A sneak peek of the Energy Whitepaper at the Spring Statement

by Matthew Dunn, Senior Account Executive

In contrast to the Budget six months ago, Chancellor Philip Hammond focused in on energy policy in the Spring Statement this week and announced the laudable aim of “building sustainability into the heart of the UK’s economic model.”

The first major announcement was a new Future Homes Standard – which would see fossil fuel heating systems banned in newly built homes from 2025. Effectively mirroring a recent recommendation from a Committee on Climate Change report (CCC), the Government will require ‘world leading’ standards of energy efficiency in new builds alongside low-carbon heat systems such as heat pumps. However, this stopped short of banning new gas grid connections as suggested by the CCC.

The second was the announcement of encouraging more green gas into the grid to decarbonise heat. This is often overlooked, but with over 80% of our heating coming from gas sources and heat being the largest source of the UK’s greenhouse gas emissions, green gas will be essential to minimise disruption in reducing the environmental impact of our heat systems.

Such announcements will ignite debate on the low carbon heating systems that will be heating our homes in the next decade, whether it be heat-pumps, biomass boilers or solar powered water heaters. Given a mixture of these solutions will be needed, how the Department for Business Energy and Industrial Strategy (BEIS) seeks to incentivise these, whilst maintaining a level playing field, will be something to keep an eye on in the coming months. Much of the sector will therefore be looking towards how the Government plans to replace the Renewable Heat Incentive, with its funding due to run its course by 2021.

These announcements of course foreshadow the arrival of a new Energy White Paper set to be published in the summer. BEIS Secretary Greg Clark MP, when announcing a new White Paper last year, boldly claimed the ‘energy trilemma’ was over and that low carbon energy could cut consumer bills rather than add to them.

While the Spring Statement effectively gave a sneak-peek as to how the Government expects to tackle decarbonisation, we are still left waiting to see how the Government expects costs to drop as well. Time will tell once further details are released, but for now, the Spring Statement offers enough food for thought for the energy sector.

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Matthew Dunn

Senior Account Executive

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