Community Energy England’s response to the newly released Heat and Buildings Strategy


We are pleased to see the release of the long awaited Heat and Buildings Strategy. The Heat and Buildings Strategy builds on the Prime Minister’s ten point plan for a green industrial revolution, which outlined how decarbonising households and workplaces could support 240,000 jobs across the sector by 2035, with many thousands more into the future in areas such as manufacturing, developing and installing new low-carbon technologies.

We agree with the overarching aims set out within this strategy, including to drive down the cost of low carbon heating technologies and we welcome the ambition to phase out fossil fuel reliant heating systems by 2035.  We are particularly pleased to see reference to the strategy ensuring that “fairness and affordability are at the heart of [the] approach”. We are also pleased to see recognition of the work done at a local level: “Local actors can play a crucial role in decarbonising their local area and informing our national approach. We will continue to use local expertise to deliver solutions that are suitable for local areas.” (p111)

We welcome the announcement that £3.9 billion of new funding has been allocated for decarbonising heat and buildings, set out in the newly released Heat and Buildings strategy. This £3.9 billion funding pot includes money allocated for:

  • The Public Sector Decarbonisation Scheme (£1.425 billion)
  • The Home Upgrade Grant Scheme (£950 million)
  • The Social Housing Decarbonisation Fund (£800 million)
  • The Boiler Upgrade Scheme (£450 million)
  • The Heat Network Transformation Programme (£338 million).

The government also announced a further £65 million funding for the Flexibility Innovation Programme which will deliver funding for a range of innovative projects that will help manage increased demands on the UK’s electricity system in a green future. Funding for this and the Heat Pump Ready programme will come from the £1 billion Net Zero Innovation Portfolio.

Although we are pleased to see a new funding pot announced to tackle the issues around heat and buildings, we are disappointed that the £3.9 billion pledged in this strategy is not anywhere close to making up the £9.2 billion for home energy efficiency improvements pledged in the Conservative manifesto. We believe the money allocated will not be sufficient to meet the targets set by the Government in their ten point plan. 

For example, the Heat and Buildings Strategy pledges £450 million over 3 years to fund grants for heat pump installations (at £5,000 per home). This constitutes only 30,000 installations per year (or 1 in every 250 households), which is set to fall way short of the government's target for 600,000 per year by 2028. This target also falls short of the 900,000 installations in existing houses per year by 2028 that the Climate Change Committee stated in the CCC Pathway in their progress in reducing emissions 2021 Report to Parliament

Within this strategy, the government has committed for as many homes as possible to achieve Energy Performance Certificate (EPC) band C by 2035, where it is cost-effective, practical and affordable.  The Environmental Audit Committee’s publication on Energy Efficiency of Existing homes published in March 2021 states that the Department for Business, Energy and Industrial Strategy’s (BEIS’) preliminary estimate is that it will require mobilising between £35 and £65 billion across the UK to 2035 to bring all households up to an EPC rating of C. The government’s ten point plan set out an aim to ensure the improvement of 1.5 million homes to EPC band C by 2030 but currently in the UK 19 million households fall below the EPC band C mark, leaving over 17 million homes falling below band C. This seems like a large oversight when, as the New Economics Foundation reported in 2020, investing £10bn in building energy retrofit will pay itself off in just over 7 years from health cost savings alone.

Given the vital nature of the retrofit process in achieving a decarbonised heating system, we were disappointed to see that retrofit appeared to be absent from the main body of the official government press release, only present in the Notes to Editors. 

This strategy also set out intentions for the UK to be pioneers in the use of hydrogen for heating buildings. We were disappointed to not see more emphasis on ensuring the sole use of Green Hydrogen within these systems, as this is a decarbonisation strategy. Given the emphasis within this report on acting now in order to meet the targets, we were surprised to read that the strategic decisions on the role of hydrogen for heating will not be decided until 2026. 

The Heat and Buildings Strategy states that “According to the CCC, behaviour change and contributions from households have so far played little to no role in emissions reductions” (p175). We believe this is where Community Energy can play an integral role. The strategy states that they will make the most of local experts and identifies a number of areas for local level decisions. We would like to see this mentioning the power of a community led approach as community energy is 4-5 times better at engaging the public than commercial players. 

Overall, we are pleased to see the aims and intentions set out in the Heat and Buildings Strategy but are disappointed that the financial backing does not seem sufficient to see these intentions met. 

Key announcements:

  • £3.9 billion funding including £450m for heat pumps over 3 years
  • Commitment for as many homes as possible to achieve EPC band C by 2035 where cost-effective, practical and affordable
  • Decision on the use of hydrogen for heat expected in 2026
  • Ambition to ban new gas boilers from 2035
  • Fairness and affordability call for evidence proposed around moving levies away from electricity bills and onto gas bills.