitioning to low-carbon heating will further reduce energy demand. This is because, once the building is more energy efficient, a smaller heating system can be installed. This reduces operating costs and enables low temperature systems to operate more efficiently and effectively. Improving energy performance is also an investment in health and wellbeing, as it leads to warmer, more comfortable buildings with better air quality, when paired with adequate ventilation.314 In the long-term, energy performance improvements also provide benefits such as increased productivity, longevity, and higher life satisfaction.315 For domestic buildings, improving energy performance therefore supports the government’s broader ambition of smarter, healthier, cleaner and greener homes. These ambitions are even more critical to achieve when increasing numbers of people are currently spending more time at home due to COVID-19. Reducing energy demand also helps to directly address fuel poverty by lowering energy costs for households. 314 IEA (2019), ‘Multiple Benefits of Energy Efficiency’ ( efficiency/health-and-wellbeing). 315 BEIS (2020), ‘Improving the energy performance of privately rented homes’ (

In contrast, buildings with poor thermal efficiency, where excess cold, dampness and mould growth are present, create • direct costs (health and NHS treatment costs, higher energy bills) • indirect costs (opportunity costs, e.g., underperformance at school, lost working days, lost business opportunities, lost property value, lack of wellbeing) Some efficiency measures are lower cost and cause less disruption. These measures – such as draught-proofing or loft and cavity wall insulation – will likely be appropriate for most buildings. Other measures such as solid wall insulation can result in significant savings but can have higher cost-benefit ratios and are not necessarily appropriate for every building or consumer. Alongside thermal efficiency improvements there are a range of other cost-effective efficiency technologies, such as low-energy lighting, more efficient heating systems, and smart controls. These are detailed in section 3.1 Key technologies.
Maximising the number of buildings improved during the 2020s will ensure the later transition to low-carbon heating can progress smoothly, and result in an efficient, affordable and secure energy system, reducing our dependence on imported energy. Therefore, we encourage all owners and occupiers to review how they can improve the energy performance of their buildings, making use of supportive policies and subsidies, and the latest information and guidance, available through GOV.UK, Citizen’s Advice and the Simple Energy Measuring whole-building energy performance Existing energy performance policy typically uses the energy performance certificate (EPC) rating system to indicate overall building performance. This allows us to predict the energy a building will use, and the carbon it will emit. By setting minimum energy performance standards across tenures, and increasing these over time, we can improve building performance across the stock. For the longer-term we will consider whether, when and how to ensure that all homes meet a Net Zero minimum energy performance standard before 2050. We have already taken steps to address the buildings with the poorest energy performance • setting interim milestones for England to improve as many fuel poor homes as is reasonably practicable to a minimum energy efficiency rating of band E by 2020, band D by 2025, and band C by 2030,317 in line with our 2030 fuel poverty target for England • consulting on tightening minimum energy efficiency standards for privately-rented homes in England and Wales to EPC band C • regulating so all privately-rented non-domestic buildings need to reach EPC band B by 2030, where cost-effective. We will set out the detail of the policy in the coming months. EPCs are a useful tool for understanding the performance of the building stock, and the degree of accuracy and consistency of these assessments has continued to improve over time. 316 Simple Energy Advice online platform, available 317 In accordance with our ‘Fuel Poverty Energy Efficiency Rating Methodology’ (2014) (

The EPC action plan318, published earlier in 2020, sets out 35 actions to deliver an EPC • produces accurate, reliable, and trusted EPCs • supports action to reduce energy use in buildings • engages with consumers and gives people access to the data they need to make For some of the largest, most complex, and highest energy-using buildings, it is challenging to model energy performance accurately. This is particularly true for larger non-domestic buildings. In March 2021, we published a consultation for a performance-based policy framework that measures real-world performance of private non-domestic buildings above 1,000m².319 It aims to better reflect real-world, rather than modelled performance across the whole building stock and we aim to publish more details about the scheme later this year. In addition to the thermal efficiency of a building, to improve overall energy performance, we need to consider the efficiency and flexibility of energy-related products and how they are used When improving energy performance, we need to build-in flexibility to allow • innovative technologies and techniques • solutions tailored to building types • consumer choice that meets individual needs There are factors that impact the energy used in a building that are not related to the building fabric or heating system, but are related • the way occupants use the building, • how the building operates and is managed (including smart technologies) • the energy-related products in the building There are lots of actions households and businesses can take to reduce emissions, such as installing a smart meter and purchasing energy efficient products. Methodologies such as the Standard Assessment Procedure (SAP) will continue to be refined to ensure they appropriately assess whole-building energy performance and environmental impact, considering energy efficiency, heat source and system flexibility. 318 BEIS and DLUHC (2020), ‘Energy Performance Certificates for Action Plan’ ( 319 BEIS (2021), ‘Introducing a performance-based policy framework in large commercial and industrial buildings’ ( commercial-and-industrial-buildings). Using smart and flexible technologies to measure and improve energy Smart meters and advanced meters help consumers to be more informed about their energy use. This can encourage energy-saving behaviour, such as turning the thermostat down, which then leads to lower energy bills. We have set out plans for the installation of smart meters in households across GB, confirming a four-year smart meter policy framework which will start from January 2022, with annual installation targets for energy suppliers to deliver market-wide roll-out in Great Britain.320 Smart technologies and energy storage improve the energy performance of a building by matching demand to periods of greater renewable energy supply – which are also cheaper for the consumer. We will consider how to build smart and flexible technologies, including heating systems, into our policies. We are in the process of reviewing the next version of the Standard Assessment Procedure (SAP 11), which is the methodology used for compliance with the Building Regulations and for generation of domestic EPC ratings. As part of this review, we are considering how to better recognise the benefits of flexibility and storage to encourage smart systems in new and existing homes. We will consider how to integrate flexibility from smart technologies into our energy efficiency, fuel poverty and heat policies in an appropriate way. This could involve product innovations, adding new measures to schemes, better incentivising smart solutions, or requiring measures adhere to technical standards. 321 Using product efficiency to improve energy performance The efficiency of products and appliances have a significant role in delivering cost-effective carbon savings and reducing energy demands and bills for consumers. Our existing policy drives change through energy-related product standards, ecodesign and energy labelling. Minimum energy performance standards, along with energy labels, are one of the most cost- effective ways to improve the energy efficiency of products, reduce energy bills, and make significant energy and carbon savings. We will continue to review and improve these standards and energy-related product policies to ensure the market keeps moving towards more energy efficient and sustainable products.
Following consultations in 2021, we implemented new ecodesign measures322 which cover a range of products such as washing machines, dishwashers, televisions and lighting products.323 All of these measures include resource efficiency requirements in addition to 320 BEIS (2020), ‘Government sets out plans to drive up smart meter installations’ ( 321 As part of the Optimised Retrofit Programme, Welsh Government is making Intelligent Energy System (IES) mandatory to enable response capability and allow real-time measurement of building energy performance. IES will help access to flexible energy tariffs from suppliers and mitigate possible fuel cost increases associated with increased electrification of heat. Once the benefits of IES are proven, the Welsh Government is considering making it a condition of Welsh Housing Quality Standard and any retrofit funded by the Welsh Government. 322 BEIS (2020), ‘Draft Ecodesign and Energy Labelling Regulations 2021’ ( 323 BEIS (2020), ‘Draft Ecodesign and Energy Labelling Regulations (Lighting Products) 2021’ (

On 1 January 2021, existing EU ecodesign and energy labelling regulations were retained in UK law.324 In 2021, we estimate that existing ecodesign standards will save 8 MtCO2e, and £75 on annual energy bills for the average dual-fuel household in the UK.325 We are now exploring how existing standards can be improved to maximise the energy- and carbon-saving potential of products (through better energy performance and better resource efficiency). We are also exploring whether there are other, currently unregulated, energy- related products where minimum standards and energy labels could achieve significant savings. Our call for evidence, which closed in September 2020, addressed these topics. Products covered cooking appliances, lighting, boilers, heat pumps, smart appliances, heat distribution systems, space cooling and ventilation where Ecodesign measures exist, and taps and showers where the current scope of Ecodesign and energy labelling could be expanded.326 The 2018 Boiler Plus Standards for England set a minimum efficiency standard for domestic gas boiler replacement that is 6% higher than the Ecodesign minimum requirements.327 We have also launched an UK Energy-related Products Policy Study328 to explore the energy and resource efficiency improvement potential of products sold in the UK and the associated carbon savings. We will publish a policy framework which will set out illustrative proposals for raising minimum energy performance standards and improving consumer information for a range of high potential products, including but not limited to space heating, cooking, taps and showers and lighting. We plan to consult on more concrete proposals between 2022 and 2023 ahead of implementing measures from 2025. We will also continue to improve the efficiency of boilers. We recently published our initial review of the Boiler Plus standards.329 We will use an upcoming consultation, which will consider the case for enabling, or requiring new gas boilers to be hydrogen-ready, to also test proposals on the future of broader boiler and heating system efficiency and explore the best ways to reduce carbon emissions from our heating systems over the next decade. We are taking action to ensure products are more energy efficient, sustainable and resource efficient through our commitment to new product standards and better consumer information. We have laid legislation to do this for a range of products and our future policy will be outlined in our upcoming Energy-Related Products Policy Framework, which we aim 324 Under the terms of the Northern Ireland Protocol certain legislation, including both existing and future EU Ecodesign and Energy Labelling regulations, will continue to apply automatically in Northern Ireland, as long as the protocol has the consent of the people of Northern Ireland. The UK’s approach to the Northern Ireland Protocol can be found 325 BEIS (2020), ‘Draft Ecodesign and Energy Labelling Regulations 2021’ ( 326 BEIS (2020), ‘Energy-related call for evidence’ ( 327 Seasonal Space Heating Energy Efficiency as defined in Commission Regulation (EU) No 813/2013. Available 328 ICF, BEIS and DEFRA (2021), ‘UK Energy-related Products Policy Study’ ( 329 BEIS (2021), ‘Boiler initial policy review’ (

For commercial and industrial buildings, the government’s Energy Technology List330 (ETL) provides a useful procurement tool to help identify some of the most efficiently performing technologies such as boilers, air conditioning and refrigeration. The • sets eligibility criteria for technologies that typically represent the top 25% performance • addresses information barriers • provides independent assurance of technology performance • reduces transaction costs for businesses In December 2020, we published the outcome of our consultation on the future direction of the ETL scheme, and on proposed technical changes for the 2020 update of the Energy Heating water (excluding for space heating) accounts for 17% of household energy use.332 We are working across government departments to explore whether better consumer information such as labelling, as well as minimum standards, could help to reduce the volume of water used by these products – and therefore the energy used to produce, supply and heat the water. In addition to increasing the climate resilience of our water supplies, Energy Saving Trust suggest that carbon savings of up to 50 MtCO2e could be achieved over 25 years.333 We will take different approaches to different types of buildings to reflect the diversity of the building stock and use existing trigger points relevant to each building-type to minimise disruption. This will ensure that all consumers have the flexibility to make the changes that work best for them and have the support to do so. This will include targeted action to address our least efficient buildings (worst-first), while tackling fuel poverty.
• 2.6% of low income households in England have an energy efficiency rating F or G334 • 21.5% of households living in homes with a fuel poverty energy efficiency rating (FPEER) of band F, are in fuel poverty335,336,337 330 Energy Technology List ( 331 BEIS (2020), ‘Energy Technology List its future direction and technical changes to the 2020 update’ ( 332 BEIS (2021), 'Energy Consumption in the UK 2020' ( 333 Energy Saving Trust (2019), ‘Independent review of the costs and benefits of water labelling options in the UK’, p. 8 ( 334 National Statistics (2021), ‘Fuel poverty factsheet 2021’, p. 10 ( ( ( 337 In our policy paper on ‘Sustainable protecting vulnerable households in England’, BEIS (2021) ( we announced an update to the fuel poverty metric (from Low Income High Cost to Low Income Low Energy

