Renewable Liquid Heating Fuel

George Eustice Excerpts

1st reading
Wednesday 11th January 2023 Commons Chamber

[George Eustice (Camborne and Redruth) (Con)]

I beg to move,

That leave be given to bring in a Bill to reduce the duty charged on renewable liquid heating fuel; to provide for the imposition of obligations on suppliers of heating fuel in relation to the supply of renewable fuel; and for connected purposes.

Although, obviously, no ten-minute rule Bill can compete with Prime Minister’s questions for the attendance of hon. Members, I have been heartened by the extraordinary expressions of support I have had for this proposed legislation from Members from all parts of the House. In addition to those who have agreed to sponsor the Bill, others have offered support in taking it forward, including my right hon. Friend the Member for Ludlow (Philip Dunne), the Chair of the Environmental Audit Committee; my hon. Friend the Member for North East Bedfordshire (Richard Fuller); and my hon. Friend the Member for Ynys Môn (Virginia Crosbie).

It is no surprise that the Bill should have such support, for 1.7 million homes in the UK are off the gas grid—about 1.1 million in Great Britain and a further 600,000 in Northern Ireland. They are mainly in rural communities and they mostly rely on kerosene boilers for their heating. As we chart a course towards net zero, finding a low-carbon solution for these homes is going to be incredibly important. In 2017, the Government introduced the green growth strategy, which concluded that there should be a concept of electrification first in respect of such homes. That mantra has been repeated in consultations since, and in 2017 the Government also indicated that they wanted to seek to remove boilers from off-grid homes in these rural communities after 2026.

More recently, the heating and building strategy in 2021 and two associated consultations on homes off the gas grid moved further, saying that there should be a heat pump first strategy. The Government propose that, from 2026, the installation of replacement boilers will be banned in those off-grid properties and instead households in those rural communities will be forced to have either air source heat pumps or ground source heat pumps. Don’t get me wrong: there is a role for both air source and ground source heat, and I am a supporter of those technologies. Indeed, Cornwall has impressive geothermal resources and companies such as Kensa, which is a national market leader in this technology.

However, there are some drawbacks to air source heat pumps in particular, and that technology is not right for everyone. The capital cost is very high; at about £12,000, it is at least three times the cost of a new boiler. In some coastal areas, the equipment can be prone to decay and rusting. It also requires a lot of additional insulation in homes, with which comes a lack of ventilation. In some old properties, an associated problem of increased insulation is an increased risk of mould and the health problems that come from that.

The Bill would establish a better path towards decarbonising our energy in these off-grid homes, because the technology now exists to adapt existing boilers to run not on kerosene but on hydrotreated vegetable oil, a renewable fuel derived from waste. The adaptation to the boilers is very modest, involving a small change to a nozzle, an adjustment in the pressure and sometimes a clean of the tank. The cost of the adaptation is no more than a few hundred pounds. The Government’s work in this area on their standard assessment procedure for building energy efficiency—the so-called SAP document—shows that switching to HVO as opposed to kerosene would lead to an 88% reduction in greenhouse gas emissions, which would be an extraordinary achievement.

In my constituency, the small village of Kehelland has been taking part in a fascinating pilot, organised by local fuel distributor Mitchell & Webber. Residents, the local school and the chapel have all taken part in the switch to the use of HVO. I met them shortly before Christmas and found that the results were fascinating. Typically, fuel consumption is around 30% to 35% lower than for kerosene. Residents reported slightly higher temperatures in their radiators. The local chapel made a very good point, which is that it only needs heat intermittently—that is, when communities are using the hall. It does not want an air source heat pump running continuously to keep temperatures high; it wants to be able to switch that energy off and on, which makes this an ideal solution.

The Government have long recognised the value of renewable fuels in the transport sector. We have the renewable transport fuel obligation, which requires fuel manufacturers and importers to purchase a proportion of fuel from renewable sources. The Bill would extend the RTFO mechanism to cover the use of renewable fuels in domestic boilers and remove the current duties from these renewable fuels, which are entirely counterproductive.

The intended impact of my Bill is to reduce the cost of HVO so that it can achieve parity with kerosene. If we get parity of cost with kerosene—the cost of conversion is modest—we will see a very rapid adoption of HVO. The key thing is that, if the Government were to target carbon emissions, the incentive to use renewable fuels would become quite obvious. The challenge is that the Government are not so much targeting carbon with their current strategy, as targeting the adoption of a chosen technology. They have chosen a winner in air source heat pumps, and that is how they are measuring their success. The risk that they face with their current strategy is that people will put off the decision to make that huge capital expenditure in air source heat pumps. They will patch up their boilers to keep them going, replacing parts when they might otherwise have replaced the whole boiler. That means that the current strategy is unlikely to yield any results in carbon reductions until at least carbon budget 6 in the mid to late 2030s. The great advantage of my proposal is that there would be a rapid uptake of HVO within carbon budget 4—literally within the next four years. Within those four years, we would see a dramatic 88% reduction in carbon emissions.

In conclusion, if we are to meet our net zero ambitions and those crucial carbon budget staging posts in the meantime—4, 5 and 6—the key is to make it as easy as possible for people to make the change. The easier we make it and the more effort we put into making sure that they do not need to change their way of life, the faster the uptake will be; and the faster we get uptake, the quicker we will get to net zero.

I welcome the fact that the Minister for Energy and Climate, my right hon. Friend the Member for Beverley and Holderness (Graham Stuart), has listened to this speech. The Government have forthcoming responses to two consultations in this area, and they have a wonderful Energy Bill that is ripe for amendment—I look forward to it returning to this House. I hope that my right hon. Friend the Minister will engage further with this proposal, but, for now, I commend the Bill to the House.

Question put and agreed to.

Ordered,

That George Eustice, Sir Gary Streeter, Kevin Foster, Anne Marie Morris, Mr David Jones, Jim Shannon, Ben Lake, Sir Mike Penning, Mr Robin Walker, Selaine Saxby, Ian Paisley and Derek Thomas present the Bill.

George Eustice accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 3 March, and to be printed (Bill 224).