What the carbon budget means for social housing

The Climate Change Committee (CCC) has published its 7th Carbon Budget, outlining a pathway to achieving net-zero emissions in the UK.

While the government has yet to comment, the initial findings provide key insights into the future of housing, energy efficiency, and low-carbon heating.

The report underscores the importance of electrification, infrastructure investment, and workforce development—issues that are particularly relevant to housing associations. Here’s what the sector needs to know.

A heat pump revolution?

One of the most striking elements of the 7th Carbon Budget is the role of heat pumps. By 2040, the CCC’s Balanced Pathway envisions around 50% of UK homes being heated by a heat pump, up from just 1% in 2023. This represents an extraordinary scaling-up of installations, from 60,000 per year in 2023 to nearly 450,000 by 2030, and an ambitious 1.5 million annually by 2035.

To put this into context, current government targets had previously aimed for 600,000 installations a year, but the revised pathway now provides a five-year window to ramp up from 80,000 installations today to nearly half a million by the decade’s end. This increase follows patterns seen in other European nations, such as Ireland and the Netherlands, which have successfully expanded heat pump adoption.

Another crucial observation is the implied end date for gas boilers. The UK currently installs around 1.6 million gas boilers per year—almost exactly the number that will need to be replaced by heat pumps from 2035 onwards.

This raises a fundamental question: does the government now consider 2035 the de facto end of gas heating? While no official announcement has been made, the numbers in the Carbon Budget strongly suggest that fossil-fuel heating will be phased out entirely within the next decade.

The cost of energy: making electricity cheaper

A major component of the CCC’s strategy is shifting households and businesses towards low-carbon electricity. However, for this to be successful, energy pricing structures must change.

The report argues that electricity should be made cheaper by removing policy levies from electricity bills, reducing costs for consumers and incentivising the switch away from fossil fuels.

Currently, electricity remains significantly more expensive than gas, a pricing imbalance that discourages heat pump adoption.

Addressing this issue would make low-carbon technologies more accessible, particularly for social housing tenants who are already facing cost-of-living pressures.

Overcoming barriers to adoption

While technological solutions exist, their rollout will depend on removing practical and financial barriers. Key challenges include:

Affordability: While heat pumps can lead to lower long-term energy bills, upfront costs remain prohibitive for many households. Government support, particularly for low-income and social housing tenants, will be critical.

Awareness and Perception: Public misconceptions about heat pumps persist, including concerns over performance and running costs. Education campaigns and better communication of financial incentives will be essential.

Installation and Skilled Workforce: The scale of transition required will demand a major expansion of the skilled workforce. More heat pump engineers, electricians, and retrofit specialists will be needed to meet demand, requiring government-backed training programmes and investment in skills development.

The need for policy certainty

The CCC emphasises that certainty is key for both consumers and investors.

To that end, it calls on the government to provide clear, timely decisions on phasing out gas heating and supporting the market for low-carbon technologies.

One notable point in the report is the definitive stance that there will be “no role for hydrogen in home heating.” While hydrogen has been floated as a potential alternative to gas boilers, the CCC’s findings suggest that policy and investment should instead focus on proven electrification strategies, such as heat pumps and district heating networks.

Legislative timelines and next steps

The government is required to propose a level for the 7th Carbon Budget to Parliament by June 2026, at which point MPs will approve or reject it.

While this may seem like a long timeframe, the urgency of the transition means that action must begin now.

Housing associations, local authorities, and industry stakeholders should start preparing for the coming changes by investing in energy efficiency measures, upgrading infrastructure, and advocating for financial support mechanisms that ensure social housing tenants are not left behind.

In summary

The 7th Carbon Budget provides a roadmap for decarbonising homes and industries, but its success will depend on implementation.

The housing sector must engage with policymakers, energy providers, and training institutions to ensure the workforce, infrastructure, and financial support systems are in place to meet these ambitious targets.

As the government deliberates on its response, housing associations should position themselves at the forefront of this transition, championing the shift to low-carbon heating and ensuring that tenants benefit from a more sustainable, affordable, and energy-efficient future.

Joe Bradbury is digital editor of Housing Association magazine