5.2. How to improve our buildings We have tailored our policy to drive and enable improvements across the UK building • upgrading housing funding for improving fuel poor and social housing, regulatory levers tailored to individual sectors and tenures for the private-rented sector, and gathering further evidence to inform our approach for owner-occupied • trailblazing a whole-building approach for public sector buildings • initiating a performance-based rating system to begin decarbonising large commercial and industrial buildings New buildings offer a unique opportunity – if we build them to be low-carbon and highly efficient, they will not need to be retrofitted later. Therefore, we plan to future-proof new Approximately 1 million new dwellings have been built in England over the last 5 years.338 We expect to significantly increase the rate of homes built over the next decade and remain committed to progress to an additional 300,000 homes built per year.339 By 2039 we expect the number of households in the UK to increase from 28 million currently to 31 million.340 This could rise even further by 2050, increasing the number of heat replacements per year. It is significantly cheaper and easier to install energy efficiency and low-carbon heating measures as buildings are constructed, rather than retrofitting them afterwards. This also reduces disruption to consumers. Making our homes and workplaces healthier and more comfortable also means making them resilient to the impacts of climate change. In accordance with the Climate Change Act, the government will continue to develop five-yearly assessments of the risks arising from climate additional dwellings, by local authority district, England 2001-02 to 2019-20’ ( 339 HM Treasury (2017), ‘Building the homes the country needs’ ( g_the_homes_the_country_needs.pdf). 340 ONS (2020), ‘Households projections for England’ (

change and a programme of adaptation measures to improve climate resilience.341,342 When developing policies to future-proof buildings, we will consider our current and possible future scenarios, including overheating risk, indoor air quality risk, flood risk and water scarcity. Energy efficiency measures, when installed incorrectly or without appropriate adaptation measures, can create airtight spaces, which can increase the risk of overheating and decrease indoor air quality. This is of particular importance as we anticipate the demand for cooling to increase. Improving energy performance, while reducing the need for active cooling, is key to future-proofing these buildings and minimising carbon emissions. We will increase standards for new-builds in the 2020s to ensure that they are ready for In 2019, the Government announced the introduction of a Future Homes Standard for England343 by 2025. The standard will ensure that new-build homes are future-proofed with low-carbon heating and high levels of energy efficiency. We expect that homes built to this standard will produce no operational carbon dioxide (once the supply has been decarbonised), with 75% to 80% lower emissions than those built to current Building Regulations standards. As a stepping-stone to the Future Homes Standard, we plan to introduce an interim uplift in standards for England, effective from June 2022, that would result in a 31% reduction in carbon emissions from new homes compared to current standards. The consultation for a Future Buildings Standard for England closed in April 2021.344 Subject to final analysis of consultation responses, we aim to ensure non-domestic buildings are constructed to be highly efficient, better for the environment, and fit for the future, with implementation of this standard starting from 2025. The Future Buildings Standard consultation also proposes mitigation against the risk of overheating in new residential buildings. In addition to building regulations, we will continue to examine how we can ensure that all new buildings are designed and constructed to be ready for Net Zero. We will review the gas regulatory framework (as set out in the Gas Act 1986), to ensure that the appropriate powers and responsibilities are in place to deliver Net Zero. BEIS are planning to consult on whether it is appropriate to prevent new-build homes from connecting to the gas grid in England from 2025. This will look at how best to ensure new dwellings use low-carbon sources of heat and therefore would allow for later connections to the gas grid if low-carbon hydrogen becomes part of our heat decarbonisation pathway. 341 HM Government (2017), ‘UK Climate Change Risk Assessment 2017’ ( climate-change-risk-assess-2017.pdf). 342 DEFRA (2017), ‘Climate second national adaptation programme (2018 to 2023)’ ( 343 In March 2020, the Part L consultation for new dwellings in Wales closed. 344 DLUHC (2021), ‘The Future Buildings Standard’ (

Of the UK’s 28 million households345, there are approximately 17 million properties below EPC band C346. To cost-effectively decarbonise heat, most or all these buildings will need to be treated between now and 2050. In 2017, the government set out the aspiration in the Clean Growth Strategy347 for as many homes in England as possible to be upgraded to EPC band C progress that has been made since 2004, but the significant action that needs to be taken to bring as many homes as practicable to EPC band C. 349 ( ouseholdprojectionsforengland). 346 Figures taken from the English ( Scottish ( Welsh and Northern Ireland ( housing surveys.
347 BEIS (2017), ‘Clean Growth Strategy’ ( 348 As stated in their 2021 policy programme ( green-party-shared-policy-programme/), Scottish Government are seeking to upgrade the majority of homes in Scotland to at least EPC Band C by 2033, where feasible and cost-effective. 349 BEIS (2020), ‘Government response to the Committee on Climate Change’s 2020 progress report to Parliament’, p. 25 ( report-government-response), and DLUHC (2020), ‘English Housing Survey 2019 to 2020: headline report’, annex

We recognise that a well-functioning housing market is important to deliver the affordable homes this country needs. We aim to deliver interventions that minimise impacts on the housing market. It is important that we make progress across all tenures (e.g. by introducing more stringent minimum standards in all sectors), while minimising disruption to consumers by using natural trigger points, and continuing to provide incentives and support for households We are developing proposals to improve the energy performance of homes (including through the Decent Home Standard Review) and will continue to consult on the role of minimum energy performance standards across England, in line with our approach to the private-rented sector. Alongside these regulations, we know that some households and businesses will require support to meet these standards, in the form • financing to make improvement measures more affordable • further engagement to help households and businesses make informed choices • consumer protection to ensure the improvements deliver the expected results We have provided targeted grants and schemes to improve affordability. • The Green Homes Grant voucher scheme was created to encourage and enable individuals to install energy efficiency and low-carbon heating measures in their homes in England to help reduce energy bills and greenhouse gas emissions, as part of the short-term Economic Stimulus Package announced in July 2020. The voucher scheme was open to owner-occupiers, park homeowners350, and landlords who let privately or through the social-rented sector. It offered financial support through vouchers covering up to two-thirds of the cost (up to £5,000) of installing energy efficient and low-carbon heating improvements to homes. This increased to up to 100% of the cost (up to £10,000) for low income households. The scheme closed to new applications at the end of March 2021. To date, more than 133,700 applications were made, and more than 79,200 vouchers have been issued.351 • The Local Authority Delivery scheme provides funding for local authorities throughout England to support low income households in their area with energy efficiency and low- carbon heating upgrades. This scheme has been extended, so that it can continue to support consumers in 2021 who wish to adopt new energy efficiency or low-carbon • We have consulted on proposals for a new Boiler Upgrade Scheme352 (previously named the Clean Heat Grant), to support low-carbon heat source installation through upfront capital grants (of £5,000) for households and small businesses. 350 Park homes are detached bungalow-style homes, measuring less than 20 x 6.8 x 3.05 metres that must be relocatable. They are covered by the Mobile Homes Act 1983 and British Standard BS3632 building regulations. Park homeowners own the building, but do not own the land underneath. 351 On average, more than one voucher has been requested per application. 352 BEIS (2020), ‘Future support for low carbon heat’ (

In addition to government grants, loans and other schemes, we are also supporting the growth of private green finance, building on existing measures to protect consumers, and ensuring that they are provided with the relevant information and advice. This is discussed in greater detail in section 6.2 Green finance. We continue to consult over options for regulatory measures to improve energy performance of all homes, and ensure these measures are sequenced appropriately, providing certainty to the market and clear signals to homeowners, landlords and tenants. DLUHC has published the Social Housing White Paper353 in which we commit to reviewing the Decent Homes Standard to consider how it can better support the decarbonisation and improve the energy efficiency of social homes in the context of expectations for other tenures, and wider government policies. The 2020 Summer Economic Update announced the UK Social Housing Decarbonisation Fund (SHDF) Demonstrator354, launched in 2020, which awarded £62 million of funding to social landlords across England and Scotland to test innovative approaches to retrofitting at scale.355 The Government has announced up to £160 million funding in financial year 21/22, delivering up to January 2023 as the first wave of the SHDF, which is England only. We are investing a further £800 million over financial years 2022/23 to 2024/25. We will also consider setting a long-term regulatory standard to improve social housing to EPC band C, with levers required to decarbonise the stock in line with Net Zero. We will consult the sector before setting any regulatory standard. Decarbonising socially-rented homes in Wales In November 2020, Wales launched the £20 million Optimised Retrofit Programme for testing and trial of a whole-building approach to decarbonisation of homes. The trial period also identifies capacity, skills and capability gaps in the delivery system. This scheme will trial several approaches to decarbonise social housing. New green standards for new homes in Wales (Welsh Development Quality Requirements 2021: Creating Beautiful Homes and Places by 2025356) include energy efficiency requirements in new social homes to reduce carbon emissions and energy bills while supporting delivery of the aim to build 20,000 high quality, low-carbon homes for rent over the next five years.
353 DLUHC (2020), ‘The charter for social housing social housing white paper’ ( 354 BEIS (2021), ‘Social Housing Decarbonisation Fund Demonstrator- Successful Bids’ ( 355 Wales are also looking to fund the fitting of energy efficiency measures in up to 1000 existing homes owned by registered social landlords and councils through their Optimised Retrofit Programme ( million-programme-reduce-housing-carbon-footprint) 356 Welsh Government (2021), ‘Welsh Development Quality Requirements 2021: Creating Beautiful Homes and Places by 2025’ (

Tirion Homes and Pobl Living are working in partnership with Sero to build 225 smart, affordable, low-carbon homes in Parc Eirin, Rhondda Cynon Taff.357 Welsh Government have committed to fund around £7.5 million to this scheme, which started in April 2020. In the initial phases, social housing will be constructed, with owner-occupied housing Our consultation on improving the energy performance of privately rented homes358 (September - January 2021) proposed increasing energy performance requirements from 2025, fulfilling our public commitment to review whether we are on trajectory for private-rentals to meet or exceed EPC band C by 2030. This policy proposes to bring the majority of privately- rented properties in England and Wales up to at least EPC band C in the period from 2025 to 2028. We are aiming to publish a response before the end of the year. The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 require that, from April 2020, all privately-rented homes in England and Wales which are required to have an EPC must have a minimum energy performance rating of EPC band E, unless a valid exemption has We have provided significant additional support to local authorities to ensure compliance and enforcement of these regulations, building on earlier compliance and enforcement pilots. This includes providing £4.3 million to 57 local authorities to support activity in these areas. We plan to scale-up activity further in the coming years. We have also set out proposals to strengthen the compliance and enforcement framework under our recent EPC band C consultation. This includes the introduction of a compliance and exemption database to support local authority enforcement of the regulation. We have consulted on introducing and enforcing minimum energy performance standards for rented properties in the 2020s. 357 Tirion Homes, Parc Eirin development ( 358 BEIS (2020), ‘Improving the energy performance of privately rented homes’ ( 359 BEIS (2018), ‘Private Rented Sector minimum energy efficiency standard exemptions' ( 360 BEIS (2017), ‘Domestic private rented minimum energy efficiency standard - landlord guidance‘ (

