With a new government in place, a policy refresh is on the horizon. What examples of successful policy outcomes exist in the UK and around the globe for the government to draw upon? And what lessons can the UK learn to help tackle future policy challenges?

In the latest event of our How to make good things happen series, we looked at Sweden’s rollout of heat pumps as a leading example of how to move quickly on home decarbonisation.

The UK needs to act swiftly to transition to clean heat and meet net-zero targets. Home heating accounts for 15% of total carbon emissions, so replacing our heating systems with low-carbon systems such as heat pumps will be crucial. But the UK’s heat pump adoption rate is currently too slow – only 1% of heating installations per year are heat pumps. This isn’t the case elsewhere in Europe. Sweden’s rollout of heat pumps is a leading example of how to move quickly on home decarbonisation. What can we learn from their experience?

In Sweden, the rate of heat pump adoption is high. Despite having one of the coldest climates in Europe, there are more than 40 heat pumps per 100 households and the nation has consistently reached 100,000 installations per year for the last decade.

A typical Swedish household would be confused by the question of whether to buy a fossil fuel boiler or a heat pump. The choice for them is obvious.Let’s unpack how Sweden got to the point where installing a heat pump has become the default.

Nesta's sustainable future mission director Madeleine Gabriel chaired a panel of expert speakers. We heard from the Principal and Director of European Programmes at the Regulatory Assistance Project Dr Jan Rosenow, CEO of Aira UK Daniel Särefjord, the Chief Executive of the Heat Pump Association Charlotte Lee and Paul Kenny from the European Heat Pump Association.

Capitalise on a crisis

In the 1970s, Sweden experienced an oil crisis which meant the cost of using fossil fuel heating systems rapidly increased. The Swedish government used the crisis as a catalyst for change, implementing a range of reforms to invest in new technologies and consumer subsidies to create a home heating transition across the country. Crises and price shocks like this can give governments the political space to approach a policy area differently, in a way that isn’t always possible during normal times. For the UK, the recent energy crisis could give the opportunity for a new shift in policy.

Get the economics right

Underlying the success of Sweden’s heat pump adoption was a set of financial carrots and sticks that made heat pumps a sensible economic choice for consumers. In 1991, Sweden became one of the first countries to implement a carbon tax, which increased the running costs for fossil fuel heating systems. This changed what is referred to as the spark gap – the price ratio between gas and electricity – effectively incentivising electric heating systems compared to fossil fuel ones. At the same time, the government provided significant financial incentives to install heat pumps, and also ensured that there were social safeguards for households that may still struggle to afford upfront costs.

Focus on consumers: build trust and remove barriers

One of the best ways to ensure heat pump policies work well is to focus on consumers. Policymakers can do this by systematically identifying and removing barriers which may be affecting uptake. This is something that proved to be a success in Sweden, but could be made better in countries like the UK. For example, UK consumers may be inaccurately told by their heating engineer that a heat pump is not suitable for their home. Or installations may be blocked by planning permission. In Sweden, you don’t need planning permission at all. Nesta recently published a blog explaining why planning is holding back heat pumps and argues for reform. One further difference in approach is the choice of technologies. Part of Sweden’s fast rollout was due to the installation of air-to-air heat pumps – a technology that is currently restricted by UK government subsidies, but may better suit some consumers or housing types.

These issues for consumers are not insurmountable, and analysing them by considering the customer journey can be a useful way to understand what is affecting uptake.

As well as specific barriers, public acceptability is key. In Sweden, the government engaged consumers from the very start of the process, and used a positive narrative which focused on energy security and to bring down costs. This quickly got citizens on board with the transition, which paid dividends later on.

Build a credible plan, with policy stability

Sweden was able to form a credible, long-term plan, where the individual policies added up to a complete strategy. Countries that adapt programmes that are short-lived, or that lack a clear pathway, often fail to deliver.

It’s become a truism to say that we need a stable policy environment, but Sweden really did make faster progress by setting a long-term delivery plan. It enabled the necessary private sector investment and workforce training that can be hard to achieve without policy certainty.

The next event in our How to Make Good Things Happen series takes place on Wednesday 13 November 2024: What can we learn about governance and public service leadership from Singapore?