13:30 Mr David Jones (Clwyd West) (Con)

It is a pleasure to serve under your chairmanship, Sir Christopher. I thank the Backbench Business Committee for facilitating today’s debate, which I hope will give hon. Members the opportunity to discuss the options available to the owners of rural homes and businesses that are not connected to the gas grid to decarbonise their properties. I hope to hear from my right hon. Friend the Minister how that might be done, always bearing in mind the principles of choice and fairness.

One of the clear outcomes that emerged from the Climate Assembly that was commissioned by Select Committees of this House was that the path to net zero must be fair to people who live in different parts of the UK. Hon. Members will be aware of the need to phase out boilers using fossil fuels in all homes to meet the net zero challenge, and it is the Government’s aim to ban replacement natural gas boiler installations from 2035. Most homes are connected to the natural gas grid, and the debate continues as to whether those homes may eventually be powered by hydrogen or whether they will have to resort to electric heat pumps, but little attention has been paid to rural homes and businesses that are not connected to the gas grid. The primary solution proposed by the Government appears to be electric heat pumps, which are very costly and disruptive to install, or biomass boilers, which come with air pollution concerns.

The Government also appear to assume that the cost of heat pumps relative to traditional boilers will halve by 2025 and reach cost parity by 2030. That is ambitious. The heat-pump market is already at a mature stage of development—many thousands are manufactured each year—so it is hard to see where those cost reductions will come from. Delta-EE, the independent analyst and Government adviser, recently published a paper stating that even in an ambitious scenario, reductions of only 34% could be achieved by 2030. That means that rural homeowners will be required to pay a significant premium to decarbonise their heating unless extra support and a more affordable range of choices are provided.

Last year, the Prime Minister wrote in The Sun , “Boiler Police are not going to kick your door in & seize your trusty combi”. That is a reassurance and it may well be true, but it appears that the only option available for off-grid households after 2026 will be a heat pump. I would suggest that a greater range of affordable, low-carbon heating options will be required if rural homes are to decarbonise fairly and affordably, so how can the Government make the transition fairer for rural off-grid consumers?

Secondly, the Government should provide a choice, not a mandate, on the heating system that may be used. Heat pumps should be installed because householders want them, rather than because they are forced to have them. The Government should also give greater support to other technologies, such as hybrid heat pumps. These run alongside traditional boilers, which, in times of high heat demand, will allow more difficult-to-heat rural homes to use the traditional boiler element to keep those homes warm. The Government should also incentivise the development of alternative renewable fuels, including bioliquids and biogases such as BioLPG and HVO—hydrotreated vegetable oil. BioLPG is already on the market, but its uptake is hindered by a lack of policy support and by the fact that it is not currently recognised in building standards. These fuels, if adopted, would allow existing central heating systems to reduce their emissions significantly and could see hard-to-treat homes decarbonised more affordably.

I hope that the Government will pause for thought as to how they treat rural homes and businesses in the transition to lower-carbon heating. It is essential that the principle of fairness should be upheld. The Government should give rural homeowners and businesses access to a full range of options to decarbonise their homes and premises. The extent of the challenge is great indeed—too great to rely on heat pumps alone.

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13:43 Ben Lake (Plaid Cymru)

It is a pleasure to serve under your chairmanship, Sir Christopher. I begin by congratulating the right hon. Member for Clwyd West (Mr Jones) on bringing this very important and timely debate before the House this afternoon. I will underline and support most if not all of the remarks that he made. He made a very powerful case in favour of the Government pausing, taking a step back and reconsidering their approach to decarbonisation of heating fuel for rural households, for the following reasons. On average, rural households tend to have been built a lot longer ago, so the energy efficiency is somewhat lower. Also, something that we need to bear in mind—we do not do that enough, in my opinion—is the discrepancy between average rural incomes and those of our urban counterparts, which the right hon. Member made very clear in his speech.

I fully support the right hon. Member’s calls for the Government to pause and reconsider their approach. I was particularly struck by his argument about needing a just and fair transition as we decarbonise the economy. I fully agree that we need to decarbonise our society and economy, but it has to be done in a just and fair way. Otherwise, it is not realistic and will, at worst, place a substantial cost on the shoulders of those who can least afford it. I very much endorse his remarks.

