It is a pleasure, Mr Sheridan, to serve under your chairmanship.
Decarbonisation policies and renewable energy policies, both nationally and internationally, may not be in crisis but they are at a turning point. The Chicago climate exchange ended carbon trading, and a year ago the Copenhagen summit was not a success. Wind farms are increasingly criticised as an environmental blight as well as extremely expensive, and it has been noted that energy companies make three times as much money from wind farms as they do from coal and oil. The debate takes place in that context.
I am rather impressed by the potential contribution that heat pumps could make to our future energy needs. However, we must have complete assurance that the installed technology will actually deliver what it says on the tin. I fear that in 30 or 40 years, many of our energy policies, including wind farms, will be seen in the same way as we now look back on deck-access housing accommodation from the 1960s and 1970s—a good idea at the time, but no more than that. Heat pumps are a big investment for both householder and taxpayer, and both deserve to be assured that they will be worth the money.
Heat pumps extract heat from the ground or the air, and redirect it for space heating and hot water. The efficiency of heat pumps is measured by their coefficient of performance, which I shall refer to as COP. It is the ratio of heat produced per unit of electricity consumed in generating that heat. A COP value of 3 means 3 kWh of heat output per kWh of electricity used to run the pump. Higher COP values represent relatively more efficient heat delivery.
COP values vary by season; the colder the ground or the air, the more work the pump has to do to raise the temperature to acceptable levels for domestic heating, and the more energy is consumed. Poor design and installation also affect the COP. In well-insulated buildings with low temperature under-floor heating of about 40° C, ground-source heat pumps can be beneficial. Conversely, in poorly insulated buildings, where the pump is required to heat high-temperature radiators and hot water to about 60° C, their performance is less impressive.
The 2009 European directive on renewable energy excludes low-performing heat pumps from making a contribution to renewable energy targets. It states that
“Only heat pumps with an output that significantly exceeds the primary energy needed to drive it should be taken into account.”
From other data, we can deduce that that the EU implicitly requires heat pumps to achieve a COP of 2.875 before their energy contributes to the renewable energy target. The logic behind the EU requirement for a minimum efficiency level is that replacing a fossil-fuel heating system with a poorly performing heat pump may result in increased CO2 emissions. That is because the emissions costs in the extra electricity requirement of a heat pump need to be balanced against the emissions of burning a fossil fuel.
The most recent study of heat-pump performance, “Getting warmer: a field trial of heat pumps”, was published by the Energy Saving Trust on 8 September. The study reveals that the performance of heat pumps installed in the UK is surprisingly poor. It showed that only one of the 22 properties that had ground-source heat pumps achieved the implicit minimum EU directive COP, and that only nine of the 47 sites with air-source heat pumps achieved that standard. Something similar occurred during the Joseph Rowntree Foundation study in Elm Tree mews in York; a communal ground-source heat pump was installed that had a nominal design COP efficiency of between 3.2 and 3.5, but despite a number of interventions throughout the year’s monitoring, the delivered COP efficiency was 2.15. As a result, it failed the renewable test.
The risks are clear. There is the potential for consumer dissatisfaction with technology that fails to deliver on value for money after expensive and possibly disruptive installation; in some cases, it will raise carbon emissions rather than lower them; problems may arise from the EU failing to count the majority of heat pumps in the UK as a contribution to our renewables target; and there is the possibility of failing to qualify or to remain qualified for renewable heat incentive payments.
I understand from my A-level physics—it was a long time ago—that the real problem is the difference in temperature between the ground and the building being heated.
In response to a parliamentary question, the Minister of State, Department of Energy and Climate Change, the hon. Member for Bexhill and Battle (Gregory Barker), confirmed that
“Heat pumps that do not meet the required average seasonal performance factor, as defined in Annex VII of the use of energy from renewables sources Directive 2009/28/EC, will not count as renewable.”—[Official Report, 21 October 2010; Vol. 516, c. 865W.]
In order for heat pumps to have the correct COP, each installation needs to be inspected and monitored to ensure compliance. How will the Minister monitor that, if it does not do what it says on the tin? I would be grateful if he answered that question today.
