Energy Efficiency of Existing Homes

 

Introduction

  1. In June 2019, the UK government set a legally binding target to achieve net zero greenhouse gas emissions from across the UK economy by 2050. It was the first major economy in the world to legislate for a net zero target, which will end the UK’s contribution to climate change. Improving the energy efficiency of homes that have already been built will play a critical role in achieving net zero at least cost, as well as contributing towards our interim emission reduction targets – the Carbon Budgets. As such we remain committed to building a vibrant and sustainable market for energy efficiency through introducing a suite of complementary policies and measures that will drive uptake.
  2. Central to this is our aspiration, as set out in the Clean Growth Strategy (CGS), to help as many homes as possible to reach Energy Performance Certificate (EPC) Band C by 2035.  Delivering this not only has the potential to make a major contribution to the emissions savings required to deliver our Carbon Budgets and lift households out of fuel poverty, but will pave the way for the full decarbonisation of homes necessary to meet our 2050 target. For this reason, the government is looking at ways to accelerate action on existing homes across tenure types.
  3. The government aims to publish a Heat and Buildings Strategy in due course, which will set out the immediate actions we will take for reducing emissions from buildings in the most cost-effective way. These actions include the deployment of energy efficiency measures and low carbon heating as part of an ambitious programme of work required to enable key strategic decisions on how we achieve the mass transition to low-carbon heat and set us on a path to decarbonising all homes and buildings.
  4. The actions we take to improve the energy efficiency of existing homes will also reduce energy bills for households, improve levels of comfort and air quality, and have multiple health benefits. Energy efficiency is the most sustainable long-term solution to fuel poverty and we are committed to reaching our statutory fuel poverty target of improving as many fuel poor homes as reasonably practicable to EPC Band C by the end of 2030, as well as our interim targets of Band E by 2020 and Band D by 2025. We conducted a consultation on the Fuel Poverty Strategy for England from July 2019 – September 2019 and intend to publish the government response and an updated strategy for England later this year.
  5. The actions we take will also help improve productivity and support economic activity across the whole country. Installing energy efficiency measures is labour-intensive and has a high multiplier effect creating new direct jobs and supporting others across the wider supply chain. A recent report by McKinsey stated that for every $10 million invested in energy efficiency measures it could create 77 direct and indirect jobs, the highest of any sector[1]. Energy efficiency measures are often delivered by local SMEs and there is potential to target policies to create jobs in deprived areas, including those most impacted by Covid-19, supporting the government’s levelling up agenda.

 

Context

  1. The energy efficiency of the UK’s domestic sector experienced the highest rate of improvement from 2000 to 2017[2]. It improved by 34 per cent when measured on a per dwelling basis and by 39 per cent when measured per m2, despite smaller dwelling size and higher appliance ownership rates in the UK. The UK also improved by roughly twice as much as the EU average over this period, which experienced a 17 per cent reduction in consumption per dwelling and a 21 per cent reduction in consumption per m2.
  2. UK domestic energy performance per household was relatively high when compared to other countries in the EU27 and Norway: it was ranked fifth most efficient country in 2017 on a per household basis (see Chart 1). This data also shows that the UK consumed 15 per cent less energy per household than Germany and 19 per cent less than France, when adjusted to the EU average climate.

 

Chart 1: Domestic energy consumption per household in 2017, unadjusted and adjusted to EU average climate

Source: ODYSSEE

 

  1. The energy intensity of UK households is slightly higher than the EU average if assessed on a per m2 basis, with an overall rank of ninth, once adjusted for climate (see Chart 2). The main reason for this difference is likely to be the relatively small size of the UK’s dwellings combined with its high rates of appliance ownership, which were the highest among the chosen sample of European countries.


