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Renewable Liquid Gases and their role in decarbonising heating in off-gas grid Britain

Duncan Carter, Corporate Affairs Manager

Duncan Carter, Corporate Affairs Manager | Calor Gas

7 min read Partner content

The National Audit Office (NAO) has recently called on the government to clarify its policies on supporting rural, off-gas grid homes to decarbonise. A consultation is expected later this year after the government reversed plans for the early phase out the sale of fossil fuel boilers used in off-gas grid homes and business from 2026.

We welcomed the government’s decision last September to drop plans to ban the replacement of oil and gas boilers in rural, off-gas grid homes from 2026, instead aligning this with plans to ban boilers in homes on the gas grid by 2035.

During the passage of the Energy Act 2023, rural MPs were persuasive in exposing the difficulty and high cost some of their constituents would face if this unfair ‘rural first’ boiler ban had gone ahead. They secured a commitment from the government to consult on a ‘Renewable Liquid Heating Fuel obligation’ on off-grid energy suppliers, such as Calor, to increase their availability.

A consultation is expected later this year that will look at alternatives to low-temperature heat pumps, which remain the government’s favoured technology to decarbonise new and existing homes. Low temperature heat pumps, which will play a significant role in decarbonising heating for many homes, are not always suitable for high heat demand buildings, such as poorly insulated and hard to retrofit homes, which are overrepresented in rural communities.

A renewable liquid heating fuel obligation would work in a similar way to the tried and tested Renewable Transport Fuel Obligation, which has successfully increased the supply of lower carbon transport fuels to replace diesel. In a similar way, off-grid energy suppliers – like Calor – would need to supply an increasing proportion of renewable fuels to the market. Over time this would grow production of these fuels and replace existing fossil fuels. If coupled with the right fiscal and policy framework, a heating fuel obligation would enable the transition to low carbon heating fuels and complement the rollout of heat pumps.

At Calor, we were the first company to supply Renewable Liquid Gas (RLG) to the UK market starting in 2018. RLGs such as BioLPG are a direct, drop-in replacement for conventional Liquefied Petroleum Gas (LPG), and can be used in either existing standalone boilers (avoiding any high upfront costs from changing your central heating system) or in combination with a heat pump in a hybrid system. The recent report from the Energy Systems Catapult indicated that hybrid heat pumps could save over £7bn in ‘systems costs’ by reducing peak energy demand, including a role post 2050 for bottle gas. If this bottled gas were RLG this would be entirely compatible with net zero.

What’s more, independent evidence shows that BioLPG is the most affordable way to decarbonise around 44 per cent of rural homes currently heated by heating oil, yet there is no support for these fuels in current energy policy. Through our parent company’s innovation and R&D pipeline, we are already bringing these new fuels to the market, but we need policy clarity and support from government to continue making these investments here in the UK. Just like the rollout of heat pumps, hydrogen or sustainable aviation fuel, government needs to create the right fiscal and regulatory environment to help industry and customers make the shift to net zero. There is a global market for RLG R&D and production and the UK risks missing out with further delay.

Even without the necessary support from government, we believe RLGs will be a part of our net zero future. Our parent company has embarked up an exciting joint venture with Dimeta and KEW Technology, which will soon bring forward a first of a kind ‘fuel from rubbish’ renewable dimethyl ether (rDME) production plant at the Teesworks Freeport in the northeast of England. We will initially supply rDME to our commercial customers (for heating and as a replacement for diesel), offering an immediate route to reduce their carbon intensity without requiring major investment in new equipment. rDME can also be blended with LPG and BioLPG to make a drop in fuel for all current LPG uses, including home heating. The Teesworks plant will be operational this year and supply 50,000 tonnes of rDME when it reaches full capacity.

The government accepts not all buildings are suitable for heat pumps and has indicated that RLGs could play a role in decarbonising off-gas grid heating. We welcomed last year’s Biomass Strategy, which confirmed that “biomass will likely have a role in heating in certain properties such as off-gas grid homes that are not readily suitable for heat pumps, and where appropriate mitigations can be set in place to minimise air quality impacts." It’s worth noting, that RLGs have less impact on air quality and produce much lower NOx, SOx and particulate pollution compared to burning wood pellets, another biomass fuel.

A recent NAO report stated that the government’s assessment that up to 20 per cent of all homes won’t be suitable for heat pumps needs greater clarity. It’s likely that a large proportion of these homes will be hard-to-treat rural homes that require a high-heat demand solutions and are unsuitable for heat pumps. However alternative low carbon heating solutions, including stand-alone boilers running green gas or hybrid heat pumps, are not currently supported by existing grant schemes such as the Boiler Upgrade Scheme.

We would like to see a future government favour a mixed-technology approach to clean heat and recognise that addition low carbon heating solutions are available for homes unsuitable for heat pumps. This will help many of the 2 million, rural off-gas grid households that are ill-suited to heat pumps, and those families and businesses who could face unaffordable upfront costs. The latest statistics show that the average cost of installing an air sourced heat pump via BUS costs £13,480. However, this is not inclusive of any retrofit that might be needed for a heat pump to run efficiently in these homes. Evidence shows that with the necessary works, the upfront cost could increase to nearly £31,000 for some homes.  Many with traditional or hard-to-treat properties simply won’t have the disposable income necessary to make the transition to a heat pump. Policy support for RLGs and hybrids is needed to help these consumers with their transition. The NAO report also found the government’s optimistic prediction for rapid falls in heat pump installation have not materialised, in fact costs have risen.

The Labour Party must also recognise the need for alternatives to heat pumps in addition to its plans to green the grid and insulate 5 million homes by 2030. A significant number of rural properties may not be reached by these grid upgrades, due to the high costs involved. A decentralised solution for these hard-to-reach properties could be more practical and affordable, which means that an incoming government must also support alternative, low-carbon solutions, including RLGs that will help rural homes and businesses to decarbonise without high upfront cost or disruption.

An early simple solution would be to tweak existing support programmes, such as the BUS to include hybrids and boilers using RLGs. Perversely, while hybrid heat pumps aren’t currently supported, biomass boilers which can use imported wood pellets and can have a negative impact on rural air quality are. A hybrid heat pump using LPG or BioLPG is a much cleaner alternative to woody biomass.

We look forward to the consultation later this year: a clear plan taking into consideration rural realities is required from government and its core challenge remains finding a range of solutions that are acceptable and affordable to rural communities without imposing too much disruption and cost on ordinary families and businesses, a role that RLGs can fill.

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