1. Help reduce carbon dioxide emissions: almosta third of the UK’s carbon dioxide emissionsare from heat, equal to those from electricity.Converting only four per cent of domestic usersto renewable heat would save one million tonnesof carbon.

2. Increase energy security: almost 60 per centof the gas we use in the UK is to provideheating but the security of the gas supply anduncertain prices are an increasing concern.Sustainable heating will reduce our gasdependency, as it uses a wide variety of fuels –many from within the UK.

3. Increase competitive markets: Ofgem, theelectricity and gas regulator, has no remit to

address competition in the heating market beyondgas. Unlike electricity and transport fuels, heatmarkets are naturally distributed, presentingthe opportunity for the development of adiverse and competitive market.

4. Reduce fuel poverty: reducing heat demandand waste heat could potentially decreaseheating bills by an average of 26 per cent.This would help the two million fuel poor,whose numbers have swelled with the increase inconsumer gas prices since 2003.

• a third of the UK’s carbon dioxide emissions come from heat• half of all energy in the UK is used to produce heat• typically two thirds of the energy consumed in large electricity plantsis lost as waste heat

• why is there no strategy for producing heat more sustainably?

a strategy for sustainable heat

1

Picture three scenes. In the first you settle back into a hot bath with a mug of soup. In the second it is midsummer and the office oppressive, air conditioning is the only way to ensure any work is done. A large factoryextracting sugar from beet using boiling and hot air is the third.

What do these pictures have in common? Hot water, radiators, heating food, keeping cool, industrial boilingand drying… all are dependent on heat.

Heat is so much a part of the fabric of our everyday lives that we simply take it for granted. Most of the UK’sheat comes from burning North Sea gas. This supply has been so cheap and abundant that we have never hadto be sparing in the amount of heat we use. But the energy future facing us now is quite different. As concernabout the UK’s contribution to global warming mounts, a heating economy that relies on carbon-emissionproducing gas, is no longer viable.

Even so, home-owners, industry, developers and planners rarely consider more sustainable sources of heating.As indicated by the recent Commons Trade and Industry Committee ‘low-carbon heat production is theCinderella of energy policy’.With heat responsible for three-quarters of our energy use outside transport it isvital that we turn our attention to sustainable sources, which could provide up to a quarter of our annualheating needs by 2016.

what can sustainable heat deliver?

Sustainable heat alternatives can go a long way to addressing the government’s energy policy aims:

what is sustainable heat?Sustainable heat is heating and cooling from low carbonmeasures and renewable sources.

energy efficiency, designing for heat, smart meters, biomass heating, solar thermal, ground and air source heat pumps

why don’t we use sustainablesources of heat more?

� Heat is a hidden energy use: typically, energyuse information does not highlight the highpercentage that heat accounts for. Statistics thatfocus on heat are hard to come by andinsufficient in comparison with electricitystatistics.

� Heat is a policy and regulatory blindspot: theenergy regulator, Ofgem, currently has no remitfor looking at heating supply beyond gas.There isno framework for supporting the supply of heatfrom alternative sources.

� The market is currently small and awarenessis low: with low awareness and a lack ofinformation on sustainable heating technologiesconsumer demand is too low to drive the market.

� Upfront investment costs are high:homeowners and business often find it difficult tofinance the initial investment costs of sustainableheating systems, even though the payback is oftenwithin reasonable periods of time.

developing a strategy forsustainable heat

We have set out below requirements for an effectiveheat strategy. It should:

� Put energy conservation and efficiency first:as energy efficiency and demand management areoften the most efficient forms of carbon saving,any support for low carbon and renewable heatshould be coordinated with efforts to ensure thathigh levels of efficiency have already beenachieved.

� Be comprehensive: only a coordinated packageof measures can address the current barriers togrowth. A comprehensive heating and coolingstrategy should include a number of reinforcinginstruments that provide both the mechanism ofchange and the optimum long-term marketconditions. It must be considered as acomprehensive whole, and not as a shopping listof discrete measures.

� Provide stability over the long-term: aframework that delivers support over a reasonableinvestment horizon will avoid the vagaries ofgovernment funding rounds and present thestable investment conditions for long-termgrowth.

� Be target-based using reliable statistics:ambitious and verifiable targets need to be set thatwill be the guiding line for the measures to betaken. A pre-requisite for these targets will bemore reliable and comparable data.

� Reward carbon reduction: linking incentives tovolume – of fossil energy saved or low carbonand renewable energy supplied – ensures that themost effective and efficient measures receive themaximum encouragement.

� Be simple and effective, for applicants andthe public sector alike: administrativeprocedures should be as simple as possible tominimise transaction costs. The burden oftransaction costs will be most acute for thedomestic sector and small-scale technologies.

