Home energy efficiency needs new long-term strategy and support say MPs

Last week came the news that the UK has made it half way to net zero (51% to be precise), half way along the timescale of baseline year (1990) to target year (2050). This is great news, and timely demonstration of commitment in the lead-up to COP25. Cue fanfare.

But whilst this progress should genuinely be applauded, because it occurred during decades when political commitment was less focused on the climate emergency than it is now, celebration might be tempered by one or two realities.

Firstly, emissions dropped 11% in 2020, not least because there was significantly less demand than usual for petrol and diesel associated with less travel. There’s likely to be rebound in 2021.

Then there is the fact that the reductions so far have come in three main areas: a move away from coal for electricity generation, cleaner manufacturing and waste industries, and a less ‘leaky’ fossil fuel supply industry with less direct emissions from mines, supply pipes and the like.

It’s no secret that all of this can be considered relatively low-hanging fruit. What remains is considerably more complex to address. Cue cold shower.

Draughty homes

One of the toughest nuts to crack is improving our leaky old buildings and making them more energy efficient. Whist the Future Homes Standard should at last begin making up for lost time in getting where the canned Zero Carbon Homes could have had us by now, existing housing needs serious surgery.

There have been various efficiency upgrade schemes in the past including the Energy Efficiency Commitment, ECO scheme and the Green Deal. They’ve achieved mixed success through varying approaches but haven’t made the kind of progress that has really been necessary and more recently that progress has stalled.

Last year, amid Johnsonian proclamations of “Rooseveltian” recovery mechanisms to lift the nation and economy out of the Covid-19 chasm, government announced its Green Homes Grant. This was launched with £2bn for the year to inject impetus into pre-COP26 climate change action in a sector needing a turbo-charge, and commentators responded favourably.

Little more than six months on, the scheme has been beset with chaos, driven companies to lay employees off rather than driving recruitment and investment in skills, had its funding slashed and rumour has it that it will be cancelled in April and re-worked.

Now the House of Commons Environmental Audit Committee (EAC) has warned that government’s approach to driving energy efficiency in existing homes needs urgent attention or achieving net zero targets will be impossible.

Major investment

Making our existing housing stock efficient is complex and costly and the Committee has warned that this is fundamentally underestimated by the government; that its reckoning of the cost to make significant progress is unrealistically low at between £35-£65bn.

There is a vast stock of older buildings in the UK, with solid walls, or in conservation areas, which mean there is very far from a one size fits all solution to this challenge. 19 million homes need upgrading so that they can meet, or preferably exceed band C on an energy performance certificate (the bare minimum necessary to achieve the UK’s net zero by 2050 target).

With insulation upgrade costs on a poorly performing house typically in the region of £18,000 before additional measures such as installing air source heat pumps should even be considered, the total costs are highly likely to come in way north of the government’s estimates.

This is of course the UN’s Decade of Action. The need to build momentum in schemes that work effectively is becoming critical given the scale and pace of the undertaking required. The government’s election manifesto pledged over £9bn for energy efficiency yet it has only announced £4bn of schemes to date – this is too slow say the EAC who urge government to front load its spending to get programmes up and running.

What was right about the Green Homes Grant was its potential use as a vehicle to drive skills development, jobs growth and savings on household bills nationwide. Those principles still apply with any energy efficiency programme.

Policy consistency

The Committee’s observation that policy consistency is the missing link to drive success is depressingly familiar. The “stop-start” nature of schemes is fundamentally undermining any ability for the sector to invest in the necessary skills and upscaling.

Clearly then, it’s not just the pace of government commitment to delivering on Conservative manifesto pledges that’s important in achieving this far more tricky second half of net zero: A very big factor given the “botched” implementation of the Green Homes Grant, schemes need to be properly conceived and delivered, then maintained long enough to enable the home retrofit sector to invest and grow the necessary supply chains. No more should they be rushed out to grab headlines and then canned.

New strategy needed

Government’s energy trumpets have been sounding about its new Industrial Decarbonisation Strategy, “an ambitious blueprint to deliver the world’s first low-carbon industrial sector and over £1 billion to cut emissions from industry, schools and hospitals” which builds upon last year’s 10 Point Plan for a Green Industrial Revolution.

Something similar and arguably far greater is needed urgently in the form of The Heat and Buildings Strategy, which the EAC says should “set out an enduring plan for at least the next decade to give industry and tradespeople time to upskill and give people the right signals to invest in energy efficiency.”

The funding necessary for this critical upgrade to our housing is clearly gargantuan. Not all needs to come from Government the report notes; it will have to establish frameworks to drive private investment too.

Alongside a multi-annual, revamped grant scheme, MPs also advocate an amendment to the VAT treatment of refurbishments. This tax is one of the biggest blockers to owner-occupiers – the biggest cohort of draughty home inhabitants and that which can make the biggest inroads into decarbonising housing – investing in the necessary upgrades. VAT on labour and materials for energy efficiency upgrades should be reduced to five percent.

What is striking and disappointing in the light of this report is that much of the necessary progress could have been instigated over the past 30 years. Unlike battery and electric vehicle technology, the necessary interventions are low-tech. What was needed was policy ambition and consistency. With nothing of note in the Chancellor’s recent budget, we must hope the spotlight of COP26 prompts a sharpening of government focus on the second half of the net zero story.

Alastair Chisholm, Director of Policy