Clean Heat without the Hot Air: British and Dutch lessons and challenges

30 May 2024

Back in 2012, the UK’s first heat decarbonisation strategy, The Future of Heating, made clear that the transition was not just a national transformation to be led by central government, but ‘also a local one’. The role of local and regional governance in supporting the planning and delivery of decarbonised heat was emphasised, particularly in relation to heat networks. However, in the intervening 12 years, the heat transition in the UK has barely started*, and there are still major uncertainties about the roles and responsibilities of local and regional organisations.

Despite this slow progress, the last nine months have been a busy time for heat policy. In addition to changes to grants for heat pumps in England and proposals to delay the start of the Clean Heat Market Mechanism, the Energy Act 2023 appointed Ofgem as the heat network regulator and made provision to implement heat network zoning in England. Similar regulation is in progress in Scotland, following 2021 legislation, and Scottish Government has consulted on proposals for a Heat in Buildings Bill. Ofgem also published its decision to introduce Regional Energy Strategic Planners (RESPs), to undertake strategic, whole system planning across electricity, gas and heat networks, including working with local authorities.

In this blog we reflect on the evolving approach to heat decarbonisation in Britain, and what changes need to happen in the near-term to accelerate action at local level. This is informed by research across England, Scotland and Wales, and by a comparison with the Netherlands, which, like Britain, is aiming to rapidly decarbonise a gas-dominated heating system. We highlight four areas that we believe are crucial for success.

Clear role for local government

First, there needs to be a clear, mandated and stable role for local governments and other local actors, situated within coherent, coordinated multi-level governance. Effective, viable solutions for clean heat systems vary across localities, and there is an acknowledged need for local government to have a planning and enabling role.

In Britain, local government is widely recognised as playing a central role in delivery of energy efficiency in buildings, heat networks and the wider planning of integrated energy systems. There have been increasing moves to deliver funding through local government and extensive experimentation in more localised approaches to whole system planning.  The details differ across Britain, because powers over local government are devolved to the Scottish and Welsh parliaments, with UK government responsible for English local authorities. In Scotland, statutory Local Heat and Energy Efficiency Strategies are in progress for all 32 local authorities, with delivery plans for the first five years under consultation. In principle, these set out a solution for every building, including zoning for heat networks. In Wales, the Welsh Government has supported the development of Local Area Energy Plans (LAEPs) for all 22 local authorities, which will be integrated into regional plans and inform a national Energy Plan for Wales.

In England, numerous local and combined authorities have prepared LAEPs, and are increasingly involved through their likely role as Heat Network Zoning Coordinators and as key stakeholders in RESP developments. However, there is as yet no common framework for local energy planning, with the Energy Systems Catapult warning this could lead to ‘a lack of consistency, coordination, and risk of duplicative cost.’ This is despite calls from the Climate Change Committee and the National Audit Office, amongst others, for a direct mandate for English local authorities in planning and delivering net zero. It’s unclear if this would change following the 2024 general election; however, the Labour Party has indicated that in government it would work more closely with local authorities on decarbonisation and “give local leaders [in England] a direct say over local area energy plans”.

Britain as a whole, but England in particular, could learn from the experience of the Netherlands in its attempts to decarbonise residential heat. The Netherlands has the most natural-gas-dependent heating system in Europe, but, following a 2019 Climate Agreement, committed to making all Dutch homes gas-free by 2050, with 1.5 million homes – roughly 20% – made ‘more sustainable’ by 2030. For comparison, at the UK level there are no targets relating to getting homes off gas for heating, but the Scottish Heat in Buildings Strategy does have a goal of moving one million homes currently using mains gas, and the vast majority of off-gas homes (altogether accounting for about 50% of the housing stock) to zero-emission heating by 2030.

The Agreement also set up a governance framework for the heat transition. The Netherlands’ 342 municipalities were given the key responsibility for planning and implementing heat transitions, specifying these for each of approximately 14,000 districts (neighbourhoods), each containing around 500 homes. Municipal heat visions, produced by the end of 2021 and available online, give a timetable for the number of homes that could be switched to sustainable heating by 2030, and an indication of which technologies would be most cost-effective in each district. Subsequent implementation plans now under way are to provide detailed plans of action for each district.