2

Space heating

WaterCooking/Catering

Lighting/Appliances

Process use

Motors/Drivers

Othernon-transport

Drying/Separation

Heat uses 76 per cent of non-transport energy

anaerobic digestion, geothermal, absorption cooling technologies, combined heat and power (CHP), micro-CHP

� Be capable of addressing capital barriers:capital can be a barrier to uptake in all segmentsof the market, but is most acute in the domesticand public sector. Incentives must have theflexibility to recognise the benefits delivered overthe operating life of a measure and equate thesebenefits to up-front capital support.

� Be sustainable: any strategy must be based onthe principles of maintaining enforceablestandards of environmental sustainability for allheating sources, and ensuring that the measuresintroduced will contribute to significant netsavings in lifecycle greenhouse gas emissions.

� Be consistent with European standards: anytechnical parameter linked to eligibility forfinancial incentives should be based on Europeanstandards and certification procedures, where theyexist, and, for small scale systems, to the BuildingResearch Establishment’s and the Department ofTrade and Industry’s emerging MicrogenerationAccreditation Scheme, to avoid creating small andisolated markets.

� Be open to innovation: qualification for supportmust be flexible to provide competitive access forall products, with appropriate incentives to tacklethe barriers to new market entry.

� Be flexible and responsive: any incentivescheme needs to be able to adjust to marketdevelopment and have minimum impact on themarket.

� Support skills: for a market to flourish, engineerand technician training in sustainable heat design,installations and maintenance is essential. Targetedtraining and recruitment is needed until themarket framework is correct, with key playersthus ensuring there is no skill shortage.

� Promote leadership, starting with the publicestate: public buildings should act as anexemplar of what can be achieved withsustainable heating and cooling, but should alsoinclude consideration for the replicability of thetechnologies elsewhere.This would help boost themarket and drive costs down.The governmentneeds to continue and deliver on its commitmentson this. Champions in the private sector shouldalso be recognised and encouraged.

The following strategy issupported by these organisations:

3

a strategy for sustainable heat

This is a holistic, simple strategy comprising a fewkey supporting measures. It is a coordinated packageof complementary actions.

Stable, long-term incentives must beintroduced.The core element of a heat strategy should be theintroduction of a stable, long-term incentiveframework built on the fundamental principle ofrewarding the delivery of renewable and low carbonheating and cooling services and products.

This incentive framework should:� Be output based, to reflect the carbon andenergy security benefits of reducing fossil-fuelledheating and cooling.

� Provide comprehensive market coverage withthe flexibility to offer upfront capital andproject development support where necessaryin exchange for revenue benefits.

� Recognise the challenge of bringing forwardalternative new products in a market dominatedby fossil heat supply and recognise the value ofinnovation and energy efficiency.

This means that the framework will need to providea direct revenue incentive for the majority ofheating and cooling options. Reward could be basedon metered heat output. Capital support should beoffered as an alternative for demand managementand domestic supply-side measures on the basis ofrated heat output.Work needs to start immediatelyto identify and implement the most appropriatemechanisms to deliver this framework. (DTI)

At the same time, and to provide continued supportfor heating and cooling technologies, the followingmeasures will be needed.We believe that many ofthese can be implemented within a short space oftime (less than18 months).

Objectives must be set, and progress measured.A clear government target for renewable andlow-carbon heating and cooling supply across

the economy is needed.The government could lookto use the incoming Climate Change Bill to set atarget, and commit now to using its powers underthe Climate Change and Sustainable Energy Act to setrobust targets for microgeneration.

Enabling action should be taken now.Local authorities should be expected to developa local energy strategy to include heating andcooling. This should specify what type of energydistribution network is appropriate for a givenlocality. In areas with sufficient heat density, this willbe district heating using heat demand in publicsector buildings to underpin development. (DCLG)

Firm direction should be given through theplanning system. The requirement forincorporating much higher standards in buildingregulations for thermal performance of buildingsand structures, together with the need toincorporate onsite renewables and low carbonenergy sources in major new developments,outlined in the current consultation on Planningand Climate Change, should be implementedand enforced in full. (DCLG, DTI)

Continued financial support should build onwhere we are. A number of measures alreadyprovide limited support for renewable and lowcarbon heat – the Low Carbon BuildingsProgramme, the Bioenergy Capital Grants Scheme,and the Energy Efficiency Commitment.Whilst notsufficient to realise the full potential of renewableand low carbon heat, these measures do play a rolein building customer demand and supportingindustry growth in the absence of a dedicated long-term incentive framework.To fulfil this role thesemeasures need to be properly structured andresourced to build confidence and capacity inthe industry until a suitable mechanism is inforce. (DTI, Defra)

A level playing field must be established.The industry as a whole, including government andOfgem, needs to broaden its horizons beyond itscurrent focus on gas. The duties of Ofgem needto be redefined to ensure that it considers theimpacts of its decisions on the heat market.

4Please see the full document ‘A manifesto for sustainable heat’ for more information.Contact: Rebekah Phillips, Green Alliance, rphillips@green-alliance.org.uk