| Heating Technology | % of Total Residential Heating |
|---|---|
| Natural Gas Boilers | 74% |
| Heating Oil & Coal | 6% |
| Direct Electric (Resistive) | 12% |
| Air/Ground Source Heat Pumps | 4% |
| Biomass & District Heat Networks | 3% |
| Other (incl. Solar Thermal) | 1% |
Retrofitting the UK's housing stock presents a massive coordination market failure. Over 60% of homes have Energy Performance Certificate (EPC) ratings of D or below, requiring significant insulation upgrades before heat pumps can run efficiently. Installation costs for heat pumps remain high (typically £8,000 to £14,000 compared to £2,500 for a replacement gas boiler). Furthermore, a lack of certified low-carbon installers creates a supply-side bottleneck, with waiting times of over eight months in rural regions.
The Boiler Upgrade Scheme (BUS) provides upfront capital grants (currently £7,500) to subsidise heat pump installation, reducing the cost gap for households. In tandem, proposed reforms to reallocate green levies from electricity bills onto natural gas bills aim to shift the relative running costs in favour of electricity, correcting the market price signal.
Proponents of regulatory intervention argue that subsidies alone are too slow to overcome consumer inertia. They advocate for a legally binding ban on the sale of new gas and oil boilers from 2035, alongside strict landlord obligations to bring all private rental properties up to EPC Band C by 2030, supported by municipal-led heat network zones in dense urban areas.
A rapid transition to low-carbon heating threatens to worsen fuel poverty among low-income households who cannot afford insulation, even with subsidies. On the other hand, a nationwide retrofitting programme could boost local economies, supporting over 120,000 skilled jobs in insulation, plumbing, and electrical engineering, while permanently lowering the UK's reliance on imported liquid natural gas (LNG).
After considering the evidence in Extracts A, B, C, D and E, which policies, if any, would you recommend that the UK government should introduce to ensure that 100% of domestic residential heating comes from low-carbon sources (heat pumps, direct electric, and green district heat networks) by 2038? Justify your recommendation.