My constituents are therefore particularly exposed, both to the recent increases in the price of heating fuel and to any policy changes the Government might bring in to decarbonise their fuel source. We know—but it bears repeating—that prices have typically increased by some 150% over the past year. Eye-watering sums have been quoted for some of my constituents. On top of the fact that so many households and properties in Ceredigion are not connected to the mains gas grid, our housing stock is very inefficient, primarily because it is quite old. In neighbouring Gwynedd, some 56% of the housing stock was built before 1945. In Ceredigion, only 36% of homes reach a C rating on the energy performance certificate standard.

As part of this conversation about how we transition and decarbonise fuel sources for off-grid properties, we seriously have to look at energy efficiency measures. The right hon. Member made the case far more eloquently and persuasively than I could, but I will reiterate that if we are serious about this, we need to improve the energy efficiency of our housing stock. Only 2% of homes in Ceredigion were built after 2012. The vast majority of the housing stock to be built for Ceredigion by 2050 has already been built. We need to renew our focus on energy efficiency measures.

I would like to mention the impact that the current crisis is having on businesses. We need to think about how we include them in our efforts to decarbonise our off-grid properties. One hospitality business in Ceredigion —it is off-grid—has informed me that its energy bills have increased by some 450%. It is, without putting too blunt a point on it, making them consider whether they can continue in business. It is otherwise a very profitable, successful business, but this hike in fuel prices for off-grid heating has caused them to consider their future. I do not think that good businesses like that should be allowed to fail because of the current crisis. As part of the debate, we need to look at interim measures that the Government may wish to consider in order to give them some short-term support. That business is very confident that if it can ride out this current storm, it can return to a very profitable, successful situation.

That group is in an interesting situation, because it does have plans to decarbonise its heating sources—for example, it plans to instal solar panels, which will drastically reduce elements of its heating and energy bills. The problem is the timescale. The group cannot quite make it through the current six-month period without having to seriously scale back their operation. So my question for the Government is: what interim, short-term measures can we put in place to help organisations such as Calon Tysul, and other community swimming pools and leisure facilities, to see out the current storm?

I fully support the need to decarbonise our housing emissions and the fuel for off-grid properties in general. The Department for Business, Energy and Industrial Strategy has estimated that some 20% of our off-gas grid homes are technically unsuitable for low-temperature heat pumps, but analysis, undertaken by firms such as Equity, found that 44% of rural homes currently using heating oil can be considered “hard to treat” when the cost of the transition is taken into account.

I am conscious that I am at risk of detaining the Chamber for too long, but I would like to ask the Minister a couple of questions and I would be grateful if he could address them in his response. We know there are various support measures for hydrogen development, for example, but there are questions about the extent to which they will be applicable to rural off-grid homes. The Minister and I had an exchange in the Welsh Affairs Committee on this point, and I am interested to know his thoughts on supporting the roll-out of local carbon gas alternatives such as BioLPG, as mentioned by the right hon. Member for Clwyd West. It is drop-in technology that could well offer us a short to mid-term solution if we are keen to decarbonise homes in rural setting.

One couple who live in an off-grid house have contacted me to say that they have been quoted over £1,000 to fill their oil tank. That is more than their monthly income as a couple, and the problem is that they have been told they cannot place orders for volumes less than 500 litres. If it were possible to have some clarification on that point, it would be very welcome, because other households in Ceredigion have also told me that they would be able to afford 250 litres at the moment, but the 500-litre minimum is a stretch for them at current prices, and they cannot quite make it. I appreciate that that is a very short-term measure and that it is addressing an immediate problem rather than something in the future, but if we are talking about a just transition, we need to make sure that everybody comes along with us and that nobody shoulders a disproportionate amount of the cost of what we should all hope will be a shared endeavour.

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13:56 Greg Smith (Conservative)

I have looked at this issue across not just the home energy sector but the transport sector, and I sincerely believe that drop-in fuels have to be part of the solution. An example is renewable liquid gas, which is a liquid fuel that resembles the same chemical and energy content as LPG but can be used as a drop-in fuel for existing infrastructure, boilers and solutions in people’s homes and businesses. However, it is produced through technology that utilises renewable feedstocks, meaning it has a low carbon content when compared with conventional LPG. Due to the drop-in nature, renewable liquid gases effectively utilise all of the existing infrastructure to deliver affordable decarbonisation solutions, particularly to the most hard-to-treat domestic and non-domestic properties that are off grid.

