Eurofuel blog

What next for liquid fuel heating in the UK?

Since 2016, the UK’s heat policy has proposed that off-gas grid buildings be transitioned to low carbon heating early in the process of achieving net zero. The installation of fossil fuel appliances such as oil and LPG was to be phased out by 2026, with heat pumps the intended replacement technology.

Despite significant technical and cost challenges, and the virtual absence of public awareness or support for of these plans, policy makers assumed this would happen and that liquid fuels would have little further role in heating. However, two recent developments mean the situation has changed significantly.

Firstly, after a successful publicity campaign and field trial using Hydrotreated Vegetable Oil (HVO) by industry trade associations OFTEC and UKIFDA, the government bowed to pressure and committed to a consultation on an obligation scheme for renewable liquid fuels in heating. The consultation is expected next year and, if approved, will enable end-users to buy fuels like HVO for much lower cost, making them an attractive low carbon option.

Secondly, the Prime Minister announced that the 2026 date for oil and LPG boilers to be phased out would be pushed back to 2035 – aligning it with the date proposed for gas boiler installations to end. The announcement was widely condemned for watering down the policies needed to achieve net zero, but the prime Minister’s explanation - that it is unreasonable to expose households to excessive cost and that policies needed the consent of the public - was much overlooked.

Yet these are important considerations. If urgent action is needed - and it clearly is - it’s vital that citizens support the plans. If they don’t, things can quickly unravel. This was highlighted by a parliamentary by-election in June, where public opposition to a costly air quality policy became a defining campaign issue and affected the result of the election.

Rather than relying on tough regulation, the government appears to be pivoting towards an approach designed to minimise the impacts on consumers. However, it has yet to make clear how this can be done. Policy support for solutions that are easy to adopt and affordable is critical, and renewable liquid fuels could now provide at least part of the answer. We know from research that rural consumers want HVO for heating, so ensuring the government quickly completes the consultation on the obligation for renewable liquid fuels is a key priority.

The next UK General Election is expected in late-2024 and could result in a change of government. If the current government delays the renewable fuel obligation consultation, it could derail plans to deploy HVO in heating, so OFTEC, together and others within industry and representatives from rural communities, will push hard for this to happen quickly.

Until party manifestos are published the potential impact of the General Election on future heat policy is uncertain. Contacts with opposition parties suggest they are unlikely to bring the oil and LPG phase out date forward again, which is reassuring for the UK’s liquid fuel heating industry and the many customers who prefer this heating option. Indeed, the prospects for liquid fuel heating appear at their most promising in a decade. However, the next 12-24 months may be decisive for determining the scale of its future role as a low carbon solution.