Why widespread housing retrofit is a no-regrets option for tackling rising energy bills

Our Director of Communications, Policy and Places, Simon McWhirter, explains why the current energy price crisis should make cutting energy waste from homes and other buildings an urgent government priority.

Soaring energy prices are front page news. Around 30 energy suppliers have gone bust in the last year and fuel poverty charity National Energy Action predicts that six million households will be in fuel poverty by April 2022 as a result of rising utility bills. As the cost to consumers is expected to increase further this year, the stark reality of heating the UK’s poorly insulated and draughty housing stock is hitting home hard.

The number one priority for government over the coming weeks and months must be to ensure fuel bills are kept affordable for the most vulnerable in society. In parallel with this, government must also grasp this opportunity to address the critical role that reducing energy demand in our homes plays in the UK’s transition to net zero by 2050. Tackling the fuel cost crisis must be approached in tandem with our climate goals, and for this, reducing our dependency on gas and retrofitting the UK’s 29 million homes is essential.

Understanding the current condition of the UK’s housing stock

The rise in energy bills is largely driven by the soaring costs of wholesale gas. This increase in cost is compounded by the fact that the UK has one of the oldest and leakiest housing stocks in Europe. The rising costs of fuel combined with poorly insulated homes have created a perfect storm for households in the UK, many of whom are already enduring disastrous cost-of-living increases, leaving millions incredibly vulnerable to even the smallest price rise as they try to adequately heat their homes.

This is not a new issue for the government. Draughty homes are the direct result of failures by successive governments to address the retrofit challenge in a coherent and coordinated way. Over the years we have witnessed piecemeal, stop-start national policy interventions, such as the failure of the Green Deal, successive swingeing cuts to funding for the Energy Company Obligation (EC0) and, most recently, the untimely scrapping of the Green Homes Grant voucher scheme. Over the last 9 years the number of energy efficiency measures being installed in our homes each year has dropped by over 70 per cent.

Reducing energy demand is key to protecting consumers as well as delivering Net Zero

The energy crisis must be the wake-up call that finally drives home the critical importance of making energy efficiency a national priority, not just to protect consumers, but because of its contribution to achieving the UK’s legally-mandated net zero ambitions.

Over the course of 2021 UKGBC convened over 100 organisations across the built environment to develop an evidence-based ‘Net Zero Carbon Roadmap for the Built Environment‘, detailing what government policy changes and industry actions are needed to deliver net zero by 2050 across the sector. With energy usage in our homes representing 16 per cent of total UK emissions, the Roadmap painfully exposes the fact that the current state of the UK’s housing stock is incompatible with our climate targets, and that there can be no further delay in tackling the retrofit challenge.

As part of the Roadmap’s recommendations for policymakers, the first interventions from government must be to provide urgent support for fuel poor households, and set out a long-term National Retrofit Strategy, clearly signalling to the industry that this is not yet another time-limited cash injection – but a carefully-considered, long-term plan which will overhaul our housing stock with comprehensive energy upgrades. Early actions must include the fulfilment of outstanding Manifesto funding commitments to the Home Upgrade Grant and Social Housing Decarbonisation schemes, alongside the introduction of a much-needed successor to the Green Homes Grant Scheme to fill the gaping policy void for owner-occupied households.

In the long term we need regulation and a comprehensive range of financial incentives to turbo-charge the market for energy efficiency across all tenure types. For example, the Roadmap recommends introducing variable stamp duty rates adjusted in line with the energy performance of a property; removing VAT on refurbishment work; and the adjustment of energy VAT regimes in favour of low carbon sources.

Last, but certainly not least, we must make long-lasting policy decisions to end our gas dependency for good. To achieve this, UKGBC’s Roadmap outlines the need to clearly signpost a cut-off date of 2030 for sales of gas and oil boilers, alongside parallel support for driving up the market for heat pumps.

The time to act is now

Steering the UK’s response to the gas crisis towards widespread deep carbon retrofits is a no-regrets option. Climate targets cannot be achieved without it, and improving the energy efficiency of low-income households will be crucial to bringing their bills down, not just now but forever. What’s more, this process to eradicate fuel poverty and upgrade the quality of our homes will create 500,000 green jobs and positively contribute to the national levelling-up agenda.

Government must not give in to pressure for knee-jerk, short-sighted policy changes when viable options exist for both the short and long term that support a sustainable and just transition.

This article was originally published in BusinessGreen on 24th January 2022, you can read the original here.

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