1.

Are the Government’s targets on residential energy efficiency still appropriate to achieve its ambition to reach net zero emissions by 2050?

Yes

The target for all homes to be EPC band C by 2035 is essential if the net zero target is to be achieved. The Committee on Climate Change state that the EPC aspiration is an essential part of their Core Scenario to meet the net zero targets. However, we are currently not on track to meet it. A robust policy framework with incentives and financial support is needed to drive the uptake of energy efficiency measures.

However, the target is currently only an aspiration and to provide the certainty needed for investment and to enable households to plan property upgrades, it must become a legislative target. A target that cannot be deviated from and one which the Government is mandated to do what it can to enable it to be met. As a member of the Sustainable Energy Association, Kingspan Insulation supports the Domestic Premises (Minimum Energy Performance) Bill. It is hoped that this Bill will provide that certainty and is given the appropriate time in the House and is accepted. 

Targets based on EPCs are useful to provide certainty for investment and ensure that progress continues to be made towards our carbon targets. EPCs are discussed further in our response to question 4, however it is important to note here that EPCs and the associated recommendations are currently calculated based on cost. This means that in some cases measures are recommended which do not give the best outcome in terms of carbon savings. A balance therefore needs to be struck between affordability and carbon emissions. It is essential that measures which increase carbon emissions are not encouraged over those that lower emissions. If EPCs continue to be based on cost alone, the measures installed as a result may lead to a net increase in emissions despite some cost reduction. Kingspan Insulation responded to the call for evidence on EPCs and also the recent Part L review consultation which proposed amendments to the assumptions within SAP.

2.

What are the potential risks and opportunities of bringing forward the Government’s energy efficiency target?

Opportunities:

-          Job creation across the country at a time when the economy is shrinking

-          Warmer, healthier homes which provide safe and affordable living and workspaces for families

-          Reduced risk of ill-health linked to poor energy efficiency standards which will deliver cost savings for the NHS and improve well-being and productivity

-          Fabric efficiency improvements provide long term carbon savings through reduced energy demand contributing to achieving the UK’s climate change ambitions.

-          Meeting EPC band C is part of the Committee on Climate Change Core Scenario and is seen as the minimum improvement needed to meet net zero, bringing this target forward would allow the UK to go further and increase the chances of meeting the target.

Risks:

-          Supply chain readiness – there is a need for upskilling across the sector to ensure that measures are installed to a high standard.

-          Performance management and enforcement of standards – prioritising speed over quality could lead to sub-optimal outcomes for the consumer, the energy system and the environment. If energy efficiency measures are not installed to a high standard, households may not see the energy savings expected and as such higher carbon emissions may be emitted. There is therefore a need to ensure high standards with appropriate enforcement alongside tracking and better information provision to consumers through building passports.

-          Without support for the supply chain to grow there is a risk that it will not be ready when a mandate is due to be applied and will be unable to cope with demand. If the supply chain is unable to cope with market demand this will limit the probability of meeting the target and put consumers at increased risk of poor standards from less trustworthy traders who choose to ‘bandwagon’ on the opportunity. We would like to see any mandated action signalled ahead of time to allow the supply chain and households to prepare for its introduction.

3.

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

Yes

The targets should be introduced into legislation.

Within the Clean Growth Strategy, the Government laid out plans to make sure all homes are upgraded to EPC Band C by 2035 and fuel poor homes by 2030 ‘where practical, cost-effective and affordable’. This target has not yet been upheld in legislation therefore a Bill has been introduced to the House of Lords to enshrine these targets in law. The Domestic Premises (Minimum Energy Performance) Bill will commit government to uphold EPC targets over the next decade. This will help set certainty for industry and homeowners who will be better able to plan, invest and budget spend on property improvements in line with the targets.

The BEIS Select Committee state in their 2019 Energy Efficiency Inquiry report that ‘only around 30 per cent of homes in the UK currently meet EPC Band C. The overriding message of witnesses was that UK Government policy in its current form will fail to upgrade the remaining 70 per cent, equating to around 19 million homes. The CCC told us that the UK Government is off-track to meeting the 2035 target, that progress has slipped, and major policy gaps remain.’

