Despite repeated warnings from the Committee on Climate Change that energy efficiency needs to be tackled immediately if the UK is to meet its carbon budgets, progress has been limited, writes Catherine Early
Back in 2017, energy efficiency campaigners had reasons to be cheerful. The government’s new Clean Growth Strategy adopted their aspirations to significantly upgrade the efficiency of existing homes, establish green mortgages to incentivise enhancements, and raise energy standards for all new developments.
The strategy outlined an overall approach to linking emissions reductions in buildings, industry, power and transport while growing jobs and the economy. Energy efficiency was a key part of the plan.
The UK Green Building Council said the new strategy appeared to be a signal of a new ambition compared with preceding years, which had seen the scrapping of policies such as the Green Deal to improve existing stock and the zero carbon homes target for new builds.
Energy use in the home accounts for 20% of the UK’s carbon emissions, meaning energy efficiency has huge potential in helping reach net-zero by 2050
The strategy established a new target for the average energy performance certificate (EPC), which defines the energy standard of a home, of existing stock to be raised from D to C by 2035, with an earlier goal for rented homes of 2030.
However, last summer, an inquiry by a group of MPs on the parliamentary Business, Energy and Industrial Strategy (BEIS) select committee concluded that the government was off track to meet the targets in the Clean Growth Strategy, and that it did not have a clear grasp of how much public money was needed to deliver them.
Energy use in the home accounts for 20% of the UK’s carbon emissions, according to the government, meaning that improving energy efficiency has huge potential in helping reach its target of net-zero emissions by 2050. It would also help the estimated 2.55 million people in the UK who live in fuel poverty.
But the challenge is huge. The UK has 28 million homes that need retrofitting, many of which are at a very low standard, earning the country the reputation of having some of the least efficient homes in Europe. In addition, the government has a target to build 300,000 homes a year by the mid-2020s to house a growing population. Without stronger standards, the risk is that these new homes will add to the volume of houses that will eventually need retrofitting.
Since the select committee’s report, some policy has come forward for new-build homes. Last October, the government launched a consultation for the Future Homes Standard, which all new homes built from 2025 will be required to meet. Homes built under the standard will emit 75-80% less carbon than those built today.
In order to start ramping up to this, the government wants to bring in some measures covering energy efficiency and ventilation later this year. It has proposed two options: a 20% reduction in carbon emissions, largely achieved through very high fabric standards such as glazing, walls, floors, and roof materials to limit heat loss; and a 31% reduction through the use of additional technologies such as solar PV panels and heat pumps.
If you really want to have world-leading levels of efficiency, you need to give people more than six months to tool up for that
The government has stated a preference for the second option. However, this is problematic for industry as the UK lacks manufacturing and installation skills for heat pumps, explained John Slaughter, director of external affairs at the Home Builders Federation (HBF).
The trade body wants to see the government’s first option bought in this year, and the second one two or three years’ later. This would allow the supply chain and skills to grow, and avoid disruption, he says.
Both the UK Green Building Council (UKGBC) and government advisers the Committee on Climate Change have criticised the government for a lack of clarity on how the Future Homes Standard will be achieved. The government’s intention to provide detail in 2024 is too late, they say.
“If you really want to have world-leading levels of efficiency, which is what they’ve said, you really need to give people more than six months to tool up for that,” says Richard Twinn, senior policy adviser at the UKGBC.
Even when homes are designed to a higher standard, they do not necessarily meet them in practice. Buildings regulations are based on the design of a home, with no requirement for developers to prove these are achieved in reality. Heat loss has been found to be as much as double the value claimed by the design, according to the BEIS committee’s report.
There are a growing number of technology solutions to fix the so-called “performance gap”, but as yet the government has not indicated that it will enforce post-build monitoring, Twinn says. “We’d like to see a requirement to make sure the property is performing as it should do in terms of thermal efficiency,” he suggests. If not, the developer should have to fix this, or pay a penalty, he adds.
This requires a collaborative strategy between the government, industry and other stakeholders, and we would welcome a collective focus
Slaughter of HBF cites many reasons for the performance gap, including the failure of existing industry tools to reliably model the in-use performance, and a lack of specification data for products and materials that relates to actual conditions rather than those in the factory.
“This requires a collaborative strategy between the government, industry, manufacturers, the professions and other stakeholders, and we would welcome a collective focus,” Slaughter says.
However tricky these problems are to solve, the issue of existing homes is even more daunting, Twinn says. Retrofitting the UK’s entire housing stock by 2050 would need to be done at the rate of 1.6 homes every minute, he says. And that is if all possible improvements were done in one go, rather than the piecemeal approach currently adopted.
Policies to improve existing homes have been chopped and changed over the years, but the two current drivers are the energy company obligation (ECO), targeting the homes of the low income and fuel poor, and the minimum energy efficiency standard (MEES) for the private rented sector.
MEES regulations were upgraded last year, and now require private rented properties in England and Wales to reach at least EPC band E, with tenancies for properties rated F and G illegal. But a cost cap of £3,500 means that landlords only undertake cheap measures, and band E might not even be reached, Twinn of UKGBC says. Proposals to tighten the standard to band C, as promised in the Clean Growth Strategy, are overdue.
ECO is an obligation on energy companies to cut the cost of home heating. Under its latest iteration, the government expects it to cost £640m a year, paid for by a levy on energy bills. This is half the spend originally proposed, and significantly below the £1.57m spent on previous schemes. This led to a large drop in installations in 2018-19, according to the BEIS committee report.
