Lord Berkeley:

Moved by Lord Berkeley

138A: After Clause 264, insert the following new Clause—“Renewable liquid fuels for low-carbon heatingWithin six months of the day on which this Act is passed, the Secretary of State must introduce proposals to bring into force a Renewable Liquid Heating Fuel Obligation, setting annual obligations on fuel suppliers to ensure the supply of recognised low-carbon renewable liquid fuels for domestic and commercial heating.”Member’s explanatory statementThis amendment requires the Government to introduce a Renewable Liquid Heating Fuel Obligation (RLHFO) for home and commercial building heating purposes, which would create a scheme that mirrors the Renewable Transport Fuel Obligations Order 2007. This would offer the option to off-gas-grid properties to switch to renewable liquid fuels, as another choice available to decarbonise their heating.

Noble Lords will be pleased to know that Amendment 138A in my name is a probing amendment, and I certainly do not intend to divide the House. This issue, which has come to me from a number of people in the south-west, is about the need for parity in the government incentives for heating homes that are off the gas mains. This would require a scheme that mirrors the Renewable Transport Fuel Obligations Order 2007.

I get the impression that the government policy on this is that everyone who is off the gas grid should be able to install a heat pump. When I am not in Scilly, I live in a little village in the middle of Cornwall, where lots of my friends use fuel oil for heating because there is no way that you can put a heat pump in some of these houses. Heat pumps are very good, but, in terms of fairness, about 1.7 million homes—perhaps occupied by 4 million people—are off the gas grid. They all want to decarbonise quicker, but how will they do so? The Government’s statistics show that 20% of off-grid homes are not suitable for heat pumps—again, we quite understand that. There is also the cost of installing them, of about £22,000, which is quite expensive for some people.

I am interested in a recent survey by the Future Ready Fuel campaign, which showed that 90% of people living off the gas grid are concerned about the Government’s current heating proposals, which are treating them unfairly. They would rather a greater choice of low-carbon heating solutions. The amendment asks the Government to investigate this further.

Before I speak about that, and the obvious need for consumer choice in this, it is probably worth explaining what the material—hydrotreated vegetable oil, or HVO—actually is. The easiest way of doing so is to say that it is used vegetable cooking oil, animal fat residue and tall oil—whatever that is—which is a by-product of the manufacture of wood pulp. Most of the time, when we hear about used cooking oil, it is because people have tipped it down the drains and eventually blocked them; it is very nasty for the drainage companies to solve this and take it away.

What surprises me is that the industry data has forecast that, by 2030, the feedstock availability, which is the important resource, is more than enough to meet the transport and non-transport needs, including home heating. The Department for Transport is very keen to use this to get more environmentally friendly airplanes in the sky—we might all have views about that. Production of HVO in the United States is already 10 billion litres and is expected to increase to 22 billion litres by 2025; ditto in Europe, where it is expected to double in the next two years from 5.5 billion litres to 11 billion litres.

This is not suggesting that this is the only low-carbon solution for people who need to heat their homes and who cannot use the existing systems, but it is an important issue for debate. You are telling people that they need to reduce their carbon usage and that the best way is air source or ground source heating, but there is an alternative. I suggest that the Government need to look at this and see whether there is a compelling case to look again at the tariffs. The Minister may say that the Government are doing this already; in which case, I shall say, “Well, that is lovely, but when is the report going to be published?” If they are not, I gently suggest that they should look at it, and I will be happy to facilitate a meeting between Ministers and the group of manufacturers concerned to see how we could take it forward. I beg to move.

My Lords, I will not detain the House. I declare an interest as living in an off-gas-grid property. I am sure that the Minister knows what I will ask him.

There is a lacuna in government communications or policy about the off-gas-grid regulations. These were consulted on extensively but so far, unless I have missed it, they have not resulted in an emanation in government policy. We are in a situation where, if you are one of the folk in an off-gas-grid residence, you do not know what to do. Under the system that was consulted on, it was proposed that, after 2026, if your oil boiler broke down you could not replace it with another oil boiler; as yet, we do not know whether that date is still in currency or not. It would be good if the Minister could tell us exactly what the current policy of the Government is and, if it is to change from something that was consulted on, when we would get an announcement.

The alternative, if they do not adopt the proposition from the noble Lord, Lord Berkeley, is that people need to get themselves an air source or ground source heat pump, but that is not a feasible proposition if you are trying to replace your recently defunct oil-filled boiler that has broken down between Christmas and New Year, when you have the grandchildren or your elderly great-granny in residence. Frankly, from the work done by the Environment and Climate Change Select Committee of this House on the boiler upgrade scheme, it was clear that getting an air source or ground source heat pump not only was an expensive proposition but would take some time. For the most part, it would take a number of weeks, and often a number of months, rather than having a nice man from British Gas or the local oil company coming round to give you a replacement on Boxing Day.

Apart from that, there is a debate to be had about the efficacy of air and ground source pumps in some houses, though I must admit that I probably come from the school that says that, providing you get a big enough one, you can heat almost anything—but that then raises major questions about ongoing energy costs.