The setting of a legislative target will provide the cornerstone of a range of policies. The Bill requires the Government to develop a clear strategy to bring all existing housing up to Band C by 2035 with plans and trajectories on how to tackle housing in all the tenures. However, without a legislative target, there is not a requirement to develop this strategy or the mechanism to ensure that the target is met. The Government consulted on policies to support energy efficiency in the Able to Pay market a couple of years ago however the outcome of that consultation is yet to be published. We believe that legislating the target will help to ensure it is achieved through the development of a comprehensive strategy and by providing the certainty for investment.

4.

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?

The accuracy of EPCs at measuring energy efficiency is largely dependent on the data made available to the assessor. The EPC certificate provides a core of information about the energy efficiency of a house but there are a number of opportunities to go further with this information. EPCs need to capture more information and better information. This needs to be kept up-to-date and made available centrally (and securely) so it can be referenced in future and not lost.

We do not think the EPC rating system needs to be completely overhauled however there are a number of improvements that could be made to increase effectiveness, enhance the information provided and better promote energy efficiency measures to households.

EPCs were introduced to provide information on a building’s energy efficiency performance (costs and emissions) and to allow consumers to benchmark theoretical performance against that of others. It is important to note, however, that despite including a list of recommended measures to improve energy efficiency ratings, the EPC report is not a retrofit design tool.

EPCs are being used by organisations that own properties to understand stock changes and allocate funding to improve them. It is important to understand the different decisions that are made based on EPCs. EPCs were not designed for to be a retrofit design tool, yet they could become a tool to encourage and advise on retrofits in the future.

EPCs collect a good level of information on the energy performance of a building, but there are many other sources of data which would add to their usefulness for retrofit. For example, information on condition of the building, the impacts and constraints of its location and other building data, which can be provided by professionals such as Energy Assessors or retrofit specialists. Information provided by the occupants can also provide details on items such as how the building is used or any previous changes or issues.

Developing a property rating system that is heavily focused on being simple and low cost may not be able to deliver the quality required and may not gather sufficient information to provide suitable recommendations. Similarly, a very complex system may not be suitable for all policy uses and may add cost to the process.

Kingspan and others in the industry have raised concerns about the potential cutting of corners which means that EPCs are not as accurate or helpful as they could be. This could be linked to a number of things, however competition around the cost of surveys is likely to be a strong driver. To ensure reliability and replicability, regulation of the EPC assessor industry should be reviewed to ensure that assessments are being carried out appropriately.

The need to recalculate many of the key measurements of a property can be an issue for existing properties, particularly if the assessor is trying to complete the assessment quickly. Ensuring that data collected at the initial EPC assessment (for existing homes) or during specification (for new homes) is made available to assessors updating the EPC rating will help to reduce this risk of incorrectly measuring key property characteristics thus leading to inaccurate results. We strongly agree that assessors should be given access to previous survey data including measurements of floor area and documentary evidence. There will need to be a process in place to verify some of the data to reduce the risk that changes to the building or previous errors are not picked up.

It is important to ensure that EPCs are regularly updated to ensure that they are fit for purpose. More accessible, interactive and up-to-date data could motivate homeowners to engage more with their EPC and make improvements in the home. Introducing additional trigger points and new information sources such as smart meter data will help to ensure that EPCs are up to date and reflective of actual property performance.

EPCs should be used as a means to encourage action. They have the ability to influence property owners to improve the energy performance of their home and property decisions for example buying a more energy efficient home. We would also like EPCs to provide a renovation route map via a home passport approach which will give homeowners more detailed information about the past installations and potential measures / improvements they could undertake to increase the performance of their home or building. The Building Passport could also ensure that measures are logged as they are installed to increase the reliability of EPCs and ensure that they are kept up to date.

Currently measures are listed by potential energy saving, however it is important ensure that measures are installed in the appropriate order to deliver the best result for the consumer. The Building Passport should therefore outline the best order to approach renovation measures to avoid the risk of unintended consequences and maximise the benefit for households. It will be particularly helpful for hard to treat rural properties that may need multiple measures installed to meet the target standard. There are proposed changes to SAP to change the performance metrics driving the recommended measures. This may impact the types of measures installed, we believe it is important that carbon must feature in the measure ranking to ensure that renovations deliver on the carbon emission reduction targets.

