Net Zero Strategy and Heat and Buildings Strategy — House of Lords, 2021-10-20
Topic: Mixed Topics
Martin Callanan (Conservative, Centre-right): I thank the noble Lords, Lord Grantchester and Lord Oates, for their comments, even though the screen indicated the noble Lord, Lord Oates, had been renamed Lord Fox for most of his contribution. I am pleased to say he has been reincarnated in a different guise I was pleased to have the initial support of the noble Lord, Lord Grantchester. It deteriorated slightly from there, but never mind. On funding commitments, since the 10-point plan was announced, and including the commitments yesterday, that makes a total of £26 billion worth of public investment. More importantly, that has leveraged £90 billion of private sector investment into this sector as well. I can confirm the figure of £950 million for the home upgrade grant, which will particularly benefit the homes of low-income families in off-gas areas Both the noble Lords, Lord Oates and Lord Grantchester, mentioned the boiler upgrade scheme, which I can confirm will have £450 million over three years: £5,000 for air-sourced heat pumps, £6,000 for ground-sourced heat pumps. What most noble Lords missed, and a number of commentators as well, is that this is not the totality of our support for heat pumps. We are also installing a considerable number under the social housing decarbonisation fund, the public sector decarbonisation scheme and, of course, from 2025 when the new housebuilding strategy comes into force, there will be, pretty much, no alternative option for new builds than to install low carbon heating, so that will see a further acceleration. We are currently installing about 30,000 heat pumps a year: roughly 10,000 as a result of subsidy schemes and 20,000 in new builds. This is a massive ramping up If the green homes grant taught us anything, it is that we cannot just inject a large amount of funds and expect the industry to change overnight. There is a huge amount of transformational change taking place. To the credit of many private sector companies, they are coming forward with ambitious plans themselves. If I may mention but one: I visited Octopus yesterday morning. It has a fantastic new training centre in Slough and is proposing to employ and retrain hundreds, if not thousands, of currently qualified gas engineers to enable them to install heat pumps in the new revolution. The chief executive told me that by April next year, including this new grant system, they hope to be offering heat pumps for costs roughly comparable to existing gas boilers. I know that many other private sector companies have similar plans Clearly, heat pumps are expensive at the moment, but this is all about government funding, pump-priming the market, helping the private sector to innovate and bring the costs down. I am sure noble Lords will accept, that it is a strategy that was extremely successful in the offshore wind market. Costs for offshore wind were initially very expensive and are now comparable to, or possibly even cheaper—we will find out in the contracts for difference round—than existing fossil fuels I was surprised to hear that both the Labour Party and the Liberal Democrats now seem to be in favour of banning boilers. Our position is that it is certainly our aim and ambition that by 2035 we will be able to move away from installing gas boilers. Crucially, before we do that, we need to make sure there are viable alternatives in place. We certainly hope—given the figures that I gave for heat pumps—that by 2030 there would be comparable offers on the market, and alternatives in place. Maybe the hydrogen offer will be comparable by then. We will certainly consult on the possibility of making all boilers hydrogen-compatible, to enable that transition to take place, but as of yet the jury is very much out on whether there will be the ability, at reasonable cost, to produce the enormous quantities of hydrogen that would be required if we were to get anywhere close to it replacing natural gas. I am on the record as saying it is more likely that we will end up using it for industrial processes—trains, HGVs et cetera—rather than the large-scale replacement of gas for domestic heating. Although already, of course, there are trials taking place of hydrogen being injected into the gas main. Injecting up to 20%, it is still possible to work with existing appliances The noble Lord, Lord Grantchester, also raised the issue of electric vehicles, and I can tell him that a further £620 million of funding for zero emission vehicle grants and EV infrastructure was announced. We allocated a further £350 million of the up to £1 billion automotive transformation fund, to support the electrification of UK vehicles and, importantly, their supply chain, as well, of course, as a £3 billion integrated bus network, and £2 billion to enable towns and cities to be cycled or walked The noble Lord, Lord Grantchester, ended by talking about a pick-and-mix approach. I fundamentally disagree —this is a comprehensive strategy, looking at every individual sector of the economy in turn and outlining a comprehensive strategy of how they all need to do their bit to contribute towards the legally binding net-zero target I am grateful that the noble Lord, Lord Oates, started on a positive note before things descended. He asked me for details of the funding under the heat and building strategy. We have talked about the boiler upgrade scheme, and the social housing decarbonisation fund that is bubbling away in the background. They are extremely successful schemes, and I recommend that noble Lords visit some of the excellent schemes we are already installing. That is a further £950 million and £800 million respectively over 2022-23 and 2024-25. A further £1.4 billion over 2022-23 to 2024-25 is being invested in the public sector decarbonisation scheme, with the aim of reducing emissions from public sector buildings. There is £338 million for the heat network transformation programme and £270 million for the green heat network fund, sector regulation and new heat network zones by 2025 I understand why noble Lords will always call on us to do more, but I think this does represent a comprehensive strategy tackling all parts of the economy and shows how they can all do their bit to contribute towards our decarbonisation goals. It was even recognised by the BBC’s environmental analyst Roger Harrabin. This is an extremely ambitious programme and is world leading.