The Chancellor of the Exchequer’s 2020 budget announcement this week has revealed some of the measures it seeks to implement in pursuit of clean growth and its ambitious carbon reduction targets. The budget included a wide range of commitments that will potentially support a greater uptake of low carbon heating technologies.

Renewable Heat Incentive extension
The government has confirmed that it will extend the domestic RHI until the end of March 2022, with continued tariff support for heat pumps, biomass and solar thermal systems. The future of the non-domestic RHI is less certain, with the government having said it will ‘introduce a new allocation of flexible tariff guarantees to the Non-Domestic RHI in Great Britain in March 2021, helping to provide investment certainty for the larger and more cost-effective renewable heat projects’.

Low carbon heat support 
The government says it will consult on a new low carbon heat support scheme to replace the RHI from April 2022. A £100m fund will provide grants to help households and small businesses invest in heat pumps and biomass boilers.

Green Heat Network Fund
This scheme follows on from the current Heat Network Investment Project, which runs out in March 2022. After that, the green heat network fund kicks in to provide a £270m investment that enables new and existing heat networks to adopt low carbon heat sources. In the meantime, the budget confirms that £96m of funding will see out the current Heat Network Investment Project.

Green gas levy consultation
The government aims to introduce a levy on gas suppliers to support green gas injection to the grid. This will accelerate the decarbonisation of the UK’s gas supply by increasing the proportion of biomethane in the grid, with an implementation date in late 2021.

Carbon Capture and Storage (CCS) support
At least £800 million will be available to establish two or more carbon capture clusters by 2030. The facilities would capture the CO2 emissions before they are released into the atmosphere. The sites will be developed using consumer subsidies.

Industry reaction to these budget commitments has been mixed. The EUA (Energy and Utilities Alliance) has described the budget as ‘interesting but ultimately lukewarm’. Isaac Occhipinti, head of external affairs, says: “We are pleased that Chancellor Sunak has included green gas, heat pumps and heat networks, in addition to a low carbon heat support scheme, but in all honesty, it’s not enough. An affordable, secure and sustainable energy system is of paramount importance to the UK. If we are to achieve it, we must put in what we seek to get out. We believe that carbon capture is one of the most significant potential contributors to reducing carbon emissions whilst continuing to utilise the UK’s most valuable asset – the gas grid.”

Speaking for the IGEM (Institute of Gas Engineers and Managers), Ian McCluskey says government backing for CCS acknowledges the importance that gas plays in the UK energy mix. He says: “Natural gas continues to have an important role in providing power and heat across the UK and, as we transition to a decarbonised energy sector the scaling up of biomethane, hydrogen and CCS will underpin a successful transition.”

Jeff House, head of external affairs at Baxi, says the budget sets out incentives needed for homeowners to embrace low carbon solutions. “It is great to see that heat pumps and heat networks are amongst the supported measures. It will go some way in making alternatives such as heat pumps more attractive to consumers, together with helping develop the supply chains required to deliver installations.”

Mark Wilkins, head of training and external affairs at Vaillant adds: “The grant of £100 million for households and small non-domestic buildings to install heat pumps or biomass to replace fossil fuel heating should be applauded. However, it’s important this incentivisation carefully balances capital and operational incentives to ensure that homeowners are both able to afford the upfront cost of renewable heating solutions and run them efficiently once installed.”

The Solar Trade Association, however, was less enthusiastic about the detail in the budget. STA chief executive Chris Hewett says: “Unfortunately this budget is thin on measures to tackle climate change and support the transition to a low-carbon economy. Renewables are vital to reaching net zero, and without good policies in place to support the uptake of solar we will fall well short of the 40 gigawatts needed by 2030 to keep on track. Time is running out to act.”