Industry impacts of the reset of government net zero policy

Following the speech by Rishi Sunak regarding a reset of government policy around net zero we consider the implications for our sector.

Policy review welcomed by industry bodies as a step towards greater fairness

With some of the key thrusts of the speech leaked the day before, many of the energy sector’s supporting bodies had already released, or at least prepared, their outraged / supportive responses before any of Rishi’s emotive words were uttered. The actual detail on the policy shift delivered on the day was met with a similarly mixed response – unsurprising in an increasingly polarised industry.


The Prime Minister took a pragmatic stance, positioning the policy revisions as necessary to address the unacceptable cost implications to families already under almost unbearable strain from the current cost of living crisis.

Highlighting the progress already made by the UK on the road to decarbonisation and contrasting this the failings of other nations, he challenged anyone to argue the fairness of current policies that ask British people to sacrifice even more.

The policies singled out as causing concern included the proposed ban on fossil fuel boilers. Commenting on the exorbitant costs for homes where a heat pump installation would either be ineffective or require significant investment in remedial work the PM suggested that imposing these costs and causing so much disruption without a proper debate would be wrong.

To move towards net zero goals by pursuing policies ill-considered policies regardless of the cost and disruption is to risk losing the consent of people, he suggested, and would risk abandonment of any achievable route to success.

Do we have the fairest credible path? This will be the PM’s test of policy and he currently believes not. He pointed out that having overachieved on all our carbon budgets to date enables us to adopt a more pragmatic and realistic approach without abandoning future targets.

Home heating

Mr Sunak announced a fairer and better approach to home heating and net zero that he believes will achieve a balance without imposing costs and keep the British public engaged with the process. Among the announcements he included:

  • Existing plans to ban the installation of oil and LPG boilers, and new coal heating, in off-grid homes will be delayed from 2026 to 2035
  • There will be an exemption to the phasing out of fossil fuel boilers, including gas, in 2035 to ensure households who will most struggle to make the switch to heat pumps, or other low-carbon alternatives, won’t have to do so. This is expected to cover about a fifth of homes, including those off the gas grid
  • An increase in the Boiler Upgrade Grant in England and Wales by 50% from £5,000 to £7,500 to help households with the installation costs of both air source and ground source heat pumps
  • The UK’s target to achieve net zero emissions by 2050 remains in place.

DESNZ has since clarified that they will explore the potential low carbon heating options for off-gas grid properties that are not suitable for heat pumps by issuing a consultation, in line with commitments the Government has made during Parliamentary debates on the Energy Bill. Other Government policies on heating remain the same.

Other announcements

The Prime Minister also moved the ban on petrol and diesel cars to 2035 from 2030, reduced the target for gas boiler replacement to 80% and removed imposition of energy efficiency measures on landlords.

He also announced the first ever grid spatial plan which will be used to consider and agree what needs to be done in local areas with respect to the electricity grid taking into account EV chargers and heat pump requirements.

He reiterated that all targets will be met even with these changes and recommitted to the 2030 carbon reduction target of 68%.


There has been response from all sides of the energy debate following the announcement. Whilst it has largely been as anticipated, the response of many trade bodies in the renewable sector was somewhat more considered post the speech than prior to it.

One notable reaction came from the Climate Change Committee whose initial reaction is not supportive “today’s announcement is likely to take the UK further away from being able to meet its legal commitments”.

Industry impacts

Following the recent promise of a government consultation on the introduction of a RLHFO the softening of both the extent and date of the oil boiler ban is another step towards greater fairness and choice for those with oil-heated homes.

Ken Cronin, CEO UKIFDA commented: “As the details continue to unfold a lot of questions remain. The government is at real risk of missing their 2030 carbon targets and the introduction of a renewable liquid heating fuel solution in the off grid can be done quickly, cost effectively and without disruption and therefore can contribute significantly to the 2030 target.”

Paul Rose, CEO of OFTEC, issued the following statement: “Our view has been very clear. The transition to net zero must be fair and affordable to have public support. The reality is the 2026 deadline unfairly targeted off-grid households who, as early forced adopters of heat pumps, would have faced some of the highest costs and disruption to transition.

“Consequently, we welcome this change of direction from the government and the recognition that consumer choice and fairness must be front and centre in this debate if we want to make genuine progress.

“However, it’s vital we do not lose momentum on our net zero ambitions, and our commitment to decarbonise off-grid properties remains steadfast. Urgent action must still be taken, and the government should now quickly move to support all viable low carbon technologies, alongside electrification, to drive the change we need.

 “This includes incentivising a renewable liquid fuel option for the UK’s 1.7 million oil heated homes. It should be possible for almost any home currently heated by oil to be converted, providing a pragmatic and affordable low carbon alternative, even where other low carbon options are considered too difficult.

“We urge the government to bring forward its consultation on renewable liquid fuels quickly and support a fuel obligation to deploy this low carbon solution more widely.”