The increase in the use of smart technology, such as smart meters in homes or online weather data, also adds to the sources of information, and more accurate information. Ensuring all available information is incorporated into the energy assessment will increase its accuracy. Smart technology also means there is an opportunity for a more interactive approach allowing homeowners to add and monitor their own data. An improved combination of information sources will lead to a better understanding of the building condition and its overall needs. This will lead to better specification of proposed improvements and in turn improved energy efficiency and health benefits. It will also ensure that other requirements, such as ventilation provisions, which may not give a direct energy efficiency benefit, will be considered and addressed.

Accuracy of data is key to ensuring the effectiveness of EPCs in rating energy performance. If inaccurate information is used to inform the EPC, the recommendations may not be suitable for the property. Moreover, there is a risk of gaming if assessments are not accurate. For all uses there should be a high level of confidence that a higher rated building performs better in reality.

A key risk in regard to effectiveness is the substitution of products during construction or a major renovation project. During the property design phase, a high-quality product may be specified for a development, however changes are made as the building is constructed which can lead to inferior products being installed. EPCs should reflect the actual products installed so that they accurately reflect the property. Some EPCs may be reflective of these changes and others are not leading to unreliable results.

Finally, poor workmanship can significantly impact the building performance and can therefore limit the reliability of the EPC as the EPC will assume that products have been installed to the design standard. When this is not the case an EPC may give a better EPC rating than deserved and thus the EPC is not reflective of the property’s actual performance.

In the longer term, the EPC or eventual home passport needs to move to capturing actual performance of buildings alongside information about what goes into a building and any changes to it. Only through monitoring of actual performance, can a proper evaluation of performance and the effect of changes to it be made.

5.

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

Improving the fabric efficiency of buildings has a substantial, long-term benefit, reducing energy demand. This in turn lowers the heating requirement for the property. Ignoring the energy efficiency of the building is not an option if we are to meet our net zero targets and ensure that our homes are healthy and comfortable to live in. A home with poor or low levels of insulation is likely to be expensive to heat and, in some case, can be impossible to keep to a comfortable temperature.

Improving the thermal performance reduces the size of heating system needed, lowering the upfront cost for consumers. Ignoring the efficiency of the building would require a substantially higher investment upfront due to the need for larger radiators and heating systems and is likely to incur greater running costs in the long term as energy is wasted. Moreover, it is not just the household that would suffer, the energy system as a whole would also have to adapt to increasingly high demand which may require significant upgrades and additional capacity. Finally, demand side response measures and smart technology may not be as effective as homes will unable to maintain an internal temperature and as such technology which responds to shortages in supply by turning heating systems off or down would not be suitable as the home would cool too rapidly causing discomfort for consumers.

The International Energy Agency published a report in 2019 which proposed three key strategies to reduce emissions from buildings:

1. Avoid unnecessary energy demand and technology investment by planning, building design and energy technology measures that address the underlying need for energy without reducing service levels in buildings.
2. Improve the thermal efficiency of the building fabric and ensure appliances are efficient.
3. Decarbonise heating supply using high performance low carbon solutions.

Almost all decarbonisation pathways show that energy efficiency is the main source of emissions reduction in buildings. The remaining energy demand must then be supplied by low carbon sources. It is therefore essential that heat decarbonisation is coupled with energy efficiency. We would argue that energy efficiency is a necessary condition for meeting our net zero aspirations. However, we recognise that energy efficiency alone will not solve the UK’s climate crisis and that a combination of measures including smart technology, low carbon heating solutions and consumer engagement will be needed.

6.

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

During this unprecedented time, we are finding ourselves spending more time in our homes than ever before. Whilst this brings with it a number of challenges, it also highlights the need to ensure that they are warm, comfortable and affordable to heat. It is clear from opinion polls that many people do not want to return back to normal once the COVID-19 pandemic subsides and this is likely to mean an increased proportion of the workforce working remotely all or some of the time. This time of reflection and a period of change provides us with an opportunity to improve our homes to make sure that they work for us.

Making our homes more adaptable and multi-functional will be key as we move through the next few years and this also means improving the thermal efficiency of the fabric and ensuring adequate ventilation. Buildings that are suitability heated and ventilated allow for increased productivity, provide mental health benefits and reduce absence from work. A recent study found that during the lockdown, over 70% of households took part in some form of DIY or home management activities. Not only are the current circumstances increasing our interest in home improvement and encouraging action to make changes, they are also influencing home buying preferences with many city dwellers looking to move out of the hustle and bustle. Buyers are also looking for larger homes that are more able to meet the needs of working from home. As a consequence, almost half of respondents said a separate space to work from home has assumed increased importance, with good access to Wi-Fi also becoming more valued.

