Rebalancing the relative costs of gas and electricity, providing support for electrification and indicating areas where hydrogen is unlikely to be an option were among the recommendations of the Climate Change Committee(CCC) in its annual report to government. The report called on the government to move urgently from policy to delivery and to try to regain international leadership on addressing climate change. But a major theme throughout the CCC’s report and recommendations was action on the built environment and the switch away from gas for heating, where it wants to “narrow the scope of the strategic decision prior to 2026”. Taken together, the CCC’s recommendations would start to provide some clarity on the likely direction for particular regions or building types and start to develop local energy planning that would involve the public in region-specific solutions.
The CCC recommended DESNZ identify a set of low-regret electricity and hydrogen infrastructure investments that can proceed now – but also that said DESNZ should “identify on a whole system and economy-wide basis which areas are unlikely to be suitable for hydrogen so that electrification and alternatives can be progressed in those areas”.
It called on the government to publicly affirm that electrical heat is the default option in all new buildings and existing properties off the gas grid, prohibit connections to the gas grid for new buildings from 2025, set out clear routes for other properties or areas where electrification or heat networks represent low-regret options and clarify the Government’s position on the economy-wide priority of use-cases for hydrogen.
In finalising funding to support development of 10GW of low-carbon hydrogen production by 2030, CCC warns this should ” reflect hydrogen costs in a way that does not
bias towards hydrogen where electrification is competitive”.

“Identify on a whole system and economy-wide basis which areas are unlikely to be suitable for hydrogen so that electrification and alternatives can be progressed in those areas”

In CCC’s recommendations to HM Treasury it said that reforms to electricity pricing and markets should remove legacy low-carbon policy costs from electricity prices, noting that such rebalancing is overdue since 2022. It wants electricity pricing reform to ensure that heat pumps are cheaper to run than gas boilers.
It also called on for HM Treasury to outline a comprehensive vision to leverage private financing for the retrofit of UK homes and businesses. Financial levers to consider include green stamp duty, green mortgages, energy as a service, property-linked finance, and using the UKIB to de-risk retail investment into home retrofit. In reducing the electricity costs of industrial users it called for greater levels of funding for industrial electrification “consistent with the support available for hydrogen and CCS”.
It said it was time for the government to improve the public’s confidence in and understanding of the coming transition for heat, with a multi-year campaign to provide assurances and combat misinformation, and raise awareness of the schemes and policies which may help households and businesses. That should encourage households and businesses to plan ahead, providing detail on when policy changes will come and how they will affect consumers.
On the electricity system as a whole, the CCC said a comprehensive long-term strategy for the delivery of a decarbonised, resilient, power system by 2035 was ‘overdue’. But it also had recommendations for local energy planning. Within a year (by Q1 2024) it called on DESNZ to set out a clear process and governance framework for delivering “credible, coordinated energy planning across local, regional and national levels”. This should “ensure that proposals complement existing initiatives (eg on heat network zoning) and put in place processes for coordinating across boundaries and incorporating meaningful public engagement into decision-making.”
It called on DESNZ to create a minister-led infrastructure delivery group, advised by the new Electricity Networks Commissioner, to ensure enabling initiatives for energy infrastructure build are taken forward at pace and necessary policy changes are implemented across the UK. That should include DESNZ, Ofgem, Defra, DLUHC, the Scottish and Welsh Governments, the Future System Operator and asset owners.

Key messages
Across the economy, the CCC’s key messages to government in its report were:
• A lack of urgency. While the policy framework has continued to develop over the past year, this is not happening at the required pace for future targets.
• Stay firm on existing commitments and move to delivery. The Government has made a number of strong commitments, these must be restated and moved as swiftly as possible towards delivery.
• Retake a clear leadership role internationally. The UK will need to regain its international climate leadership.
• Immediate priority actions and policies. Action is needed in a range of areas to deliver on the Government’s emissions pathway.
• Develop demand-side and land use policies. The Government’s current strategy has considerable delivery risks due to its over-reliance on specific technological solutions, some of which have not yet been deployed at scale.
• Empower and inform households and communities to make low-carbon choices. Despite some positive steps to provide households with advice on reducing energy use in the last year, a coherent public engagement strategy on climate action is long overdue.
• Planning policy needs radical reform to support Net Zero. The planning system must have an overarching requirement that all planning decisions must be taken giving full regard to the imperative of Net Zero.
• Expansion of fossil fuel production is not in line with Net Zero. As well as pushing forward strongly with new low-carbon industries, Net Zero also makes it necessary to move away from high-carbon developments.
• The need for a framework to manage airport capacity. There has been continued airport expansion in recent years, counter to our assessment that there should be no net airport expansion across the UK.