Policy Exchange’s new report highlights that the previous Government’s plan to decarbonise heating by fitting electric heat pumps in most homes by 2050 would cost about £300 billion. This takes into account the installation cost of more than £8,500 per heat pump, the cost of upgrading the grid, and the additional 100 Gigawatts of power generation capacity that would be required to meet the demand for electricity. All in all it would cost as much as £12,000 per household to deliver the previous government’s plans to reduce carbon emissions from domestic heating.

The paper says that the newly created Department for Business, Energy and Industrial Strategy (DBEIS) needs to completely re-think its approach and look at alternatives. Policy Exchange says the government could still meet its target of reducing carbon emissions from domestic heating by 80% through a range of measures including:

•  Improving energy efficiency by tightening standards for new build homes and for existing private rented properties, and by linking the stamp duty system to energy performance to encourage households to improve their properties.
• Making better use of gas by encouraging people to replace old boilers with new highly efficient boilers.
• Expanding the use of “greener gases” such as injecting biomethane into the gas grid (which can be made from food waste), supporting the development of new technologies which convert “black bag” residual waste into synthetic biogas, and exploring the possibility of converting the gas to the grid to run on hydrogen.
•  Ditching the EU’s Renewable Heat target, under which the UK has pursued more expensive technologies, and instead focusing on the cheapest ways of decarbonising heating.

The report warns that the UK is significantly off track to meeting legally binding carbon budgets covering the period to 2032, and the lack of progress to decarbonise heating could make or break the UK’s carbon plans. It urges the government to put affordability at the heart of its decarbonisation strategy by shifting away from its focus on electric heat pumps to alternatives.