Our response to the Department for the Economy’s consultation on using biofuels to transition away from fossil fuels for heating

While we support the approach in Great Britain to limit the use of all forms of bioenergy beyond 2035 to homes where no other clean heating solutions are available, we acknowledge there will likely be a wider role for HVO and bioLPG in Northern Ireland given the unique circumstances faced by householders here.

Certain characteristics of vulnerability are proportionately higher in rural and / or off gas-grid properties, including availability of fewer heating options, higher installation costs and lower disposable income. Rural, remote and island homes are also often more difficult to retrofit with insulation and/or low-carbon heating, due to their age and size.

Therefore, it is essential that measures are implemented to ensure low carbon heating solutions specifically
targeting properties not connected to the gas network are affordable for these households.

HVO and bioLPG can be used in existing oil heating systems following relatively low-cost modifications, making capital costs significantly cheaper and less disruptive than switching to certain other carbon neutral heating solutions (such as biomass) for rural households not connected to the gas network.

However, as stated in the consultation, biofuels are considerably more expensive than their fossil fuel equivalents. We also recognise concerns raised by the Department of Finance in a recent consultation on energy efficiency and building regulations, that there is a risk of reversion due to kerosene being significantly cheaper to purchase (Boilers running on a mix of kerosene and up to 30% HVO do not need to be converted).

In considering how HVO and bioLPG could be made more affordable to all households, the Department for the Economy may find it helpful to explore the approaches being considered in GB and the Republic of Ireland.

To address affordability concerns, the UK Government is considering the following low-expenditure measures:

• Aligning the duty charged on HVO with that charged on kerosene by reducing the duty on HVO to zero when used in heating.
• Implementing a renewable fuel incentive system (‘RLFHO’), similar to the one already in place for the road transport sector under the Renewable Transport Fuel Obligation (‘RTFO’). See our response to question 15 for more detail.

In the Republic of Ireland, under the proposed Renewable Heat Obligation, the introduction of an obligation rate of 2% of fuel produced to be from renewable sources is being considered. This rate would be fixed for 3 years to reduce the initial burden on producers and the resulting cost increase to consumers, as well as to allow time for the market to develop. This rate would then increase to 10% by 2030.

We strongly support the implementation of systems that facilitate a holistic, consistent and collaborative approach in relation to offering advice to consumers and establishing referral pathways between private, public and community sectors.

A centralised and co-ordinated approach can ensure that the most appropriate heating measures are adopted (including switching to HVO), trust is established to drive behavioural change (particularly among those most vulnerable) and the NI government can ‘help do more with less’ to alleviate fuel poverty, in line with the principles of the Northern Ireland Energy Strategy.

The Scottish Government’s Home Energy Scotland (‘HES’) advice service is one example of successful collaboration between different sectors. HES works with trusted partner organisations including health and social care organisations, local authorities, charities, food banks etc. to build referral pathways for vulnerable householders. This helps to ensure that those most in need of help can access the support available.

Through organised events, sharing of resources, free training and workshops and a secure online portal that invites local organisations to partner with them, HES offer a single point of contact that delivers centralised and effective support to enable households to save energy and keep their homes warm.

Partner organisations are also able to take advantage of training provided by HES to upskill their staff and volunteers in energy efficiency and other home energy topics to better advise their clients and members.

While most householders contact HES through a freephone number, online or through outreach activity (public-facing events and webinars), a substantial number (approximately 12,800 in 2022-23 and 9,400 in 2023-24), were referred from other organisations who have access to and are trusted by vulnerable householders.

These organisations can make seamless referrals using an online referral portal which works in real time to put the householder’s details directly into HES.

We operate HES on behalf of the Scottish government and we work with a number of partner organisations that are focused on supporting vulnerable groups. Between 1 April 2021 and 31 March 2024, more than 560 organisations used the referral portal for more than 31,000 vulnerable people seeking energy saving advice and support.