 

Chart 2: Domestic energy consumption per m2 in 2017, adjusted to EU average climate

Source: ODYSSEE

 

  1. As reported in the Government Response to the Committee on Climate Change 2019 Progress Report to Parliament – Reducing UK Emissions, in the past year the government has made progress in improving the energy efficiency of existing houses.
  2. Over 2.2m homes have been upgraded under the Energy Company Obligation (ECO) since its start in 2013. Energy efficiency measures continue under the scheme to low income and vulnerable households while enabling the delivery of innovative measures and installation methods. ECO complements the strengthened domestic private rented sector minimum energy efficiency standards under the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 (hereafter ‘Private Rented Sector Minimum Energy Efficiency Standards Regulations’) which require private landlords to improve their property to an energy efficiency rating of EPC Band E or better, by spending up to £3,500 including VAT, which must include their own financial contribution if they cannot source sufficient funds elsewhere.
  3. In England, there continues to be an increase in the percentage of properties at EPC Band C or above. In the 10 years between 2008-2018, this has increased from 9 percent to 34 percent. Moreover, properties at EPC E or below continue to decrease, dropping from 49 percent to 16 percent in the same 10 years.
  4. Much of this improvement is a result of policies such as building and product standards and ECO, driving efficiency improvements in new and existing homes, though progress in the second half of the last decade has slowed somewhat. The jump in 2018 may be in part due to an assumption change in the Standard Assessment Procedure (SAP) following evidence that uninsulated solid walls have a better thermal performance than previously believed.

 

  1. The government has also introduced market initiatives to bolster energy efficiency demand.  These include innovation and demonstration projects which will help to drive improvements in home energy efficiency.
  2. Following the Green Finance Taskforce recommendations to take a more activist approach to stimulate innovation in green finance products and service, the government launched the Green Home Finance Innovation Fund to encourage green mortgage innovation. Alongside this, the new Green Finance Strategy[3] was published, which set out our intention to act to build the market for green finance products to support home energy performance improvements. This included a commitment to consult on the merits of setting requirements for lenders to help to improve the energy performance of their homes.
  3. In addition to this, the Whole House Retrofit cost reduction trajectory competition focuses on reducing the cost for retrofit, building supply chain capacity, and addressing non-financial barriers to deeper retrofit. The winning projects will be announced shortly.
  4. The second phase of the Smart Meter Enabled Thermal Efficiency Ratings Innovation Competition (SMETERs) is now underway. SMETERS aims to help consumers, energy suppliers, providers of energy efficiency products and services, and policymakers to save energy, reducing bills and carbon emissions, by providing a better understanding of the energy efficiency of homes. During the second phase, projects will deliver field trials and final testing of new methods to measure the thermal efficiency of homes and are expected to be completed by early 2021. A total budget of up to £4.1m was allocated to carry out projects across both phases.
  5. Furthermore, we have provided £4.7 million of funding to six local supply chain demonstration pilots, which are testing new approaches for delivering home energy in the able-to-pay sector. The pilots began in October 2018 and are due to finish delivery in March 2021.
  6. Finally, through the five Local Energy Hubs, the Department for Business, Energy and Industrial Strategy (BEIS) has provided grant funding to around ten local authorities to produce a series of feasibility and design studies to test fiscal means of encouraging homeowners to improve the energy efficiency of their properties through retrofit measures. These studies are due to complete in autumn 2020 and are focused on localised solutions for incentivising retrofit through council tax and/or business rates.
  7. The government recognises the need for quality and standards in promoting and delivering energy efficiency to homes. We have implemented key recommendations from the Each Home Counts review, sponsored the development of new standards for domestic retrofit which were published by BSI[4], and have incorporated these standards and the new TrustMark government endorsed quality scheme into ECO following consultation. This will raise standards now and prepare the market to deliver net zero.
  8. In due course we intend to make further progress, for example, by:
    1. Publishing a Heat and Buildings Strategy;
    2. Consulting on increasing the minimum energy efficiency standards in the domestic private rented sector;
    3. Consulting on the role of mortgage lenders in helping homeowners to improve the energy efficiency of their homes;
    4. Publishing an Action Plan on the future of EPCs, and as part of this overhauling the Energy Performance of Buildings Register (EPBR);
    5. Publishing an updated Fuel Poverty Strategy for England.

