Incumbency and the transformation towards low carbon heating in the UK Implications for policy

This briefing paper summarises the key policy implications from the last of three working papers published by the Heat Incumbency Transitions Team. This research has investigated the role and behaviour of heat market incumbents in relation to the decarbonisation of heat.

Key messages

• The required transformation of the UKs heat system will have major implications for people and organisations involved with the sector.
• We define incumbents as people or organisations currently active in the UKs heat sector. Incumbents have the economic, social or technological capacity to influence the future of the heat system.
• Incumbents in the UK heat market are diverse and the impacts of heat decarbonisation will vary between sectors. A risk and opportunity analysis of the UK heat sector has highlighted that different heat decarbonisations pathways (electrification vs. gas decarbonisation) pose different risks for different sectors.
• Gas network owners and appliance manufacturers are the most active in their engagement with heat decarbonisation. This activity includes attempts to exert political power over policy and regulation as well as innovation activities. The upstream and supply sectors engage less with heat decarbonisation.
• The lobbying and innovation activities constitute attempts to maintain a gas based system for heat in which the gas network is decarbonised, primarily using hydrogen. This approach is unproven and risky but the idea has rapidly gained traction in the policy debate.
• Heat incumbents have also actively resisted change. These efforts include talking down other technologies and framing them as unworkable and developing coalitions of similar interests.
• Because of the ability of incumbents to lobby and innovate, new entrants in the UKs heat sector who may possess the best ideas and technologies may struggle to compete with incumbents.
• Based on our research, we have developed a number of policy recommendations for UK heat policy with implications for regulators and policy makers working on heat decarbonisation, as well as those involved in policy design process