Day 7 of 1415 minutes

Day 7: Buildings & Heating

Decarbonising UK homes and buildings

Learning Objectives

  • Understand why heating buildings is one of the hardest decarbonisation challenges the UK faces.
  • Know the key technologies — heat pumps, insulation, and hydrogen — and the policy landscape around them.
  • Appreciate the scale of the retrofit challenge and its links to fuel poverty, housing quality, and social equity.

The Heating Problem

Heating buildings accounts for approximately 21% of UK carbon emissions — more than the entire power sector. Around 23 million homes in Great Britain are connected to the gas grid and use gas boilers for space heating and hot water. Most of these boilers will need to be replaced with low-carbon alternatives within the next 25 years if the UK is to meet its net zero target.

This is arguably the most difficult part of the entire energy transition. Replacing a power station is a decision made by a company or government. Replacing a boiler is a decision made by millions of individual householders, each with different budgets, housing types, levels of information, and appetite for disruption. It requires work inside people's homes — often significant work if insulation is also needed — and it touches something deeply personal: whether your home is warm enough.

As the CCC has repeatedly noted, progress on decarbonising heating has been painfully slow. Annual heat pump installations remain far below the pace needed, and the UK's housing stock remains among the least energy-efficient in Europe.

Heating buildings produces roughly 21% of UK carbon emissions, and around 23 million homes still rely on gas boilers — making this one of the hardest sectors to decarbonise.

Heat Pumps: The Leading Solution

The government has identified heat pumps as the primary technology for decarbonising home heating. A heat pump works like a refrigerator in reverse: it extracts heat from the outside air (air-source) or the ground (ground-source) and transfers it inside, using electricity. Modern heat pumps can operate efficiently even in cold UK winters.

The government set a target of 600,000 heat pump installations per year by 2028. In practice, annual installations have been running at around 55,000–72,000 — a fraction of what's needed. Barriers include high upfront cost (typically £7,000–13,000 installed, though government grants of £7,500 are available through the Boiler Upgrade Scheme), consumer unfamiliarity, installer shortages, and the fact that heat pumps work best in well-insulated homes — which many UK properties are not.

The Boiler Upgrade Scheme (BUS), launched in 2022, provides grants to help householders switch from gas boilers to heat pumps. Take-up has increased but remains below target. The CCC has called for stronger policy signals, including a clear date after which new gas boiler installations in homes will be banned — the government has proposed 2035, though this date has been subject to political debate.

The Hydrogen Question

An alternative — or complement — to heat pumps is using hydrogen to heat homes. The idea is to blend hydrogen into the existing gas network or eventually convert the network to carry 100% hydrogen. This would potentially allow households to continue using a gas-boiler-like appliance, reducing the disruption of switching.

However, the hydrogen-for-heating debate is one of the most contested issues in UK energy policy. Sceptics point to several problems: green hydrogen is currently very expensive to produce; converting the gas network would be enormously complex; hydrogen boilers are less energy-efficient than heat pumps (because producing hydrogen from electricity involves significant energy losses); and there is not yet a large-scale demonstration that hydrogen heating works reliably in a UK community.

In 2023, the government cancelled the planned Hydrogen Village Trial in Whitby, Merseyside — one of two planned community-scale trials — after local opposition and concerns about feasibility. The remaining trial at Redcar has also faced uncertainty. This has shifted the balance of evidence and policy attention further toward heat pumps and away from hydrogen for domestic heating, though hydrogen may still play a role in industrial heat and heavy industry.

The cancellation of the Hydrogen Village Trial in 2023 was a significant moment — it signalled growing scepticism about hydrogen as a mass heating solution for UK homes.

Insulation and Retrofit: The Unsexy Essential

Even the best heating technology won't work efficiently in a poorly insulated home. The UK's housing stock is old by European standards — many homes were built before any meaningful energy efficiency standards existed. Cavity wall insulation, loft insulation, solid wall insulation, double or triple glazing, and draught-proofing can dramatically reduce energy demand.

The government's target is for as many homes as possible to reach EPC Band C by 2035. An EPC (Energy Performance Certificate) rates a building's energy efficiency from A (most efficient) to G (least efficient). As of 2024, roughly 46% of English homes had an EPC rating of C or above. Raising this figure requires upgrading millions of properties — particularly older homes with solid walls, which are the most expensive and disruptive to insulate.

Past government insulation programmes have had a troubled history. The Green Deal, launched in 2013, was widely regarded as a policy failure and was withdrawn. The Green Homes Grant voucher scheme, launched in 2020, was scrapped after just six months amid administrative chaos. The current approach relies on a combination of the ECO (Energy Company Obligation) scheme — which requires energy suppliers to fund insulation in lower-income homes — the Social Housing Decarbonisation Fund, and the Great British Insulation Scheme.