 

Energy Efficiency Targets for Existing Homes

Are the government’s targets on residential energy efficiency still appropriate to achieve its ambition to reach net zero emissions by 2050? What are the potential risks and opportunities of bringing forward the government’s energy efficiency target?

  1. The CGS set an aspiration that as many homes as possible will be upgraded to EPC Band C by 2035, where practical, cost-effective, and affordable. This will reduce greenhouse gas emissions and have the co-benefits of supporting low-carbon heat deployment; reducing grid demand; and promoting job opportunities and economic growth. The government remains fully committed to this goal as it currently represents good value for money, and we are working to introduce policies and proposals that deliver it. In light of the introduction of the net zero target last year, we are considering, as part of the development of a Heat and Buildings Strategy, whether implementation needs to go further and faster.
  2. There are a number of barriers that need to be overcome to bring the energy efficiency target forward. In 2017, alongside the CGS, the government issued a Call for Evidence on ‘Building a Market for Energy Efficiency’ in which we sought views on the role of government in overcoming barriers and stimulating the market through more direct interventions. A summary of responses was published in July 2019 that addressed these.
  3. In light of the summary of responses, the government is developing a comprehensive policy approach, focused around three pillars: 
  1. strengthening minimum energy performance standards across all tenures; 
  2. targeting funding and support to those most in need; and 
  3. supporting the delivery of regulation with market-enabling measures (e.g. information and advice for consumers, and access to attractive green finance options).  

 

Should government targets for energy efficiency be legislated for, and if so, what difference would this make?

  1. The government’s target for improving energy efficiency for households in fuel poverty is already set in legislation. The Fuel Poverty (England) Regulations 2014 legislated for the government’s target for England to improve as many fuel poor homes as is reasonably practicable to a minimum energy efficiency rating of Band C[5] by the end of 2030. The government is also required under the Warm Homes and Energy Conservation Act 2000 to publish and implement a strategy to meet this target, which must include interim milestones. Our 2015 fuel poverty strategy set out interim milestones of energy efficiency Band E by 2020 and Band D by 2025.
  2. Rather than also introducing a formal EPC target for all homes onto statute, we believe the focus should be on accelerating policy delivery to improve the energy performance of homes. While this may require legislation to ensure energy performance improvements are delivered, (e.g. to increase minimum energy performance standards), setting an overall EPC target in statute will not in itself drive action and it will take other government initiatives to further develop this. It could also reduce flexibility in the way we approach emission savings. At present, our modelling suggests our EPC Band C aspiration represents good value for money for Carbon Budget 5 and is on the least cost pathway to net zero, but other opportunities may emerge in coming years.

 

How effective is the EPC rating at measuring energy efficiency? Are there any alternative methodologies that could be used? What are the challenges for rural areas?

