Extract 1: Domestic Heating and Energy Transition

Investment in domestic energy efficiency and low-carbon heating is a significant area of government expenditure. Government intervention to tackle the market failure arising from fossil-fuel heating systems (such as natural gas boilers), which are overconsumed in the free market, is considered crucial in enabling the government to achieve its net-zero carbon objectives. However, despite government subsidy schemes spending nearly £1.2bn in 2021/22, the data in Fig. 1.1 shows that fossil-fuel gas boilers are still the primary source of domestic heating.

Fig. 1.1: UK households by primary heating source, 2022