UKIFDA Speaks at Conservative Rural Forum

Last night (Monday 20th November 2023), Ken Cronin, Chief Executive of UKIFDA, spoke in parliament at a Conservative Rural Forum (CRF) event to discuss the impact of net zero policies on rural and farming communities.

The CRF is an advisory body affiliated with the Conservative Party that influences policies around agriculture, food and the rural community.

The event was held at a busy time for parliament ahead of the Autumn Statement later this week.

Ken shared a platform with three rural MPs: Selaine Saxby, MP for North Devon, Greg Smith, MP for Buckingham and George Eustice, MP for Camborne and Redruth.

All three MPs have been hugely supportive of UKIFDA’s and OFTEC’s Future Fuels Campaign and helped the industry push through amendments in the Energy Act 2023.

Ken spoke about the need to identify historical successes in previous energy transformation projects, such as the change from town gas to natural gas from the North Sea in the 1960s and 70s. Key learnings from this period included keeping it simple, ensuring that disruption and cost to consumers were minimised and accepting that a one-size-fits-all mentality would not work.

Ken’s speech can be read in full below

“I would first of all like to thank you for inviting me here today.

I am going to talk about rural off the gas grid homes and businesses that use heating oil of which there are close to 2 million in the UK

But first I would like to digress slightly. I have had the great pleasure of working in the energy industry for over 30 years including nuclear, oil and gas, networks and renewables.

I am a great believer in looking at history for solutions to challenges.

Let’s be clear, the challenge of decarbonising heating in this country is probably one of the biggest we face.

Looking back in history, the switch from town gas to natural gas in the 60s and 70s was a logistical success, alongside the creation of the national transmission and distribution systems.

The cost of that programme was £1,700 per home in today’s money, or 1% of the country’s GDP per capita in 1966. The process was relatively simple and quick, with the main change being burner nozzles with most households getting the conversion for free.

Today’s challenge is much greater – there are twice as many homes and the average cost is also much bigger at £12,000 per home or the equivalent of 17% of 2019’s GDP per capita.

The natural gas conversion programme took 10 years, aided in part by the public’s genuine excitement to see what the North Sea could bring and also parliament acting quickly with the enabling legislation in 1965.

In terms of the gas transmission and distribution system, it only went so far – down to a combination of geography, logistics, technology and cost. Those areas left out were rural, with only 40% of homes being connected to the gas grid compared to more than 91% of urban households.

So what does history show us? – keep it simple, keep the public on side by making it quick, cheap and with the minimal amount of disruption. But above all else accept there are technical issues, accept there are differences and you can’t have a one size fits all solution – we don’t have that today so why should the future be any different?

So what about today and those rural communities and businesses that live off the gas grid using heating oil?

We already know a huge amount about these communities and the homes they live in. In England and Wales, 44% of homes were built before 1919, compared to the national average of 20%. 49% are detached, compared to 17% and 44% have 4 or more bedrooms, compared to 24% nationally.

Rural homes are different

Because of these characteristics, these properties will need a significant amount of retrofitting to take certain technologies like heat pumps. Using the Government’s own figures, this is likely to cost about £25,000 and will take weeks if not months to complete.

Customers engage with heating when it breaks down, with 60% of boilers being bought at that time. Having to wait months is unacceptable – are we really going to change consumer behaviour that much? And how to do cater for our vulnerable people in society?

A report for the Scottish Government highlights this issue by stating that Heritage homes and dwellings built before 1919 will need to be assessed individually

Rural homes are not as well served as urban homes in terms of electricity grid infrastructure. Adding heat pumps and electric car chargers will increase electricity use and the requirement on the grid will rise substantially.

A report for the Government in 2018 concluded that working at 90% capacity in order to provide redundancy, nearly 25% of all networks would be overloaded on an average peak winter day and c35% on a 1 in 20 day where properties used an air source heat pump. I suspect these figures are much higher for rural areas.

So rural homes are again different

There is however an alternative – one which will reduce carbon emissions substantially, will take about an hour to complete, involves no changes to boilers or the fabric of the building and does not increase the burden on the grid.

As importantly will cost less than £500

I am talking about the use of Renewable Liquid Fuels. We have trialled such a fuel, called HVO, in 150 homes across the UK in the last 2 years, including in the village of Kehelland in George’s constituency. These trials have succeeded without technical difficulty and studies show that 90% of our customers want it.

There is however one problem the fuel is more expensive than heating oil.

But again, history provides a solution

When faced with the same problem with respect to transport fuels in 2005, the Government introduced the Renewable Transport Fuel Obligation which had the effect of reducing the overall cost burden on motorists. I am pleased to see that the current Government, through the Energy Act which recently received Royal Assent, has put in place a similar mechanism for heating applications subject to consultation. Again, this is thanks to the pressure George – and Selaine, Greg and their colleagues – were able to exercise during the passage of the Act.

My first big plea is for that consultation to happen quickly – we already know the questions because they have been asked and answered before in transport. There is no need for delay

My second plea is to the Chancellor – liquid renewable fuels for transport are taxed the same as their fossil fuel equivalent – now there is an argument that renewable fuels should attract a lower tax – however in heating the renewable fuel actually attracts a much greater tax than the kerosene it replaces which makes no sense at all and this inequity needs to be removed.

Taken together the new obligation and the tax change would make the cost of the renewable fuel much more palatable to rural households

I think it is worth noting that none of these changes will cost the taxpayer anything, and we have been – with George, Selaine and Greg’s support – been making this case to the Chancellor in recent weeks. Wednesday’s Autumn Statement would be the perfect opportunity to start this process and again I thank the MPs who have been pressing the Chancellor to make this straightforward change.

There are no other barriers – we know there is enough of the renewable fuel to meet our needs, we have 20,000 people in our industry that can make this happen quickly we just to get on with it and remove the final few barriers quickly.

As I say the answers are often in the history.

Thanks”