  1. EPCs are a widely used measure of the energy performance of buildings, both in the residential and commercial sectors, and are a key tool in promoting energy efficiency improvements to buildings. The EPC Call for Evidence ran from 26 July 2018 to 19 October 2018 and sought evidence on how EPCs performed against three attributes: quality, availability, and encouraging action to improve energy efficiency.
  2. The forthcoming Call for Evidence Summary of Responses will outline the responses received from the Call for Evidence, including on effectiveness of EPCs. Alongside this, an EPC Action Plan will build on the views expressed as part of the Call for Evidence, alongside government policy work, to set out a series of actions which the government will take forward to maximise the effectiveness of EPCs as a tool for the future.
  3. The redevelopment of the EPBR will make data more accessible for consumers who will understand more clearly the energy efficiency status of their property and the action that they can take to improve it. Furthermore, the data will be easier to share, to compare with other property specific datasets, and to interrogate for policy makers.
  4. The Standard Assessment Procedure (SAP) and Reduced Data SAP (RdSAP) methodologies which underpin EPCs provide accurate and reliable assessments of the Energy Efficiency Rating (EER), an indicator of the assumed energy cost per square metre of a home, and the Environmental Impact Rating (EIR), an indicator of the carbon dioxide emissions intensity per square metre, of a home. They are updated regularly in line with updates to Part L[6] of the Building Regulations. We will keep these methodologies under review as we develop policies and plans for improving the energy efficiency of homes and reducing fuel poverty, including those in rural areas.
  5. The geographical location of a home does not in itself impact the SAP score.  SAP assumes that all homes are placed in the same place (the middle of the UK – the east Pennines). Rural areas may, however, have some special characteristics that could impact their SAP score in certain ways. Rural areas have a larger proportion of homes that are off the gas grid and will therefore typically be using fuels that are more expensive than main gas (oil and coal marginally, LPG more considerably and direct electric heating most significantly). The fuel factors used for EPCs can be found in Table 12 of SAP. Rural homes are also often larger and more poorly insulated, which means that they have a higher heat demand and higher heating cost, and therefore lower EPC scores. As 2018, 12.0% of properties in rural areas are fuel poor, compared to 10.3% in urban areas and 8.0% in semi-rural areas[7].

 

Action by Tenure

What additional policy interventions are needed for social housing, leaseholders, landlords and tenants?

Social housing

  1. The Social Housing Green Paper stated that in reviewing the Decent Homes standard the government will consider whether the energy performance of social homes should be upgraded, where practical, cost effective and affordable, in line with the CGS. The government is currently considering the responses to the consultation and will publish a White Paper for implementing social housing reform in due course. This would apply to England only. In Scotland, Wales and Northern Ireland, housing policy is devolved, and they have their own standards.  
  2. The 2019 Conservative Manifesto includes a proposal for a £3.8bn Social Housing Decarbonisation Fund over a 10-year period, to improve the energy performance of social rented homes. The government remains committed to taking the necessary action to improve the energy efficiency of social housing.

Leaseholders

  1. The number of leasehold dwellings in England in 2017–18 was 4.3 million, approximately 18% of the housing stock. Of these, 55% were in the owner-occupied sector.[8]
  2. The government is considering policy options for how to drive energy efficiency improvements in the owner-occupied sector. Sixty-four per cent of all households are owner occupied with an average EPC rating of Band D. While the energy efficiency of owner-occupied housing is improving somewhat, it is not improving in line with our aspiration for as many homes as possible to meet EPC Band C by 2035 where practical, cost-effective, and affordable.
  3. Leaseholders face additional challenges in improving the energy efficiency of their homes, as they may need to get permission from their landlord for certain changes to their property, depending on the terms of their lease. Future policy development will need to take account of this.

