Labour can deliver a just and fair energy transition by backing renewable liquid fuels
One of the biggest challenges facing the Labour government is delivering decarbonisation without putting unnecessary financial burden on ordinary households.
The two issues are often seen as incompatible, which partly explains why successive governments have kicked the net-zero can down the road. For Labour, a party which believes in fairness, social justice and supporting the most vulnerable, they should be acutely aware of the risks of pursuing an approach that focuses solely on technology without considering the impact on the people living in the home.
Looking beyond heat pumps
Heat pumps undoubtedly have an important role to play in the transition to net-zero. For many homes, they are an ideal low carbon solution and their rollout is rightly being encouraged. However, we must also recognise that for many rural properties off the gas grid, heat pumps are simply unaffordable. Buildings tend to be older and less energy efficient, which means costly and extensive renovations are required. Without these changes, running costs can increase significantly and it can be harder to keep the building at a comfortable temperature.
Even with government support through the Boiler Upgrade Scheme (BUS), households could still face additional costs of many thousands of pounds. An alternative solution for off-grid households is to switch them onto renewable liquid fuels such as Hydrotreated Vegetable Oil (HVO). This requires only a minor boiler adjustment costing less than £500. If we started with an initial 20 per cent blend, no intervention would be required at all.
This makes it a far more affordable and achievable option, particularly for those in rural areas already grappling with higher living costs. If Labour is serious about moving ahead with decarbonisation while protecting those who are financially vulnerable, it must ensure that it does not come at their expense. A rollout of renewable liquid fuels would allow these households to contribute to the UK’s net-zero goals without the financial burden.
Investing in energy efficiency
Many of the UK’s off-grid homes are older and poorly insulated, meaning even the most efficient heating system will struggle to perform optimally. Supporting the use of renewable liquid fuels to achieve off-gas grid carbon targets could enable funding to be redirected towards improving energy efficiency. By investing in insulation upgrades, double glazing and draught-proofing measures, the government could lower household energy bills while reducing carbon emissions.
A well-insulated home requires less energy to maintain a comfortable temperature, cutting costs for consumers and reducing reliance on any heating source. This targeted approach would provide lasting benefits, ensuring that the transition to low carbon heating is not just affordable, but also more effective in the long term.
Tackling social inequality
One of Labour’s key commitments is addressing social inequality. Energy injustice is a growing issue, with rural communities often facing higher energy costs and fewer choices for decarbonisation. Policies that favour only high-cost solutions, such as heat pumps, risk widening this divide further.
A heat pump first strategy disproportionately benefits wealthier households that can afford the upfront investment. That's because you can only benefit from the £7,500 through the BUS if you have the disposable income to top up the remaining costs. Meanwhile, lower income households, of which a higher proportion live in rural off-grid areas, won't have the disposable income so won't therefore benefit from the £7,500 subsidy - which risks leaving them behind in the race to net-zero.
Renewable liquid fuels provide a just alternative. They offer a fairer path to decarbonisation that does not discriminate based on income, property type, or location. By adopting a technology neutral approach, encompassing heat pumps and renewable liquid fuels, Labour can ensure that all households can transition to low carbon heating affordably.
Low risk but high reward for Labour
Supporting renewable liquid fuels as a core part of the UK’s decarbonisation strategy is not just the most effective way to decarbonise, it is also a pragmatic and politically advantageous move for the Labour government. At the last election, we saw Labour MPs elected in rural seats with a commitment to support low income households.
If these rural households are forced towards an unaffordable heat pump transition, Labour risks losing trust amongst voters and fuelling opposition from rural communities. In many of these rural Labour seats, the Liberal Democrats, Greens and Reform aren't far behind. Labour will need to show they are on the side of their constituents if they want to secure re-election at the next election. Instead, embracing renewable liquid fuels would demonstrate a commitment to fairness, while reinforcing Labour’s drive to net-zero.
The role of government
In October 2023, the Energy Act received Royal Assent and became an official act of parliament. The Act contained legislation which could be invoked by the government to create the renewable liquid heating fuel obligation. This would pave the way for the introduction of HVO and other renewable fuels for home heating at no cost to the Treasury.
The legislation was introduced with the promise of a consultation on the technical details within one year. It received cross party support in Parliament, including from Labour. However, a year has now passed and there is no sign of the consultation. By backing renewable liquid fuels alongside heat pumps, Labour has an opportunity to accelerate the rollout of low carbon heating whilst delivering on its core principles of fairness, opportunity and social justice.
Our industry is ready and waiting to work with the government to deliver on these ambitions.
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