In the owner-occupier sector we have identified potential points of intervention in the lifecycle of home ownership where policies could help to improve Property sales 830,000 per year in England and Wales361 The average owner-occupied home changes hand every 18 years in England and Wales362 Property financing New mortgages ~ 680,000 per year in England and Refinancing ~ 550,000 per year in England and Wales364 Repairs and improvements Extensions ~ 135,000 per year in England365 Window replacements ~ 2.5 million per year in England366 Boiler replacements over 1 million per year in England367 We are exploring opportunities to improve the energy performance of owner-occupier homes. We have conducted a series of stakeholder workshops on the case for regulation, with over 50 representatives from the housing sector, landlord representatives, retrofit supply chain, and non-government and consumer organisations. We are planning to consult further, to gather views on a broad range of options to upgrade homes in this sector, which will inform policy design. We will work with owner-occupiers to help them improve the performance of their homes. The provision of green finance will be an important step in making this easier and more 361 830,000 per year for year ending June 2019. ONS (2021), ‘Residential property sales for administrative HPSSA dataset 6’ ( tionalandsubnationalgeographiesquarterlyrollingyearhpssadataset06). 362 DLUHC (2020), ‘English Housing Survey 2018 to 2019’ ( 363 Bank of England statistics ( &G0Xtop.y=1&C=112&C=100&C=101&C=ZZ&C=10Z&C=102&C=103&C=104&XNotes2=Y&Nodes=X8699X8700 X8715X79883X8745X37884X37893X37883X37890X8761X35672X79911X8762X69339X37892&SectionRequire d=A&HideNums=-1&ExtraInfo=false#BM). These figures are subject to relatively high-frequency variation. 364 Bank of England statistics ( &G0Xtop.y=1&C=112&C=100&C=101&C=ZZ&C=10Z&C=102&C=103&C=104&XNotes2=Y&Nodes=X8699X8700 X8715X79883X8745X37884X37893X37883X37890X8761X35672X79911X8762X69339X37892&SectionRequire d=A&HideNums=-1&ExtraInfo=false#BM). These figures are subject to relatively high-frequency variation. 365 DLUHC (2021), ‘Future Buildings Standard Consultation Impact Assessment’, p.46 ( 366 DLUHC (2021), ‘Future Buildings Standard Consultation Impact Assessment’, p.46 ( 367 BSRIA (2020), ‘Domestic Boiler Market Analysis – United Kingdom’ (

This year, we closed a consultation on improving home energy performance through lenders368 (November 2020 – February 2021) on proposals to require mortgage lenders to disclose energy performance across their property portfolio and on introducing voluntary targets to improve the energy performance of their portfolios to an average of EPC band C by 2030. The consultation proposes making these targets mandatory if insufficient progress is being made. • encourage significant product innovation and new partnerships • drive the development of a green home finance market to support homeowners to make energy efficiency improvements We will provide support and advice to homeowners on how they can improve their building’s energy efficiency (for example, through the Simple Energy Advice online platform369). We are considering setting minimum standards to ensure buildings are Supporting low income and fuel poor households We consider improving the energy efficiency of homes to be the best long-term method of tackling fuel poverty. In 2019 there were around 1.3 million fewer fuel poor households living in properties with fuel poverty energy efficiency ratings of E, F or G, compared to 2010. We have directly and indirectly supported improvements in homes for many years and targeted support to those who need it most, including low income and fuel poor groups. So far, the main ways in which we have done this have been through obligations on suppliers, grants, and The first Energy Company Obligation (ECO) scheme was introduced in 2013, replacing the former energy supplier obligations (Carbon Emissions Reduction Target and Community Energy Savings Programme). The current ECO is an obligation on larger energy suppliers to provide energy efficiency and heating measures for fuel poor consumers across Great Britain. Since the programme began, over 3 million measures have been installed in over 2.2 million homes.
Eligible households can save up to £300 on their energy bills. Households are eligible if they receive certain benefits, live in the least efficient social housing or if they are referred by We have committed to extending ECO and will increase the ambition for installing energy efficiency measures. The next iteration of ECO will run from 2022 to 2026 with an increase in value from £640 million to £1 billion per year. ECO will primarily focus on improving the worst- quality homes across Great Britain, helping as many to achieve EPC band C as is cost- effective and suitable for the property. This will support progress towards achieving our fuel poverty target for England to ensure that as many fuel poor homes achieve a minimum fuel poverty energy efficiency rating (FPEER) of band C370, as is reasonably practicable, by 2030. We have committed to a four-year, £4 billion successor to the Energy Company Obligation 368 BEIS (2020), ‘Improving home energy performance through lenders’ ( 369 Simple Energy Advice online platform, available 370 In accordance with our ‘Fuel Poverty Energy Efficiency Rating Methodology’ (2014) (

The Warm Home Discount371 scheme currently provides over 2 million low income and vulnerable households with a £140 rebate off their winter energy bill. In 2020 we ran a consultation on whether to extend our Warm Home Discount scheme to provide an annual discount to heating bills for low income and vulnerable households, for winter 2021 to 2022. Government has since committed to reforming and expanding the scheme until at least 2026, meaning 780,000 additional households would receive rebates every winter. In March, the government committed to spending an additional £300 million on green home upgrades through local authorities. This increase in funding to local authorities will be through the Social Housing Decarbonisation Fund and an extension to the Local Authority Delivery scheme, with anticipated delivery to January and March 2023 respectively. The Sustainable Warmth competition was launched on 16 June 2021, this funding opportunity brings together two fuel poverty schemes (Local Authority Delivery Phase 3 and Home Upgrade Grant Phase 1) into a single funding opportunity for Local Authorities. Local Authorities can continue to target low income households living in inefficient properties through the £200 million LAD Phase 3 focused on gas fuelled homes and the £150 million Home Upgrade Grant for off-gas- The Local Authority Delivery Phase 3 (LAD3) – The LAD scheme provides support for low income households through local authorities in England. Households can benefit from energy efficiency and low-carbon heating improvements of up to £10,000. Around £200 million of funding is also available for new projects delivering to low income households in the most inefficient homes that are on-the-gas grid in England Through LAD3. We expect the main criteria for on-gas-grid properties to remain the same as those in the first two phases of LAD, including the cost caps for owner-occupier and rented properties, along with landlord Home Upgrade Grant (HUG) – aims to provide funding for energy efficiency and low-carbon heating measures. It focuses on vulnerable households and low income families living in the worst quality off-gas-grid homes (those rated EPC band D, E, F and G) in England. It aims to improve these homes to EPC band C, making progress towards our FPEER C target, while decarbonising the housing stock. This targeted funding intends to enable the installation of multiple measures in these homes to substantially improve performance and help tackle fuel poverty. We are investing a further £950 million into the HUG over 2022/23 to 2024/25. Social Housing Decarbonisation Fund (SHDF) – The SHDF will deliver energy performance improvements in Social homes. There is up to £160 million total funding for the first wave of the programme in 2021/22, an increase from the £60 million announced by the Chancellor at the Autumn 2020 Spending Review. This first wave will offer the potential for registered providers of social housing, including Private and Local Authority providers, in England to apply retrofit solutions to their stock. The bid window for this first wave of funding opened 23 August 2021 and the delivery will run until January 2023. We are investing a further 800 million into the SHDF over financial years 2022/23 to 2024/25. We will continue to prioritise providing support where it is needed most, and help consumers make improvements to their buildings. 371 Warm Home Discount Scheme (

Approximately 60% of homes in England were below EPC band C in 2019.372 Our portfolio of policy levers aims to decarbonise across the building stock and help us to upgrade as many as homes as possible to EPC band C by 2035. We project that the policies outlined in this document could bring up to 70% of the English housing stock to EPC band C or above by We understand that the combination of policies and regulations for improving different types of homes may leave some untreated in the near-term. We therefore appreciate the role of the wider market to encourage more voluntary action. We will monitor building improvements and consider whether future targeted action is required, including whether further use of minimum energy performance standards in the 2030s and 2040s, can support cost-effective decarbonisation of our housing stock. 372 DLUHC (2020), ‘English Housing Survey 2019 to 2020: headline report’

Improving public sector buildings Decarbonising public sector buildings will demonstrate leadership, encouraging action in other sectors as well as making a direct contribution to Net Zero. We will therefore aim to reduce direct emissions from public sector buildings by 75% against a 2017 baseline by the end of We want the public sector to lead the way in decarbonising our buildings in the 2020s by providing funding and demonstrating high standards with transparency and building capacity and capability. The £1 billion Public Sector Decarbonisation Scheme375 was announced as part of the summer economic update and the Plans for Jobs speech in July 2020376, to provide funding across 2020/21 and 2021/22.
The scheme is providing grants to decarbonise public sector buildings in England and reserved public services across the UK. In the 2020 Spending Review, further funding was allocated to public sector decarbonisation to make public buildings greener and the second phase of the Public Sector Decarbonisation Scheme was launched in April 2021 with £75 million funding for 2021/22. We are investing a further £1425 million for the Public Sector Decarbonisation Scheme over 2022/23 to 2024/25. This funding will provide public sector organisations with grants to fund energy efficiency and heat decarbonisation measures, and supports the decarbonisation of the public sector in line The first phase of the scheme was launched on 30 September 2020, alongside a £32 million Public Sector Low Carbon Skills Fund377 available to all organisations eligible for the first phase of the Public Sector Decarbonisation Scheme. This provided funding to public sector organisations which lack the expert skills to develop and deliver decarbonisation projects and heat decarbonisation plans. The second phase of the Low Carbon Skills Fund was launched on the 21 July 2021 and is providing up to £15 million of funding in 2021/22. Combined, the Public Sector Decarbonisation Scheme and Public Sector Low Carbon Skills Fund provide tangible benefits beyond delivering carbon savings • supporting skilled jobs in the low-carbon and energy efficiency sectors • helping develop the necessary supply chains to support the decarbonisation of commercial and industrial sectors 373Welsh Government has set the ambition for the public sector to be carbon neutral by 2030. Welsh Government Energy Service provides practical support, grants and loans, to public sector organisations and communities to help them develop energy efficiency and renewable energy schemes. 374 Scottish Government are committed to develop phased targets to help all public sector buildings to meet zero emission requirements between 2024 and 2036, as stated in their new policy programme ( 375 BEIS (2020), ‘Public Sector Decarbonisation Scheme’ ( sector-decarbonisation-scheme-psds). 376 HM Treasury (2020), ‘A Plan for Jobs speech’ ( 377 BEIS (2020), ‘Public Sector Low Carbon Skills Fund’ ( sector-low-carbon-skills-fund). • delivering energy efficiency and heat decarbonisation improvements to organisations (such as schools, hospitals and public sector offices) • demonstrating the UK’s global reputation as a world leader in the fight against climate • presenting an opportunity to build wider support and acceptance for transformation of Building on the success of the Public Sector Decarbonisation Scheme, we will continue and extend the scheme to ensure that public sector bodies have access to finance to continue High standards with transparency All public sector organisations should be thinking about how they will achieve Net Zero and should be taking steps to start this process now. As publicly-funded organisations, they should also be held accountable to the public by reporting their progress. Government departments and their arms-length bodies already set and report against targets to reduce their greenhouse gas emissions in the Greening Government Commitments378 (GGCs). Government reduced its emissions by 46% in 2018/19 compared to 2009/10, meeting the target reduction of 43% one year ahead of the 2020 deadline. We expect all public sector organisations to show leadership by taking steps to reduce direct greenhouse gas emissions. This should • monitoring their energy use (recorded in their energy bills) • making plans, including setting themselves targets, to reduce their emissions over the In particular, we expect public sector organisations to plan to reduce direct emissions from • making buildings more energy efficient • switching to low-carbon heating sources when it is time for heating systems to be • implementing smart technology • installing low-carbon heating in new buildings, which means retrofitting will not be Different targets will be appropriate for different organisations, but all public sector organisations should publicly report progress against their plans and targets. We plan to provide guidance to make clear the government’s expectations in this regard. 378 DEFRA and Cabinet Office (2016) ‘Greening Government Commitments’ (

We will also legislate to enable us to require the reporting of public sector emissions on a consistent and coherent basis if this is not done on a voluntary basis, and, if insufficient progress is made on reducing emissions in the public sector, to require that all public sector organisations are working toward and reporting against a legally binding target to reduce their Support to increase capacity and capability Public sector organisations will require specialist skills and expertise to decarbonise by making infrastructure improvements and by better managing operational energy use. As well as the funding provided through the Public Sector Low Carbon Skills Fund, we will continue to work with partners across government and the wider public sector to understand their needs relating to decarbonisation capacity and capability. Improving commercial and industrial places of work Alongside the 25 million homes in England and Wales, there are around 1.5 million commercial and industrial buildings379 which account for around one-third of UK emissions from the total Reducing carbon emissions from these buildings will therefore be key • meeting the 2017 Clean Growth Strategy381 ambition to enable businesses to reduce energy use by at least 20% by 2030, which would save business £6 billion per year on • achieving our Nationally Determined Contribution of a 68% reduction in greenhouse gas emissions (compared to 1990 levels) by 2030 Delivering Net Zero can allow businesses to make substantial savings on energy bills at a crucial time as the UK recovers from the disruption caused by COVID-19. It will also help to create safer and healthier working environments. There is huge variety across the commercial and industrial building stock in terms of business size, building size (by floor area), use, and tenure. Our policy package respects this diversity and avoids a one-size-fits-all approach. We have developed an approach where regulatory frameworks are tailored to the size of the building and the businesses operating in that building, function and energy use of commercial and industrial buildings.
379 BEIS internal analysis of BEIS (2020), ‘Non-domestic National Energy Efficiency Data-Framework (ND-NEED), 2020 ( need-2020) based on 2018 data and BEIS (2016), ‘Building Energy Efficiency Survey (BEES)’ ( 380 CCC (2019), ‘Net Zero Technical report’ ( 381 BEIS (2017), ‘Clean Growth Strategy’ (

