Policy Exchange releases report on decarbonizing UK domestic heat

By Katie Fletcher | September 22, 2016

The U.K.-based Renewable Heat Association announced that the renewables industry supports conclusions of the Policy Exchange’s recent report on decarbonizing the U.K. heating sector. In particular, the REA highlighted its agreement with the future role of biomethane in this effort.

The Policy Exchange is an independent think tank whose missions is to develop and promote new policy ideas. The authors of the report—Richard Howard, head of environment and energy, and research fellow Zoe Bengherbi—work in the Policy Exchange’s Environment and Energy Unit, which conducts policy research across a range of environmental, infrastructure and regulatory challenges.

Overall, the paper stated that the newly created Department for Business, Energy and Industrial Strategy “needs to completely rethink its approach and look at alternatives,” and that the U.K. is “significantly off track to meet legally binding carbon budgets covering the period to 2032.” Even so, the Policy Exchange reported that the government could still meet its target of reducing carbon emissions from domestic heating by 80 percent by 2050, compared to 1990 levels, through a range of measures, including: improving energy efficiency, making better use of gas, expanding the use of greener gases and abandoning the EU’s renewable heat target.

By far, gas is the most common form of heating in U.K. households, with 23 million or about 84 percent using a gas boiler to provide, usually, both space heat and hot water. Overall, gas meets 77 percent of domestic heating needs once space heating, water heating and cooking are combined. Biofuels such as wood only compose 4.6 percent. Further, nearly half of all energy consumed in the U.K. is used to provide heat, with domestic heating accounting for 28 percent of total energy used.

The “greener gases” the report referred to are gases such as biogas, biomethane, bioSNG (synthetic natural gas) and biopropane produced from waste and organic matter. According to the report, “this gas [biomethane] can be used as a drop-in replacement for natural gas, either by injection into the gas grid or as a substitute for LPG in off-gas grid homes.”

Since biomethane has a similar composition to natural gas, they do not require any changes to gas appliances or networks and can offer a cost-effective route to substantially decarbonize gas use, the report added, but there is uncertainty about the amount of green gas available.

There were 50 plants injecting biomethane into the grid as of the end of 2015, producing a total of around 2.5 terawatt-hours (TWh) of gas per year. Another 15 plants are expected to go up this year. In addition, there are 250 facilities that generate biogas and burn this onsite to produce power as of March 2016.

How much total bioenergy available widely varies from around 60 TWh per year to nearly 2,000 TWh. The CCC estimates the range of biomass availability in 2050 to be 100 to 550 TWh per year, with a central estimate of 140 TWh domestically and a further 70 TWh from imports. A question the report raised is how much should be used in domestic heating.

Currently, most studies assume only a small fraction of available bioenergy would be used for domestic heating, as most would be used in more challenging areas to decarbonize like energy-intensive industries and transportation. The Department of Energy and Climate Change’s bioenergy strategy for the U.K. has estimates of 200 to 500 TWh per year, of which less than 15 percent would be available for heating. National Grid research concludes that around 80 to 120 TWh of biomethane could be produced annually in the U.K., mainly from wastes, which accounts for around 32 percent of the overall projected domestic heating demand in 2050 and around 30 to 50 percent of National Grid’s projected 2050 overall gas demand.

At present, biogas production is eligible for support under the Renewable Heat Incentive, the small-scale Feed in Tariff, Renewables Obligation and Contract for Difference. Even so, under current conditions, the carbon savings from electricity generation outweigh those from injecting biogas into the grid, but this will change as the power system is decarbonized, the report stated. “It could be argued that green gas is more useful when injected into the grid and used to decarbonize heat. Government needs to provide greater direction on the best use of biogas and design individual policies and financial incentives accordingly,” the report concluded.

Although the renewables industry welcomed the role given to biomethane in the report, there were concerns raised, including the report’s general dismissal of the contribution from biomass boilers, amongst other renewable heating technologies, in playing a large role in decarbonizing domestic heating.

The REA stated, “biomass heating is often the natural, low-carbon choice in off-grid properties, which are less well insulated and therefore require the higher heat that biomass can deliver. About 4 million homes in the U.K. are off the gas grid, so it would be wrong to dismiss biomass as a ‘small-scale renewable’”.

Since April 2014, small-scale renewable heating solutions such as solar thermal and biomass have been supported by the domestic RHI with 11,600 domestic biomass and 7,700 solar thermal systems installed under the scheme as of April 2016.

The report stated that despite the growth, these numbers represent only a small proportion of the domestic heat market. Although bioenergy and waste incineration provides around 5 percent of U.K. domestic heat demand, only around 1 percent of this comes from small-scale domestic biomass systems. Almost 60 percent of biomass systems accredited under the RHI have displaced heating oil, but biomass boilers are generally seen as playing a limited role in meeting domestic heating requirements, according to the Policy Exchange’s report. DECC’s (2010) 2050 Pathways Analysis suggests biomass boilers will provide at most 10 percent of total heat demand in 2050, with very little coming from small-scale biomass systems. However, research suggests that small-scale biomass could play a role as a transition heating technology until 2030.

The report stated that biomass boilers “are limited by the availability of sustainable bio-resource, the cost of installations and concerns over the impact of air quality,” concluding that both solar thermal and biomass options are “unlikely to be economic for homes already connected to the gas grid.”

REA disagreed with the report. It stated that the report “wrongly attributes air quality issues to biomass boilers. Unlike stoves and open fires, biomass boilers are strictly regulated regarding their emissions with tight limits on particulate matter and nitrogen oxides. As biomass boilers are most often installed in rural, off-gas-grid locations, they have a negligible contribution to urban air quality issues.”

The report reiterated that decarbonizing heat is critical to meeting the U.K.’s overall carbon targets, and despite its significance, heat remains the “Cinderella” of energy and climate policy. Although the government has developed a number of policies to decarbonize heat, the main one being the RHI, the Policy Exchange said they’ve been largely “insufficient” and a new strategy and suite of policies will need to be developed to meet these targets. And, although the REA supports the future role biomethane plays in the Policy Exchange’s recommendations, it disagrees with the focus on heat pumps.

"The REA does not support the view that the vast majority of new renewable heating should come from heat pumps, instead a diverse heating mix will be critical,” said Frank Aaskov, policy analyst at the REA. “There should be a multiplicity of options available, including biomethane, biomass boilers, heat pumps and solar thermal. Be they off the gas grid or in cities, based in Scotland or Kent, consumers should be able to choose from a range of options best suited for their particular needs.”

To read more about the Policy Exchanges recommendations to develop an approach to decarbonize heat the report can be found here.