Heat Pumps Won’t Solve Britain’s Climate Change Crisis

(Bloomberg Opinion) -- Putting heat pumps in every home appears to be the U.K. government’s magic solution for achieving its climate change goals. It’s even offering homeowners a 5,000-pound ($7,000) grant to encourage installation, as part of its plan to switch consumers away from natural gas and drive down emissions.

But subsidies are always a sign to be wary.

Gas-fueled boilers are the norm in Britain and are far less expensive than heat pumps at an average of around 1,000 pounds. The costs of replacing a boiler for a greener alternative will depend on a range of factors, but we are talking a significant multiple of about four to five times that — and that’s before added expenses that can easily bring the total to 10,000 pounds for an average family home. The 450 million pounds ($615 million) the government has earmarked for the subsidy will not even cover replacements for 100,000 homes. We’re going to need a bigger boat.

If Britain wants a chance of hitting its climate target of net-zero emissions by 2050, it needs to transform how it heats its old, poorly insulated housing stock during the long, cold winters. This can only be achieved by lancing big emitters such as gas boilers and internal combustion engines. But as I look out the train window on a dank autumn day, I don’t see vast open land to build on, like one may see in the U.S. or even France; I see crowded, suburban Victorian Britain, with mostly brick terraced houses that leak heat like sieves. This, combined with our highly volatile maritime climate, is a tough environment for heat pumps. 

So the government has to be practical to get consumers on board. Most of us want to do the right thing, but not at an exponential cost for a product that may worsen our quality of life. People need an image to buy into, too. Teslas have become best-selling cars in the U.K. because they’re cool; it’s harder to get as excited about your house’s heating system.

The two main types of heat pumps, or exchangers, are either ground-sourced or air-sourced. The former is mainly for the deep-pocketed — as one needs a rather large garden to bury the necessary equipment under — but it can be cost-effective over the long run for those heating their country piles.

For the majority of the nation’s cramped housing, heat pumps will have to be air-sourced. But that is far from a simple solution. These resemble air conditioner units that sit outside your house, which may be hard for terraced homes and apartments with little to no outside space. They’re also quite noisy. (Imagine a big air conditioner fan. One advantage is as Britain gets hotter, these can also cool rooms.) 

Air-sourced heat pumps can be brilliant at maintaining a constant level of warmth but they take a while to significantly raise the temperature. That works well as a backup alongside the firepower of a boiler. This isn’t to say heat pumps won’t get better or cheaper, but at this point, best to keep that hot water bottle nearby.  

It’s mostly only the wealthy who can afford to take advantage of the government’s grants, as the capital outlay will extend far beyond it. The major bugbear is installation, which requires putting in a large water tank (where does that space exist in most flats?) and larger-than-standard radiators. Plus, try getting an affordable builder in logjam Britain.

Then, to make heat pumps operate effectively there has to be proper insulation, which is whole different ballgame.

Even though heat pumps are far more efficient than standard electric heaters, electricity per thermal unit is a lot more expensive than gas. So there is no obvious running cost savings yet to make the switch worthwhile. The Energy Savings Trust reckons the cost in running a home’s heating with a heat pump is roughly comparable at 4.7 pence per kilowatt/hour to a gas boiler though there are ways to reduce that with night-time electric usage — this is something the government needs to incentivize and communicate better.    

Sticking to unfeasible targets risks making a mockery of the climate initiative, and the U.K.’s stated aim to achieve only low-carbon heating by 2035 looks like a pipe dream right now.

Until the, purchase, installation and running costs are a small fraction of what they are now, heat pumps will stay a sideshow dud. Build it and we shall come, but force us to install new heating that doesn’t work as well and costs more? Hard sell.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Marcus Ashworth is a Bloomberg Opinion columnist covering European markets. He spent three decades in the banking industry, most recently as chief markets strategist at Haitong Securities in London.

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