The recent announcements around stamp duty holidays and the introduction of a green mortgage pilot are welcome to help homebuyers at this difficult time. However, there is a role for the government to play in ensuring that those purchasing properties consider the performance of the home and are encouraged to undertake renovation works to address inadequacies in terms of energy efficiency or building performance. Our policy paper submitted[1] alongside this response proposes the introduction of variable stamp duty to increase the salience of energy performance during the home buying process and to drive green behaviours whether this is buying more efficient properties or investing in performance once the sale is completed. The Green Recovery must extend beyond the short-term financial support schemes announced over recent months to ensure sustainable, longer-term changes to the way we think about our buildings.

As we emerge from the pandemic and social distancing restrictions are lifted, we are likely to see revitalised action in the domestic home renovation market with many people opting to improve their current home rather than move. However, there is a need to ensure that these improvements not only consider aesthetics with new bathroom suites, extensions and internal redecoration, households must also be encouraged to consider ways to improve the thermal performance of their homes and drive down their carbon emissions. The current circumstances, whilst causing a temporary pause in construction and home renovations which require professional support, could be a driving force behind encouraging investment in our buildings and enabling the UK to meet its net-zero commitments.

7.

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?

Whilst the Green Home Finance Innovation Fund is welcome, it in itself is not sufficient to drive the change required across the market. The BEIS Select Committee concluded that the Government’s announcement of a £5 million Green Home Finance Innovation Fund is woefully inadequate to stimulate demand for energy efficiency within the ‘able to pay’ sector.

We strongly support the introduction of green mortgages to increase the salience of energy efficiency and encourage action. It is only once sellers and buyers see a definite monetary value from buying better performing properties, or improving existing ones, will wider scale energy efficiency improvement action ensue. Green mortgages will not only impact buyer preferences they will also encourage positive seller practices. People selling dwellings are already aware that they need to do a certain amount to make a home more saleable, this is usually limited to aesthetics. However, if green mortgages mean that there is increased demand for more energy efficient homes, it will encourage actions to improve this prior to putting the property on the market.

It is encouraging to see the recent announcement of a green mortgage pilot as part of the VALUER research project.

A wider package of measures is needed to complement the Green Home Finance Innovation Fund if the owner occupier sector is to be encouraged to improve the energy efficiency of their homes.

Our Policy Paper[2] submitted alongside this response provides an overview of the measures we believe should be introduced to further incentivise action.

8.

What policy and/or regulation could supplement it (the Green Home Finance Innovation Fund)?

The Green Home Finance Innovation Fund targets home buyers in particular. However, over a third of homes are mortgage free and research by Savills found that whilst people used to move to a new house roughly four times after their first purchase, this is now lower at about two. As such additional policies and regulatory frameworks are needed to supplement the Fund and drive action across the whole market.

Kingspan Insulation has recently published a Policy Paper focused on the Able to Pay Owner Occupier market[3] which recommended financial levers to help overcome the upfront cost barrier to uptake and encourage action through differential council tax incentives such as rebates for the installation of energy efficiency measures or variable rates based on carbon emissions. Other options include grants such as the Home Upgrade Grants confirmed by the Chancellor, and Green Mortgages, in line with the pilot scheme announced recently by the Department for Business, Energy and Industrial Strategy (BEIS). In addition, the paper recommends the introduction of building passports to improve awareness and understanding of property performance and provide households with renovation roadmaps. These measures are supported by the Committee on Climate Change in their latest progress report to Parliament.

Recommended policy interventions, which are discussed in more detail in the paper, include:

•          Building Passports

•          Highlighting Energy Costs during Property Transactions

•          Green Mortgages

•          Council Tax Incentives (Variable and Rebates)

•          Home Upgrade Grants

•          Low Interest Loans and Saving Schemes

•          Mandating Action by Setting Minimum EPC standards at Point of Sale

https://www.kingspan.com/gb/en-gb/products/insulation/news/kingspan-recommends-further-incentives-needed-for

9.

