Reducing global temperatures through decarbonisation of heat

by Martin Freer

In the venture to decarbonise all parts of human activity much of the focus has fallen on energy. Often electricity has been a euphemism for energy and decarbonisation of energy has become the decarbonisation of electricity.

In a UK context great progress has been made. In 2020 42% of the country’s electricity generation was from renewable generation rising from 5% over a ten-year period. Coal-based electricity generation has dropped dramatically. In 2010 fossil fuel derived electricity was about three-quarters of generation, now low-carbon sources, including nuclear exceed those of fossil fuels. This is quite a transformation and has been driven by ambitious government policy, enshrined in the 2008 Climate Change Act. The introduction of novel market mechanisms such as contracts for difference (CFDs) and agreed strike prices gave long-term confidence to developers which has seen an extraordinary investment in offshore wind and nuclear projects. The scale of the offshore wind programme has seen the strike price for offshore wind reduce by a factor of 3 to ~£50/MWh. The same level of cost reduction has not been seen in the nuclear sector where only the Hinkley Point C project has made it off the starting blocks. The UK’s programme of small modular reactors (SMRs) could unlock a cost reduction pathway.

In the present mix of energy utilisation in the UK, heating accounts for about 40% of the energy consumption and about one third of the carbon emissions. To date, in contrast to electricity, very little progress has been made in the decarbonisation of both domestic and industrial heating. The UK generates most of its heat utilising natural gas and sits at the high end of the spectrum in terms of the carbon intensity. Scandinavian countries, in contrast, are some of the greenest where there are significant components of heating delivered by electricity and district heating.The district heating systems are well-developed pieces of infrastructure which take advantage of waste heat sources such as energy from waste. Little progress has been made in the UK on heat decarbonisation because of the significant challenges involved. Unlike greening of the electricity grid, where the appliances in the home are immune to changes in the source of generation and the switch from coal to wind can be done without any need for the customer to change behaviour, heat will need a change in 25 million homes.

There are three accepted ways of delivering low carbon heating. The approach that UK government has most enthusiastically endorsed is use heat pumps which use electricity to extract heat from the external environment, air or ground, and pump it into the building.  The UK government’s 10 point action plan for the delivery of net zero sets out an ambition to install 600,000 heat pumps a year by 2028. The challenge with a heat pump solution is that it that it is expensive compared to a gas boiler, by a factor of 10 to 20, and is not a direct one-for-one replacement. The intensity of heat  generated by a heat pump is less than that of a gas boiler and hence there is need for hand-in-hand improvements to the thermal efficiency of the home. The cost and level of disruption is therefore high. Alternatives to this approach are either the use of hydrogen or district heating.

In the case of hydrogen the approach is intuitively simple, the natural methane gas in the gas grid is replaced by hydrogen. The gas boilers can either be adapted or replaced by dedicated hydrogen boilers and cooking can also use hydrogen. The challenges to delivering a hydrogen-based solution, however, are not trivial – despite the apparent simplicity. First there is a need to ensure the piping infrastructure used to transport hydrogen is sufficiently modern that the hydrogen does not attack the piping material and cause embrittlement and cracking. Then there is the need to generate sufficient hydrogen at the scale which is required to displace the present methane usage, recognising that the energy density of hydrogen is lower than natural gas. The preferred method of generating hydrogen is one which is as low carbon as possible, green hydrogen. It is assumed that this will be done using electricity from renewable generation, such as wind. The economics of this are not as attractive as for heat pumps, as a unit of electricity can generate 3 units of heat for a heat pump, but less than 1 unit of heat for hydrogen given the efficiency of electrolysis is maximally about 70%. Thus, for a hydrogen solution one needs over three times as much electricity to be generated. Alternative sources of hydrogen, blue hydrogen, are possible, but rely on the development and demonstration of large scale and highly efficient CO2 capture and storage. The preferred option at present is to transport that captured hydrogen to offshore saline aquifers in the process of carbon capture and sequestration.

Thus, to deliver low carbon solutions for heat pumps and/or green hydrogen a significant amount of additional electricity generation is going to be required which could be up to a factor of four higher than presently delivered; approximately 40 MW. This will require a massive scale-up of offshore wind and solar generation, with not insignificant consequence for grid stability. The intermittency of wind and solar, where there can be extended periods of low generation is an issue if at the same moment the system is relying on that generation for heating. There is a clear need for some form of grid-scale energy storage system which can store either heat or electricity or both. The proposition that the development of electric vehicles will create a second life market for lithium-ion batteries which can be used for energy storage, or that that electric vehicles plugged into the charging infrastructure can be used for a large battery is unlikely to be a solution. The type and scale of storage required to manage the future grid will not be met by this type of battery, but rather technologies such as compressed air energy storage, CAES, or liquid air energy storage, LAES. These are in development, with potential for deployment in the next 5-10 years.

