How state intervention can help decarbonise heating systems

The need for a state-led approach

Heating is one of the major sources of greenhouse gas emissions in the UK, accounting for about 15% of the total. Most of the heating systems in the UK rely on fossil fuels, such as natural gas, oil and coal, which contribute to global warming and air pollution. To meet the net-zero target by 2050, the UK needs to rapidly decarbonise its heating sector and switch to low-carbon alternatives, such as heat pumps, heat networks and hydrogen.

However, the transition to low-carbon heating is not easy, as it involves high upfront costs, complex technical challenges, and behavioural changes for consumers. Moreover, the current market and policy frameworks are not conducive to the adoption of low-carbon heating technologies, as they favour the incumbent fossil fuel-based systems. Therefore, there is a strong case for state-organised action to modernise the heating systems and facilitate the decarbonisation process.

The benefits of state-organised action

State-organised action can help overcome the barriers and create the conditions for a successful transition to low-carbon heating. Some of the benefits of state-organised action are:

How state intervention can help decarbonise heating systems

  • Economies of scale and scope: State-organised action can leverage the economies of scale and scope in the deployment of low-carbon heating technologies, such as heat pumps and heat networks. By coordinating the installation, operation and maintenance of these technologies across multiple buildings and areas, the state can reduce the unit costs and increase the efficiency and reliability of the systems. Moreover, the state can integrate the heating systems with other infrastructure sectors, such as electricity, transport and water, to optimise the use of resources and minimise the environmental impacts.
  • Risk sharing and financing: State-organised action can share the risks and provide the financing for the transition to low-carbon heating. By providing grants, subsidies, loans and guarantees, the state can lower the upfront costs and increase the affordability of low-carbon heating technologies for consumers. By setting clear and stable policy and regulatory frameworks, the state can also reduce the uncertainty and increase the confidence of investors and developers. Furthermore, the state can use its borrowing power and tax revenues to mobilise the public and private funds needed for the transition.
  • Public engagement and awareness: State-organised action can enhance the public engagement and awareness of the benefits and challenges of low-carbon heating. By involving the local communities and stakeholders in the planning and implementation of the transition, the state can increase the acceptance and participation of the consumers. By providing information, education and advice, the state can also increase the awareness and understanding of the consumers about the options and implications of low-carbon heating. Additionally, the state can use its influence and leadership to set an example and inspire others to follow.

The examples of state-organised action

Some countries and regions have already taken state-organised action to modernise their heating systems and achieve their climate goals. Some of the examples are:

  • Denmark: Denmark has a long history of state-organised action in the heating sector, dating back to the 1970s. The country has developed a comprehensive and coherent policy framework to support the expansion and decarbonisation of district heating, which now covers about 60% of the heat demand. The policy framework includes mandatory heat planning, heat supply regulation, taxation, subsidies, and carbon pricing. As a result, Denmark has reduced its dependence on fossil fuels and increased its use of renewable energy and waste heat in district heating, reaching about 70% in 2019.
  • France: France has launched a state-organised action plan to modernise its heating systems and reduce its carbon emissions, called the “Heat Fund” (Fonds Chaleur). The plan, which started in 2009, provides financial support for the development of renewable and recovered heat projects, such as biomass, geothermal, solar thermal, and heat recovery from industrial processes. The plan aims to support 5.5 million tonnes of CO2 equivalent avoided per year by 2023, equivalent to about 10% of the heat demand. The plan is funded by a carbon tax and managed by a public agency, the Environment and Energy Management Agency (ADEME).
  • Tamil Nadu: Tamil Nadu, a state in India, has recently launched a state-organised action plan to tackle climate change and enhance environmental protection, called the Tamil Nadu Climate Change Mission. The plan, which was announced in December 2023, focuses on climate change adaptation and mitigation activities, with an outlay of Rs 500 crore (about $67 million). The plan will be headed by the Chief Minister of Tamil Nadu, and will involve international, national and local experts to identify and implement the measures at the district level. The plan will also look at climate budgeting, green initiatives, and master plan preparation.

The way forward for the UK

The UK has a lot to learn from the examples of state-organised action in other countries and regions, and should adopt a similar approach to modernise its heating systems and meet its net-zero target. The UK should develop a comprehensive and coherent policy framework to support the transition to low-carbon heating, which should include:

  • A clear and ambitious vision and roadmap: The UK should set a clear and ambitious vision and roadmap for the decarbonisation of its heating sector, with specific targets, milestones, and indicators. The vision and roadmap should be aligned with the net-zero target and the carbon budgets, and should be based on robust evidence and analysis. The vision and roadmap should also be communicated and consulted with the public and the stakeholders, and should be regularly reviewed and updated.
  • A coordinated and integrated strategy: The UK should adopt a coordinated and integrated strategy to implement the transition to low-carbon heating, which should involve multiple actors and sectors. The strategy should be led by the central government, but should also involve the devolved administrations, local authorities, regulators, utilities, industry, academia, civil society, and consumers. The strategy should also integrate the heating sector with other infrastructure sectors, such as electricity, transport and water, and should consider the interactions and synergies among them.
  • A balanced and flexible mix of instruments: The UK should use a balanced and flexible mix of instruments to facilitate the transition to low-carbon heating, which should include a combination of regulation, taxation, subsidies, incentives, information, and innovation. The instruments should be designed and implemented in a way that reflects the diversity and complexity of the heating sector, and that allows for adaptation and experimentation. The instruments should also be consistent and stable over time, and should be monitored and evaluated for their effectiveness and efficiency.

By taking state-organised action to modernise its heating systems, the UK can not only reduce its greenhouse gas emissions and meet its climate obligations, but also improve its energy security, air quality, health, and well-being. The transition to low-carbon heating is a challenge, but also an opportunity, for the UK to become a global leader in the green economy and the green recovery.

By Ishan Crawford

Prior to the position, Ishan was senior vice president, strategy & development for Cumbernauld-media Company since April 2013. He joined the Company in 2004 and has served in several corporate developments, business development and strategic planning roles for three chief executives. During that time, he helped transform the Company from a traditional U.S. media conglomerate into a global digital subscription service, unified by the journalism and brand of Cumbernauld-media.

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