Decarbonising heat: the basics

Government efforts to reduce the UK’s CO2 emissions have, thus far, focused mainly on replacing fossil fuels with renewable technologies in the power generation sector. Less progress has been made with transport, although the direction of travel is clear – combustion engines will be phased out and replaced by electric vehicles over the next few decades.

The Government has yet to decide, however, how best to reduce emissions associated with heating buildings, residential and non-residential. There are a number of technological solutions, and the choice between them will be made based on performance, emissions and cost.

The International Energy Agency (IEA) estimate that globally, around half of all energy consumption is used for providing heat, mainly for homes and industry. In the UK, energy used for domestic heating and hot water accounts for 15% of national greenhouse gas emissions.

Adjusting for annual temperature variations, estimated emissions from buildings in 2019 were just 17% lower than in 1990. This rate is not compatible with the Government’s commitment to reach net zero emissions by 2050.

Two key reasons why emissions have fallen so little are the country’s relatively old and inefficient housing stock – over a third of homes were built before the Second World War – and that new homes continue to be heated by fossil fuels; since 1990 around 10 million homes have been connected to the gas grid.

Direct emissions from buildings
Source: UK Green Building Council. Note: Heating and hot water account for 80% of energy consumption in UK homes.

The Government will not meet its net zero target without tackling emissions from heating. Achieving this will require new homes to be designed and constructed to use clean heat, and that heating systems in existing properties are switched to low carbon alternatives.

The government recently issued a consultation to bring in regulations for new homes. The Future Homes Standard will mandate low carbon heating in new homes from 2025, as well as higher levels of efficiency. Critics, however, have said that this policy is not ambitious enough.

For existing properties, heating systems will need to be changed. There are approximately two ‘replacement cycles’ between now and 2050 – a gas boiler generally lasts for 15 years – during which systems that run on electricity or on low carbon gas(es) can be installed. This churn means that there is little danger of boilers being ‘ripped out’.

It is also likely that additional heating technologies, like heat networks (sometimes called district heating) and bioenergy will be required to make sure that all homes and buildings can be decarbonised.

Options for decarbonising heating

Electrification

The theory is simple – use renewable electricity to generate heat in the home. As power sector emissions fall, emissions associated with electric heating are decreasing rapidly. Electric heating technologies are available to buy now, however, some argue that because the costs of electricity are currently higher than for gas, electrification could be an expensive option. There's more on the electrification of heat here.

Low carbon gases

Again, the theory is simple - replace the natural gas that most homes use for heating with hydrogen, which releases energy but no carbon dioxide, the only waste product is water. Biomethane is also an option as it produces less carbon than natural gas over a full lifecycle.

For hydrogen or biomethane to work, the national gas grid would need to be repurposed and home boilers would need to be adapted or replaced. This is possible but would incur considerable cost. The benefit to this technology is that it requires very little behavioural change on the part of the homeowner – the heating system would operate in a very similar way as gas. There’s more on hydrogen for heating in this ECIU briefing.

Hybrids

A hybrid system combining both electrification and hydrogen is a third option. Here, heat pumps could be used to meet the majority of heat demand, with a (low carbon) gas boiler taking over in extremely cold weather. One advantage of this approach is it helps to establish a market for heat pumps while hydrogen is developed to displace natural gas in the hybrid system eventually.

Heat networks

Heat networks connect a central heat source to a number of buildings via a series of underground hot water pipes, and are popular in countries such as Denmark, where heat networks supply 63% of households. The Government expects the heat networks market in the UK to grow quickly to supply c. 20% of heat demand over the next decade or so, investing £320 million into its flagship Heat Networks Investment Project to help get this underway.

Heat networks work particularly well in built-up urban areas or industrial clusters where there is a large demand for heat. Over time, it is thought that if the central heat source can be low carbon, then there is the opportunity to ensure that multiple homes and buildings are decarbonised at once.

Biomass

Biomass can be used to reduce emissions when used instead of more polluting fuels like oil in off gas grid properties. Support for biomass boilers has been available since 2011 via the Renewable Heat Incentive (RHI), but take-up has been low.

Supply constraints also restrict the role that biomass – burning solid material such as wood – can play. In any case, according to the Committee on Climate Change, this resource may be better used in other sectors of the economy such as construction, where it provides carbon storage without the need for CCS and reduces demand for carbon-intensive materials such as steel and cement.

Cost

All these options will likely be more expensive than simply maintaining the current, natural gas-based heating system. However, factoring in economic growth, the total costs of heating will represent a smaller share of GDP in 2050 than today.

Source: Element Energy. Note: These figures cover residential and non-residential buildings. The residential sector accounts for 76% of heat demand, so 76% of these costs can be allocated to home heating.
TechnologyCumulative additional cost to 2050 (£ billion)Annual cost in 2050 (£ billion)Emissions under new system (MtCO2)
Electrification (heat pumps)270405-10
Electrification (direct)1903810-15
Hybrid180 (no green gas), 210 (with green gas)4020-25 (no green gas), 15-20 (with green gas)
Hydrogen1303620-25

Another study modelling zero emissions also found the annual cost for electrification and a hybrid system to be very similar, but the cost of hydrogen about 30% higher, reflecting the costs of producing the gas via electrolysis. This shows that it is currently quite unclear about which option will be the cheapest and easiest.

Policy

Given the similarities in running costs, the Government sees both electrification and low carbon gases as genuine, viable options for a home heating system compatible with its net-zero emissions target. Experts agree that heat networks and biomass will also play some role in the energy transition.

The Government is expected to decide which technology to employ by 2025, when heat decarbonisation will need to be underway to meet net zero. The choices and immediate actions from Government are expected to be outlined in autumn 2020, when the Heat and Buildings Decarbonisation Strategy is due for release.

In the meantime, it plans to continue trialling both systems at scale and assessing the results. In 2020, the Clean Heat Grant was announced which is due to replace the RHI in 2022. The RHI pays owners of renewable heating systems like heat pumps incremental sums over 7 years to help cover the initial cost. The new Clean Heat Grant will instead be an upfront grant (up to £4,000) issued to someone buying a renewable heating system.

It seems likely that a combination of heating technology options will be needed for the UK’s heterogeneous building stock to decarbonise, with the pathway that offers the best heating performance, lowest greenhouse gas emissions and the lowest cost likely to be the ultimate choice.