Heat pumps consume an amount of electricity which is of the scale of running several electric kettles continuously. If all houses on a street and all streets in a suburb are running heat pumps and if all the homes are also charging electric vehicles this then very quick provides an electricity demand which is higher than the rating of the local electricity grid. As a result, there will need to be significant reinforcement of the local grid infrastructure to support low-carbon heat pump heating and electric vehicle charging.

The last, main, source for delivering low-carbon heating is the Scandinavian approach – district heating. Here hot water/steam is circulated in pipes to the buildings which then circulate the heat through their heating systems either directly or through a heat exchange process. Cities such as Birmingham, Coventry and Nottingham have district heating systems serving the large municipal buildings in the city centre. Indeed, the system which serves Birmingham distributes heating, cooling and power. There is the possibility for the extension of such networks across wider swathes of cities, particularly in dense urban environments. The installation of district heating is highly invasive and needs pipework laying and is not the ideal solution in low density residential areas. The source of the heat for such systems in the UK is typically combined heat and power plants (CHP). These consume natural gas and hence are not low carbon. To make these systems low, or zero, carbon there is a need to either combust hydrogen rather than methane in the CHP engines or use sources of waste heat. Such sources could be geothermal, industrial or even from the energy from waste incinerators which are used to process municipal waste. At present most of the UK’s district heating systems are not configured in this way.

It is clear then why the UK has not made so much progress in decarbonisation of heat – it is really very difficult to achieve without a simple solution that can be rolled out. These challenges were analysed, with a series of policy recommendations to assist in the CBI-University of Birmingham joint policy commission on Net-zero: The Road to Low Carbon Heat, chaired by Lord Bilimoria, published in July 2020. Among the recommendations was that there needed to be coordination across the sector to deliver heat decarbonisation – a National Delivery Body, NDB. The NDB would coordinate the national infrastructure required, the scaling up of production in terms of heat-pumps and hydrogen boilers, support the creation of national skills and training programmes to create low-carbon heating engineers, to provide the expertise such that local heat planning and heat zoning joins up into a deliverable national decarbonisation plan and also to create the right portfolio of incentives and penalties to induce change. The UK government is poised to deliver its heating and buildings strategy and it is clear there is a need to be purposeful and ambitious to accelerate what has been a slow and muddled start to heat decarbonisation.

The Midlands is proposing a National Centre for Decarbonisation of Heat, NCDH, working between local government, academic institutions, innovation Catapults and industry to coordinate the delivery, as a potential delivery arm of the NDB. The NCDH would work on a whole series of activities including driving down the cost of delivering heat. This would be the analogue of what has been achieved in offshore wind. As a benchmark of heating installation, the cost of heat pump installation for heat pump and thermal retrofit is £20,000 per house and 25 million homes, so of the order of £500 billion. An innovation programme which took just 10% off the installation costs would save £50 billion, which is a staggering amount and could be redeployed elsewhere in the energy system, or even in healthcare. The Midlands has the assets to lead decarbonisation of heat, since it is home to several major companies such as Worcester-Bosch, Baxi and Engie, state-of-the-art manufacturing expertise through the Manufacturing Technology Centre, the Energy Systems Catapult, Energy Capital and a powerful network of Midlands universities through the Energy Research Accelerator. These are some of the organisations which, along with  the Green Finance Institute, are advocating the development of the National Hub for the Decarbonisation of Heat (NHDH). 

Regional and national leadership in creating low-carbon heating solutions will provide massive economic potential for delivery of heating solutions and services to international markets. The BEIS clean growth transforming heating report identified an estimated £11 trillion of public and private investment will be required in the global energy sector, including heating, between 2015 and 2030 if the signatories to the Paris Agreement are to meet their national targets. Of this Ricardo Energy & Environment, in their work for the Committee on Climate Change, estimated the low carbon economy in the UK could grow 11% per year between 2015 and 2030, four times faster than the rest of the economy, and could deliver between £60 billion and £170 billion of export sales by 2030.[1]    

The CBI have called this the decade of delivery. What this captures is that we have heat pumps, we have electric vehicles, we have wind and solar and we have large scale nuclear generation and we need to stop treading water and get on and deliver. However, the journey to low-carbon heat is not going to be easy, it will require massive behavioural change and enormous national coordination. As such structures such as the proposed National Delivery Body and National Centre for the Decarbonisation of Heat will place an absolutely crucial role.


[1] Ricardo Energy and Environment for the Committee on Climate Change ( 2017 ) UK business opportunities of moving to a low-carbon economy ( supporting data tables )