However—this is the problem that I bring to the debate this afternoon—there is currently a lack of recognition, particularly for renewable liquid gas and drop-in fuels more widely, from the Government and some suppliers. The key to enabling the supply and production of renewable liquid gas is a supportive political framework orientated to the long-term benefit of many families and businesses in off-grid locations. Are we not all seeking cost-effective and convenient decarbonisation solutions? It is critical that the upcoming biomass strategy explicitly recognises renewable liquid gas to ensure continued funding and development in this area. Affordable clean energy for families and businesses is key if we are to meet the 2050 net zero ambition.

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14:03 Jim Shannon (DUP)

We have set a legally binding target to achieve net zero greenhouse gas emissions by 2050, and the sixth carbon budget is another indication of our shared dedication to a green industrial revolution. While we are certainly on the current path in terms of sustainability, some issues have been brought to my attention by the organisation Calor, and I would like to briefly address some of them. Others have mentioned liquified gas. There are options that need to be considered, and I believe that that is one of them.

In relation to Northern Ireland, residential heating is increasingly important. As of 2019, the residential sector accounted for 14% of Northern Ireland’s total greenhouse gas emissions, primarily through fossil fuels. That evidence highlights the need for more off-grid gas homes. Great efforts have been made to compensate for the potential lack of progress. The Government’s Climate Change Committee has recommended that at least 25% of heat supply in Northern Ireland should come from low-carbon sources by 2030. Why not start in the most residential places—our homes? Some may feel that their home is where their business takes place most of the time.

We must do more to support people through the transition to sustainable and green energy, as it is a process that we were all encouraged to be part of; indeed, we are happy to be part of it, although I acknowledge that that comment applies within the confines of the financial constrictions that everyone is facing.

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14:11 Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)

UK Government support is inadequate; the right hon. Gentleman referred to a maximum of 90,000 households being eligible and there is no support for energy efficiency within that. He is absolutely right to call for far greater ambition in that regard. Low-carbon heating and buildings can help significantly in tackling both the climate crisis and the spiralling costs for families, but first they actually need to exist.

The Climate Change Committee said recently that it is still disappointing not to see more energy efficiency, or support for households to make changes that can cut their bill. The UK Government have fallen short in that area time and again. As has been pointed out, they can do a lot more to help people, such as by using some of the additional VAT they are getting in or cutting VAT. The Scottish Government have helped 150,000 households that are either in, or at risk of, fuel poverty, and Scotland is way ahead of England when it comes to spending per capita, spending £27 on insulation as opposed to £8. This UK Government need to do more, and I look forward to hearing from the Minister whether he will take action to address these problems—not only the future problems that people off the gas grid will face when they have to make these changes, but the current problems that people are facing across rural areas in all the nations of the UK—problems that are deeply affecting them, their families and their businesses.

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14:19 Dr Alan Whitehead (Southampton, Test) (Lab)

This has been a good debate about a very troubled subject. I congratulate the right hon. Member for Clwyd West (Mr Jones) on securing the debate and putting forward comprehensively just what trouble we are in as far as off-grid properties and decarbonisation are concerned. We heard very thoughtful contributions from the hon. Members for Ceredigion (Ben Lake), for Buckingham (Greg Smith) and for Strangford (Jim Shannon); the latter is something of a fixture in these debates but always has something relevant and useful to say, whatever the subject. We also heard a thoughtful contribution from the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry), who was supposed to be summing up the thoughtful contributions of everyone else, but made one himself.

This is a really thorny subject, because the imperative of decarbonisation heavily hits off-grid housing and businesses. There are, as hon. Members have mentioned, a surprisingly high number of properties in England, Wales and Scotland that are off-grid. I think it is about 1.1 million houses in England, 230,000 in Wales and 550,000 in Scotland. Put together, that is a very large number of homes. Not only do they often have different characteristics from the mass of on-grid housing in urban areas, but they also have limited choices for decarbonisation.

Far more off-grid homes are poorly insulated and of a lower standard assessment procedure rating than their urban comparators. They are generally larger and more free-standing than properties in urban areas. Therefore, in the solutions we put forward to decarbonise them, we must take account of those issues, particularly so that we can get the energy efficiency quality of those homes up to the standard where they can take those low-carbon arrangements.