Although I welcome the Minister’s statement earlier today about the extension of the boiler upgrade scheme term, it is a real pity that it was a complete failure in terms of numbers in the last financial year, and that most of the money that had been allocated had to be sent back to the Treasury. That is a great regret. My question—which my noble friend Lord Berkeley has given me the opportunity to ask yet again—is when we will get some clarity on the off-gas-grid regulations and what that clarity, if I have missed it, might be.

My Lords, I want to offer a few words of support for the amendment from the noble Lord, Lord Berkeley. It is something that the Government should take very seriously if it is to be used in a very specific and limited way for off-grid properties—the key point being the feedstock availability, which needs to be understood in more detail.

On the link with sustainable aviation fuel that the noble Lord, Lord Berkeley, mentioned, there is potentially an important counter-cyclical benefit here, in that jet fuel is dominant in the summer months and heating oil is dominant in the winter months. They are essentially the same fuel, so there is potentially a good economic fit between those two cases, and the relevant departments—DESNZ and DfT—should work together on that.

I would suggest some potential improvements to the amendment, such as limiting it to those off-grid properties that already use heating oil and specifically stating in the amendment that this is only for recycled fuels, to eliminate the unintended consequences of biofuels being eligible. Overall, however, this is something that the Government should take seriously.

My Lords, I certainly echo the question that the noble Baroness asked about the timing of the boiler scheme. There has been a big debate in the past on the use of frying oil, and getting the fiscal measures and the subsidy right so that it can be used as a transport fuel. Those arguments went on for a long time. However, I believe that there needs to be fiscal-incentive neutrality between the different types of renewable fuels, whether they are used within transport or indeed off grid.

My Lords, I will briefly thank my noble friend Lord Berkeley for this amendment, which is asking the Government to introduce renewable liquid heating fuel obligations that mirror the renewable transport fuel obligations as a choice available for decarbonising heating. I do not know—perhaps the Government know—whether there is any reason why they cannot accept this proposal, given that these fuels can be produced and distributed using industrial facilities that seem to already exist, and in turn using local raw materials, making it possible to diversify the energy base of the country in order to keep moving forward and achieve energy independence. Would it work? If so, why not give it the go-ahead?

My Lords, I too thank the noble Lord, Lord Berkeley, for his amendment, and the noble Baroness, Lady Young, and the noble Lords, Lord Ravensdale and Lord Teverson, for their contributions to this debate. Decarbonising buildings off the gas grid—and I should perhaps declare an interest in that I, too, live in a house that is off the gas grid—using fossil-fuel heating is a key priority for the Government, as they use some of the most polluting fuels. Action on these buildings will help us to reduce our dependence on imported oil and protect consumers from high and volatile energy prices, while keeping us on track for net zero.

In 2021, we consulted on a policy of phasing out the installation of fossil-fuel heating systems in homes, businesses and public buildings in England off the gas grid during the 2020s. We will issue the government responses to these consultations in due course, setting out our plans regarding these policies. I am afraid that I cannot be more specific than that on the timing.

The noble Lord’s amendment seeks to impose new obligations on heating fuel suppliers, to encourage the supply and use of renewable liquid heating fuels. I appreciate his intent to increase the role of renewable liquid fuels in heating to help with the transition to clean heat off the gas grid. However, a number of questions must be answered before we can make decisions on what role renewable liquid heating fuels should play in the future heating mix and develop the policy framework which would support such a role. As he will be aware, sustainable biomass is a limited resource. We will need to prioritise its use in sectors that have the fewest options for decarbonisation and the most potential for emissions reductions. Indeed, the Climate Change Committee argues that the use of biofuels in heat should be minimised as far as possible to enable best use of biomass across the whole economy. Overcommitting in heating risks having effects in other sectors, such as transport, or driving up the prices paid for these fuels. The forthcoming biomass strategy will review the amount of sustainable biomass available to the UK and will then consider how this resource could be best used across the economy to achieve net zero. Policy decisions on the role of renewable liquid fuels will need to reflect this strategy.

However, I assure all noble Lords that the Government recognise the challenges in decarbonising certain buildings off the gas grid. We are committed to ensuring that the transition to clean heat will be fair and affordable for properties off the gas grid. We will continue to work with industry stakeholders, including members of the renewable liquid fuel industry, to build further evidence that will allow us to evaluate the most feasible and cost-effective means of decarbonising those properties. For those reasons, I ask the noble Lord to withdraw his amendment.

I am grateful to the Minister for her reply; I will read it with great interest. I think what she was really saying is that further work needs to be done, but the problem is that the zero carbon target date is still there. Perhaps she would not mind if, having digested what she has said and talked to some of my colleagues, we could come back to her and see whether it would be appropriate to have a meeting. In the meantime, I beg leave to withdraw the amendment.

Amendment 138A withdrawn.

Amendment 138B not moved.

Clause 266: Regulations