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Calor Gas Report Urges Government Rethink on Renewable Heat Incentive (RHI)

A report commissioned by Calor Gas Ltd urges a government rethink on what the authors Dr John Constable and Dr Lee Moroney describe as the “irresponsible” plan for a Renewable Heat Incentive (RHI).

The RHI is designed to incentivise domestic, commercial and industrial customers to switch from fossil-fuelled heating to a specific set of renewable technologies, including ground source heat pumps, air source heat pumps and solar water heating.

The Renewable Heat Incentive: Risks And Remedies report, released by the environmental consultancy Renewable Energy Forum, assesses the cost-effectiveness and impact of the RHI on consumers using the Department of Energy & Climate Change’s (DECC) own charts and figures.

The report claims that the RHI is an expensive leap into the dark, relying on the major deployment of renewable heat technologies that are new in the UK, and that the Government’s own estimates show that its costs exceed the energy benefits by £1.2bn to £13.4bn and resulting carbon savings in 2020 are estimated to be only three per cent of current emissions.

The report also says that the RHI would increase the average domestic gas bill by 14 per cent (£94) per annum, and the average medium sized commercial gas bill by 19 per cent (£86,000) by 2020, and could consume around two per cent of the annual income of the poorest households, with the funds going to the richest households, which will be able to benefit from the RHI subsidies.

The report states: “The funding mechanism for the RHI is as yet undetermined. The options are either a levy on fossil fuel sold for heat, or a direct draw from general taxation. A levy on fossil fuel would fall on all users of fossil fuels for heat, including off-grid lp gas and oil consumers.

“This would almost certainly mean that a significant proportion of poorer members of society would bear a disproportionate share of the costs, and is very likely to increase fuel poverty in certain sectors, particularly rural areas. DECC’s own analysis suggests that government is aware of this.”

The report concludes that the actual costs and outcomes of the proposed RHI are so uncertain that it would be irresponsible to proceed in the current form, since it will expose consumers subsidising the scheme to the risk of high costs without adequate assurances of any compensating benefits.

Contact Calor Gas Ltd on 01926 330088 www.calor.co.uk

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