Landlords and tenants

  1. As of April 2020, certain privately rented homes in England and Wales which are required to have an EPC must have a minimum energy performance rating of EPC Band E, unless a valid exemption has been registered under the Private Rented Sector Minimum Energy Efficiency Standards Regulations[9]. This policy will deliver lower energy bills and improved thermal comfort to around 290,000 households. A cost cap of £3,500 per property introduces an upper limit that landlords will be required to spend on energy efficiency improvements. Most landlords will not reach this upper limit – the average capital cost to landlords reaching EPC Band E or above is estimated to be £1,200 per property. If a landlord cannot improve their property to EPC Band E for £3,500 or less, an ‘all relevant improvements made’ exemption can be registered. The £3,500 cost cap will allow approximately 48 per cent of Band F and G rated rental homes to be improved to EPC Band E, while the remaining 52 per cent will be able to make some level of improvement. 
  2. We committed in the CGS to look at a trajectory to improve as many privately rented homes as possible to EPC Band C by 2030, where practical, cost-effective, and affordable. The government remains committed to this ambition and intends to consult on improving the energy performance standards of privately rented homes in due course.
  3. Key to the effective delivery of the Private Rented Sector Minimum Energy Efficiency Standards Regulations, and any proposed increases in minimum standards, is their enforcement, which is the responsibility of local authorities. If a breach is confirmed, a local authority can issue a publication penalty and/or a total financial penalty of up to £5000 per breach per property.
  4. To support local authorities, BEIS is conducting a PRS Enforcement Pilot Study, which completed its first phase in March 2020. The first phase of the study, which involved seven local authorities in England, explored and tested bottom-up, local authority-generated solutions to monitoring, compliance, and enforcement of the Private Rented Sector Minimum Energy Efficiency Standards Regulations. The learning from the pilots has informed the design of the minimum standard trajectory and was used to develop a best practice enforcement toolkit that contains case studies, templates, and off-the-shelf tools to help streamline the enforcement process and make it less resource intensive for local authorities.
  5. BEIS is now conducting a second round of pilots to road-test and refine the toolkit with a new, wider pool of English and Welsh local authorities before it disseminates the final toolkit to all local authorities in England and Wales in 2021. This will ensure that the toolkit supports all local authorities to promote and enforce the Private Rented Sector Minimum Energy Efficiency Standards Regulations in a cost-effective way.

Enabling action

  1. In addition to the policy development outlined above, we are taking a number of actions to enable the improvements in energy performance to be delivered. This includes continuing to develop our successful Simple Energy Advice service, which was launched in 2018. The service – which includes a free phoneline for those unable to use the website – provides impartial and tailored energy efficiency advice to homeowners. It also signposts members of the public onwards to relevant national and local financial support schemes, as well as locally based tradespeople. Simple Energy Advice is exceeding the usage levels of the government’s previous service, the Energy Saving Advice Service (ESAS) phoneline, and is continuing to grow.
  2. To improve consumer confidence in the quality of installations, we have also launched a government-endorsed quality scheme for home energy improvements under TrustMark. The TrustMark framework incorporates more robust standards, which were developed with the British Standards Institute (BSI). From 1 January 2020, installers under ECO are required to be TrustMark registered to install relevant energy efficiency measures, which is a route for demonstrating compliance with the relevant PAS standards. The latest PAS standards, introduced in June 2019, are as follows:  
    1. PAS 2035:2019 Retrofitting Dwellings for Improved Energy Efficiency: Specification and Guidance  - this covers the whole life-cycle of a retrofit project, from the initial engagement with a client, through assessment, design, install and evaluation stages that should be undertaken to ensure suitable energy efficiency measures are installed correctly to the right premises. 
    2. PAS 2030:2019 Specification for the installation of energy efficiency measures in existing dwellings and insulation in residential park homes – this sets out how the installation of specific energy efficiency measures should be carried out in existing domestic buildings.  

 

  1. Through our Whole House Retrofit Innovation Competition, we are testing the potential to reduce the costs of deep retrofitting homes through economies of scale. The winning projects will seek to achieve reductions in the cost of retrofitting of between 5–20% across a range of building types, with each retrofitted property delivering an energy performance of at most 30 kWh/m2/yr. Each project aims to retrofit a minimum of 75 houses and an announcement of the winning projects will be made shortly. The learnings from the programme will be used for the development of other policies that cut across social housing, leaseholders, landlords and tenants.

 

  1. The government is also committed to in the Local Supply Chain Demonstration Pilots. We have provided £4.7 million of funding to six local supply chain demonstration pilots, which are testing new approaches for delivering home energy in the able-to-pay sector. The aim of the pilots, which will end in March 2021, is to address supply-side barriers and to reduce the frictions and challenges that prevent greater take-up of retrofit among consumers. Overall, the project is designed to provide learnings and insight which will help to drive up retrofit in local areas at a broader scale.


Green Home Finance

Is the £5 million Green Home Finance Innovation Fund enough to stimulate the market for and drive action from the banks to encourage owner occupiers to improve the energy efficiency of their homes? What policy and/or regulation could supplement it?