The largest commercial and industrial buildings in England and Wales (those above 1,000m²) use more energy than all other commercial and industrial buildings combined, despite only accounting for around 7% of the stock.382 The government has proposed to introduce a regulatory requirement for these buildings to obtain a performance-based energy rating based on measured energy data. This will ensure building users are aware of their energy use and where they are on their trajectory to becoming a Net Zero compatible building. The government intends to publish more details about the scheme in due course. This performance-based approach is right for these buildings because it takes account of all the factors which influence building performance. This includes optimising the existing services and systems, behavioural changes, installing improved equipment or investing in the building’s fabric efficiency or low-carbon heat. The proposal would require building owners and tenants to obtain and publicly disclose a rating on an annual basis. For smaller commercial and industrial buildings, the picture is different, as these buildings use far less energy per building.383 Building owners and businesses should look to understand and optimise their energy performance, but there is not the same need for government regulation to ensure owners and businesses to measure, benchmark and disclose their annual energy use. Instead, the government’s preferred approach through the 2020s is to set long-dated regulatory targets based on the EPC, which requires building owners to invest in the quality of their building’s fabric and services. For the rented sector, we have confirmed an ambitious target of requiring landlords in the rented sector to improve their buildings to EPC band B by 2030, where cost-effective, and we are now looking into how best to enforce this target.384 For owner-occupied commercial and industrial buildings, the government is considering an equivalent long-dated regulatory target. We aim to consult on our approach by the end of Privately-rented commercial and industrial buildings Between October 2019 and January 2020, the government consulted on introducing requirements for all rented buildings in England and Wales to meet EPC band B by 2030, where cost- effective.385 This will potentially save businesses around £1 billion per year in 382 Internal BEIS analysis of BEIS (2016), ‘Building Energy Efficiency Survey (BEES)’ ( Private buildings only. Excluding energy used for manufacturing and refining. 383 BEIS (2020), ‘Non-domestic National Energy Efficiency Data-Framework (ND-NEED), 2020’ ( 384 BEIS (2021), ‘Non-domestic Private Rented Sector minimum energy efficiency EPC B implementation’ ( energy-efficiency-standards-epc-b-implementation). 385 BEIS (2019), ‘Non-domestic Private Rented Sector minimum energy efficiency future trajectory to 2030’ ( efficiency-standards-future-trajectory-to-2030). In the responses to that consultation, 91% of respondents were supportive of EPC band B and 86% agreed that 2030 was an appropriate date. However, respondents and evidence from a pilot study confirmed that there were significant implementation issues that needed to be addressed if the policy was going to be a success. A further consultation in March set out the Government’s approach for improving the implementation and enforcement of the regulations – ensuring that the EPC band B target can be delivered in practice.386 Large and complex commercial and industrial buildings In March 2021, we published a consultation package on a proposed performance-based energy rating that will become mandatory for some buildings larger than 1,000m2 in the coming years.387 Large buildings account for 64% of energy consumed by non-domestic buildings in England and Wales.388 The consultation sets out the government’s proposals to reduce carbon emissions in this portion of the building stock, by recognising and rewarding actual improvements in energy and carbon performance for the first time. The strategy paper proposes a phased roll-out, starting with commercial offices in England and Wales. The government’s proposal is to use the performance-based approach to set sector-by-sector energy reduction targets which will be in line with the reductions required to meet our carbon budgets. Progress against these targets will be tracked on an annual basis. By structuring the policy in this way, we can provide building owners and businesses with visibility over the rate of progress that will be required out to 2050 to make a building compatible with Net Zero. The government aims to identify appropriate sector-level targets when ratings are rolled out to other commercial and industrial sectors and building types, subject to further sector-specific Improving the measured energy performance of large buildings will be a key contribution to the UK meeting its long-term climate targets. At the same time, large buildings need to take steps to decarbonise their heat sources through the 2020s. The performance-based framework will work alongside proposals to prohibit new fossil fuel installations in large commercial and industrial buildings which are not connected to the gas grid. If your business operates in a building over 1,000m2, our proposed performance-based energy rating will recognise measured reductions in actual energy use and carbon 386 BEIS (2021), ‘Non-domestic Private Rented Sector minimum energy efficiency EPC B implementation’ ( energy-efficiency-standards-epc-b-implementation). 387 BEIS (2021), ‘Introducing a performance-based policy framework in large commercial and industrial buildings’ ( commercial-and-industrial-buildings). 388 BEIS (2016), ‘Building Energy Efficiency Survey (BEES)’ (

Smaller buildings and businesses Smaller private owner-occupied buildings under 1,000m2 account for 17% of all the energy used by commercial and industrial buildings in England and Wales.389 BEIS is considering policy approaches to this segment of the non-domestic building stock, including whether to adopt minimum energy efficiency standards similar to the private-rented sector approach. We are aiming to consult on owner-occupied buildings by the end of 2021. SMEs can significantly benefit from improving the energy performance of their buildings by reducing energy bills and improving their bottom-line competitiveness. However, the barriers to decarbonisation are particularly high (for example, they may struggle to invest due to high capital costs).
Therefore, we believe targeted support is vital to drive the scale and pace of We plan to provide targeted support to improve the energy efficiency of SME sector buildings. As part of the Spring Statement 2019 we published a call for evidence on a new Business Energy Efficiency Scheme for SMEs390. A summary of responses from this consultation was published in June 2020. We have commissioned further research to inform policy We have been exploring new business models to stimulate the SME energy efficiency market through the Boosting Access for SMEs to Energy Efficiency competition391. The competition, now closed, offered up to £6 million of funding for innovative solutions that encouraged the uptake of energy efficiency by SMEs. If you are a small or medium-sized business, we plan to provide support to help your buildings become more energy efficient and adopt low-carbon heat. The UK-wide Energy Savings Opportunity Scheme392 (ESOS) currently requires large businesses to measure their total energy consumption every four years and to carry out an audit covering energy use from buildings, transport and industrial processes. It recommends practicable and cost-effective energy efficiency measures to ensure that businesses have tailored information on the opportunities for saving energy in their buildings. These recommendations can include both investing in building improvements and other measures to use energy more effectively (such as investing in better controls or training staff to change behaviour). ESOS reports can be used by businesses to identify how they can make savings that will improve their performance-based rating. 389 BEIS internal analysis of BEIS (2016), ‘Building Energy Efficiency Survey (BEES)’ ( Private buildings only. 390 BEIS (2019), ‘Energy efficiency scheme for small and medium sized call for evidence’ ( businesses-call-for-evidence). 391 BEIS (2020), ‘Boosting access for SMEs to energy efficiency (BASEE) winning projects’ ( 392 BEIS and Environment Agency (2014) ‘Energy Savings Opportunity Scheme (ESOS)’ (

In July 2021, we published a consultation on strengthening ESOS393, looking • increase the number of participants that take action to reduce energy use by raising the • increase the carbon and cost savings from ESOS by increasing the number and scope of recommendations taken up by participants • ensure that recommendations are consistent with the UK's Net Zero commitments In 2019 we introduced Streamlined Energy and Carbon Reporting394 that requires large businesses to report annually on their energy use and carbon emissions within their company reporting. This mandatory obligation now falls on all large or quoted companies and large limited liability partnerships incorporated in the UK – increasing the coverage from an estimated 1,200 quoted companies who were previously required to report on greenhouse gas emissions to a new total of 11,900 organisations.395 This will increase transparency around emissions from non-domestic buildings and how this is managed by businesses. The reporting requirement applies to reports for financial years starting on or after 1 April 2019. 393 BEIS (2021), ‘Strengthening the Energy Savings Opportunity Scheme (ESOS)’ ( 394 BEIS (2017), ‘Streamlined energy and carbon reporting’ ( 395 BEIS (2017) ‘Streamlined energy and carbon reporting’ (

according to BEIS’ current thinking. 5.3. Kickstarting the transition to low-carbon heat The transition to low-carbon heat will be a gradual one, starting with building markets, improving technology and driving down costs. We will use of natural replacement cycles and trigger points we need to set long-term signals to build markets now. • For on-gas-grid buildings, this o setting the long-term ambition to phase out installation of new natural gas boilers from 2035, once the cost of low-carbon alternatives has come down o building markets for low-carbon sources of heat, including heat pumps and o consulting on the case for gas boilers to be hydrogen-ready by 2026 and improving the efficiency of gas boilers in the near term o decarbonising the gas grid through biomethane injection • For off-gas-grid buildings, we propose phasing out the installation of new fossil fuel heating systems and switching to low-carbon alternatives from 2026 (2024 • We are introducing measures to continue testing and researching, build low- carbon markets, and make these technologies more accessible and affordable for o investing in innovation of heat pumps – making them smaller, easier to install, beautifully designed and lower cost o increasing deployment of low-carbon heat networks using the Heat Networks Delivery Unit, Heat Networks Investment Project, Green Heat Network Fund and by employing a zoning approach o exploring the role of hydrogen for heating buildings through neighbourhood and village trials, with strategic decisions on its role taken in 2026 Improving buildings’ energy efficiency alone will not be enough to deliver Net Zero. We must also replace carbon-emitting fossil fuel heating systems with alternative low-carbon heating. Much like the transition to electric vehicles, this will be a gradual transition, led by incentivising consumers and reducing costs first. We are setting the ambition that, from 2035 new heating system installations should be low- carbon or hydrogen-ready (in areas where we know there will be future hydrogen supply) so we keep pace with the natural replacement cycles of heating systems throughout the late 2030s and 2040s and minimise disruption and costs to householders and building owners. By this time, costs should be low – we anticipate cost reductions of at least 25-50% by 2025 and towards parity with boilers by 2030 as the market grows. Alongside action on fuel price distortions we anticipate heat pumps will be no more expensive to buy and run than fossil fuel boilers. We therefore need to set long-sighted plans for the next decade to increase consumer

