Trade bodies, environmental groups, citizen’s groups and think-tanks had all written to the Treasury in the run-up to the Statement to urge a broader look at measures to improve energy efficiency and decarbonise heat at scale.
Rishi Sunak's announcement of a VAT relief for energy-saving products and home solar panels was seen as a step in the right direction. The relief will be in place for at least five years. It covers things like insulation, triple glazing and renewable energy generation.
But there was a hope that further measures to make retrofitting and low-carbon heating more available, such as an extension of the Boiler Upgrade Scheme and expansion of the Social Housing Decarbonisation Fund, would have been floated.
However, the chancellor did at least draw praise from the Building Engineering Services Association (BESA) for removing VAT on heat pump installations and for simplifying qualifying rules.
The association also welcomed the decision to bring forward business rate relief on plant and machinery used in onsite renewable energy generation and storage by a year and to provide 100% tax relief on eligible low carbon heat networks.
What more can the government do?
First, let’s take the aforementioned Boiler Upgrade Scheme.
So far, £450m has been committed to the scheme until 2025. Grants of £5,000 are set to be available from April, meaning a maximum of 90,000 heat pump installations could be supported.
However, climate think tank E3G has urged the government to set aside £4.15 billion to the scheme – as per the Energy Efficiency Infrastructure Group’s suggestion – which would support the installation of 820,000 heat pumps by 2025 and really accelerate the electrification of heat.
Expansion of the Boiler Upgrade Scheme is just one of nine suggestions made by E3G, which, if implemented, would save between £130 and £170 on average, it claims. The steps would also allow the UK to reduce its already low level of Russian gas imports by a further 80% this year, E3G adds.
Other measures proposed by the think tank include the launch of a major new public information campaign “with a clear focus on steps that do not compromise on warmth and comfort”.
It also wants to accelerate the phasing out of gas boilers in new build homes by bringing the Future Homes Standard forward to 2023.
Collectively, the nine steps would require a capital investment from public and private sources of £6.7 billion – but E3G argues that this would be paid back within two years.
“But the national mission to move off gas swiftly and safely will not end in 2025,” the think tank stressed. “The government must set out clear intentions to extend successful schemes throughout this decade and to fill in identified policy gaps.”
What’s next?
Prime Minister Boris Johnson is set to release a new energy security strategy in the coming weeks. Although, it’s been rumoured that any announcement has been delayed, with one official quoted by the Financial Times as saying that “he (Sunak) doesn’t want to provide any new money”.
However, with the chancellor coming in for some heavy criticism for failing to do enough to offset the cost-of-living crisis, he is expected to go much further with measures in the Autumn Statement, amid fears that the energy price cap could rise to £2,800.
