New gas boilers should be banned within a decade, a review of net zero policy urges.
The report also calls for an “onshore wind revolution” and a five-fold increase in solar panels, amid efforts to boost the UK’s energy independence in the wake of the war in Ukraine.
The review, originally commissioned under Liz Truss, the former prime minister, and conducted by the MP Chris Skidmore, says net zero represents “a new era of opportunity” that risks being undermined by a lack of government ambition.
But it acknowledges that the net zero transition, including replacing boilers and buying electric cars, will cost households £4,000 to £6,000 each by 2040, with savings possible only after that.
The review also warns that nearly 500,000 households would not make any savings even in the long run, unless the Government provides more support.
It comes amid debate over the pace and direction of net zero during the cost of living crisis, prompted by the war in Ukraine.
It was announced this week that one of Britain's last coal-burning power plants is to be kept open for an extra two years, after an appeal by ministers concerned about blackouts.
As a minister in 2019, Mr Skidmore signed into legislation the UK’s commitment to get its emissions down to net zero by 2050.
Writing for The Telegraph, he says the UK is “now in a net zero race” with other countries around the world that have followed its lead - and is at risk of losing.
The review was initially announced in September last year by Ms Truss, to ensure the long-term policy was “pro-business and pro-growth”.
The review says the Government should set a target to increase solar energy five-fold by 2035, from the current 14GW. That could mean an extra 1,500sq km (580sq miles) of panels, larger than the size of Berkshire.
It calls for a "rooftop revolution", which would mean the removal of barriers to placing solar panels on residential and commercial buildings.
It stops short of calling for a specific target for onshore wind which Rishi Sunak, the Prime Minister, opposed during the Tory leadership election. But it says there should be an “onshore wind revolution” with planning laws relaxed to make it easier to build turbines in England.
Mr Sunak last year backed down on his opposition to the turbines in the face of Tory backbench dissent, announcing a consultation on changes to the planning rules that would make it easier to build onshore wind farms.
The Government has also quietly rowed back on threats to ban solar panels on productive farmland, after warnings that it would threaten £20 billion of investment in the energy sector.
Among its other recommendations, the review says new and replacement gas boilers should be banned by 2033, two years earlier than planned - with the installation of heat pumps “turbocharged”.
It also calls for all homes to have an energy performance rating of C by 2033, potentially affecting two-thirds of homes that currently fall short of that standard. And it says landlords should have to provide an “average bill cost”, to help encourage renters to choose more energy efficient properties.
Retrofitting a new home to the highest energy efficiency standards and replacing its gas boiler with a heat pump could cost an average household £26,000, according to the climate change committee.
While heat pumps currently cost roughly the same to run as a gas boiler, they may become relatively more expensive as record high gas prices come down, reducing potential household savings.
But long-term savings of between £400 and £6,000 could be more than doubled if the UK makes changes to the pricing of electricity that would allow it to better reflect cheap renewable energy, says the review.
The report says that the benefits of net zero will “ultimately” outweigh the costs.
Dieter Helm, a professor of economic policy at Oxford University and a government adviser, said the review’s estimates of costs were “highly speculative”, with the costs and savings of heat pumps “incredibly optimistic”.
“My own view is that the costs are likely to be much higher,” he said.
“Net zero is incredibly important and I think it critical to tell the public that this is likely to mean they must pay for the pollution they cause and save to fund and finance the investment.”
We are now in a net zero race - to stand still is not an option
By Chris Skidmore MP
Forty-two months ago, the UK became the first G7 country to sign our commitment of net zero carbon dioxide emissions by 2050 into law.
The UK’s leadership on tackling climate change has not only delivered real change at home, reducing our carbon dioxide emissions over the past 20 years by nearly 50 per cent, compared with 1990 levels. It has also led to a global transformation abroad in how countries and companies now view the importance of taking action on net zero.
Thanks to the UK’s presidency of Cop26, the Glasgow Climate Pact in Nov 2021 meant more than 90 per cent of the world’s GDP committed to a net zero target.
Indeed the rest of the world, along with international investment communities, have woken up to the fact that the energy transition is a new economic reality. 2022 marked a watershed moment for global investment in net zero - not least from the US’ Inflation Reduction Act, with its commitment of placing clean technologies at the heart of future economic strategy.
The global reality of the energy security crisis and rising gas and fossil fuel prices in 2022 has demonstrated the importance of delivering future energy security through the greater use of domestically generated renewable and clean sources of power, while seeking to better reduce energy demand.
Planning for our net zero future
Forty-two months on, much has changed. For this reason, the Independent Review of Net Zero, which I have chaired, was commissioned in Sept 2022 to ask how the UK could better meet its net zero commitments, taking account of these global changes.
Above all, this review has sought to ask how the UK can deliver on its net zero commitments by demonstrating how to deliver and implement most effectively and efficiently a plan for our future energy transition.
Climate commitments and net zero targets remain just words on a page without a clear, consistent and stable transition plan. While 42 months may have passed since the UK signed net zero into law, there remain just 324 months until 2050. Planning effectively for that net zero future must be our priority.
This review has sought to establish how best to create a delivery ecosystem to achieve the best possible decisions for the future. This requires not merely government to play its role, but importantly to empower the agency of regions, local communities and individuals to play a greater role in their own net zero journey. How we create a “big bang” moment for net zero, enabling and unleashing the potential of the whole of the UK to seize the opportunities that net zero presents has been a key focus.
This 350-page report, Mission Zero, sets out clearly the international opportunity for future investment and economic growth that net zero presents. This opportunity must be seized if the UK is not only to maintain its international leadership on climate action, but also if the UK is to realistically compete with other nations who are making important strategic decisions over their own energy transitions.
The review has outlined what is needed to effectively deliver net zero investments - what must be achieved to deliver the certainty, clarity and consistency needed from government policy and investment to de-risk the costs of private investment and capital expenditure.
There is a vital requirement for stable, long-term programmes, rather than piecemeal, short-term projects, if the UK is to meet its net zero ambitions in an affordable manner.
Long-term certainty for investment, allowing for supply chains to be created and secured, will drive down the costs of net zero at the same time as making the UK a more attractive place to invest.
This is why we need a new approach to our net zero strategy - one that identifies stable 10-year missions that can be established across sectors, providing the vision and security for stakeholders and investors.
Tipping point
There is no denying the fact that, 42 months on from the UK signing net zero into law, we are now in a net zero race. To stand still, delay or maintain the status quo is not an option.
International markets and investors are seeking to make decisions now on where to invest for the future. The UK can either seek to provide the incentives for investment - as outlined in this review - along with the wider opportunities for job creation and local and regional regeneration, or else these markets will go elsewhere.
There is an active, strategic choice to be made. Does the UK wish to compete in the net zero race, with the chance to lead, or do we wish to simply observe from the sidelines?
On the one hand, to lead and to seek first mover advantage brings with it the opportunity to attract inward investment, to generate new supply chains and lower the costs of wider deployment of clean technologies and industries. On the other hand, to follow risks witnessing the opportunities for jobs, infrastructure and investments that could have been on-shored in the UK go elsewhere in the world.
We have reached a tipping point. The risks of “not zero” are now greater than the associated risks of taking decisive action on net zero now.
Chris Skidmore is chairman of the Net Zero Review, which is being published on Friday