take-up and confidence, and prepare markets, bringing down costs and improving consumer appeal, so technologies can be deployed at a large-scale in the 2030s and 2040s. Currently 1.7 million fossil fuel boilers are installed per year (natural gas, oil and coal).396 Therefore, the low-carbon heating supply chain will need to grow considerably to be capable of matching this capacity and rate of deployment. Our Net Zero technology balance will be determined through evidence gathered and decisions made by 2026.
Over the coming years, we need to continue to develop heat pump, heat network, and hydrogen-compatible markets – ensuring that we have the best possible choices. We have consulted on proposals for a new £450 million Boiler Upgrade Scheme397 (previously named the Clean Heat Grant) from 2022, to support the installation of low-carbon heating systems following the closure of the Domestic Renewable Heat Incentive. This will provide upfront capital grants of £5,000 to households and small businesses looking to install heat pumps and, in some limited circumstances, biomass boilers. By helping grow low-carbon heat supply chains and driving cost reductions across the market, the scheme will keep us on track to deliver Net Zero and will enable the introduction of planned regulatory and market-based policies. We intend to limit our support for new gas heating systems and remove support for new LPG and oil heating systems from 2022, only supporting fuel poor households with new fossil fuel-based heating systems under very limited circumstances. Phasing out unabated fossil fuels In the consultations published in parallel to this document398,399, we set out our proposals to phase out the installation of new fossil fuel heating systems in buildings not connected to the gas grid (off-gas-grid) in England. Addressing off-gas-grid homes will enable us to start to decarbonise 1.1 million high-carbon fossil fuel heated buildings in England400, and provide up to 8 MtCO2e of carbon savings401 over carbon budget 5 (2028 to 2032). This will mainly happen through the shift from high-carbon fossil fuels (such as oil and LPG) to electric heating 396 BSRIA (2020), ‘Domestic Boiler Market Analysis – United Kingdom’ ( 397 BEIS (2020), ‘Future support for low carbon heat’ ( 398 BEIS (2021), ‘Phasing out fossil fuel heating in homes off the gas grid’ ( 399 BEIS (2021), ‘Phasing out fossil fuel heating systems in businesses off the gas grid’ ( 400 DLUHC (2020), ‘English Housing Survey 2018: energy report’ ( 401 According to BEIS internal analysis. We propose to introduce regulation to ensure new fossil fuel heating installations in England are phased out in line with the natural appliance replacement cycle. We plan to introduce regulation to address large off-gas-grid non-domestic buildings (over 1,000m2) no earlier than 2024, followed by small and medium non-domestic buildings and all homes from 2026. We are keen to hear views on this approach, and in particular whether there are sectors or building types with specific needs that should be taken into account, for example, heritage buildings or those occupied by voluntary sector organisations. These off-gas-grid regulations will be supported by number of policy levers to enable the transition. We expect most off-gas-grid buildings will be able to transition to a low-carbon heat pump. BEIS analysis shows that around 80% of fossil fuel heated off-gas-grid homes in England have sufficient energy efficiency and internal fuse limit electrical connections to accommodate a low temperature heat pump system.402 Other homes may require further upgrades to operate low temperature heat pumps to meet thermal comfort. Where low temperature heat pumps cannot be reasonably practicably accommodated subject to minor energy efficiency measures, other low-carbon heating options (such as solid biomass boilers, high temperature heat pumps, and potentially liquid biofuels) may offer an alternative. We are offering support to those buildings transitioning to low-carbon heating. These supporting activities are detailed in Current and planned activities for the 2020s403 and include financial support to those unable to pay (through the Local Authority Delivery scheme, Home Upgrade Grant, ECO, Social Housing Decarbonisation Fund and the Public Sector Decarbonisation Scheme), and for the installation of low-carbon heating in all homes (through We will continue to work on the wider enabling framework, ensuring the cost of transformational change is fair as we move forwards, and off-gas-grid buildings are upgraded to low-carbon heating systems as part of their natural replacement cycle. We are providing significant support to help off-gas-grid buildings decarbonise their 402 BEIS internal analysis based on BEIS (2017), ’National Household Model’ ( 403 The geographical extent of these schemes is listed in Current and planned activities for the 2020s. Equivalent schemes may be available in Wales, Scotland or Northern Ireland. We will take decisions on the use of hydrogen for heating in 2026, following neighbourhood and village trials. While we do this, there are a number of low-regrets actions we can 1. Setting long-term Signalling our ambition that from 2035, once costs of low- carbon alternatives have come down, we will phase out the installation of new natural 2. Supporting early For households and businesses who are keen to make the switch to low-carbon heating, we are providing £5,000 grants to help overcome the current cost differential between heat pumps and boilers, through our £450 million Boiler 3. Ending new connections to the gas We will be publishing a consultation on ending new connections to the gas grid for new-build domestic properties in England by 2025. This is supported by our policy paper on Sustainable protecting vulnerable households in England404, published February 2021, which stated our intention to limit support for new gas heating systems from 2022. This will prevent us from expanding our reliance on natural gas and fossil fuels, and is compatible with Net 4. Improving the efficiency of new We will continue to improve the efficiency of new and existing boilers, through the promotion of smart controls and system management, and explore options to strengthen and extend the Boiler Plus standards. Boiler Plus measures for combination boilers (such as smart controls and weather compensators) further raise the standard of domestic boiler installations, reducing carbon emissions and making it cheaper to heat homes. We recently published an initial review of the Boiler Plus standards.405 This, along with the findings from our recent call for evidence on energy-related products406, will help us determine if there is more that can be done to improve efficiency and drive additional carbon savings.
An important element of this work will be supporting the continued development of behaviours and technologies which support achievement of greater comfort, efficiency, and carbon savings in natural gas systems, but which also pave the way for efficient operation for low-carbon heating systems. We will look to test proposals on future boiler and heating system efficiency through our consultation that considers the case for hydrogen-ready boilers, which we are aiming to publish shortly. 5. Greening the gas in the While we are looking to end new gas grid connections in England, new gas boilers will continue to be installed on the existing gas grid well beyond that point. For those already connected to the gas grid, we are exploring how best to improve efficiency and replace the current supply with alternative low-carbon fuels (biomethane and hydrogen) to reduce natural gas demand. This is why we have committed to enabling the blending of hydrogen in the gas grid (up to 20% volume) and continuing to support the deployment of biomethane through the Green Gas Support 404 BEIS (2021), ‘Sustainable protecting vulnerable households in England’ ( 405 BEIS (2021), ‘Boiler initial policy review’ ( 406 BEIS (2020), ‘Energy-related call for evidence’ (

Biomethane injection from anaerobic digestion is currently supported by the Non- Domestic Renewable Heat Incentive and will receive future support under the Green Gas Support Scheme for Great Britain, which is expected to run from November 2021 for 4 years for new applicates. The primary objective for this policy is to increase the proportion of green gas in the grid, which will in turn reduce gas-grid-related emissions through providing a greener source of natural gas. The funds will be raised by the Green Gas Levy, which is also expected to launch in November 2021 – with the first levy payment from gas suppliers being collected in April 2022. This support for the biomethane sector will lead to carbon savings of up to 3.7 MtCO2e over carbon budgets 4 and 5 and 8.2 MtCO2e over the lifetime of the scheme.407 It will also help to boost green jobs by maintaining and building growth in the biomethane industry at a time when economic recovery will be very Unlocking the potential of hydrogen for heating We will work in partnership with industry to test and evaluate the potential of hydrogen as an option for heating our homes and workplaces. This will include ensuring that we clearly define the evidence needed to make a policy decision about the role hydrogen for heating can play in our future energy system. We are supporting the gas industry to deliver core research and development projects, such as developing new appliances and testing conversion of the gas grid including through community trials. Further detail is included in section 4.3 Research and innovation. This work will allow us to evaluate the technical and practical feasibility of using hydrogen instead of natural gas for heating and provide an assessment of the expected costs, benefits and impacts, and practical In advance of our strategic decision in 2026 on the role of hydrogen in heating buildings, we aim to consult on enabling, or requiring, new gas boilers to be readily convertible to hydrogen (‘hydrogen-ready’) by 2026 to prepare homes for a potential hydrogen conversion. We will also use this consultation to test proposals on the future of broader boiler and heating system efficiency and explore the best ways to reduce carbon emissions from our heating systems We will continue to work with industry to test and evaluate the potential role for hydrogen in heating our buildings and will take strategic decisions in 2026. 407 Assuming that the scheme would be open for four years, and the tariff payments would be for 15 years. Building a market for heat pumps Hydronic heat pumps are the only currently proven scalable low-carbon heat technology. Therefore, we need to take action now to build a market for them, and to prepare buildings for their installation. Heat pumps will be a key technology for • properties not connected to the gas grid • new-builds (following the launch of the Future Homes and Future Buildings Standards • properties that do not have an opportunity to connect to a local heat network • consumers that may prefer to install a heat pump over other low-carbon alternatives (for example, as part of broader improvements to create a ‘smart home’) Even in a scenario where hydrogen is the predominant heat source for the UK, the CCC estimate that around 13 million heat pumps (including hybrid heat pumps) would be used in We acknowledge the recommendations provided by many stakeholders to increase our • Centrica, PwC and Energy UK state that we should have 1 million low-carbon heating systems by 2025409, many of which will be heat pumps • The CBI410 have advised that we aim to deploy 1 million heat pump installations a • the CCC advised that we aim to install 1 million heat pumps per year in homes by • E3G have advised installing 10 million heat pumps in total by 2030412 We believe that in all future heat scenarios, 600,000 hydronic heat pump installations per year is the minimum market size that will be required by 2028 to be on track to deliver Net Zero. As part of this, we will aim for cost parity between heat pumps and gas boilers by 2030 with significant cost reductions of at least 25-50% by 2025 and ensuring heat pumps are no more expensive to buy and run than boilers by 2030. 408 CCC (2020), ‘Sixth Carbon Budget’ ( 409 Centrica, PwC and Energy UK (2020), ‘Rebuilding the UK economy’ ( work/pwc-and-energy-uk-rebuilding-the-uk-economy.html). 410 CBI (2020), ‘Net the road to low-carbon heat’ ( 411 CCC (2020), ‘Sixth Carbon Budget’ ( 412 E3G (2020), Getting on Track to Net Ten million heat pumps for homes by 2030’ (

It may ultimately prove desirable to pursue greater levels of heat pump deployment.
For example, if limited low-carbon hydrogen is used for heating, we would need to further grow the heat pump market to install up to 1.7 million heat pumps per year by the mid-2030s if we wish to switch over remaining gas boilers by 2050 through natural replacement cycles. However, we have set our minimum market capacity target at 600,000 heat pump per annum to ensure that deployment is low-regrets and offers a cost-effective route to decarbonisation. In 2023 we will look to review and consult on our approach to heat pump deployment; on whether and how this should be accelerated beyond the 2028 target of 600,000 per year. We expect this ambition to be met through deployment over a range of different segments of the building stock. The majority of the additional deployment is likely to be retrofits into existing on- and off-gas-grid homes, with a significant but smaller contribution of about 200,000 annual heat pump installations in new homes from 2028. We want manufacturers to scale-up UK production to help meet UK demand. We know that supply chains can expand rapidly to meet this demand, with the support of a range of policy measures. In line with forecasts of UK manufacturing capability in the Heat Pump Manufacturing Supply Chain Research Project Report413 (published in December 2020), we are aiming for a 30-fold increase in heat pumps manufactured and sold within the UK by the end of the decade, while also growing our heat pump exports. In the early part of the decade, subsidy measures (such as the Boiler Upgrade Scheme) will be essential to building supply chain capacity ahead of the introduction of regulation for new and off-gas-grid buildings. To support a transition to a market-led approach, we also propose the introduction of a market- based mechanism414 to put industry at the heart of efforts to develop heat pump supply chains and transform the consumer proposition for heat pumps in the UK. This market obligation will provide a stretching but clear direction of travel for industry, and a framework of incentives to encourage investment in expanding the market for low-carbon heat. It will do so while keeping the choice to install a heat pump voluntary to consumers. As set out in the consultation published alongside this strategy415, we are proposing an obligation for fossil fuel boiler manufacturers to achieve heat pump sales in line with the trajectory of market growth needed to put us on a path for 2050 and our ambition for 600,000 installations per year by 2028. This would operate similarly to tradable market-based mechanisms in other sectors, for instance ‘fleet-wide’ obligations on car manufacturers to increase the proportion of sales of lower-emission vehicles. The proposal will not only ensure we are on track to achieve our longer-term targets and deliver carbon savings, but will provide industry with the incentive and confidence to invest in heat pumps, so that the choice to switch to a heat pump becomes easier, more attractive and more affordable. 413 BEIS (2020), ‘Heat pump manufacturing supply chain research project’ ( 414 BEIS (2021), ‘Market-based mechanism for low carbon heat’ ( 415 BEIS (2021), ‘Market-based mechanism for low carbon heat’ (

