INDUSTRIAL & COMMERCIAL HEATING
How does the off-grid commercial heating sector fit into the new approach to Net Zero?
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Malcolm Farrow, head of public affairs at OFTEC is calling for a diversity of heating technologies to be embraced in order to succeed in decarbonisation and this includes the renewable liquid fuel Hydrotreated Vegetable Oil (HVO) as an ideal alternative for some off- grid properties
lot has happened since the government published its Heat and Buildings Strategy in 2021. At the time this was a landmark document, outlining the UK’s overarching
decarbonisation strategy to achieve Net Zero emissions by 2050. It sought to set in motion fundamental changes to the way commercial and domestic buildings would be heated, with a primary focus on the off- grid sector and electrification with a shift away from fossil fuel heating. However, in the years that followed, the true impact of the pandemic and war in Ukraine became apparent and fundamentally changed the economic and social landscape. With no further update from the government on their plans, businesses were left in limbo facing uncertainty over how the cost of the net zero transition would be paid for.
A combination of economic headwinds and
growing political pressure recently led the Prime Minister to announce a change of direction in some of his government’s major net zero policies. This is undoubtedly a defining moment in the UK’s drive to carbon neutrality. But many questions still remain for the off-grid commercial heating sector. It’s vital these are answered quickly to provide clarity for businesses to avoid creating wider uncertainty. Rishi Sunak initially confirmed the proposed ban on installing new fossil fuel boilers from 2026 in existing off-gas grid domestic homes would be delayed to 2035. Subsequently, we have clarified that the 2026 deadline for small businesses and 2024 deadline for larger commercial premises is similarly being pushed back to 2035. In its proposals the government expected these buildings to instead switch to a heat pump once their existing heating system came to the end of its lifecycle. For large parts of the commercial sector
still recovering from the strain of the past few years and now navigating the current economic challenges, this refinement to the government’s plans gives some much-needed breathing space.
The Prime Minister also announced an exemption to the phase out of fossil fuel boilers so that properties that would struggle the most
to switch to a heat pump, or other low carbon technologies, would not be required to do so. This is expected to be around a fifth of buildings. So, what does this all mean for the off-grid sector? Whilst this is a change of direction, the endgame is still the same – the government remains committed to Net Zero by 2050. We must continue the transition onto low carbon heating and not lose momentum. What has changed is that the government
recognises that choice and fairness must now be at the heart of its decarbonisation strategy. We welcome this and have long argued for such an approach. No just for moral reasons, but because it’s clear if businesses aren’t on side, the scale of change needed won’t happen. According to the Heat and Buildings Strategy, just under a fifth (17%) of the 1.7 million non- domestic properties in England and Wales are situated off the gas grid. They contribute to around one third of UK emissions from building stock. Heat pumps undoubtedly have an important role to play in their decarbonisation. For many commercial buildings, they are an ideal solution and OFTEC will continue to support the rollout of this technology. But as the government has recognised, many properties off-grid are not suited to the
technology without extensive retrofit cost and disruption. These buildings tend to be older and poorly insulated. They often require new radiators, new piping and the reintroduction of a hot water tank for the heat pump to work effectively. This is simply not realistic, particularly in the current economic climate. Businesses have more challenging issues to overcome. They need alternative, straight forward, cost effective solutions.
For the past two years we’ve demonstrated that the renewable liquid fuel Hydrotreated Vegetable Oil (HVO) is an ideal alternative for these harder to treat properties on oil heating. The fuel is made from used cooking oil (UCO) and reduces emissions by around 88%. Boilers can be converted in just a few hours for around £500. Around 150 buildings, including a pub, school and church have made the switch and the project has been a huge success. The government recognised this solution and the Energy Act requires the Department of Energy Security and Net Zero to deliver a consultation on a renewable liquid heating fuel obligation within 12 months following Royal Assent. It followed growing pressure from rural MPs for the government to deliver this option for homes and businesses off the gas grid. The liquid fuel heating industry is ready to
rollout HVO at scale if the government can put in place the appropriate mechanisms. We are now urging the government to bring forward its consultation as quickly as possible to drive this forward. The government also needs to go further to show they are on the side of off-grid businesses by supporting with the transition. They can do this by equalising the duty on renewable liquid fuels with that of kerosene when used for heating to align with the equal treatment of the fuels when used in transportation. We’ve written to the Chancellor to highlight how the disparity in the existing duties on renewable liquid fuels and kerosene when used for heating are counterintuitive and a significant barrier to wider take up. In comparison, renewable liquid fuels and fossil fuels attract the same duty when used in transportation. The Autumn Statement was a missed opportunity for the Chancellor to make this change, but we are continuing to press the government to address this duty disparity in the 2024 Budget. Fundamentally, a diversity of technologies is key if we want decarbonisation to succeed in the commercial sector. Heat pumps and renewable liquid fuels both have an important role to play so we need to stop focusing on one technology over the other. The priority must be the solution that will deliver the best outcome for each end user. This is a pragmatic approach which will deliver both our carbon reduction targets and fairness for businesses.
26 BUILDING SERVICES & ENVIRONMENTAL ENGINEER JANUARY 2024 Read the latest at:
www.bsee.co.uk
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