‘Dilly dally and delay’: Treasury blocks carbon cheques plan

Chancellor Rishi Sunak has thwarted a plan to compensate households for a rise in the cost of gas, while the end of new gas boiler installations is being pushed back to 2040, according to reports.

The end date for installing new domestic boilers could be pushed back to 2040. Photograph: Andrew Aitchison / Getty Images

Introducing a rebate scheme for poorer households’ power bills has been discussed in Downing Street for some weeks, press reports have suggested. It would go hand-in-hand with extending carbon pricing to domestic gas consumption, intended to encourage the installation of heat pumps. It was hoped that the so-called ‘carbon cheques’ would alleviate growing concerns within the Conservative ranks about the cost and political consequences of policies to reach net zero. Johnson told MPs earlier this month that he was “determined to keep bills low”.

Under initial proposals, annual payments worth hundreds of pounds would have gone to most households. Now “only the poorest Brits are expected to get grants to cover the entire cost of swapping” from natural gas to heat pumps, “leaving middle-class families to pay some of the bill”, the Sun reports.

A Whitehall source told it that, “Clearly carbon cheques are the answer,” but added that the Treasury had vetoed the measure. The ongoing dispute helps explain why the Heat and Buildings Strategy did not emerge before parliament broke up for the summer holiday last week.

The Sun also said that Johnson is considering ending the installation of new gas boilers by 2040, five years later than had been under consideration. Last year, the Climate Change Committee recommended doing so by 2033. The delay would give more time for the substantial cost of heat pumps to come down to a generally acceptable level, and for the pace of installations to gear up.

“Phasing out dirty gas boilers is key to reducing emissions. If we kick this can down the road, we risk leaving our climate commitments in tatters and paying more in the long run. The Treasury really should know better,” said Joe Tetlow, senior political advisor at the Green Alliance.

Energy and Climate Intelligence Unit analyst Jess Ralston accused the government of “dilly dally and delay”that will ultimately make hitting net zero more expensive. She also noted that boilers contribute to air pollution.

“This isn’t the hokey-cokey, it’s people’s homes and investment. Valid questions are starting to be asked; is this government in or out with cleaning up our homes?” Ralston asked.

The expected delays come despite two separate coalitions of NGOs and businesses pressing for action on domestic decarbonisation.

Last week, the Energy Efficiency Infrastructure Group called on the Treasury to support a £12bn ‘Better Buildings Investment Plan’, including a successor to the Green Homes Grant scheme to make retrofits attractive and affordable for all homeowners.

The group counts the likes of Arup, the Energy Saving Trust (EST), Institution of Civil Engineers, WWF and think tanks IPPR, Policy Connect and Policy Exchange among its members. They say that £7bn should be invested in energy efficiency infrastructure during this parliament, with an additional £5bn going towards meeting new heat pump targets.

“With the climate emergency upon us, there is no time to waste and we need to take positive action. We have to make our homes more energy efficient and move away from reliance on fossil fuels for heating. Heat pumps are an important low-carbon heating technology that will help us meet net zero carbon emissions by 2050,” said EST chief executive Mike Thornton.

“It is vital that through the Heat and Buildings Strategy and Spending Review that the UK government provides the funding, incentives and policy certainty that are needed to take action in our homes. Government funding for retrofit and low carbon heat would also drive investment and local job opportunities that will make an important contribution to building back better and to levelling up for people and businesses across the UK”, he added.

A ‘Fair Heat Deal’ was demanded by 20 major businesses and green groups last month, calling for environmental levies to be shifted off electricity bills and on to gas, with free heat pumps for low-income households. The coalition, which includes energy giant E.ON, E3G, the Federation of Master Builders, the New Economics Foundation and the Association for Decentralised Energy, also called for a ‘Warm Homes Agency’ to be established, to train heat pump installers and maintain high standards.

“Decarbonising our homes is mission critical for net zero – but the UK currently lags behind on action and investment for greener homes. There is no silver bullet, and getting on track requires a mixture of regulations, incentives and support. Pushing back the timeline for phasing out fossil gas sends the wrong signal to households and businesses – risking a high-carbon lock-in that could jeopardise climate targets, while holding back innovation and investment needed to pump-prime the market to lower technology costs for all. It is time for the government to invest in greener British homes, and reap the benefits of new jobs, healthier communities and lower energy bills”, said E3G senior policy advisor Juliet Phillips.