Against this strategic and policy context, we would expect to see industry take a wide range of • innovate with products and processes to broaden the consumer appeal of heat pumps and make it easier for consumers to make the switch • expand consumer marketing and the range of ways they reach consumers • develop partnerships across the wider marketplace, for instance on service-based or green finance offers available for heat pump consumers • build the awareness of and skills for heat pumps among heating installers throughout • explore how to address barriers to and deployment of heat pumps that use alternative Transforming the market for heat networks Heat networks have the advantage of being compatible with a range of heat sources, including heat pumps and hydrogen. Particularly when electrifying heat, networks have benefits over individual building-scale solutions, • unlocking heat sources which result in higher performance compared to individual solutions (for example by using larger water source heat pumps operating at higher • reducing peak energy loads by using thermal energy storage In their Net Zero modelling, the CCC showed that 18% of the UK’s heat supply will need to must accelerate the deployment of these systems in the 2020s. We will continue to provide • identifying and developing project opportunities through the Heat Networks • the roll-out of heat networks by supplying gap funding for schemes through the Heat • very low-carbon heat sources, such as heat pumps and waste-heat recovery through the Green Heat Network Fund417 • improving the performance of existing poor-performing heat networks through the Heat 416 BEIS internal analysis of BEIS (2018), ‘Energy March 2018, special feature article - Experimental statistics on heat networks’ ( feature-article-experimental-statistics-on-heat-networks). Total UK heat demand in 2017 derived from BEIS (2019) 'Energy Consumption in the UK 2020' ( 417 BEIS (2020), ‘Green Heat Network proposals for the scheme design’ (

This is part of a broader Heat Network Transformation Programme, in which we are investing £338 million (over 2022/23 to 2024/25), designed to create the market conditions in the first half of the 2020s by helping to overcome barriers to heat network market entry, providing an environment for regulation and market mechanisms to successfully support increased deployment in the second half of the 2020s and into the 2030s. Regulation will be core to the transformation of the heat network market, and we intend to introduce Heat Networks Regulation as soon as possible. The regulations • introduce consumer standards • give equivalent statutory rights for heat networks as other utilities • enable carbon emissions limits to be set on the market It is intended that the Heat Networks Market Framework will introduce maximum CO2 emission limits for district heating by the early 2030s at the latest. These will be set so that heat networks swap gas generation for other low-carbon options.
We will also help the transition by regularly reviewing the contributions of different technologies. For example, gas combined heat and power (CHP) has previously been one of the most viable heat sources for heat networks as a result of the heat and electricity generation revenue streams. However, as the electricity network decarbonises the emission saving benefits of this technology are declining. Therefore, we conducted a consultation on new emissions factors for gas CHP in the Standard Assessment Procedure (SAP)418, published a call for evidence on future CHP policy and the role of CHP in our path to Net Zero419 (which closed in September 2020). This was followed by a further call for evidence on decarbonisation pathways for CHP operators420, which is open to 20 December 2021. Through the Heat Network Transformation Programme, we will continue to grow the market for low-carbon heat networks through the 2020s and provide financial support through the Green Heat Network Fund, combined with heat network zoning in the latter 418 BEIS (2021), ‘Standard Assessment Procedure (SAP 10.2): proposals for updates for heat networks’ ( 419 BEIS (2020), ‘Combined Heat and Power (CHP): the route to 2050 - call for evidence’ ( 420 BEIS (2021), ‘Combined heat and pathway to decarbonisation call for evidence’ (

We are currently consulting on proposals to provide local authorities in England with powers to put in place heat network zones, within which certain buildings will be required to connect to heat networks.421 This zoning will provide the market with a level of certainty that the demand for heat networks will be there to support investment decisions and growth in the market. We consider zoning to be a solution for supporting the development of existing and new heat networks in the 2020s. We are proposing the introduction of heat network zones in England by 2025,422 providing local authorities with the powers to identify and designate areas best suited for heat networks as the lowest cost, low-carbon solution. Given the diversity of local authorities we recognise that a one-size-fits-all is not appropriate and intend to ensure a flexible approach regarding the level of support and split of functions between central and local government (and industry), to ensure the most appropriate approach can be taken in each locality. Heat network zoning builds on the work the Heat Networks Delivery Unit has been doing since 2013 with local authorities to identify and develop heat network opportunities and we are already piloting how zoning could work through our City Decarbonisation Delivery Heat network zoning will help drive demand for heat network connection and grow the market by requiring certain buildings in heat network zones to connect to networks, where it is cost- effective to do so. Providing certainty that some types of building within a heat network zone will connect to the network and use the heat provided will give project sponsors and investors greater assurance which helps support delivery of viable, large-scale heat networks. This also helps drive the pace of deployment while reducing cost and enabling new investment models. Giving local authorities the powers to require buildings within heat network zones to connect to the network would help households and businesses to plan for their transition to Net Zero. It would also provide investment certainty to heat network developers and local authorities. We propose that within heat network zones, large public sector buildings, large non-domestic buildings, all new-builds and residential buildings which are already heated via communal systems (such as tower blocks) should be required to connect to the heat network within a given timeframe. We also propose that buildings could apply for an exemption from the requirement to connect, in order to avoid suboptimal outcomes – for example, where a low- carbon heating system is already installed. Many of these building types align with the buildings that are best equipped in 2020s for the transition, including public sector buildings, new-builds, social housing and large commercial and industrial buildings. Starting the natural transition of these buildings in the 2020s will support the action needed to save emissions and grow the low-carbon heating markets ready for wholesale transition in the 421 BEIS (2021), ‘Proposals for heat network zoning’ ( 422 Scotland recently enacted proposals on zoning in the ‘Heat Networks (Scotland) Act 2021’. 423 BEIS have worked with six cities (Bristol, Birmingham, Greater Manchester, Leeds, Newcastle and Nottingham) to pilot the identification of potential heat network zones. Whilst we are planning further, more detailed pilots this work has informed the approach outlined in our recent consultation, particularly in relation to the methodology and the data likely to be required in the identification and designation of potential zones. Zoning can also support the wholesale move to low-carbon heating alongside the wider framework of regulation and enablers which will drive the transition. Zoning has the potential to play a valuable role beyond the 2020s, when we start to transition all buildings on the gas grid to low-carbon heat. Zoning may provide some flexibility in timings up to 2050, potentially allowing buildings to delay their low-carbon heating transition so that they can connect to new infrastructure as it becomes available. While the objective of heat network zoning is to identify areas most appropriate for heat network deployment, it will also help highlight areas where other low-carbon solutions may be more appropriate. This knowledge could help inform our longer-term strategic decisions on the most appropriate, cost-effective solutions to decarbonising heat across the country. areas of the city where heat networks are theoretically the lowest-cost option to achieve heat decarbonisation based on current parameters and assumptions. technologies, according to BEIS’ current thinking.
Chapter 6: Creating the conditions for To be most effective, clear regulatory drivers and market-based approaches need to be accompanied by a cross-cutting framework for transformation which ensures that measures are accessible and affordable, that consumers have confidence in choosing and deploying these measures, and that we use lessons learned to remain on track for Therefore, we need a comprehensive strategy • cost distribution – which ensures costs are distributed fairly in a way that incentivises positive action to decarbonise • green finance – which ensures that those less able to pay are supported by relevant funding and financing measures • consumer protection – which provides consumers with the confidence that the measures they choose to install deliver the expected results • public engagement – which equips the public to make decisions best suited to their building and heating needs • monitoring and evaluation – which uses evidence and feedback to inform our Government will target support to enable action for those in most need. We recognise the challenge faced by businesses and consumers in recovering from the impacts of the COVID-19 pandemic, and we want to make sure that our policies support those who are hardest hit, such as small businesses and the fuel poor. We intend to provide more direct support at earlier stages of the transition, while growing the green finance sector to improve affordability and generate self-supporting markets in the longer term. We will also use taxpayer money efficiently to transform public sector buildings. We will build on the support and consumer protection available to ensure that measures are accessible and affordable, and that individuals have the confidence to take steps to decarbonise their home and place of work. 6.1. Cost distribution and fuel prices We want to ensure a smart, energy efficient, low-carbon heating system can be affordable and accessible to all. We will continue to review how best to fairly distribute • national and local infrastructure construction, reinforcement and operation including energy generation, transmission and distribution • retrofitting measures to upgrade individual buildings • moving away from fossil fuels • running costs of low-carbon heating As we face the costs of moving to clean forms of energy, fairness will be at the heart of our approach. Every household and business should be confident that all of us are paying our fair share of the costs of transitioning to Net Zero and that these costs are spread across all We will ensure that price incentives are fair, continue to address fuel poverty, and help achieve We need to strike the right balance between how costs are distributed • different types of households • domestic and business consumers, including the big energy users in industry There are a number of distortions within the existing business rates determination structures that restrict investment in low-carbon technologies. If these were addressed, businesses could more easily deploy the technologies needed to meet Net Zero while also improving productivity. HM Treasury’s fundamental review of business call for evidence424 explored how we can ensure business rates are not a barrier to our Net Zero We will work to ensure that the transition to Net Zero is fair and proportionate across the UK through improving our approach to affordability. 424 HM Treasury (2020), ‘HM Treasury fundamental review of business rates’ (

To help the market drive down the upfront costs of technologies, we will look to provide certainty and stability for businesses by setting clear and timely targets and standards. We want to create the conditions where innovative products and business models can flourish, leading to a downward pressure on costs, including investing in the development of innovative technologies, such as hydrogen, and employ a range of enablers to support delivery, including green finance and skills support. We will continue to learn from other sectors on reducing costs, including offshore wind. Some leading manufacturers and suppliers have already made great strides in reducing capital costs, demonstrating the direction of travel we are keen for industry to take. There are numerous factors that can influence the cost of heat decarbonisation. Energy efficiency improvements in buildings, demand shifting tariffs, the efficiency of heat pumps and the extent to which hybrid heat pumps are deployed will all have an impact. Alongside these improvements, and action to address distortions in energy prices, we anticipate that in future, heat pumps will be no more expensive to buy and run than gas boilers. We will launch a Fairness and Affordability Call for Evidence on options to shift or rebalance energy levies and obligations over this decade. We are planning to introduce a range of policy measures to support our ambition to grow the heat pump market, including the regulations on heating off-gas-grid buildings and the market- based mechanism. We are also exploring the possibility that a certain amount of targeted financial support for heat pumps may be needed both to ensure that complying with regulations is affordable for all consumers and that the balance of costs associated with the market mechanism remains proportionate. Separately, we are also considering how a market for hydrogen heating could operate ahead of making strategic decisions in 2026 on hydrogen’s role in heat decarbonisation. We will engage with stakeholders on these issues in due course. Improving the performance of our buildings and installing low-carbon heating often involves a high upfront cost, with long and uncertain payback periods. A portfolio of green funding and finance options needs to be available to prevent this from acting as a major barrier to uptake, in addition to working with industry to drive down costs through innovation and refining supply chains.
In this section • set out the currently available government grants, subsidies, and loans to support the public, especially for those less able to pay • highlight the growing demand for private finance • encourage the private sector to continue to evolve and improve the green finance options available for consumers

To build a market for energy efficiency and low-carbon heat, we need to make it as easy as possible for people to pay for and make these improvements. Therefore, our planned portfolio of action in the 2020s seeks to distribute costs in a socially and economically responsible way. To support those who are least able to pay, we will continue to provide targeted support and funding to ensure that the transition to energy efficient low-carbon heating is accessible and affordable to all, including through • Local Authority Delivery Scheme • Social Housing Decarbonisation Fund We have pledged over £9 billion of taxpayer funding over the next decade through proposals on public sector, social housing and fuel poor schemes. In August 2020, we announced a Net Zero building package worth in excess of £3 billion. The Prime Minister’s Ten Point Plan426 for a green industrial revolution invests £1 billion to make our homes, schools and hospitals greener, warmer and more energy efficient. However, the scale of investment required to fully decarbonise buildings is huge – therefore private finance, as well as government support, will be critical. Estimates suggest that upgrading as many homes to EPC band C by 2035 where practicable, affordable, and cost- effective will require mobilising up to £65 billion of investment for the UK.427 Between 2018- 2019, around 60% of EPC registrations in England and Wales for non-domestic buildings were below EPC band C.428 For non-domestic buildings, estimates suggest it could require around £20 billion in investment to deliver our Clean Growth Strategy429 commitments.430 425 Further government funded activities are provided in Annex 2: Current and planned activities for the 2020s. Equivalent schemes may be available in Wales, Scotland or Northern Ireland. 426 BEIS (2020), ‘The ten point plan for a green industrial revolution’ ( 427 BEIS and HM Treasury (2019), ‘Green finance strategy’, p. 37 ( 428 DLUHC ‘Live tables on Energy Performance of Buildings Certificates’ ( 429 BEIS (2017), ‘Clean Growth Strategy’ ( 430 BEIS and HM Treasury (2018), ‘Helping businesses to improve the way they use call for evidence’ (

