Are renewable liquid fuels the solution?

Decarbonising heat in oil heated homes has remained an unfulfilled aspiration for the government, despite its mandate to improve domestic energy efficiency. Paul Rose from OFTEC says that renewable liquid fuels may provide an expedient solution that requires little initial capital outlay or a new appliance. 

Extensive trials underway across Europe show that hydrotreated vegetable oil (HVO) – a renewable, sustainable, fossil-free fuel derived from waste – can provide a direct drop-in replacement for kerosene in oil heated homes.

HVO is already available across the UK and used for a range of commercial applications. Sweden currently leads the way on HVO use, and after passing legislation in 2017 to remove tax on the fuel, annual sales increased by 124%. Renewable liquid fuels now make up almost a third of the Swedish market, and 83% of this is HVO.

If the right policy support were also available in the UK, industry would have the confidence needed to invest in domestic HVO production, boosting UK PLC, creating jobs and contributing to a green-led economic recovery – all while providing households with a simple solution to decarbonising heat.

Shifting demand 

The supply of waste materials used for renewable liquid fuel manufacture is also increasing alongside demand.

HVO is most commonly produced from crop residues and used cooking oils (UCOs). Encouraging more waste capture schemes across the UK could dramatically increase UCO and FOG (fats, oils and greases) supplies and is a step that water companies would almost certainly support. 

Biodiesel is currently used in large quantities for road transport, but with demand from this sector likely to fall as the use of electric vehicles rises, off gas grid heating offers an attractive alternative market. 

Any new renewable liquid fuel introduced to the market would be certified as fully sustainable to ensure there is no adverse impact on the environment.

Affordable solution 

Cost has been cited as an issue with the use of renewable liquid fuels for domestic heat. A 100% fossil free liquid fuel would inevitably prove more expensive than kerosene, which continues to be the cheapest off-grid heating fuel by far, with prices recently falling to a new four-year low. 

The price differential could be offset through simple fuel subsidies to cushion the initial impact of switching to the new fuel. However, while this is desirable to drive conversion, a key advantage of moving to HVO is that there is virtually no capital outlay required. 

Even without a fuel subsidy, the overall cost to a household over the typical lifetime of an appliance would be far lower than the combined capital and running cost of competing low carbon options such as heat pumps and biomass. Better still, the carbon reduction achieved by using 100% HVO would be equal or greater than these options.   

Competitive market 

Renewable liquid fuels must be supported as part of a mix of low carbon heat options available to homeowners. Creating a competitive market is the only way to drive down costs and make green heating technologies affordable and thus more acceptable.

This scenario could be achieved by introducing carbon intensity targets, opening the playing field to any technologies that can meet the emissions reduction criteria set. 

A similar approach is advocated by the Sustainable Energy Association (SEA) and would help address one of the main challenges to net zero heat identified in a recent Confederation of British Industry led report – achieving consumer behavioural change.

Common sense suggests that lower cost solutions which require minimal disruption for homeowners will likely prove most popular and aid the major shift in attitude required. 

Unfortunately, the current options supported by government for rural homes – heat pumps and, in limited cases, biomass boilers – do not meet either criteria. This is why take up of these technologies remains low. Despite six years of financial incentives available through the domestic Renewable Heat Incentive, less than 1% of oil heated homes have migrated to heat pumps. 

Even with the help of £4000 Clean Heat Grants, many low to middle income rural households wouldn’t be able to fund the additional £6000 to install a heat pump – and thousands more for biomass systems. 

This cost also excludes the expensive energy efficiency improvements that would be needed to make the 97% of oil heated homes currently rated EPC ‘D’-‘G’, suitable for low temperature heat pump technologies. Support for property upgrades is available through the new Green Homes Grant scheme, but again would only scratch the surface for major retrofits.

The solution 

Introducing renewable liquid fuels for oil heated homes would overcome the high up front costs and major upheaval associated with heat pump and biomass installations. These fuels offer equivalent heat performance to kerosene so major home energy efficiency improvements, while always desirable, are not a prerequisite to success and could be carried out as budgets allow. 

Crucial decisions on domestic heat decarbonisation are expected over the coming months, and OFTEC will continue its campaign for the inclusion of renewable liquid fuels in UK strategy. A fair, affordable transition to low carbon heat must be achieved for rural households, and changing the fuel – rather than the appliance – is the answer. 


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