I would not be in favour of taking a break in our plans to move to low carbon, as the right hon. Member for Clwyd West suggested this afternoon, to get our choices right. The replacement turnaround time for the types of heating in those off-grid properties—the boilers and other apparatus—is about 15 years. That is slightly longer than for boilers in urban properties, because oil-fired arrangements and so on are often set out differently. If we take that normal replacement turnaround time, and we pretty much start now with replacing those boilers with low-carbon alternatives as they come up for replacement, the cycle will have been completed by the early 2040s. That is within the 2050 target for low-carbon replacements. If we put our plans off, we simply would not replace the boilers as quickly as otherwise. That suggestion assumes that we are being very careful to undertake the replacements with the active will and participation of the people who live in those homes, as the right hon. Member for Clwyd West enjoined us to do—that we are not marching in and ripping boilers out, and demanding they do things on the spot, whether or not their arrangements are obsolete and whether or not they can afford the changes.

I have considerable sympathy for the Government’s problem of how to go about decarbonising the sector. The Government have chosen, in the first instance, to go for a heat-pump-first solution—to prioritise heat pumps as the replacement arrangements in those homes. As hon. Members have pointed out, heat pumps do not always work in those homes, and they certainly do not work unless the energy efficiency is substantially upgraded. Given the homes we have in that group, heat pumps might require a whole-house refit, including the gauge of pipes and various other things related to the central heating, in order to work as well as they should. The cost of the heat pump is therefore not the only cost for those off-grid homes. Quite a lot of other work is also required.

I think we can question whether heat-pump-first is the right way to go about this plan. It is not that they should not be a substantial part of the process but, as has been said, a number of other options are available that ought to and could be considered alongside heat pump installation. We might undertake a more horses-for-courses arrangement, because of the variety of off-grid homes that we need to decarbonise.

As right hon. and hon. Members have mentioned, the alternatives are several. Some are very promising, some less so. Certainly, as the hon. Member for Buckingham mentioned, hybrid heat pumps—I have been to see a couple in operation in south Wales—do a very good job of arranging for the boiler to continue to operate, but as an auxiliary to other kinds of heating, which was an air source heat pump in this instance. The pumps do that in such a way that completely redoing the central heating, and so on, in the home is not required. The house can work very well with a combination of technologies working together effectively to decarbonise the heat in the home.

The Government also ought to be considering, just as they should with hydrogen, the best uses for the alternative fuels. For example, what are the lowest-carbon uses for LPG or hydrogen? Do we put all our hydrogen into heating homes, transport and logistics, decarbonising heavy industry, or whatever? The Government must make that choice in terms of the priorities they put forward for those different forms of low-carbon fuels, and bioLPG is certainly one of them.

I would criticise the Government not on their timescale or their ambition to decarbonise the off-grid area, but on the fact that they have not looked properly at the options that could be available to decarbonise those off-grid properties in the most efficient way. The Government will have to work on rectifying that if they are to get public backing for that decarbonisation over the next period. That is essential in getting not only off-grid properties decarbonised efficiently but, in general, our homes heated in a low-carbon way. Certainly, if the wider debate ends up with people marching down the street protesting that the Government are ripping out their boilers in an assault on their liberties—because they do not have a decent option to decarbonise by consent —then we will not have achieved our objectives at all.

The issue is not strictly the subject of today’s discussion but clearly comes into how we ensure that the public are properly behind the decarbonisation of their properties across the board, and particularly in off-grid areas. I do not envy the Minister the task of getting that right, and I know that it is a real knotty problem, but I am sure that he will be able to provide us with some good pointers to ensure that we decarbonise our off-grid properties in the most efficient way that we can, and with the most public support that we can get.

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14:34 The Minister for Energy, Clean Growth and Climate Change (Greg Hands)

I congratulate my right hon. Friend the Member for Clwyd West (Mr Jones) on securing this important debate. I reassure him that decarbonising heat remains a key priority. We recognise that this is a deeply worrying time for most of our constituents, for whom the impact of rising energy bills is perhaps the biggest concern. That applies as much to rural communities as to any other.