Therefore, in addition to government schemes which provide targeted support to those less able to pay, we need to establish a fit-for-purpose green finance market that provides a range of financing options to meet the needs of all consumers, especially those to whom less government-funded support is available. A comprehensive portfolio of government and private-funded green finance products will encourage homeowners to take earlier and more comprehensive action than is required A range of private finance options, alongside government support, is needed to ensure affordable, accessible decarbonisation for all. We want to continue to stimulate the market to provide innovative financial support. Growing demand for green finance Decarbonising buildings will require the development of a market for finance, so • building owners and occupiers can access appropriate financing when they require it • investors have opportunities of a suitable scale, and a good enough understanding of risks, to invest significant capital The demand for green finance has been low to date. However, long-sighted regulatory signals, and the gradual reduction of public funding available to those more able to pay, should see significant demand for green finance over the 2020s. The investment market will increase in size if we incentivise building owners and occupiers to invest in low-carbon heating and energy efficiency measures. Additionally, improving consumer protection and public engagement will be key to encouraging action by consumers, which will further grow the market and investment demand. Ensuring that high-quality installations deliver expected outcomes also reduces the associated financial risk for investors. We acknowledge that a single financial product will not suit the needs of all consumers and that the types of investment required may vary between property types, tenure types, technologies, and business users. Some consumers will be able to meet the costs of these measures upfront. However, others are likely to need to spread the cost over time – and low income and fuel poor consumers and SMEs may not be able to pay at all. Larger buildings, and those with many occupants use shared infrastructure and bring economies of scale, while individual houses have individual costs per property. Similarly, some of the technologies we are developing (such as hydrogen for heating) do not have an investment track record, and therefore proxy investment indicators (such as natural gas boilers and networks) are needed. Large investors typically look for large-scale investments. However, much of the investment to decarbonise buildings and heating will be in a large number of small investments (individual building improvements). Therefore, multiple small investments will need to be aggregated to create large enough packages to be attractive to large investors. Each type of energy efficiency or heat source replacement measure carries its own investment profile in terms of risk, returns, and duration. There are likely to be opportunities to bundle interventions together and match financing to the expected lifetime of a measure. This could include infrastructure-type approaches for very long-life assets that may be shared between multiple beneficiaries (such as ground arrays for certain types of ground source heat pumps, where the asset may last up to 100 years and be shared across properties). This would enable long-term investments (such as pension funds) into the space. As trailed in the Green Finance Strategy431 in 2019, and given the support for a pay-as-you- save option to green financing, we will explore opportunities to simplify and improve the GB Green Deal framework to support the funding of energy efficiency measures. Developing supply of green finance Different types of buildings – with different users, owners, and heating needs – will require different types of financial support to decarbonise.
Therefore, we need to support the development of a competitive, fit-for-purpose green finance market that provides a range of financing options to meet the needs of different consumers. This may include loans, mortgages, or other financing products. There is investor interest in green finance products globally, but this has yet to be converted into established financial products in the UK. Government action is vital to create a flourishing market for UK green finance products, which could see capital flow into those areas, including Therefore, as set out in our Green Finance Strategy432, there is a need to stimulate innovation in green finance products to increase the options available to households, building owners and businesses. Opportunities of a suitable size, duration, and risk profile will encourage investors A total of £1.8 million grant funding has been awarded to three organisations in the Green Home Finance Innovation Fund competition.433 This programme, which will conclude by March 2022, is aiming to promote the establishment of green lending products to be made available to domestic owner-occupiers for energy performance improvements. To overcome the barrier to innovation posed by high initial development costs in an untapped green finance market, the programme is providing funding for the initial development and piloting of a limited number of green home finance products, • a digital platform that connects green vendors to mortgage lenders • an online home energy saving tool and a mortgage product • an additional borrowing product to encourage customers to install energy efficiency 431 HM Treasury and BEIS (2019), ‘Green finance strategy’ ( 432 HM Treasury and BEIS (2019), ‘Green finance strategy’ ( 433 BEIS (2020), ‘Green Home Finance Innovation Fund competition - successful bids’ (

Building on the outputs and learnings from the Green Home Finance Innovation Fund competition, a further programme will look to provide grant funding to stimulate more innovation in the UK green home finance market. This may include support for UK retail lenders to design, develop and pilot a range of finance propositions that encourage domestic installation of energy efficiency measures and low-carbon heat. This funding programme will formally launch by Spring 2022. BEIS has invited the UK Infrastructure Bank (UKIB) to help steer the design and delivery of the green home finance programme, and we will work further with UKIB to explore whether they can play a wider role in scaling-up green home finance. Lenders will have a significant role in building a competitive green finance market. They may be able to offer green financing options as part • a secured loan, such as a mortgage • green equity release products • unsecured concessional loans, that would allow consumers to spread the costs of installing energy efficiency and low-carbon heat sources and systems For mortgaged properties, lenders are uniquely placed to influence homeowners, landlords and businesses at key trigger points, such as at the point of purchase, renovation, or re-mortgage. We ran a consultation on the potential role of mortgage lenders in financing green improvements434 (November 2020 – February 2021). The consultation builds on feedback from the government’s call for evidence on building a market for energy efficiency,435 which was Lloyds, RBS, and Nationwide, which account for about 40% of the UK’s residential and buy-to- let mortgage market436, made commitments to support homeowners to improve the energy efficiency of their homes in 2020.437 As part of their commitment to support a post-COVID green recovery, Lloyds Banking Group have also committed to explore how they can support the non-domestic sector to invest in low-carbon heat and energy efficiency measures.438 This action from the market demonstrates that they are beginning to recognise the important role they play in decarbonisation. In addition, there is emerging evidence suggesting a link between investments in energy efficiency and low-carbon technology on the one hand and property values and a lower risk of default on the other. 434 BEIS (2020), ‘Improving home energy performance through lenders’ ( 435 BEIS (2017), ‘Building a market for energy call for evidence’ ( 436 UK Finance (2019), ‘largest mortgage lenders’ ( research/data/mortgages/largest-mortgage-lenders). 437 Lloyds (2020) ( group/2020/lloyds-banking-group-pledges-to-cut-carbon-by-half.pdf), NatWest ( and Nationwide (2020) ( 438 Lloyds Banking Group (2020) ( future/executive-summary-supporting-a-green-recovery-post-covid19.pdf). In the non-domestic sector, there are existing finance products for energy efficiency in larger buildings. However, for smaller properties and particularly those occupied by SMEs, the availability of finance for such projects is limited. This is a general challenge for SMEs. In the latest BVA BDRC SME Finance Monitor report, 41% of SMEs stated that it was difficult for them to access finance.439 With a new focus on Net Zero, lenders and industry leaders (such as Bankers for NetZero440 and the Green Finance Institute441) are working to understand the types of financial products that will be most effective for businesses, particularly SMEs. We also launched the Boosting Access for SMEs to Energy Efficiency competition.442 The competition offered up to £6 million in funding for innovative solutions that reduce transaction costs and introduce economies of scale for lenders investing in small-scale energy efficiency. It also aimed to attract SMEs to use external finance through simple online platforms. We will work to provide an environment which enables innovation in business models for homes and businesses. This will include building on pay-to-save models, wider use of energy service contracts, and new offerings such as ‘heat- or comfort-as-a-service’, which provides customers with an agreed heating or comfort plan rather than fuel alone. Consumers need to be assured that upgrades to their homes and workplaces will be deliver the expected results, this can be achieved • providing protection for consumers Poor-quality installations of any heating system can lead to over or under heating of properties, dampness, higher energy bills, and at worst could leave consumers feeling cold in their homes, or even be unsafe. Therefore, consumer protection is a critical part of the transition to low- Consumer protection is a key part of enabling a transition to Net Zero.
We will continue to ensure we have a rigorous technical standards regime to provide households and businesses with assurance of high-quality decarbonisation measures. 439 BVA BDRC (2011), ‘SME Finance Monitor’ ( last 440 APPG Fair Business Banking, ‘Bankers for NetZero’ ( onwards/bankers-for-netzero/). 441 Green Finance Institute ( 442 BEIS (2020), ‘Boosting access for SMEs to energy efficiency (BASEE) winning projects’ (

Quality of work delivered – skills and standards Section 2.3 Skills discusses action to upskill the workforce to prepare for mass decarbonisation In the Each Home Counts Review443 we considered what is needed to encourage and enable consumers to decarbonise their buildings safely and confidently. We have implemented recommendations made in the review, including the TrustMark government-endorsed quality scheme, supported by a Code of Practice and Consumer Charter, and the Simple Energy The TrustMark scheme is a quality mark based on the recommendations from the Each Home Counts Review.445 To register with TrustMark, businesses must adhere to its framework operating requirements, its code of conduct and consumer charter, thereby demonstrating technical competence, good trading practices and good customer service. To ensure sufficient consumer protection and guarantees are in place, businesses installing measures under government schemes (such as the Energy Company Obligation) are required to be registered with TrustMark or equivalent schemes. Publicly Available Specification (PAS) standards set an agreed level of quality and good practice, and help to maintain and build trust on the market products and services. The British Standards Institute published a new, more robust version of these standards (from the existing PAS 2030:2017 standard) in June 2019. From 1 July 2021, most government schemes will not accept PAS 2030:2017.446 The new standards mark a step change for industry and cover the end-to-end delivery of energy efficiency measures (PAS 2035:2019 and PAS 2030:2019). These have been embedded within the new TrustMark government-endorsed quality scheme. • PAS 2035 covers how to assess dwellings for retrofit, identify improvement options, design and specify energy efficiency measures, and monitor retrofit projects • PAS 2030 was redeveloped in conjunction with PAS 2035 and covers the installation, commissioning, and handover of retrofit projects PAS 2038:2021 sets out requirements to improve energy efficiency (as part of a whole-building approach) when retrofitting non-domestic buildings. The government is exploring how to encourage the uptake of the non-domestic standard. 443 BEIS and DLUHC (2016), ‘Each Home Review of Consumer Advice, Protection, Standards and Enforcement for Energy Efficiency and Renewable Energy’ ( home-counts-review-of-consumer-advice-protection-standards-and-enforcement-for-energy-efficiency-and- 444 Simple Energy Advice online platform, available 445 Independent review chaired by Peter Bonfield (2016), ‘Each Home Review of Consumer Advice, Protection, Standards and Enforcement for Energy Efficiency and Renewable Energy’ ( standards-and-enforcement-for-energy-efficiency-and-renewable-energy). 446 BEIS, UKAS and the British Standards Institute agreed that the PAS 2030:2017 standard would be accepted for remaining installations under the Green Homes Grant Voucher Scheme and Local Authority Delivery Scheme (Phase 1) until 31st October 2021. We have demonstrated a whole building approach through mandating the use of PAS 2035 for the Social Housing Decarbonisation Fund (SHDF) Demonstrator. This is helping develop capacity and capability, improving and increasing use of new tools, and allowing better investment decisions to be made for each building archetype. Low-carbon and renewable heat technologies The Microgeneration Certification Scheme (MCS)447 produces product and installation standards for small-scale renewable technologies that allow for the certification of products and installers. These standards ensure that an installer must install to a defined quality, using products that have met rigorous testing standards. A certification scheme is run on behalf of MCS by certification bodies who hold UKAS accreditation to ISO 17065.448 To be certified, installers must both adhere to MCS standards and be members of a consumer code that has been approved by the Chartered Trading Standards Institute. These consumer codes set out standards that installers must meet in contracting with consumers. The codes cover advertising and promotion, estimates and quotes, cancellation rights, and protect against mis-selling. To ensure high-quality installations, we currently mandate that installers must be MCS certified or equivalent to participate in government incentive schemes (such as the Boiler Upgrade Scheme). They must also use MCS certified (or equivalent) products and carry out the installation in compliance with the relevant MCS (or equivalent) installation standard for that technology.449 They must also comply with the requirements of the relevant consumer code. We intend to continue to mandate this requirement. However, we will keep this under review as part of our work to continuously improve consumer protection across low-carbon and renewable heat schemes. We will also consider whether further measures should be introduced to ensure consumers have confidence in the quality of installations. We recognise that many businesses and public buildings will require a heating system with a capacity over 45 kW, and we will consider how consumers in these instances are protected against poor-quality installations. We are also looking to consider the role of standards (like PAS 4444, production of which was funded by BEIS's Hy4Heat programme) if hydrogen is widely used as a heat source for buildings. We are currently consulting on a UK standard for low-carbon hydrogen production450, which will establish a greenhouse gas emissions threshold to ensure the hydrogen production routes we support provide real carbon reduction benefits. In developing the standard, we have commissioned extensive external research to consider the carbon intensity of different hydrogen production pathways and have published this report alongside 447 Further information about the Microgeneration Certification Scheme can be found 448 A list of UKAS training courses is available advisory/training/?gclid=EAIaIQobChMI6Mv-8eSS8wIVUertCh0X4gppEAAYASAAEgLeMvD_BwE. 449 Ofgem (2020), ‘Domestic RHI Product Eligibility’ ( 450 BEIS (2021), ‘Designing a UK low carbon hydrogen standard’ (

