Three things we learnt from the CCC's 7th Carbon Budget about Labour’s decarbonisation challenges

5 min read07 March Partner content

The Climate Change Committee (CCC) has an important role in providing independent, evidence based advice to governments. However, its recommendations have historically been more ambitious than what successive governments have been willing or able to implement. While the CCC’s bold proposals often set the direction, they are not always fully embraced due to financial, practical, and political constraints.

The CCC recently published its 7th Carbon Budget report, outlining key strategies to meet the UK’s net zero targets. Ed Miliband has responded to say that the government will carefully consider these recommendations. However, several insights from the report highlight the significant decarbonisation challenges facing Labour. Here are three key takeaways.

1. The scale of the heat pump rollout is a major challenge

One of the CCC’s headline recommendations is that half of all homes in the UK should have a heat pump installed by 2040. That's just 15 years from now. There's no doubt that heat pumps are an important technology and OFTEC fully supports their deployment. In fact, we are running heat pump training courses to expand the workforce of trained technicians, ensuring more homeowners can access this low carbon heating solution.

However, the current total number of qualified heat pump installers in the UK remains low with just under 8,000 recorded in 2023. With 29 million homes in the UK, we would need enough technicians to install nearly one million heat pumps every year for the next 15 years to reach the halfway mark. To put this into context, last year there were around 60,000 heat pump installations.

Achieving the CCC’s target would therefore require a dramatic increase in government investment in the Heat Pump Training Grant, alongside the Boiler Upgrade Scheme. This is at a time when Labour is facing pressures to boost spending in Defence, Health and other policies areas whilst also trying to balance the books.

The availability of qualified technicians also varies considerably across the UK. This challenge is particularly pronounced in off-grid areas, where fewer technicians are available, making heat pump installation more difficult. Without a substantial and sustained government effort to expand the heat pump workforce, reaching the CCC’s target is unlikely.

2. Heat pumps are still too expensive for harder to treat homes

The CCC’s chief executive acknowledged that heat pumps remain more expensive than fossil fuel boilers, stating, "For heat pumps, we're saying it's different, the costs are still higher than a fossil fuel boiler and the government will need to act to help people get those technologies."

The report also stresses the need to "provide long-term certainty that upfront costs will not present a barrier to the ramp-up in roll-out of heat pumps, ensuring that the transition is affordable and accessible to households."

We welcome this recognition that cost remains a significant barrier, particularly for off-grid households. Many of these properties require extensive modifications when a heat pump is installed, including costly insulation upgrades and larger radiators. This makes the transition disruptive and financially unfeasible for many households, particularly those on lower incomes, even with support from the Boiler Upgrade Scheme.

The CCC has pointed to examples from Ireland and other European countries where heat pump adoption has been successful, but the UK’s housing stock is different. Many off-grid homes in rural areas are older, poorly insulated, and fundamentally less suited to heat pumps. Simply looking at colder countries does not provide a complete picture. The quality and efficiency of housing must also be considered.

Furthermore, the CCC has called for the reinstatement of regulations ensuring that "beyond 2035 all heating systems installed are low carbon." While this is a well-intentioned policy, it raises a fundamental question: how can the government make low carbon heating mandatory when viable and affordable solutions are not yet in place for many homeowners? Without a clear strategy to address the high costs and technical challenges of heat pumps, a regulatory approach risks leaving households with few realistic options.

3. Alternatives to heat pumps must be part of the government's plan

While the CCC remains focused on heat pumps, it also acknowledges the challenges associated with widespread adoption. But what alternatives exist for homes that are not suitable for heat pumps?

Renewable liquid fuels offer a practical, cost effective solution for off-grid homes. These fuels can be used in existing oil heating systems and, if we started with a 20% blend, no boiler modifications are required. This means the government would save billions compared to investing more into the Boiler Upgrade Scheme to support heat pump deployment.

Unlike heat pumps, switching to a renewable liquid fuel does not require insulation upgrades or disruptive installation, making it a far more practical solution, particularly during a distress purchase situation. Combined with an existing and experienced supply chain of technicians and fuel suppliers, renewable liquid fuels are an immediate and scalable way to reduce carbon emissions.

Crucially, renewable liquid fuels have strong consumer backing with over 90% of oil households supporting the solution in a recent survey. Despite this, Labour has yet to publish the long awaited consultation on renewable liquid fuels, which it supported when the Energy Act legislation was passed under the previous government. Given the scale of the challenge highlighted in the CCC's report, Labour needs to bring this consultation forward urgently to provide clarity and reassurance to both consumers and the wider industry.

A balanced approach is needed

The CCC’s latest report underscores the immense challenges Labour faces in decarbonising home heating, particularly off-grid. While heat pumps will play a key role in reducing emissions, the scale of the rollout and the high costs involved mean they cannot be the sole solution. The government must invest in workforce training, address affordability concerns and ensure that alternatives such as renewable liquid fuels are part of the strategy.

A one-size-fits-all approach will not work. Rural homeowners, in particular, need flexible and practical options to transition to low carbon heating. By embracing a mixed-technology approach, the government can ensure that all households have access to affordable and practical heating solutions as the UK gets increasingly closer to its net zero commitment deadlines.

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