The Future Homes Standard, expected to take effect from 2025, will require new-build homes to produce 75–80% fewer carbon emissions than those built under current regulations, effectively mandating high levels of insulation and low-carbon heating from the outset. This is welcome but only addresses new construction — the real challenge is the 28 million existing homes.

Fuel Poverty and Equity

There's a critical social dimension to this challenge. Fuel poverty — where a household cannot afford to heat their home to an adequate standard — affects approximately 3.2 million households in England alone, according to DESNZ estimates. Cold, damp homes cause significant health problems, particularly for elderly and vulnerable people.

Decarbonising heating must be done in a way that doesn't make fuel poverty worse. Heat pumps are cheaper to run than gas boilers for well-insulated homes, but the upfront cost is a barrier for low-income households. Insulation retrofits deliver the biggest benefits to the least efficient homes — which are disproportionately lived in by lower-income families — but funding and delivery capacity are insufficient. This is a challenge that sits at the intersection of energy policy, housing policy, health policy, and social justice.

Key Takeaway

Decarbonising how the UK heats its 23 million gas-connected homes is the most personally disruptive element of net zero — it requires work in every home, costs thousands of pounds, and demands a massive expansion of installer capacity and insulation retrofit programmes, all while protecting the most vulnerable households from fuel poverty.

Quick-Fire Recap

  • Heating accounts for approximately 21% of UK carbon emissions, with 23 million homes on gas.
  • Heat pumps are the government's preferred solution, but annual installations (~55,000–72,000) are far below the 600,000/year target.
  • Hydrogen for home heating is increasingly uncertain after the cancellation of the Hydrogen Village Trial in 2023.
  • The Future Homes Standard (from 2025) will require new homes to be low-carbon, but 28 million existing homes need retrofitting.
  • Approximately 3.2 million households in England are in fuel poverty — the heating transition must address equity.

Reflection Prompt

What type of heating does your own home use? If you were told you'd need to switch to a heat pump within the next decade, what would your main concerns be?

Sources & Further Reading

  1. Climate Change Committee, "2024 Progress Report to Parliament", CCC, 2024.
  2. Department for Energy Security and Net Zero, "Heat and Buildings Strategy", HM Government, October 2021. https://www.gov.uk/government/publications/heat-and-buildings-strategy
  3. Department for Energy Security and Net Zero, "Boiler Upgrade Scheme Statistics", DESNZ, 2024. https://www.gov.uk/government/statistics/boiler-upgrade-scheme-statistics
  4. Department for Energy Security and Net Zero, "Annual Fuel Poverty Statistics Report 2024", DESNZ, 2024. https://www.gov.uk/government/statistics/annual-fuel-poverty-statistics-report-2024
  5. Department for Levelling Up, Housing and Communities, "The Future Homes and Buildings Standards", DLUHC, 2023. https://www.gov.uk/government/consultations/the-future-homes-and-buildings-standards-2023-consultation
  6. Energy & Climate Intelligence Unit, "Heat Pump Tracker", ECIU, 2024. https://eciu.net/
  7. UK Government, "Hydrogen Village Trial Decision", DESNZ, 2023.
  8. Ofgem, "Energy Company Obligation (ECO)", Ofgem, 2024. https://www.ofgem.gov.uk/environmental-and-social-schemes/energy-company-obligation-eco

Through a Product Designer's Lens

The heating transition is a service design challenge of enormous proportions. The user journey for a homeowner considering a heat pump is currently fragmented, confusing, and riddled with friction: researching options, understanding suitability for your home, finding a trustworthy installer, applying for grants, managing disruption, and learning to use a new system. There's a clear opportunity for an end-to-end digital service — a 'one-stop shop' — that guides homeowners from assessment to installation and aftercare. Companies like Aira and Octopus Energy are beginning to build this, but the experience is still far from seamless.

From an ethical and inclusive design perspective, the fuel poverty dimension is critical. Digital tools for managing energy use (smart thermostats, apps, time-of-use tariffs) are increasingly important, but they risk excluding older, less digitally confident, or lower-income householders. Designers building energy products must consider accessibility, digital literacy, and the needs of vulnerable users from the outset — not as an afterthought.

The data and metrics angle is also rich. What does a good retrofit look like in measurable terms? Products that can show homeowners their actual energy savings after a heat pump installation — compared to their old gas boiler, in real money and real carbon — would build confidence, generate word-of-mouth, and provide the evidence base that policymakers desperately need.

Let's Build