In this parliament we intend to take primary powers to regulate the heat network market to protect consumers and provide assurance of high-quality standards. In 2018, the Competition and Markets Authority (CMA) set out recommendations for introducing sector-specific heat network regulations to protect consumers. The government accepted this recommendation and published the Heat Networks Market Framework consultation451 on 6 February 2020.
We are committed to developing a heat network market where consumers are properly protected and benefit from reliable and affordable heating. We want heat network consumers to have easy access to information about their heat network, a good quality of service, fair and transparently priced heating and a route for redress if these standards are not met. All heating installations must comply with Building Regulations.452 Where installers certify compliance through a Competent Person Scheme453, consumers receive additional protections. Competent Person Schemes must ensure that consumers are provided with appropriate financial protection (for a minimum of six years) to correct work done on dwellings that is not compliant with Buildings Regulations. In 2021, Government consulted on changes to Building Regulations and the accompanying Approved Documents, which provide practical guidance on how the Building Regulations can be satisfied. These proposals included additional guidance on the standard expected of heat pump installations. The consultation closed in April 2021 and Government is currently 451 BEIS (2020), ‘Heat building a market framework’ ( 452 Information and advice about building regulations approvals is available on GOV.UK 453 Information about competent person schemes is available on GOV.UK regulations-approval/use-a-competent-person-scheme. Protecting vulnerable consumers Following the results of our consultation on proposals to update the 2015 Fuel Poverty Strategy for England454, we have included further detail of our vulnerability principle in our policy paper on Sustainable protecting vulnerable households in England455, published February 2021.456 Under the vulnerability principle, we specifically consider the needs of low income households most at risk from the impact of living in a cold home while designing fuel poverty policy. Based on NICE guidance457, in England, we consider low income households to be vulnerable if at least one member of the household falls into one (or more) of the following • living with a long-term health condition which makes them more likely to spend most of their time at home, such as mobility conditions which further reduce ability to stay warm • living with a long-term health condition which puts them at higher risk of experiencing cold-related illness (for example, a health condition which affects their breathing, heart As trailed in the ECO3, Improving Consumer Protection government response458 we are committed to ensuring that high standards for consumer protection become the norm, especially for low income households. Our long-term ambition is that anyone improving the heating efficiency of their home or workplace will have the same level of confidence in that product or installation as they would expect of other comparable goods. We will continue to consider how to best support vulnerable households as we design fuel To deliver consumer protection, we need to help consumers make choices that best suit their situation and deliver high-quality heating in their homes through clear, accurate and relevant information and advice. Our key communication channels are detailed in section 6.4 Public 454 BEIS (2019), ‘Fuel poverty strategy for England’ ( 455 BEIS (2021), ‘Sustainable protecting vulnerable households in England’ ( 456 Welsh Government is currently consulting on the fuel poverty strategy for Wales. 457 Based on NICE (2015), NG6 guidance on ‘Excess winter deaths and illness and the health risks associated with cold homes’ ( 458 BEIS (2018), ‘Energy Company ECO3, 2018 to 2022’ (

Public engagement is a vital element of successful decarbonisation, since the public will need to take action to change the way they heat their homes and workplaces. We will ensure that all consumers are made aware of the actions they should be taking, the specific changes that will affect them, and the support available. The importance of public engagement If people are adequately informed, they are able to make choices that best suit their heating needs and maximise carbon reduction. Without engagement and understanding, the public will be less able to be early adopters of energy efficiency measures and low-carbon heating, or make use of the green finance options available. We all have a shared responsibility to achieve Net Zero by 2050. Mass transition will require extensive co-operation and collaboration both nationally and locally between a range of actors. However, according to the CCC, behaviour change and contributions from households have so far played little to no role in emissions reductions.459 We understand that a lack of consumer engagement can be a barrier to deployment of low-carbon heating, as individuals may feel hesitant to affect change that they do not understand. Ultimately, more information leads to We want more consumers to understand the importance and urgency of decarbonising how we heat our buildings and opt to voluntarily upgrade their buildings. We will continue to review and improve the way we communicate information and provide support. Public engagement should be used • inform and shape policies by drawing on the expertise of others, through public consultation and advisory groups, such as Citizens Advice • raise awareness and acceptance of substantial infrastructural and behavioural change needed to decarbonise buildings over the next 30 years • improve understanding of the rationale behind Net Zero and the need to decarbonise • inform the public and industry of relevant policy and regulatory changes to ensure • provide tailored advice so that individuals can confidently make informed choices regarding heat sources and energy efficiency measures in their homes and • help individuals be equipped to use these technologies effectively, building confidence and readiness for change 459 CCC (2019), ‘Behaviour change, public engagement and Net Zero’ ( content/uploads/2019/10/Behaviour-change-public-engagement-and-Net-Zero-Imperial-College-London.pdf). We view public engagement as a two-way exchange of information and advice. In our policy development, we will continue to engage, listen to, and use the expertise of others to inform • commissioning expert advice for setting and meeting targets • publicly consulting on our proposals before launching policies • collecting and channelling feedback into policy development, as part of our monitoring We have used the responses to our consultations and calls for evidence to inform our portfolio of actions and will continue to inform our ongoing heat and buildings strategy.
A reformed and refocused scheme460 (published 2016, response 2018) Non-domestic further proposed amendments461 (published 2017, response 2018) Building a market for energy call for evidence462 (published 2017, response A future framework for heat in call for evidence463 (published and response Energy Performance Certificates in call for evidence464 (published 2018, biomass combustion in urban areas465 (published 2018, response 2020) Heat Networks (Metering and Billing) Regulations 2014: proposed amendments466 (published 2019, response 2020) 460 BEIS (2016) ‘The Renewable Heat A reformed and refocused scheme’ ( 461 BEIS (2017,) ‘The Non-domestic Renewable Heat further proposed amendments’ ( 462 BEIS (2017), ‘Building a market for energy call for evidence’ ( 463 BEIS (2018), ‘A future framework for heat in call for evidence’ ( 464 BEIS (2018), ‘Energy Performance Certificates in call for evidence’ ( 465 BEIS (2018), ‘Renewable Heat biomass combustion in urban areas’ ( 466 BEIS (2019), ‘Heat Network (Metering and Billing) Regulations 2014: proposed amendments’ (

• a consultation on the implementation of EPC band B minimum energy efficiency standards in non-domestic private-rented buildings490 • a consultation on facilitating a grid conversion hydrogen heating trial492 • a consultation on a market-based mechanism for low-carbon heat, to grow the numbers of low-carbon heating appliances installed in existing premises each year493 • a consultation on regulations to phase out fossil fuel heating in homes not connected • a consultation on regulations to phase out fossil fuel heating in businesses not • the government response to Clean Heat Grant proposals within ‘Future support for low-carbon heat’ consultation, ‘Future Support for Low Carbon Boiler Upgrade There are clear benefits of providing support through effective consumer engagement. This was evidenced by the smart meter roll-out. Smart Energy GB497 was established in 2013 as the independent, not-for profit body responsible for delivering coordinated 490 BEIS (2021), ‘Non-domestic Private Rented Sector minimum energy efficiency EPC B implementation’ ( energy-efficiency-standards-epc-b-implementation). 491 BEIS (2021), ‘UK hydrogen strategy’ ( 492 BEIS (2021), ‘Hydrogen for facilitating a grid conversion hydrogen heating trial’ ( 493 BEIS (2021), ‘Market-based mechanism for low carbon heat’ ( 494 BEIS (2021), ‘Phasing out fossil fuel heating in homes off the gas grid’ ( 495 BEIS (2021), ‘Phasing out fossil fuel heating systems in businesses off the gas grid’ ( 496 BEIS (2021), ‘Government Future support for low carbon heat’ ( 497 Smart Energy GB (

The Simple Energy Advice online platform504 has been developed to provide consumers with information and advice on energy efficiency and low-carbon heating tailored to the consumer’s home. Over 1.5 million unique users have utilised this service since its launch. This was enhanced in September 2020 to provide consumers with more information and help to find local tradespeople, including heat pump installers registered with TrustMark.505 We will enhance our digitally-led service and move our Simple Energy Advice service to GOV.UK, which will improve user experience. Our redesigned Energy Performance of Buildings Register506 provides simple access to EPCs, Display Energy Certificates and air conditioning inspection reports with their associated recommendations to help consumers improve the energy efficiency of the building that has been assessed. There are other technologies and interventions which can improve public understanding of energy use and energy • in-home displays for smart meters give accurate information about energy consumption to help consumers easily understand how to use less energy and save money on their • energy labels provide consumers with easy-to-understand information about the energy performance of products through a scale similar to the EPC, which encourages people to purchase more efficient products • the Energy Technology List507 sets out the most energy efficient energy-using products, and acts as an incentive scheme for businesses to invest in these technologies We appreciate the significant role of local actors engaging at a local level to provide more targeted advice to consumers relevant to their local area. We are considering options to support tailored advice in local areas to help more households improve the energy performance of their homes, and get ready for Net Zero. Current public awareness and understanding Despite these existing channels, we recognise that there is currently low public awareness of any need to switch to low-carbon heat sources and systems and little understanding of the scale of the challenge.508,509,510 504 Simple Energy Advice online platform, available 505 There also exist other sources of support beyond Simple Energy Advice and Citizen’s advice, such as Care and Repair Cymru ( which offers help to older people to live independently in warm, safe, accessible homes. 506 Find an energy certificate on 507 The Energy Technology List, available 508 BEIS (2020), ‘Transforming public attitudes research’, Public Attitudes Tracker Wave 32 ( 509 CCC, (2019) ‘Behaviour change, public engagement and Net Zero’ ( content/uploads/2019/10/Behaviour-change-public-engagement-and-Net-Zero-Imperial-College-London.pdf). 510 Modassar Chaudry and others (2015), ‘Uncertainties in decarbonising heat in the UK’ (

We commissioned NatCen to engage with the public to better understand current attitudes towards transition to low-carbon heating. The results were published in September 2020.511 Key findings • low public understanding of the need for a mass heating transition • high levels of support for policies seeking to reduce carbon emissions • agreement that levels of awareness would need to be tackled to achieve heat Consumers who considered, but did not proceed with, a heat pump installation through the Renewable Heat Incentive, fed back that the main barrier was the difficulty finding trustworthy and consistent advice bespoke to their needs.512 We see this Heat and Buildings Strategy and its accompanying documents as a significant step toward improving awareness of the challenge ahead and the options and opportunities available for households, businesses, and industry to transition to energy efficient low-carbon We will review and improve our communications to ensure that the public have the information they need to make decisions that are best suited to their building and heating needs. We communicate our broader approach to public engagement in our Net Zero Strategy513.