Ministers must wean themselves off quick-fix policy announcements to address net zero and instead adopt a more coordinated approach, says Matthew Farrow.
Everyone likes a round number, especially politicians, so no surprise that when Rishi Sunak announced the snappily named Public Sector Decarbonisation Scheme (PSDS) last year he allocated exactly £1bn to it. Having said that, the PSDS is actually a good idea. Emissions from heating buildings are 20% of the total and to achieve net zero virtually every single building in the UK must run on zero emission energy by 2050.
The scheme is intended to boost investment in low carbon heating in the public sector estate, especially where existing fossil fuel heating systems are coming to end of life. The problem is that the government is still addicted to trying to solve huge problems in short sharp media-friendly bursts.
Talking to environmental consultancies in Environmental Industries Commission (EIC) membership that work with the public sector clients, it’s clear that the scheme has been less successful than it could have been due to flaws caused by its rushed implementation. For a start PSDS means a sudden injection of public funds into this area for six months followed by silence as to whether the scheme has now ended after two phases or whether it will continue in some form.
The result is a ‘boom and bust’ mentality. Hard-pressed public sector bodies may hold off investing their own resources in decarbonisation hoping for a Phase three. Meanwhile the heat pump industry had little warning of the scheme and struggled to meet the surging demand. Secondly, because the scheme was dropped into an already complex policy field at short notice there was little coordination with other initiatives. This was true even between the main scheme and its sister scheme (the Low Carbon Skills Fund) which gave grants to enable firms to pay for the professional advice needed to prepare their bids to the main scheme. LCSF funding approval was so delayed that in some cases the BEIS budget for the main scheme had already been exhausted before applicants knew whether they would be successful in securing funding to prepare their bid in the first place.
Another example of a lack of coordination was the way that while the scheme rightly excluded replacement gas boilers other initiatives such as the DfE’s Condition Improvement Fund do fund these. Third, while schools and colleges were intended to be a major target for the scheme only 3% of the funding was allocated to them, in part because they often did not have the internal resources to analyse and prepare bids in the way larger public institutions could.
And fourth, as PSDS only covered capital spend, some applicants were put off investing in heat pumps as the long-term running cost could be higher than the systems they replaced. None of these problems are unsolvable, and I’ve been feeding into BEIS EIC’s thoughts to help officials do this. But ministers must wean themselves off quick-fix policy announcements to address net zero.
We need a detailed, phased, coordinated whole economy roadmap. Let’s hope the government’s overarching ‘net zero strategy’ due out in late summer does this, with or without round numbers.
Matthew Farrow is director of policy at EIC. This blog originally appeared in his column in Infrastructure Intelligence.