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

England is some way behind the level of uptake needed and falls far behind the devolved nations. Interestingly, the levels of investment into energy efficiency were lower in England in 2017 than in any of the devolved nations (average annual per capita investment £35 in Scotland, £23 in Northern Ireland, £17 in Wales and £8 in England). It is clear that more needs to be done, particularly in England, to address these installation rates if we are to meet the net-zero by 2050 target.

Numerous countries have introduced loan schemes to help overcome the upfront cost barrier. Below are some examples.

Germany

Germany’s development bank offers low interest loans (0.75%) and subsidies of up to €30,000 towards energy renovation and low carbon heat, linking the level of subsidy to energy performance standards. 276,000 retrofits were supported in 2016, costing €1.7 billion although €1.6 billion was recuperated in VAT alone meaning the scheme almost paid for itself. In addition to financial sector spending, property owners invested €8.4 billion, and there was €6.6 billion net turnover upstream in the supply chain.

Scotland

In Scotland, interest-free loans of up to £15,000 are available for energy efficiency measures under the Home Energy Scotland Loan Scheme, a £30 million fund in 2017/18. The Home Energy Scotland Loan has proven popular with over 2,000 applications and over 1,600 successful applicants. Households can also claim cashback if they apply for and claim a loan. Cashback can only be claimed by owner-occupiers for some energy efficiency measures and is not available for renewable technologies or energy storage systems.

There’s a funding cap for each improvement or installation, that covers both cashback and the loan. Cashback funding will be up to 25% of either the total cost of the improvement. Maximum loan amount and cashback available for each energy improvement: 

• Solid wall insulation: up to £10,000 (£7,500 loan plus £2,500 cashback)
• Heating system (gas, LPG or oil boilers): up to £5,000 (no cashback available)
• Heating system (warm air units or high heat retention electric storage heaters): up to £5,000 (£4,600 plus £400 cashback)
• Gas connection: up to £5,000 (no cashback available)
• Glazing: up to £4,500 (£4,100 loan plus £400 cashback)
• Insulated doors: up to £4,500 (no cashback available)
• Flat roof or room-in-roof insulation: up to £4,000 (£3,000 loan plus £1,000 cashback)
• Loft, floor or cavity wall insulation: up to £1,000 (£750 loan plus £250 cashback)

Households can choose how long to take to repay the loan – up to the following maximum number of years:

• Under £5,000: 5 years
• £5,000 - £9,999: 10 years
• More than £10,000: 12 years.

If the application is successful there is an administration fee of 1.5% of the total loan value.

EPCs are an important point of reference for this loan scheme, as measures can only be supported if they are recommended in the property’s EPC (or alternatively in a qualifying report issued by a Home Energy Scotland advisor. The loan requires the EPC to be updated after work has been completed before loan funds are issued.

Equity loans allow homeowners to borrow against the value of their property for energy efficiency measures. Equity loans are recommended by both the Sustainable Energy Association and the Green Finance Institute. They are currently being piloted in Scotland, where the loan (up to £40,000 can be borrowed at a maximum of 50% of the property’s market value56) is repaid upon sale of the property meaning there are no ongoing repayment. It is also helpful that the loan is repaid on selling, as this avoids the unintended consequences of other loan schemes such as the Green Deal. At least 55% of the costs of the work must be for energy efficiency works, however the equity loan can be used for the following measures which must be recommended in the building’s EPC or in a Home Energy Scotland energy report:

• A new boiler
• Insulation
• Double glazing
• Renewable technologies
• Repairs which reduce heat loss through the building’s fabric or damp and moisture

The amount paid back under the HEEPS equity loan scheme is the lesser amount of either the loan amount if it had been a commercial loan at 2.5% APR for the duration of the agreement, or the Scottish Government’s agreed equity share of the property’s sale price. This safeguard ensures that an increased property value over a short period of time will not mean that the homeowner has to pay back more unfairly.

USA

In the US, third party finance schemes such as the Property Assessed Clean Energy (PACE) program has interest rates of 6% - 8% APR. The finance is attached to the property and is transferred to a new owner upon sale and is repaid via  charge on added to the property. Charging less interest than the UK Green Deal, uptake of PACE was significant at over 200,000 energy efficiency and renewable energy improvements (worth $4.7 billion) from its launch in 2008 to 2019. The scheme has resulted in more than 42,000 new local jobs and the creation of hundreds new companies. The PACE approach is also being explored by EuroPACE. PACE financing covers up to 100% of a project’s costs and is repaid as a special assessment added to a property tax bill over a term of up to 20 years. The scheme can be combined with utilisty, local, regional and state incentive programmes. EuroPACE adopts best practices from the US PACE market and intends to further enhance its reach, scope, and overall impact (https://www.europace2020.eu/).