The Energy Saving Trust report was bad news for heat pumps, but disappointing COP values are only part of the picture. The threshold for being considered renewable takes no account of the carbon footprint generated by manufacture and the emission of the heat pump’s fluorocarbon refrigerant. Fluorocarbons used as refrigerants can be highly polluting if they leak, because their global warming potential can be thousands of times that of CO2. The refrigerant R404A, for instance, has a global warming potential 3,800 times that of carbon dioxide. In a written answer, the same Minister said:
“we would expect heat pump manufacturers to avoid using this particular gas wherever possible.”—[Official Report, 19 October 2010; Vol. 516, c. 649W.]
Unfortunately, I understand that 15% of heat pumps use that refrigerant.
A further study undertaken by Atlantic Consulting, “Fluorocarbons’ Contribution to Air-Source Heat-Pump Carbon Footprints”, showed that the contribution of fluorocarbons to the carbon footprint of heat pumps was considerable. Production and disposal of heat pumps made a negligible contribution; however, in power generation, fluorocarbons added 20% to the footprint. The annual operating leak rate was estimated at 6% of rated charge, in accordance with the current estimate of the Refrigeration, Air Conditioning and Heat Pumps Technical Options Committee of the United Nations Environment Programme. Another academic study from 1999 found leak rates as high as 8%. Those rates are significant; they are not negligible, as was claimed in a written answer of 19 October 2010, which was based on information supplied by the industry.
Further, could the Minister obtain independent confirmation of whether the leak rates are negligible or significant, as a lot could ride on that for the future of the industry? There are no current mandated standards on leak rates for heat pumps, but the problems do not end there, because much damage is done when the refrigerants are vented into air at the end of the installation’s life, as all too often happens. I also see from a recent parliamentary answer, on 19 October 2010 at column 647, that no information is held on quantities of HFCs and HCFCs recovered and recycled in the UK. So we simply do not know how much of these dangerously polluting gases, which are controlled under the Kyoto convention, are emitted into the atmosphere at the end of the life of the installation. If emissions are not measured, they cannot be managed.
UNEP’s RTOC, which I mentioned earlier, has adopted a working assumption that end-of-life emissions of refrigerants are on average over 50%. That is not “negligible”. Atlantic Consulting’s findings are supported by a similar, peer-reviewed study published by the university of Delft in the Netherlands, which found that,
“Even though heat pumps are generally considered to be sustainable heating systems because they extract heat from renewable sources rather than by burning non-renewable fossil fuels this research shows that a heat pump is actually not more environmentally friendly than a gas-fired boiler.”
A press release from Atlantic accompanying its report argued that the RHI should be re-targeted, pointing out that,
“Under the proposed RHI, homes and offices in the UK would be subsidised to displace or replace gas- or LPG-fired heating with heat pumps, even though this would, at best, cause a very minor reduction in carbon emissions, and in many cases an increase.”
Currently, the Government are considering the detail of how the RHI will operate. The potential contribution of heat pumps to our renewables target is significant, but some way has to be found of assessing and certifying each installation, so that it makes a genuine and positive, rather than negative contribution. Ideally, minimum fluorocarbon leak rate standards should be mandated for heat pumps, so that these powerful global warmers do not undermine their contribution further.
The key point is that the nominal or certified design of coefficient of performance of a heat pump can differ radically from the efficiency after installation; so radically, in fact, that it can detract from rather than add to our battle against climate change. The Department of Energy and Climate Change is to subsidise heat pumps with taxpayers’ money at 5.5p per kWh for 20 years. That is an enormous amount of money committed for a long period, and we must be absolutely certain that taxpayers’ money subsidises only that which is renewable after installation and that which is good, rather than inefficient, not renewable and bad.
It is a pleasure to serve under your chairmanship this afternoon, Mr Sheridan.
I thank the hon. Member for Blackley and Broughton (Graham Stringer) for securing the debate and for the constructive way he introduced it. We believe this is an area where it is entirely proper there should be constant scrutiny. We are determined to try to do things in the way that is most efficient and effective and to ensure that we always have in mind the needs of consumers and the people paying for the technologies and installations, That must be at the heart of our efforts. I thank him for his contribution today and for ensuring that we saw in advance the article he wrote ahead of the debate.