 

  1. The government’s Green Finance Strategy set out its intention to act to build the market for green finance products to support home energy performance improvements. The Green Home Finance Innovation Fund was launched as part of this to promote the establishment of green lending products by overcoming the barriers to innovation posed by high initial development costs in an untapped green finance market. The winning projects have been awarded funding to develop their own financial products and supporting apps to incentivise homeowners to install energy efficiency measures in their homes. An announcement of the winning projects will be made shortly. Depending on the impact of Covid-19, learnings from the programme will be disseminated in 2022 and will influence the development of future policy and/or regulation.
  2. The Green Finance Strategy also included a commitment to consult on the merits of setting requirements for lenders to help households to which they lend to improve the energy performance of their homes. The government remains committed to publishing this consultation and intends to do so in due course. The consultation will build on feedback from the government’s Call for Evidence on ‘Building a Market for Energy Efficiency’, the government response to which was published in July 2019.
  3. Prior to the outbreak of Covid-19, there were indications that some lenders were beginning to take accelerated action in this area. In January, Lloyds Banking Group announced its commitment to cut its carbon emissions by 50% in the next decade and to support its customers to make energy improvements to their homes through the creation of green products. In February, Nationwide Building Society earmarked £1 billion to help borrowers to buy energy efficient properties as well as to provide loans to homeowners wishing to make older houses more eco-friendly. In the same month RBS announced its commitment to support its customers to increase their energy efficiency, with an ambition that 50% of its mortgage book will have an EPC or equivalent rating of Band C or above by 2030. Recent engagement with these lenders indicates a continued commitment to these announcements.
  4. In December 2019, the Green Finance Institute established the Coalition for the Energy Efficiency of Buildings (CEEB) to stimulate action across the finance sector to support the decarbonisation of buildings. The CEEB is formed of 52 member organisations, including experts from financial services, energy and construction industries, local and national government, academia, and civil society. Phase 1 of CEEB is focussed on developing the market for financing net zero and resilient homes through the design and launch of viable financial ‘demonstrators’ that provide the catalyst for further financial innovation at scale.
  5. In its interim report, published in May 2020, CEEB identified a portfolio of c.20 demonstrators made up of financial products and services that appeal across tenure types and focus on homes which are not already supported by existing government policy. The proposed demonstrators aim to promote the development of innovative products to finance energy efficiency, build a vibrant market for retrofit, and support the UK in delivering its commitment to move towards net zero.
  6. While the government continues to support this work, the Green Finance Institute is an independent, commercially focussed organisation.


Which models in other countries have been successful at stimulating (Green Finance) demand for energy efficiency within this market?

  1. In Germany, the state-owned development bank, KfW, offers low-interest loans of up to €120,000 to fund installation of energy efficiency measures into homes as part of their Energy-Efficient Renovation scheme. The scheme incentivises uptake by offering a subsidy of up to 40% of the loan value. This is dependent on the retrofitted property meeting specific energy performance measures and a higher subsidy is received for a higher standard of performance. Between 2005 and 2017, this scheme has led to installations in 2.8m properties, invested €73bn, and delivered 7.5 MtCO2 savings.[10] KfW has been offering low-interest loans for refurbishment of energy inefficient buildings since 1996.
  2. Since 2014, the Dutch government has run the National Energy Saving Fund, offering low-interest loans of up to €65,000 to fund installation of energy efficiency measures into homes. This can be for either private owners or homeowner associations. The fund is provided by the government in partnership with banks and, as of 2020, has a loan portfolio worth €395m.[11] Between 2014 and 2019, the fund has provided 23,683 loans to private homeowners and 187 loans to homeowner associations and is seeing a consistent growth in loans issued year-on-year.
  3. There is much that can be learned from the success of these schemes. However, it is important to understand that the context in the UK is different and, as such, lessons learned will need to take that into account.

