Greenpeace: the economic impact of decarbonising household heating in the UK

This report for Greenpeace provides a robust analysis of the potential macroeconomic impacts of deploying energy efficiency measures and low-carbon heating technologies in the UK’s residential buildings. The analysis is intended to highlight the potential return on action to increase take-up of such technologies and inform the debate on the policy needed to put the UK’s household heating stock on the right trajectory for Net Zero.

Emissions from residential buildings, primarily from the use of fossil fuel for heating, are a major source of the UK’s CO2 emissions. As a result, and as part of its 10 Point Plan to build back better and support the UK’s transition to Net Zero, the UK Government have set an ambition to deploy electric heating in residential buildings, by delivering 600,000 heat pumps installations per year by 2028.

However, the Climate Change Committee’s 2021 Progress Report to Parliament states that this target is insufficient and should be upscaled to 900,000 installations per year by 2028, if the path to Net Zero is to be successful.

Key findings

The analysis used macroeconomic modelling to assess the impact of three housing decarbonisation scenarios. The central scenario, taken from recommendations by the Climate Change Committee (CCC), aims to install just over one million heat pumps per year by 2030 and upgrade all buildings to EPC C standards within the next 10-15 years.

The other two scenarios were also based on the CCC’s recommendations but one used the UK government’s current, less ambitious, plans to install just 600,000 heat pumps per year by 2028. The other had the cost of heat pump installations falling to £5,500 in line with industry estimates.

  • The analysis found that all three scenarios would provide a significant boost to the economy, both in terms of job creation and GDP. However, the greatest benefits would come from the more ambitious rollout of low-carbon heating technologies and energy efficiency.
  • A properly funded, ambitious programme to insulate homes and swap gas boilers for low-carbon heating sources, such as heat pumps, could deliver substantial economic and social benefits. Up to 138,600 new jobs could be created and the economy boosted by £9.8bn by 2030 if the government was to deliver a strategy for decarbonising homes that significantly increased the deployment of heat pumps and energy efficiency measures, with grants to cover the costs.

 

Jon Stenning Associate Director js@camecon.com