Ireland

The Bank of Ireland introduced a Green Home Improvement Loan, available at 6.5% variable APR from €2,000 to €65,000, in 2019. This helps overcome the cost barrier to installing energy efficiency because the capex is now available, and repayment terms of 1 to 7 years mean that this loan is relatively short-term. This ‘green loan’ compares to alternative home improvement loans for aspects such as a new kitchen or bathroom with higher rates of interest (from 7.5% APR).

10.

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

In Scotland, the Government has proposed to maximise the proportion of social housing meeting EPC B by 2032. The 2032 milestone will be supported by a formal review in 2025. However, they have recognised that full attainment for all stock of the new milestone will not be possible in all circumstances and that landlords should focus on ensuring all reasonable efforts have been undertaken to improve energy efficiency of stock. To support the achievement of the standards, funding has been made available to social landlords to help them deliver energy efficiency and heat decarbonisation programmes.

In England there is currently no trajectory for the social housing sector. The Clean Growth Strategy stated that BEIS would consult on how the social housing sector can meet EPC band C by 2030. However this consultation has not been published. The BEIS Select Committee stated “We are concerned that the social housing sector is not going to be able to undertake more complex, expensive works without a change in policy or investment. Despite these problems and the Minister telling us that the social rented sector should be “a flag bearer” and an “exemplar” for energy efficiency standards, there remains no policy framework or trajectory for the social housing sector. The dearth of policy persists even in the face of repeated calls from the CCC for the Government to agree a delivery mechanism and trajectory immediately for the social housing minimum standards.”

We agree that the sector is well placed to lead, however government leadership is essential to ensure that the sector moves quickly, and the most appropriate measures are installed to achieve the overall target. We welcomed the funding announced in the Summer Statement with £50m allocated a housing retrofit pilot for social homes. However, this is not enough to deliver the net zero aspiration. The Autumn Statement and forthcoming Heat and Buildings Strategy must set out a clear trajectory and provide support for the sector to meet the targets.

The Private Rented Sector Minimum Energy Efficiency Standards (PRS MEES) were introduced which meant that homes in England and Wales must reach a minimum of EPC band E, making new tenancies for F and G rented properties illegal. When the legislation came into force it was projected that around 300,000 rental properties did not meet EPC Band E. Better enforcement is needed to ensure that these standards are successful. Kingspan Insulation and others in the sector have previously raised concerns about the resourcing of enforcement teams within local authorities to ensure compliance. Moreover, it is currently easy for landlords to claim an exemption due to the low cost cap and limited evidence required to gain an exemption. BEIS was due to consult on the future trajectory for the PRS sector, however this consultation has not yet been published. Certainty of future standards is essential for the sector to invest and for industry to develop products and services to support the EPC band C ambition. Without this clear trajectory, the sector will face higher costs, unintended consequences of incremental improvements and the end target may be missed.

11.

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?

Kingspan Insulation welcome the Green Homes Grant scheme announced by the Chancellor in the Summer Statement. We agree that this grant scheme should be available to both Fuel Poor and Able to Pay households. Additional support must differ from the existing ECO Scheme and close the energy efficiency gap that is still very much in place today. We therefore believe that these schemes should complement each other.

Grants in the form of a ‘cash-back’ scheme such as the grants for social housing energy efficiency improvements in Scotland (worth £3.5 million) or boiler scrappage schemes (as recommended by the Heat Pump Association) could help to drive demand and support uptake of energy efficiency measures.

Grant schemes have been successful in other sectors, for example UK GBC evidence that a variety of countries including the UK, US and those in the EU have previously encouraged consumers to purchase new, fuel efficient cars with discounts and rebates. In 2010, a boiler scrappage scheme was introduced in the UK to households to install new, A-rated boilers. Households were able to claim £400 in vouchers to help cover up-front cost of the boiler. Often, installers matched the value of the voucher to give a combined discount of up to £800. In total a significant 125,000 vouchers were given out and there was a high rate of use – 95% of vouchers were cashed in by consumers, showing the successes that this sort of scheme could have in the energy efficiency industry.