Some examples of outreach activities undertaken to help low-income and vulnerable households to save energy and money, and reduce carbon emissions, include:

• Energy advice stands at flu clinics in partnership with NHS Lothian. These were targeted at the cohorts of vaccine recipients with the highest level of vulnerability and specifically included frail older people, those with chronic health conditions and disabled people.
• Attending and raising awareness of the most appropriate alternatives at information sessions organised by partner organisations, including, Alzheimer Scotland, Food Banks, Fair Start Scotland providers and NHS organised events.
• Case studies which provide more information about HES working in partnership with East Ayrshire Women’s Aid and MND Scotland.

Introducing a similar advice and referral service in Northern Ireland can help ensure that low income and vulnerable households are provided with end-to-end tailored support and that they fully understand the suitability and implications of transitioning to biofuel alternatives such as HVO and bioLPG.

The need to address the climate emergency is urgent and swift action is needed to progress towards a decarbonised future and protect households from volatile fuel prices. Biofuel can, in certain instances offer an immediate and effective interim solution for decarbonising homes not connected to the gas network.

This can form an important first step in engaging vulnerable households to further contribute towards emissions reduction targets set by the Climate Change Act and Carbon Budgets. However, there is a finite supply of HVO, and any support mechanisms for the use of HVO, should prioritise vulnerable households that do not have alternative and affordable options available.

Consideration should be given to the approach proposed in the Republic of Ireland and the role these measures could play in protecting consumers against excessive costs if adopted in Northern Ireland. Under the proposed Renewable Heat Obligation, a buy-out mechanism up to a maximum cap of 30% of an obligated party’s total annual obligation is being considered.

A cap on buy-outs, in addition to obligations proposed on fossil fuel suppliers to ensure an increasing and phased proportion of the energy they supply is from a renewable source, will help drive production of biofuels and contribute to stabilising prices.

Consideration should also be given to how tailored and expert energy advice can contribute to protecting consumers from serious and unexpected detrimental consequences caused by fuel price fluctuations. The Consumer Council’s report on the ‘Survey on Consumer Attitudes to Energy Transition Issues’ indicates 70 percent would welcome renewable energy in their home, but 85 percent reported having little to no knowledge of low-carbon heating systems.

The report highlights a worrying trend showing a decrease in awareness among households on the need to switch to low carbon alternatives and no improvement with regard to knowledge of renewable technologies.

This emphasises the need to empower consumers with the knowledge and tools to contribute towards net zero. A key focus should be ensuring people are equipped to make informed choices on the most appropriate low carbon heating options available and fully understand the value of installing energy efficiency measures and the impact fuel price fluctuations can have.

In this regard we welcome the Northern Ireland government’s intention to establish a “one stop shop” to act as the focal point for delivering expert advice to all consumers and help protect them on their journey towards net-zero.

Policy measures are currently being advanced in GB and the Republic of Ireland to support adoption of HVO and bioLPG. While we cannot determine whether these will be successful, they are largely based on the Renewable Transport Fuel Obligation (‘RTFO’), which has been relatively successful in both jurisdictions.

Great Britain – Renewable Liquid fuel Heating Obligation Section 159 of the Energy Act (2023) contains legislation that, if invoked, would create the renewable liquid heating fuel obligation (‘RLFHO’), which will be similar to the RTFO and accelerate the adoption of Hydrotreated Vegetable Oil (‘HVO’) and other renewable fuels for home heating.

Unlike the RTFO mechanism, which applies to all nations of the UK, this legislation does not apply to Northern Ireland.
Currently no duty is applied to kerosene for heating use but renewable liquid fuels for heating use are subject to an additional duty of approximately 10p per litre. In comparison, renewable liquid fuels and fossil fuels attract the same duty when used in transportation.

