Thank you for the invitation to this evening's event.
HEAT AS A STRATEGIC GAP: THE SCALE OF THE CHALLENGE
Heat is a subject that's been off the radar for far too long.
It's the single biggest driver of energy demand in the
country. We spend £33 billion a year on heating - more than
we spend on primary healthcare or military equipment. And it
accounts for around a third of our greenhouse gas emissions.
We must get the UK on a path consistent with avoiding the
damage to our economy, society and public health that would
be caused by a global temperature rise above 2oC.
We cannot meet our targets for emissions reductions or those
for renewable energy without changing the way we produce and
consume heat. Most heat - for space heating and for
industrial processes - currently comes from burning natural
gas, which is a fossil fuel.
We believe that, to meet our climate change goal, emissions
from buildings must be near zero-carbon, and emissions from
industry nearly halved. To get there, we're going to have to
change the way we generate, distribute, and use heat.
So in March we published a Strategic Framework for Heat, to
look at the changes we'll need to make across the economy
when it comes to heating. The scale of effort can seem
daunting, but we do not need to make the transition
overnight. We need a sensible plan, focussed on building a
market for low carbon heat, supporting economic growth and
taking cost effective measures.
The heat strategy sets out how we might do that - by managing
demand, changing the way we heat buildings, setting up heat
networks, and realising the potential for efficient, low
carbon industrial heat.
Let me emphasise the point: this does not need to be a
threat. We should see this as a great opportunity for the UK;
an opportunity to diversify our sources of heat, make our
processes more efficient and our companies more competitive,
to develop our cities and towns in sustainable ways that
prepare us for a low carbon future. And it will bring
renewable heat into the mainstream alongside gas boilers, a
market which currently sees around 1.6 million new boilers
put into homes every year.
WHERE SHOULD WE START?
Demand reduction is where we must focus our efforts now - the
Green Deal offers a new way of financing energy saving
improvements to our building stock, supporting a whole new
market in energy efficiency. A successful, vibrant, effective
Green Deal will help save money, save carbon - and make a
real contribution to economic growth. It is also be an
important precursor to the roll-out of renewable heating
solutions for homes.
And we need to prime the renewable heat market if we are to
have a supply chain that can meet the challenge. We are not
beginning from a standing start: the world's first Renewable
Heat Incentive for non-domestic heat is already up and
running, as is our Renewable Heat Premium Payment scheme. We
are currently consulting on the RHI for homes.
HEAT STRATEGY RESPONSES
The Heat Strategy posed a number of questions and we are
grateful to the E.N.A. and its members for their responses to
There were some common themes on building-level heat that we
picked up from the 170 responses we received.
Overwhelming support for our approach - that we start with
energy efficiency, encourage low carbon networks in urban
areas, renewable heating in rural off grid areas, and move
more slowly in the on-grid suburban areas;
The consumer angle came through very strongly.
Understanding consumer attitudes to the way people manage
their heat use and understanding the triggers and
influences for change will be central to any new policy
proposals. And so will protecting the most vulnerable.
Questions about the future of the natural gas grid, and the
challenges of relying so heavily on electricity for our
heat in the future.
In this respect as in many others, we should not look at heat
as separate from the wider energy security and electricity
market questions we are tackling. We have to consider the
entire energy system. And we have to look at local
decentralised approaches so that markets do not remain
dominated by a small number of very large players.
ENERGY NETWORKS ASSOCIATION REPORT
We have been fortunate to receive many case studies and
reports to supplement our evidence base. Clearly the report
being launched today is a very welcome addition.
I am struck by many of the common challenges identified by
the E.N.A. Like us, you have highlighted the importance of
reducing our demand for heat, expanding district heating
networks, the need for technology, product and supply chain
development, the decarbonisation of the electricity grid, and
the importance of the customer.
But there are points of difference. About the challenge of
meeting the peak winter demand for heat and whether there is
a role for biomethane for domestic heating. We will need to
continue to engage closely with the E.N.A. and its members to
share analysis and to work through these points.
What we do know is that we need to achieve the 80% emissions
reduction target, we need to drive economic growth by
encouraging new low carbon investment, and we need to protect
the security and affordability of our energy supplies. The
interactive 2050 Pathways model is a stark reminder of the
trade-offs and the scale of transition required.
THE WORK UNDERWAY TO TAKE THE HEAT STRATEGY FORWARD
The Strategy was published in March, since then we have been:
Supporting cities in developing their plans for district
Working collaboratively with UK Green Investment, the
Greater London Authority and others on models for funding
new heat networks
Using our contact groups on Community Energy and
Decentralised Energy to push those agendas forward
Creating a national heat model
Commissioning social research to learn more about consumer
Learning from the RHI, Renewable Heat Premium Payments
scheme and the Green Deal
...and much more besides. My officials have been out and
about visiting industrial sites, city centres, new housing
developments, technology test-beds and anything else that can
help us plan for the low carbon future.
This will all be pulled together over the next few months,
and published in the New Year as a policy document for
consultation. We look forward to continue working closely
with the E.N.A. and its members as these proposals start to
Let me finish by thanking you all for coming, to the E.N.A.
for commissioning this timely report, and for inviting me