As my right hon. Friend very ably said, most off-grid properties will ultimately transition to heat pumps, which are a proven and highly efficient technology. In electricity, they benefit from a secure energy source that is not subject to the same price spikes as oil, and critically, they are consistent with net zero as the electricity grid decarbonises. Heat pumps have been successfully deployed in high numbers across the world, including in countries that are colder than the United Kingdom, such as Sweden and Norway.

I also reiterate that our continued support for decarbonisation policies relying on heat pumps is contingent on the industry taking action to drive down the costs. By signalling now our intention to take the action later, once the cost of heat pumps is much lower than today, we aim to give industry the long-term confidence to invest and drive the costs down. We will also keep the cost of heat pumps under constant review. Making sure they become more affordable is a key part of Government policy and, well ahead of implementing any regulation, we will set out what additional actions may be needed to support the phasing out of high-carbon heating systems.

My right hon. Friend the Member for Clwyd West raised various points. I believe his central question was: why off grid first? Off the gas grid, there is currently no strategic option to decarbonise heat with hydrogen or other technologies. That is why we are taking a range of actions to bring forward the decarbonisation of this critical group of buildings. If we can make heat pumps affordable, there are considerable advantages in moving forward, including for off-grid households and businesses, even if that means that they will be required to switch from fossil fuel heat earlier than their on-grid counterparts. My right hon. Friend asked me to reconsider the 2026 deadline. Equally, the pace at which we can make heat pumps become affordable will guide our decisions on the right time to introduce regulation and the other actions needed to make a fair transition.

My right hon. Friend asked how many off-grid homes are hard to treat. Our analysis shows that 80% of off-grid homes already have sufficient insulation for a heat pump to work effectively. They have already been deployed successfully in high numbers across the world; I mentioned Sweden, Norway and other countries. On his questions about hybrids and biofuels, along with those from my hon. Friend the Member for Buckingham, we would like to see those fuels become another solution, particularly for off-grid properties that cannot use a heat pump. We are working closely with industry to build the evidence that will inform the biomass strategy mentioned by my hon. Friend, due to launch later in 2022. The strategy will review the amount of sustainable biomass likely to be available to the UK and set out how this can be best used across the economy to achieve our net zero targets.

The use of hydrogen is an interesting question. Decisions will be made in the coming years on where we think hydrogen can be used as a source of heat. We will have to think about our hydrogen production capacity, and the alternative pressing needs for hydrogen, such as decarbonising industry and major forms of transportation, including maritime, heavy goods vehicles and aviation. There are a lot of potential uses of hydrogen, we will need to look at the option of using it to heat buildings before taking a decision, particularly given the other alternative uses of hydrogen.

I congratulate the hon. Member for Strangford (Jim Shannon) on being the chair of the healthy homes and buildings all-party parliamentary group. We are of course keen to see Northern Ireland, like all parts of the United Kingdom—I stress that it is fantastic to have all four nations represented here today—play its full role in decarbonisation, and to ensure that it is supported during times of high prices. He said that he had learned that I speak to Gordon Lyons, the Northern Ireland Minister for the Economy, frequently and perhaps even weekly. In fact, I spoke to him only yesterday about ensuring that Northern Ireland’s renewable energy opportunities are boosted. The hon. Gentleman will also know that one of the key reasons that we are taking the approach that we are on the Northern Ireland protocol is to ensure that things such as the VAT cut on solar panels can be enjoyed as much by the people of Northern Ireland as by the people of England, Wales or Scotland. Watch this space; we are always keen to help in Northern Ireland.

The basis behind the boiler upgrade scheme is not to provide everybody with a new heat pump. The idea is for the Government to prime the private sector to be able to do exactly that. The hon. Member for Southampton, Test says that heat pumps do not always work, but they frequently do. They are the only proven, scalable technology to decarbonise heating, although there might be hydrogen and other technology developments in the future. As I have said, Sweden and Norway have done this at scale. We will ensure that heat pumps can only be installed on suitable properties, and that there is a greater degree of choice for less suitable properties.

To conclude, I reiterate that decarbonising buildings off the gas grid will be key to delivering on Government priorities. It will protect rural consumers and businesses from high and volatile energy costs, and further strengthen our energy independence. We are taking action, and will continue to act to ensure the transition is smooth, fair and affordable for off-grid households, and rural customers and businesses.

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