Legal & General announces investment in low carbon heating

LGIM Real Assets has provided debt finance to HeatRHIght, a renewables funding scheme that supports the delivery of air source heat pump technology to the social housing sector.

Legal & General is taking action in the fight against climate change and will address the challenge of reducing emissions from the built environment.

This long-term commitment will speed up HeatRHIght’s delivery of low carbon heating to Housing Associations across the UK, further demonstrating Legal & General’s commitment to its ESG and decarbonisation agenda.

As the UK recovers from the pandemic, it is crucial that the opportunity to ‘build back better’ is not lost say L&G. The housing sector is a primary contributor to carbon emissions, with heating and hot water for UK homes accounting for 25% of total energy use and 15% of the UK’s greenhouse gas emissions.

If the UK is to meet its climate targets, major changes need to be made within the housing sector than any other industry. 

“As the UK navigates its way through the fall out of the coronavirus pandemic, future-proofing our society has never been more important. Legal & General is delighted to have made another investment in the low carbon heating space, an area where we intend to increase our exposure in the coming months,” said Matthew Taylor, Head of Alternative Debt, LGIM Real Assets.

“As we continue to invest in businesses where we can deliver social and economic good, whilst driving value and offer secure returns, clean energy technology has become an increasingly attractive match for our clients long-term pension commitments.”

Alongside this long-term financing in HeatRHIght, Legal & General Capital’s corporate investment has also taken a 36% stake in The Kensa Group, a ground source heat pump firm.

Today, over 23 million homes in Great Britain are using carbon intensive gas as their heating fuel; two million homes electrically heated; and the remaining two million using heating oil or other fossil fuel systems. The UK Government has already set a target to install 600,000 heat pumps every year by 2028, as part of their ‘Ten Point Plan’, in the hopes to ensure homes are greener, warmer and more energy efficient.

Bill Hughes, Head of Real Assets, LGIM, said: “Climate resilience must be embedded into the heart of investment decision making, which under the challenges presented by Covid-19 resonates strongly with the emphasis on “Building Back Better”. 

“As one of the largest managers of real assets in the UK, we have a duty to invest in a more resilient and responsible future.  With heating representing such a significant proportion of the UK’s total energy use, investment in the delivery of low carbon heating solutions will play a vital role in how we future proof our society and progress to a net zero carbon future.”

Find out more here.