Report urges overhaul of Renewable Heat Incentive and uptake of “imaginative options”

The CBI is urging the government to develop a clear strategy to reduce carbon
emissions from heat, including encouraging the use of surplus industrial heat to
warm homes.

At its
energy
conference in London today, the CBI launched The Heat is on: Delivering
an integrated heat policy, a report which says cutting emissions from heat
is crucial to meeting legally-binding carbon reduction targets by 2050 and
mitigating rising energy costs.

“Heating for domestic homes and industry accounts for almost half of all
energy used in the UK, and cutting emissions here could take us a long way
towards reaching our carbon targets,” said Dr Neil Bentley, CBI director for
business environment.

In the report, the CBI warns that existing heat policy is fragmented and
complex, and calls on the government to review the Renewable Heat Incentive
(RHI), which will subsidise homeowners and businesses that want to install
low-carbon heat technologies.

In its current form the RHI will offer a subsidy to a range of renewable heat
technologies, such as solar panels, air- and ground-source heat pumps and
renewable combined heat and power (CHP). But, as planned, the CBI says the RHI
runs three risks.

First, large amounts of subsidy could be directed towards expensive
technologies in cases where cheaper alternative technologies could be used.
Second, the cost of funding the RHI could fall disproportionately on industrial
gas users.

Lastly, the scheme will not encourage imaginative options to make better use
of existing heat generation, such as district and community heating schemes that
use surplus industrial heat to warm domestic homes and businesses.

“Some renewable heat technologies such as solar panels won’t always offer
good value for money, so the RHI must have inbuilt limits on how much can be
spent on individual technologies,” argues Bentley.

“One of the most cost-effective ways of reducing heat emissions is by
insulating homes and businesses, and this should be the first step for anyone
seeking to improve energy efficiency,” he added.

The report urges the government to think outside the box.

“Linking surplus heat from industrial sites into local homes through district
heating schemes could be an efficient and cost-effective way to reduce heat
emissions, but existing government policy won’t encourage this sort of
innovation,” said Bentley.

Among the measures the CBI’s report is calling for are:

• An early review of the of the RHI with a presumption that support levels will
decrease as needed to ensure the total subsidy cost does not escalate
disproportionately

• The government to encourage better energy management in buildings by creating
a one-stop advice service

• More resources put into heat-mapping to uncover where there is surplus heat
and where demand is high enough to facilitate the development of district
heating networks

• The public estate, including schools and hospitals, should commit to procure
heat and cooling services from district heating networks

• The government should consider pump-priming support for the infrastructure to
enable waste heat from industrial processes to be linked to district heating


• DECC and Treasury should consider opening up the competition for carbon
capture and storage (CCS) to industrial projects.

The original plans to fund the RHI by a levy on fossil fuel users should be
reviewed, says the report