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Fri, 23 October 2020

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OFTEC comments on Committee on Climate Change (CCC) annual report to Parliament

OFTEC

4 min read

OFTEC chief executive Paul Rose says:

Today the Committee on Climate Change (CCC) published its annual report to Parliament on the UK’s progress in reducing emissions.

As in 2019, the CCC highlights that the Government's policies and plans are insufficient to meet the targets set out in the fourth or fifth carbon budgets (covering 2023-2027 and 2028-2032). It also makes clear that Covid-19 presents a profound threat, highlighting the need for government to adopt the CCC’s six key principles for mitigating its impact.

The CCC is right to pull no punches in making the case for urgent climate action. However, it is less successful when it comes to recommending solutions, particularly to reduce emissions from off-gas grid homes. Indeed, it is hard not to feel that the CCC has lost touch with the lives of many ordinary people.

For example, the CCC continues to argue that heat pumps are the best choice for homes that currently use oil heating, describing them as a “no regrets solution”. However, there is little evidence that off-grid households see heat pumps as a viable choice - despite six years of generous support through the Government’s RHI scheme - and plenty of reasons why they don’t:

  • Heat pumps are expensive to install (on average £10,900 according to BEIS)¹.
  • Costly energy efficiency improvements are often also needed to make homes suitable for heat pumps - 97% of oil heated homes in Great Britain are in the lowest EPC bands D-G².
  • Rural consumers typically have lower disposable incomes and suffer significantly deeper levels of fuel poverty³.
  • Almost 70% of low to middle income households in the UK have less than £1,500 in savings, while over 55% have no savings at all⁴.
  • Average unsecured household debt is currently over £14,000 - a record high⁵.
  • Households with efficient traditional heating will see little improvement to their quality of life that would justify the investment.

Instead of focussing on how to address these challenges, the CCC has instead proposed fossil fuel taxes, which will only make the lives of most rural families harder. Taxes are often regressive and it is hard to see how a carbon tax could avoid this.

Rural households overwhelmingly live in hard to heat homes in more remote locations, so pay more for their fuel and travel. These people would be disproportionally hit by a carbon tax. At a time when many tens of thousands of people face uncertainty over their incomes due to the impact of Covid-19, this proposal is a slap in the face for anyone hoping for a ‘just transition’ to a low carbon future.

OFTEC recommends that the CCC and Government face up to what should be their number one priority: reducing the cost of low carbon heating. It is only by bringing down prices that deployment at scale can be achieved. There is no evidence that the existing RHI, the proposed Clean Heat Grant, or a carbon tax will achieve this.

Instead, government should focus on putting in place a policy framework that will encourage competition, innovation and choice, as this will create a competitive market and drive down prices, enabling consumers to select low carbon products that best suit their needs and budgets.

While it is essential to step up the deployment of heat pumps where it is cost-effective to do so, OFTEC continues to assert the potential of renewable liquid fuels as a viable solution for many homes that currently use oil heating. These fuels have the potential to deliver a transition to net zero for the lowest overall cost. At the same time, they avoid the high capital investment required for heat pumps and offer a genuine no regrets solution. With the right policy framework in place, these fuels can provide a compelling solution within a competitive low carbon heat market.

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