The Future Home Standard and growing rural housing supply

Duncan Carter, Corporate Affairs Manager | Calor Gas

The Future Home Standard was devised by the last government and seeks to make significant improvements to the energy efficiency levels of new build homes and ban the use of heating systems run on fossil fuels by 2025. This would see a new generation of housing stock largely fueled by heat pumps and was seen as one of the main vehicles to reach Boris Johnson’s target of installing 600,000 heat pumps a year by 2028 made when he was prime minister.

The General Election and change in government has delayed the response to the Future Home Standard consultation. Recent media reports make it clear that the new Labour administration supports the policy, however, a delay to 2027 has been mooted so that housebuilders have time to adequately prepare to deliver housebuilding at the scale needed to meet the government’s ambitions of delivering 370,000 new homes a year.

What does this standard mean for rural housing supply?

There is a recognized crisis in rural housing, particularly affordable social housing. If not designed properly, the Future Home Standard could disincentivize housebuilders from building in rural communities if faced with higher costs due to restrictions on which heating systems they can specify. Rural developments also tend to feature a smaller number of units than larger developments typically built nearer towns and cities. In many case upgrades to rural electricity grid connections and substations are required which could make rural developments uneconomical if only electrified systems, such as heat pumps are mandated.

The government should take learnings from Scotland’s New Build Heat Standard

Scotland introduced its own version of the Future Home Standard earlier this year. The Scottish Government’s New Build Heat Standard (NBHS) came into force on 1st April and prohibits the use of fossil fuel boilers in new Scottish homes, via a ban on Direct Emission Heating (DEH) systems.

Under the regulations, all heating defined as DEH was prohibited in new homes unless for use as emergency heating. When the NBHS coming into effect, a significant number of concerns were raised, particularly by rural and island communities where power cuts can be common and long lasting, relating to their reliance on bioenergy (principally wood burning stoves) and peat for heat.

During policy development for the NBHS, the Scottish Government viewed the combustion of biomass as producing CO2 emissions at the point of use, deeming these systems as non-compliant as DEH systems. Following a review of the NBHS, the Scottish Government position on bioenergy has evolved as this definition proved to be practically and politically inflexible.

Bioenergy systems do emit CO2 at the point of use, however these emissions are balanced out against the CO2 that was absorbed from the atmosphere when the feedstock grew. The Scottish Government now accepts that, in line with international carbon accounting practice, bioenergy is compatible with net-zero.

Importantly, this means that the Scottish Government will now permit the use of Renewable Liquid Gases (RLGs) such as Calor’s bioLPG that are able to run in existing gas boilers. Rural developers would be able to specify conventional central heating systems if these homes will use renewable fuels. It also means that developers could specify hybrid heat pumps in off-grid areas which are able to utilize a boiler running on bioLPG during periods of peak heat demand in the coldest winter months when standard air source heat pumps can struggle to meet the heat and hot water needs of a large family home economically.

The government should support the development of RLGs via the Industrial Strategy

There are a number of practical considerations that the UK and Scottish governments need to consider now that there is a growing recognition that RLGs and other biofuels will play in role in decarbonising homes and businesses that are unsuited to heat pumps.

Firstly, for the purposes of the Future Home Standard and New Build Heat Standard, RLGs such as bioLPG need to be recognized in the New Home Model (the replacement of Standard Assessment Procedure) which is the methodology currently used by the government to estimate the energy performance of homes and to generate Energy Performance Certificates (EPCs). Without this recognition, it is difficult for housebuilders to specify heating systems for the purposes of securing a building warrant.

Secondly, the government needs to provide greater support to the off-grid fuels market to develop alternative, renewable fuels such as RLGs. Through the Industrial Strategy the government should identify mechanisms to support the transition of the UK’s ageing refineries to support the production of RLGs and other biofuels. For example, the government could support the co-production of bioLPG via the Sustainable Aviation Fuel Mandate as it can be taken as a by-product of this process.

Lastly, the government could also incentivise demand by taking forward the consultation on alternative heating systems for off-grid heating. This was included in the Energy Act 2023 and would seek to introduce a Renewable Liquid Heating Fuel Obligation, similar to the Renewable Transport Fuel Obligation (RTFO) that set an obligation on the transport sector to supply an increasing amount of biofuel to the road fuels market. While improved energy efficiency will see homes consume less energy in the future, such a mechanism would catalyse the increased production of RLGs necessary to support the net-zero transition for rural homes and businesses.  

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