Action on Fuel Poverty

How should the proposed Home Upgrade Grant Scheme be delivered to help the fuel poor? Should the new grant scheme supplement ECO in its current form, or should ECO be redesigned?

  1. The £2.5bn Home Upgrade Grant is a proposal in the 2019 Conservative Manifesto. The government remains committed to taking the necessary action to improve energy efficiency for fuel poor households.
  2. We are exploring what policy should succeed ECO3, and how it could complement other policies such as the proposed Home Upgrade Grant and forthcoming regulations. We will also consider how a successor scheme could be designed to enable a greater choice of measures for householders whilst continuing to raise standards of installation and consumer protection.

 

Low Carbon Heat

How will lack of progress on residential energy efficiency impact the decarbonisation of heat and the associated costs of this?

  1. Good progress has already been made improving the energy performance of our housing stock, with 34% of homes in England at Band C or above according to the 2018 English Housing Survey. This is up from 7% in 2007.
  2. The government is also developing options for how a long-term framework of policy approaches, including regulation, can combine to provide a clear direction-of-travel for industry and accelerate the uptake of low-carbon heat, initiate a transformation of our building stock, and set us on a path to decarbonising all homes and buildings. Our Heat and Buildings Strategy, which we aim to publish in due course, will establish the strategic direction within which we will consult on further strands of this policy framework.
  3. Currently, around 16m homes in England are below EPC Band C. Our estimates suggest that delivering our EPC C aspiration will require mobilising between £35 - £65bn of investment to improve homes across the UK. Improving the level of energy efficiency of homes is a no regret action under all possible heat decarbonisation pathways.
  4. Energy efficiency enables us to reduce energy demand by reducing the overall size and cost of the energy system. Energy efficiency will also provide energy bill savings for consumers and improve thermal comfort.  In a high electrification scenario, improved energy efficiency is important for readying the UK housing stock for heat pumps, reducing the costs of heat pumps, ensuring efficient operation, and reducing the extent of reinforcement required for the electricity network. In a high hydrogen scenario, energy efficiency will reduce operating costs for householders by reducing demand and associated systems costs. Under all pathways for decarbonising heat, we will need to increase heat pump installations significantly in the 2020s.
  5. In the longer-term, a heat pump-led pathway is one of the main options for meeting heat decarbonisation targets. Improving energy efficiency to a sufficient level in parallel with this wide-scale heat pump deployment results in a cost-effective transition to low carbon heating, as it supports more efficient operation of lower temperature heating systems.

 

  1. The government recognises the scale of the challenge to reach net zero carbon emissions, and the important role low carbon heat must play in meeting decarbonisation targets. There is an urgent need to increase the pace of installation of low carbon heating technologies in the 2020s.

Economic Opportunities

How can the government frame a Covid-19 stimulus strategy around improved energy efficiency of homes?

  1. Improving the energy efficiency of homes could play a central role in supporting economic recovery post-COVID-19. Energy efficiency is labour-intensive with supply chains able to ramp-up quickly in response to increased demand. Increasing action in this area could support jobs and economic activity in key sectors of the economy such as construction.
  2. These same arguments have been put forward by the International Energy Agency, who stated that promoting greater energy efficiency will deliver “longer-term benefits,” including increased competition, improvements to energy affordability, and an overall reduction in greenhouse gas emissions. Many proposed policies in energy efficiency are “oven ready” and this means economic stimulus can be delivered quickly and at scale.
  3. The labour-intensive nature of energy efficiency means that it has the potential both to support existing jobs and to create new ones. Indeed, raising as many homes as possible to EPC band C by 2035 – a key ambition in the CGS – has the potential to support delivery of thousands of new jobs and billions of pounds of GVA growth.  Experience from ECO indicates that installations can ramp-up quickly in response to increased demand and rely upon local supply chains to deliver.
  4. Greater development in this area could deliver measurable economic benefits for the whole of the UK: spending on energy efficiency could be targeted at more deprived regions of the UK, including those most impacted by Covid-19, allowing for supply chain development and economic growth.
  5. Including energy efficiency as part of an economic recovery package could allow the government to promote the learning of new skills and advance innovation. These in turn will provide training opportunities for UK workers, ensuring the sector is sufficiently equipped with the skills needed to deliver a transformation of UK homes by 2050. There are also significant innovation opportunities in new low-carbon technologies and services which would further aid economic recovery.
  6. We are actively considering the role of energy efficiency in supporting a clean, resilient, and sustainable economic recovery.