In putting forward the amendment to the Act, the UK Government recognised the success that the RTFO has had in lowering emissions, being directly responsible for 54% of the overall transport emissions savings in carbon budget 3 and emphasised that it intends to replicate this for home heating oil.
The amendment provides powers to:

• Introduce regulations that imposes obligations similar to the Renewable Transport Fuel Obligation on off gas grid home heating fuel suppliers
• Introduce regulations that obligate suppliers of home heating fuels in GB to produce evidence showing that a percentage of the fuel that they supply comes from renewable sources
• Make provision for the issuing of certificates evidencing supply of renewable liquid heating fuels (Section 126 of the Energy Act 2004)
• Make provision for a supplier to pay a specified sum if they do not fulfil their obligation to supply the specified amount of renewable liquid heating fuel (Section 128 of the Energy Act 2004)
• Impose civil penalties on persons who contravene specified obligations (Section 129 of the Energy Act 2004).
  Republic of Ireland – Renewable Heat Obligation.

A Renewable Heat Obligation is due to be introduced that will oblige suppliers of fossil fuels used for heat to ensure that a proportion of the energy they supply is considered renewable and blended into their fuel mix.

It was proposed to introduce an obligation rate of 2%, which would be fixed for 3 years to reduce the initial burden on producers and the resulting cost increase to consumers, as well as allow time for the market to develop. This rate is proposed to increase to 10% by 2030.

Navigating the series of existing and emerging support schemes and the multiple low carbon home heating options is incredibly complex, particularly for vulnerable households. While there a range of expert and reputable advice services available in Northern Ireland, it can be confusing for consumers and particular experts to identify the most appropriate service for a particular household, given the absence of centralised referral pathways.

This was recognised within the Department for Communities’ ‘Consultation on Fuel Poverty‘, in which they proposed the need for a One-Stop-Shop to empower consumers through the provision of free impartial advice, building trust in new technologies, ensuring alignment and delivery of support, services and grants, and supporting behavioural change to avoid such confusion.

Additionally, the consultation states that “People only really seek help when they are at rock bottom and are desperate.”

Coupled with the findings from the Consumer Council’s report on the ‘Survey on Consumer Attitudes to Energy Transition Issues,” that there is a worrying decrease in awareness among households on the need to switch to low carbon alternatives, it will be essential to take a proactive approach to raising awareness and supporting households to adopt measures that affordably lower their domestic carbon emissions (including through use of HVO).

Please see our response to question 10 for detail on how Home Energy Scotland are pro-active in engaging vulnerable consumers to lower their carbon emissions.

In the Republic of Ireland, the outcome to the consultation on the ‘Design of the Renewable Heat Obligation’ indicated that a majority of respondents advocated that all bioliquids, including HVO and LPG, renewable fuels of non-biological origin (RFNBOs), biomethane, and domestic use biomass & biogas should be considered eligible renewable fuels for certification under the proposed Renewable Heat Obligation.

Biomethane

Biomethane could form a key interim solution in the transition away from the use of carbon intensive sources of fuel in Northern Ireland, for properties connected to the gas network. In the short to medium term (out to 2035) we believe the use of biomethane for heat should be confined to injection into the existing gas grid and local heat networks.

Whilst we are supportive of the approach being adopted in other parts of the UK to limit the use of all forms of bioenergy beyond 2035 to homes where no other clean heating solutions are available, we acknowledge there will likely be a wider interim role for biogas in Northern Ireland given the specific challenges and circumstances faced by householders in Northern Ireland.

The EU has placed a significant emphasis on the production of biomethane, which it recognised as a mature alternative to natural gas, by increasing 2030 production targets from 3.8 billion cubic meters to 35 billion cubic meters . They have demonstrated a preference for advanced biomethane (produced from feedstock not requiring agricultural land) as an energy source to avoid a resultant reduction in food security and deforestation.

Hydrogen

In their advice report to the UK government on the seventh Carbon Budget (released Feb 2025), the Climate Change Committee indicated that they believed there was “no role for hydrogen in heating buildings.”