The high upfront cost barrier of some energy efficiency measures such as SWI is often cited as the most significant barrier to uptake. Therefore, Kingspan Insulation welcomed the Conservative Party Manifesto pledge for £9.2bn of investment in energy efficiency of which a proportion was allocated to a new Homes Upgrades Grant scheme (now the Green Homes Grant). The Manifesto sets out annual funding budgets with £150m allocated to 2020/21. However, the scheme is yet to be introduced in full meaning that deploying the funding this financial year is likely to be challenging. The Home Upgrades Grant should be introduced as soon as possible to provide the much needed boost to demand by creating a strong driver for action. The grant should be targeted towards hard to treat properties receiving holistic energy efficiency upgrades, providing upfront funding to support these higher cost projects.

The Chancellor has proposed that the grant will be available for a range of energy efficiency measures. However, we would stress the importance of encouraging multiple measure, whole house solutions and ensuring that the hard to treat properties are supported. For particularly expensive retrofit measures such as Solid Wall Insulation (SWI), grants may be a good option to increase uptake as they will provide some of the upfront funding needed to encourage and enable action.

So far, SWI grants are limited to the ECO programme where there are specific targets for the number of SWI properties the energy supplier must treat in a year. This means that currently only fuel poor or vulnerable households can access the grant funding and we recommend that this is adjusted so that the able to pay market can also benefit, creating opportunities for carbon emissions savings and making progress towards EPC targets in hard to treat properties. As such the grant should operate alongside ECO providing full funding for fuel poor and a percentage grant for Able to Pay households. Targeting the Green Homes Grant towards harder to treat properties will ensure that these leaky homes are not left behind. Households will benefit from lower energy bills and will be able to undertake works they may not have otherwise been able to afford.

However, grants and cash-back schemes can lead to a cycle of boom-and-bust, as seen in the Feed-in-Tariff scheme which saw high uptake in solar PV (over 800,000 installations between 2010 and 2019) yet when the scheme closed, installations of solar technologies fell dramatically. Whilst helpful for increasing initial uptake, securing a long term market through grants and cash-back schemes is difficult as the market is dependent on Government-led subsidies rather than constant consumer demand. As such there is a need for a combination of both finance provision, consumer incentives and regulation to drive sustained demand.

The National Insulation Association has recently published a report which details how the grant scheme could be delivered. We have provided a link to it for information: https://www.nia-uk.org/media/1631/a-street-by-street-locally-led-energy-revolution.pdf

12.

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

The Committee on Climate Change’s Progress Report to Parliament published last month highlighted the importance of cross-departmental co-ordination and set out a suite of recommendations. Whilst this collaboration is necessary, it is also important that responsibility is clearly assigned to ensure targets and objectives are met.

The allocation of responsibilities between MHCLG and BEIS in regard to energy efficiency can sometimes be unclear and this can lead to confusion. For example, the methodology behind domestic EPCs, SAP, is the responsibility of BEIS but for non-domestic buildings the responsibility sits with MHCLG. Similarly, decarbonisation policy objectives are set by BEIS, yet housing standards are set by MHCLG. Therefore, collaboration between these two departments is essential. The sharing of consultation responses, policy proposals and industry insight should be encouraged.

We support the CCC’s recommendations for all departments set out below:

• Integrate Net Zero into all policy making and ensure procurement strategies are consistent with the UK's climate objectives.
• Ahead of the CCC's next adaptation progress report in 2021, demonstrate adaptation planning for a minimum 2°C and consideration of a 4°C global temperature rise (by 2100 from pre-industrial levels).
• Follow best practice shown by leading businesses to monitor and verify their paths to a net-zero and climate resilient future.
• Demonstrate actions that address all of the more urgent risks set out in the second UK climate change risk assessment relevant to the Department.

Finally, it is not just government departments that should share information and collaborate on policy development, it is also important to ensure that devolved administrations share knowledge to avoid duplication of efforts or conflicting policies. With greater devolution and local authorities taking a leading role in the delivery of local decarbonisation strategies (often with more ambitious targets than national government), there is a need to share learnings between local governments and ensure alignment where possible. This will avoid a patchwork of standards, policies and supporting mechanisms across the country.