 

Cross-departmental Cooperation

Are there examples of where energy efficiency policy has fallen between government Departments? How could cross-departmental coordination be improved?

  1. In October 2019, the Prime Minister announced that he will chair a new Cabinet Committee on Climate Change. This will drive action across government to protect our environment, reduce emissions and improve air quality.  The Committee will bring together ministers responsible for domestic and international climate change policy and provide a forum to hold departments to account for their actions to combat climate change. It will play a leading role in coordinating our strategy for delivering net zero emissions by 2050 and will also oversee the UK’s preparations to host the COP26 summit next year.
  2. We are aiming to publish a Heat and Buildings Strategy in due course, which will set out the immediate actions we will take for reducing emissions from buildings. These actions include the deployment of energy efficiency measures and low carbon heating as part of an ambitious programme of work required to enable key strategic decisions on how we achieve the mass transition to low-carbon heat and set us on a path to decarbonising all homes and buildings
  3. To develop this strategy, key departments are working closely together on how to deliver these actions to decarbonise homes, led by BEIS and MHCLG.
  4. Moreover, MHCLG and BEIS work together on EPCs: MHCLG is responsible for the overarching policy and regulatory framework governing the EPBR, EPCs and the management of the accreditation schemes; and BEIS is responsible for the underlying methodology (SAP and RdSAP), and related BEIS policies and regulations for decarbonising buildings.
  5. BEIS has also contributed to DEFRA’s Clean Air Strategy which looks to improve air quality and maximise public health benefits, including plans to reduce emissions from transport, housing, industry and farming. Work is ongoing to improve regulations on the use of solid fuels such as coal and wet wood in rural households.

 

[1] https://www.mckinsey.com/business-functions/sustainability/our-insights/how-a-post-pandemic-stimulus-can-both-create-jobs-and-help-the-climate?cid=eml-web

[2]https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/875425/International_comparisons_of_household_energy_efficiency_2020.pdf

[3]https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/820284/190716_BEIS_Green_Finance_Strategy_Accessible_Final.pdf

 

[4] https://www.bsigroup.com/en-GB/our-services/developing-new-standards/Develop-a-PAS/what-is-a-pas/

 

 

[5] As measured by the Fuel Poverty Energy Efficiency Rating (FPEER) system. FPEER is a measure of the energy efficiency of a property based on the Standard Assessment Procedure (SAP) but accounts for policies that directly affect the cost of energy.

[6] Approved document L provides guidance on the conservation of fuel and power in buildings.

[7]https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/882404/annual-fuel-poverty-statistics-report-2020-2018-data.pdf

[8] https://www.gov.uk/government/statistics/estimating-the-number-of-leasehold-dwellings-in-england-2017-to-2018

[9] https://www.legislation.gov.uk/uksi/2015/962/contents/made. The 2016 amending regulations are available online at https://www.legislation.gov.uk/uksi/2016/660/contents/made and the 2019 amending regulations are available at https://www.legislation.gov.uk/uksi/2019/595/contents/made.

 

 

 

[10]

https://www.kfw.de/PDF/Download-Center/Konzernthemen/Research/PDF-Dokumente-alle-Evaluationen/Monitoring-der-KfW-Programme-EBS-2017.pdf

[11] https://www.energiebespaarlening.nl/strakke-reele-planning-onontbeerlijk-2/