Electrification is only option for decarbonising buildings, says NIC report

The Second National Infrastructure Assessment – a five yearly review conducted by the National Infrastructure Commission – has said that electrification is the only “viable option for decarbonising buildings at scale” and calls on government to rule out the use of hydrogen for heating.

The report sets programme of transformation for the country’s energy, transport and other key networks over the next 30 years. Its recommendations include:

  • backing electrification as the only viable option for decarbonising buildings at scale, to reduce reliance on volatile fossil fuels, lower energy bills over the long term and to meet the UK’s climate targets, with government fully subsidising the costs of installing a heat pump for one third of households – based on income – and offering £7,000 support to all others to switch to a heat pump or heat network
  • adding low carbon, flexible technologies to the electricity system to ensure a highly renewable energy system remains reliable, and creating a new strategic energy reserve to boost Great Britain’s economic security
  • building additional water supply infrastructure and reducing leakage, while introducing compulsory water metering as part of efforts to reduce water demandUrgently implementing reforms to meet a 65% recycling target by 2035 and phasing out energy from waste plants that do not include carbon capture facilities.

The report is upfront about the need for significant public and private investment in infrastructure if the UK is to rebalance its economic geography, meet climate obligations, improve resilience and enhance the natural environment.

The review calculates that government’s commitment to a sharp increase in public sector investment in infrastructure to around £30 billion per year will need to be sustained until 2040. This sits at the top of the funding envelope set by HM Treasury for the Commission’s recommendations of up to 1.3% GDP a year. Meanwhile, private sector investment will need to increase from around £30-40 billion over the last decade to £40-50 billion in the 2030s and 2040s.

It also sets out the likely impact on households, where private investment is recouped through infrastructure service bills. It finds that the average household will save at least £1,000 per year by the mid 2030s compared to today, largely driven by the transition away from fossil fuels onto cheaper low carbon electricity.

The report draws on two years of analysis, expert engagement and public research, resulting in what Commission Chair Sir John Armitt labels “probably the most comprehensive assessment yet of the infrastructure costs associated with supporting regional growth and reaching net zero”.

Heat pumps

The case is made for heat pumps and heat networks as the solution for switching buildings from gas for heating. Noting that 7 million buildings in England will need to make this transition by 2035 to meet the Sixth Carbon Budget, the report sets out a bold, comprehensive and fully costed programme of government support for households to make the switch, including:

  • Around £1.3bn per year to 2035 to cover the full cost of heat pump installations for lower income households, with additional support for energy efficiency improvements and devolution to local authorities to manage local energy efficiency programmes
  • Around £1.9bn per year to 2035 for an initial upfront subsidy of £7,000 to households installing a heat pump or connecting to heat networks, tapered over time as costs fall, in addition to zero per cent financing for the remaining cost
  • Around £3.2bn per year to 2035 to improve energy efficiency and install heat pumps across the public sector estate and social housing.

In addition, it calls on government to rule out the use of hydrogen for heating and focus hydrogen on power generation and industrial decarbonisation.

Writing in the report’s foreword, Sir John Armitt, Chair of the National Infrastructure Commission, said:

The good news is that modern, reliable infrastructure can support economic growth, help tackle climate change and enhance the natural environment.

We stand at a pivotal moment in time, with the opportunity to make a major difference to this country’s future. But we need to get on with it.

People often talk about infrastructure as the backbone of our economy: what our infrastructure needs now is the collective mettle to turn commitments into action that will reap rewards for decades to come.

Government is expected to respond formally within 12 months.