The hon. Gentleman has raised some important issues to which I hope to respond fully. We will certainly base our decisions on evidence. Consumers expect us to do that and to use public funding wisely, and we are determined to do so. Of the issues he has raised, a number come through most clearly.
We recognise that poor insulation and design would have a significant impact on the performance of heat pumps, to the degree that it might jeopardise whether they could count as renewable under European legislation. That is why we have a microgeneration certification scheme, to ensure minimum quality standards for both microgeneration products and installers; and why we have consulted on whether the renewable heat incentive should, where practicable, be conditional on energy efficiency measures being carried out.
In response to the hon. Gentleman’s question about whether we will continuously assess and monitor the installations, we should recognise that we can set the renewable heat incentive at a level that would essentially require that to be done. We can set it at a level that would assume that the home is properly insulated and that the COP, the coefficient of performance, would be at a level to give us the assurance of efficiency. Otherwise, the consumer would not get sufficient income to justify the investment. There are ways in which the work we are doing to define and refine the renewable heat incentive can be used as a driver of efficiency. Our findings on that will be published over the course of the next few weeks. That will be an important part of the process.
We need to recognise that many different types of technology are included in the concept of heat pumps. There are fundamentally different types, including those that use water, ground-source heat pumps or air-source heat pumps. We are looking at a policy that will drive investment towards them, because we believe, as the hon. Gentleman does, that they can make an important contribution in the battle against climate change. We can help individual consumers to understand the contribution they can make in their own homes towards tackling some of the problems we are facing.
There is a well established market for heat pumps, predominantly in the commercial sector so far. More than 90% of the 217,000 heat pumps installed in 2009 were in the commercial sector. There is also a growing number of domestic heat pumps—a technology to which we are paying close attention. Our view is that they are one of the most energy-efficient ways to provide heating and cooling in many applications, as they can use renewable heat sources in their surroundings. Even at lower temperatures, the air, ground and water around us contain useful heat that is continuously replenished. By applying a little more energy, normally from electricity, a heat pump can raise the temperature of that heat energy to the level required. Heat pumps can also use waste heat sources, such as from industrial processes, cooling equipment or ventilation air extracted from buildings.
We have been increasingly interested in heat pumps because the analysis of pathways to 2050 suggests that in almost all scenarios there is a high degree of electrification of heating in order to reduce greenhouse gas emissions by 80%. By that stage, the grid is projected to be mainly decarbonised, so electric heating offers a low-carbon alternative to gas. In that context, domestic heat pumps could provide an efficient way to raise the performance of electric heating. The International Energy Agency has estimated that heat pumps might contribute 6% of global CO2 emissions reductions over the time scale.
By 2020, we also have to increase dramatically, for reasons of security of supply as well as climate change, the proportion of energy that comes from renewable resources such as solar or wind. Our level of ambition is suggested by our proposed contribution to the meeting of renewable energy targets. Those targets cover not just electricity, but heat and transport fuel. Heat pumps in that context, as long as they are efficient enough, count as renewable—or rather, the fraction of heat provided by the geothermal or aerothermal source, minus what the electricity produces directly, counts as renewable.
We aim to ensure that renewable heat plays a robust role in meeting our renewable energy targets for 2020. To help to achieve that ambition, we have announced that from June 2011, we will be launching a renewable heat incentive. Current scenarios suggest it will encourage up to 800,000 domestic or commercial heat pumps by 2020, but we are already supporting the installation of heat pumps to improve household energy efficiency and reduce fuel poverty. An estimated 2,245 ground-source heat pumps have been installed through the carbon emissions reduction target. Energy suppliers, who have to meet carbon emissions reduction goals, have increasingly chosen to meet their goal by the promotion of heat pumps in the domestic sector.
Nevertheless, we recognise that the technology is not yet mature. Much work still needs to be done to answer the sort of questions that the hon. Gentleman has raised. We need to challenge the industry to improve efficiency standards for their products, because we recognise that issues with heat pumps remain. My officials have already met heat pump industry representatives to consider how they can tighten standards.