Municipalities thus have a lead role in defining local heat decarbonisation plans, but they also receive support and guidance within a multi-level governance framework. PBL, the Dutch equivalent of the English Environment Agency, and equivalent bodies in the devolved nations, provides technical support for assessing the  feasibility, costs, and emission reductions of different heating technologies for each district. A Heat Expertise Centre (HEC) created under the Climate Agreement gives guidance on how to: include local data in the PBL’s model; develop heat transition visions; interface with network operators; and assess the technical and commercial feasibility of heat networks. The government also created a pilot programme for establishing natural gas-free districts (Programma Aardgasvrije Wijken, PAW) to test out low-carbon heating technologies, trial citizen engagement strategies, identify opportunities for cost reduction, and analyse the role of existing laws and regulations. The PAW has facilitated a learning-by-doing approach, with a national Knowledge and Learning Programme sharing the knowledge gained through the PAW pilots. Finally, the Dutch government is also committing resources; initial funding for local and provincial planning and implementation across climate sectors of €2.6 billion for 2022 to 2026 was expanded in 2023 by a further €5.38 billion to 2030.

Not everything is perfect in the Dutch approach. Local government capacity has been squeezed by austerity, and there is a high degree of reliance on consultants. Like the UK, the Netherlands is having to navigate tensions between levels of governance, particularly municipalities and the regional level, where energy planning boundaries do not align with administrative and political ones. This remains an area where both countries could learn from each other. But the underlying point is that the role of local government is both clear and well-supported.

Public engagement

A second issue is the need for public engagement. Transforming heat technologies in peoples’ homes and switching them to heat pumps or networks is potentially controversial (with the media playing a role in fuelling controversy in the UK).

Even in the Netherlands, which despite recent populist challenges has a more consensual political culture, some municipalities are facing pushback, making it clear that a one-size-fits-all approach is not going to work. But the Dutch are putting resources into public engagement and participation as part of their piloting and learning. The UK needs to take this issue much more seriously, not least because its climate governance thus far has been more technocratic than in the Netherlands. The Scottish Heat in Buildings Strategy 2021 referred to an engagement programme, led by a new public agency Heat and Energy Efficiency Scotland. This has however been slow to develop, with a ‘strategic framework’ published only in late 2023. England is even further behind.

Coordinating approaches

A third area is the coordination of planning and market-based approaches. District-based heat decarbonisation planning in the Netherlands is led by municipalities, but co-exists with existing market-based incentives for renewable energy and heat pumps for individual dwellings. A key question is how these frameworks will fit together (or not). This is particularly apparent in relation to plans for heat network zoning versus incentives for individual purchase of domestic heat pumps. In the Netherlands the individual dwelling heat pump market is racing ahead, but the expansion of heat networks has been held back by a wait for new legislation, making it difficult for owners to make effective choices between decarbonisation options.

In Britain, the evolving approach to heat network zoning (involving both national and local government), the RESPs, and market-based incentives for renewable heat provides an opportunity to ensure cross-sector coordination between heat decarbonisation technologies.

New build housing market

A final issue is the role of the new build housing market. A key driver of the heat pump sector expansion in the Netherlands are new build homes, which since 2018 have not been allowed to connect to the gas grid. In 2022, of 100,000 heat pump installations, 70,000 have been in new buildings. This is scaling up the heat pump market, delivering cost reductions and developing a supply chain and skills. Here again Britain is playing catch-up, having scrapped the zero carbon homes policy in 2015. In Scotland, new homes and buildings are required to have ‘climate friendly’ heating systems from April 2024, and in Wales, gas heating in new build is ruled out from 2025. In England, this is ‘the switch that has not been flipped’ and the Future Homes Standard urgently needs to proceed.

Lessons and shared challenges

In summary, a comparison between the Netherlands and Britain shows shared challenges but also lessons for the latter, especially England. A basic step is getting consistent and stable governance arrangements for heat decarbonisation in place, with clarity on interlinkages between local, regional, devolved and UK government roles. Roles allocated to local authorities need to be properly resourced beyond competitively-allocated funding, particularly when many are struggling to deliver core services. Technical support, knowledge-sharing and mutual learning need to underpin these roles. We need to prioritise public engagement and learn from communities about what works in heat decarbonisation delivery. Planning in heat and electricity networks needs to be better aligned with market incentives for renewable heat, and we need to end the perverse practice of connecting new homes to the gas grid.