New homes should be net zero

The government has asked for views on their “Future Homes Standard”, their proposal to reduce emissions from new homes. This week we provided our response.

It’s a really important topic. We do not lightly change something as fundamental as how we heat our homes but, today in the UK, our homes are responsible for a fifth of emissions, so change them over time we must. Today, two thirds of houses are cold and draughty, 85% of them are heated by natural gas. And, of the remaining homes, only half are powered by electricity: the rest, mostly by oil.

The Committee on Climate Change (CCC) has said that today’s homes are not “fit for the future.” They’ve argued that, by 2050, all homes must be insulated to the highest standards, and that the vast majority must use low carbon heat.

We agree. If the UK is to meet net zero by 2050 we need to crack this. New homes must be net zero as soon as possible.

To achieve this, we think the technology-neutral approach taken by government is key.  The CCC has said there is no “silver bullet” to decarbonising heat, so it makes sense to allow housebuilders to install whatever technologies they can, provided those technologies are clean enough to meet net zero. So, what could such technology changes look like? There are a few options available to us in the UK:

One immediate option is electric heat pumps. Heat pumps use electricity to draw warmth from the air or the ground and “pump” it into buildings. They can heat homes individually, or at the centre of a collective heat network. The technology is proven and can be easily installed today. However, heat pumps operate at lower temperatures than gas boilers, so tend to work best in well-insulated homes: otherwise, homes won’t stay comfortable in the coldest weather and will be expensive to heat. That’s why we’ve said energy efficiency should be fully recognised in the final regulations.

An alternative option could be replacing the gas in  the grid with hydrogen, and then upgrading gas boilers for hydrogen ones.  For a homeowner, this would be a “straight swap”: it would likely be little different to using a conventional gas boiler today. But large- UK hydrogen production will likely need Carbon Capture and Storage. So we’re calling on government to bring forward plans to fund the first few clusters.

Still, another option could be combining heat pumps and gas into a “hybrid” system. This is where a heat pump provides warmth most of the time, but a boiler is available to quickly ramp up temperatures on the coldest winter days. Rather than in new houses, which should (we hope) have world-class insulation, this makes most sense in today’s stock.

In fact, the CCC says around a third of existing homes should have hybrid heating systems by 2035. This would see heat pumps retrofitted to today’s gas, LPG or oil boilers. The CCC sees such systems as a “low regrets” means to cut emissions in today’s homes  – provided government incentives are available to tackle the initial higher installation and operating costs. There is then a clear expectation that the gas boilers in hybrid systems will be replaced with hydrogen, pure heat pumps with insulation, or other zero carbon alternatives as the technologies become affordable and familiar to consumers.

The home energy market is changing rapidly so it makes sense to be open to innovation. We are at Shell.  We have to be, as we don’t yet know all the answers – we suspect all the above options will have a role to play in decarbonising our homes. So we are learning by doing, systematically putting together the pieces of the low carbon business of tomorrow. In recent years, we’ve begun green home services such as our B-Snug hybrid heat pump business, and sonnen home batteries. We are delivering 100% certified renewable power for 900,000 homes through Shell Energy Retail. And we are also helping our customer adopt electric charging both at our forecourts, through Shell Recharge, and at home, through Shell-owned New Motion. It makes sense for the Future Homes Standard to be future-proofed as new technologies develop and as existing ones fall down the cost curve.

At Shell we aren’t waiting – we are beginning to deploy today’s solutions, as well as working with government, industry and our customers to develop tomorrow’s. We look forward to further discussions on the future of heat over the coming weeks and months.