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Industry response to the implications of the CSR

What effect will the Government’s recently-announced Comprehensive Spending Review have on the HVAC sector? Industry experts gave H&V News readers their response.

David Frise, HVCA head of sustainability says that incentives for renewables and the radical transformation of Carbon Reduction Commitment energy efficiency scheme (CRC) are “just what many in the industry have been asking for”. The CRC is now, effectively, the carbon tax many have said was necessary to make energy a boardroom issue.

“This is one of those ‘be careful what you wish for’ moments,” said Mr Frise. “People have been pleading with the Government to simplify the CRC – well, it is certainly simpler now. A tax on consumption will push up the price of energy so creating the ultimate incentive to save it.”

He urged the industry to focus on the “big prize”, which is the boost these measures should give to the building refurbishment market.  Although the CRC only effects 5,000 companies,  information is being gleaned from as many as 20,000 organisations, creating an opportunity to expand the tax to these businesses at a later date. This could lead, he believes, to a huge potential market for energy efficiency upgrades.

The Department of Energy and Climate Change (DECC) has confirmed the £860m of funding previously set aside for the Renewable Heat Incentive (RHI) and Mr Frise says this will “shift renewable heat from a fringe industry firmly into the mainstream”.

Feed-in Tariffs for microgeneration technologies are to be trimmed in 2014-15 with £40m removed from the funding supporting this initiative. DECC says that, in future, the tariffs will be aimed at “the most cost-effective technologies”.

“Clearly, we have to wait and see what this means,” said Mr Frise.

BEAMA’s marketing director Kelly Butler welcomed the Government’s sustained commitment to develop the renewable heat market by announcing its intention to launch the Renewable Heat Incentive from June 2011.

“The UK’s legally binding renewable energy target always meant that a Renewable Heat Incentive had to be launched, despite the economic challenges we face. 

The real challenge now is to ensure the scheme is designed to be attractive to the customer - and help grow the market for important technologies.

“The Government’s own 2050 Pathways Scenarios largely point us towards a future dominated by the electrification of heat and transport. The Government’s announcement will set us on the right path to meet renewable targets, and build a confident heat pump market to meet the longer-term 2050 aspiration.

“Now the real work starts as we gear up the heat pump industry to deliver the 1.4m heat pumps to be installed by 2020, as we predicted to Government.”

Blane Judd, CIPHE chief executive, says: “We are glad to see  that  the Sector Skills Council will  remain to ensure that educational standards meet the need of the sector. It is essential for the public to be able to gain access to properly qualified installers who have the professionalism and integrity to provide a safe and protected environment.
“We welcome the investment in the green deal. The registered professional plumbing and heating engineer will be the front line adviser to the consumer on how to embrace green technologies.”

OFTEC director Jeremy Hawksley said: “We have yet to learn the full details of the RHI, but we are pleased to learn that a levy will not be imposed upon oil or other existing heating fuels in order to fund the RHI.

“The original draft RHI contained incentives for a new generation of blended bio-liquids for heating (B30k) which could replace 100% kerosene, and we urge the government to include those at the subsidy level which was originally proposed.”

Field trials carried out in Norfolk last year used this B30k blend to replace kerosene in around 25 sites with no adverse effects, says OFTEC.

Over 1.8 million oil heating customers in the UK and Ireland could switch over to a lower carbon fuel, without having to replace existing heating systems. Businesses could benefit too from the switch to bio-liquid heating fuel with minimum capital expenditure.

Roger Webb, HHIC, says: “As expected the Spending Review announcement was short on detail. The Renewable Heat Incentive is definitely in but what will it cover?

“Similarly Feed in Tariffs’ are to be reviewed but what will this mean, for example will microCHP still be included?

“It is important to consider what these cuts will have on the vulnerable in our society. This is because of the cuts to social housing and the Warm Front programme.”

He expressed concern that the Government may be selected over which renewable heating technology support, stating that these are at an early stage and all deserving of continued support.

Association of Plumbing & Heating Contractors’ Rick Crees says the CSR was a mixed bag and several worries proved unfounded. On the downside, CLG is facing big cuts to its budget and we wait to see how this will affect Competent Persons Schemes. Funding for social housing has been cut by 60%, as has school building spending.

On the plus side, there’s a £1 billion investment in a Green Investment Bank to finance green infrastructure projects, the RHI will come in next year and the feed-in tariffs have survived, although with a promise to look for cost savings. Warm Front has taken a bit of a hit in terms of its budgets, however.

“For any businesses in our industry looking, it’s fairly clear where the Government’s immediate priorities lie - it’s green, green, green all the way,” says Mr Crees.