Turning to the specific issues raised by the hon. Gentleman, some heat pumps use hydrofluorocarbons—a type of fluorinated gas—as refrigerant. Such gases are greenhouse gases that come under the Kyoto protocol. Like stationary air conditioning and refrigeration equipment that also uses those gases—supermarket refrigeration, for example—heat pumps are subject to the provisions of a comprehensive EU regulatory framework, fully underpinned in the UK by domestic legislation. The framework aims to minimise gas emissions by ensuring that equipment is properly installed, serviced and disposed of. We are satisfied that the risk of HFC leakage is very small, but both the Department of Energy and Climate Change and the Department for Environment, Food and Rural Affairs are aware of the issue.
It is also our understanding that because most small heat pumps are hermetically sealed, the risk of leakage arises not during use but during disposal. The gas is securely contained within the units. However, I will give way if the hon. Gentleman wishes to make any further point on the matter.
I am grateful for that answer, which is in line with the answers that I have received, but is the Minister not concerned that studies have found leakage rates of 8% and that there is no mandated level of allowable leakage? Some units clearly leak, and there is no standard or maximum.
I will clarify that in writing to the hon. Gentleman, if I may, as I think he wants a very specific response, but I can reassure him that the levels are similar to those in refrigeration. The same emissions issues that apply to standards for refrigeration apply to other devices, including heat pumps.
The hon. Gentleman rightly mentioned efficiency and whether heat pumps are truly renewable. Like electric cars, they rely on electricity, but we are considering how we can be sure that they are renewable. We will work within European guidelines. He pointed out the problems identified in some of the models examined for compliance with European standards. We will continue the work being carried out to gain clarity in the evidence available to us.
As the hon. Gentleman said, the Energy Saving Trust has published results for the first year that were certainly mixed. In some cases, heat pumps performed as expected; in others, they ran so inefficiently that they produced more carbon emissions than a gas boiler. There is a gap, for a number of complex reasons, between design and actual performance. We have therefore decided to hold a second round of field trials to examine those questions in more detail. The project will continue for a further year, and we will then compare this winter’s performance with last winter’s. Given that manufacturers and installers have identified several areas where improvements can be made, we can expect to see significant improvements in most of the very poor-performing sites.
My hon. Friend the Member for Hove (Mike Weatherley) mentioned installations on chalk in his constituency. That will clearly be a significant issue for large parts of the south coast. We understand that the technology is more challenging in that area; the chalk base is particularly poor for conductivity purposes, so how ground-source pumps are installed in such areas must be considered carefully. We have therefore requested that people in all parts of the country consider the local geology in order to be certain that the technologies are appropriate for those locations. However, as his is a coastal area, we hope to see development of water-based heat pumps. In addition, the sunny climes of the south coast would ensure that air-source heat pumps have a significant contribution to make.
One thing is becoming clear: no technology can be considered in isolation. There are issues involving control systems, the integration of different technologies in a home or business and how best to co-ordinate a properly managed installation. All those considerations point to the need for better procurement, quality assurance and project management. Consumer behaviour is also an issue: it is most efficient to keep a heat pump running for a long time at a low temperature, but consumers might not realize that. However, the hon. Gentleman clarified it effectively.
We know from experience in other countries that improving standards for product design and installation and building consumer confidence are important to creating a sustainable industry. To support quality and drive standards, we will require installations receiving public money to be certified under the microgeneration certification scheme which is now administered as an independent, not-for-profit accredited certification scheme. The MCS approves products and installer companies against industry-agreed standards and requires that installer companies belong to a consumer code of practice that meets requirements similar to those of the Office of Fair Trading. It is therefore likely that the MCS will be linked to the renewable heat incentive, as it has been to electricity feed-in tariffs, to give consumers assurances about the safety, durability and performance of heat pumps and other on-site heat technologies.
To conclude, I welcome this debate and hope that I have been able to reassure the hon. Gentleman on some of the issues that he raised. What strikes us the most clearly at the moment is the range of new technologies that are emerging at an extraordinary pace to deal with some of the challenges that we face on both the energy and the climate change fronts. We have to be sure, though, that those technologies work well. We believe that heat pumps offer the prospect of an exceptional contribution to meeting the challenges and the goals that we have set, but we must ensure that consumers understand what they are buying, that they get a good deal and an efficient product, and that it makes the contribution that we all hope for.