The economic impact of decarbonising household heating in the UK in an era of high fossil fuel prices

Report prepared by Cambridge Econometrics for Greenpeace UK


This report provides a robust analysis of the potential macroeconomic impacts of deploying energy efficiency measures and low-carbon heating technologies in the UK’s residential buildings.

The report builds on work previously carried out by Cambridge Econometrics in 2021, before gas prices began to climb upwards. In this new piece of analysis, updated gas, electricity and heating oil prices have been incorporated into the economic modelling, along with new future trajectories to 2030, to reflect an updated outlook on prices.

Incorporating these adjusted energy prices in the analysis allows us to provide a more accurate picture of the potential macroeconomic benefits of decarbonising heating.

The headline messages are:

  • The adoption of low-carbon heating technologies, energy efficiency measures and the shift towards low-carbon fuels can lead to positive impacts on the economy.
  • The estimated impacts are greater when assuming higher energy prices persist into the future; shifting to low-carbon fuels and low-carbon heating technologies reduces the adverse effect of soaring fossil fuel prices through reducing demand.
  • Shifting away from high-carbon heating and fossil fuels has a positive impact on economy-wide employment.
  • Furthermore, the impact on total employment is greater when modelling high energy prices and greater Government support for energy efficiency measures and low-carbon heating technologies.

The benefits of decarbonising heating in, and improving the energy efficiency of, residential buildings are not just limited to environmental and economic effects. Decarbonised heating can also cultivate positive social effects, alongside reductions in emissions, gains in employment and the creation of economic output.

Further benefits identified in this report include:

  • Reduced vulnerability to fuel poverty
  • Improved health and wellbeing
  • Greater educational attainment and employment opportunities
  • Financial benefits of occupiers and property-owners
  • Improved local air quality

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