We think that the timing is right to get some money. The logic is all there, and there are local authorities who want to do this
All these figures are a drop in the ocean compared with the actual investment needed, estimated at £5-7bn, according to Twinn. Again, the scheme mostly pays for cheap measures such as loft and cavity insulation. Condensing boilers are also popular, but though these save on cost and carbon in the short term, to meet net-zero, gas boilers will have to be removed from homes by 2030, Twinn says.
Campaigners want a programme for widespread whole-house retrofits. This is where a home undergoes all possible energy efficiency upgrades in terms of insulation, low carbon technologies and building fabric in one go, similar to the Energiesprong idea that has taken off in the Netherlands (see below).
But though this is a more efficient approach than the piecemeal approaches of ECO and MEES, it is extremely expensive. Moving your house from EPC band F to E or D could cost around £3,500, but a whole house retrofit would cost £70,000, making it a challenging idea to support politically, says Chaitanya Kumar, head of climate and energy at think tank the Green Alliance.
Some local authorities are planning to pilot the concept, including Cornwall Council, which will retrofit 83 homes starting later this year, and the Greater London Authority, which will be tackling 1,600 homes over three years.
But while these are good learning experiences for councils, they are not really sufficient to support the business case for widespread uptake, Kumar says. The Green Alliance wants the government to challenge industry to prove cost reductions and build up a supply chain. Around £250m of government money could create a pipeline of 5,000 to 7,000 homes to pilot the approach, he says.
“We think that the timing is right to get some money for this. The logic is all there, and there are local authorities who want to do this,” he says.
In the 'able to pay' sector, there are currently no government or market signals to persuade people to invest in energy efficiency in their homes
Meanwhile, in the “able to pay” sector, there are currently no government or market signals to persuade people to invest in energy efficiency in their own homes. Campaigners have suggested adjusting council tax or stamp duty to reflect energy performance.
Last July, the government announced a £5m Green Home Finance Innovation Fund to pilot home finance products such as green mortgages, where mortgage providers support homeowners to make improvements up to EPC band C. But the fund was blasted as “woefully inadequate” by the BEIS committee.
Twinn sums up overall progress in energy efficiency as “bleak”. “There are a few green shoots but energy efficiency is not really happening at scale. We’re nowhere near the delivery rates that we need, and there’s no plan in place for how we get there.”
With policymakers in the UK, as in the rest of the world, currently focused on the Covid-19 crisis, there is now huge uncertainty over progress on other agendas, such as climate change.
Jenny Holland, public affairs and policy specialist at UKGBC said: “What is clear is that we cannot tackle one emergency and continue to ignore another. Policy to scale energy efficiency measures across the country cannot be on the backburner for any longer than is absolutely necessary. Installation rates, particularly in homes, have fallen off a cliff and this worrying trend needs urgently to be reversed.”
Kumar at the Green Alliance agrees: “The coronavirus crisis could well result in the UK economy facing a deep recession. In such a scenario, what is needed is a ‘green stimulus’ package from the government, where the clean growth sectors of the future, including energy efficiency retrofit industry, are supported to create jobs and improve productivity.”
Catherine Early is a freelance journalist specialising in the environment and sustainability. She writes for Business Green, China Dialogue and the ENDS Report among others. She was a finalist in the Guardian’s International Development Journalism competition
A Dutch leap forward in climate-proofing existing homes
ONE OF the most important ways we can reduce emissions from towns and cities is by making existing homes more energy efficient, writes Mike Scott. But retrofitting houses is much more difficult than building new ones to higher standards.
One organisation that is trying to address this issue is Energiesprong, which has developed a way of upgrading homes to the highest energy standards in only a few days. The approach was developed in the Netherlands (Energiesprong is Dutch for “energy leap”) and involves creating a net-zero home in one step, rather than implementing efficiency measures piecemeal.
This is typically achieved by installing a new thermally efficient facade on the house, creating an airtight and insulated shell around an existing property, enough solar panels to generate as much energy as the house uses, and an energy pod that can house batteries and a heat pump, allowing the house to provide energy services to the grid.
“The work is funded with a whole-life financing model, where the cost is covered by energy savings and reduced maintenance costs,” says Emily Braham, strategy and operations director. Much of the energy saving comes from the use of offsite manufacturing, which makes it easier to cut costs and guarantee quality while scaling up production.
The group focuses on social housing because it enables it to scale up most rapidly. In the UK, Energiesprong has pilot projects in place in Nottingham (155 properties) and Maldon (five properties) in Surrey, and the retrofits are expected to raise property values by 25% and cut energy bills by up to 60% a year.
The first small-scale trial in Nottingham cost £75,000 per home. But the organisation believes this could be reduced significantly if installations are scaled up, as has happened in the Netherlands.
Industry believes that a government commitment to supporting 5,000 retrofits would drive economies of scale
"In the Netherlands we have already seen what can be achieved when innovation and economies of scale come into play; the Netherlands has now almost halved the cost of its Energiesprong retrofits," says a report by Green Alliance.
In the UK, it adds: "Industry believes that a government commitment to supporting 5,000 retrofits would drive economies of scale, enabling market actors to finance further retrofits towards a £35,000 per retrofit cost goal. At this level, Energiesprong retrofits could be subsidy-free.”
Braham says costs need to come down for the supply side. “We’re working with the financial sector and government to ensure a favourable policy regime. We would like to see a fall in VAT for whole house retrofits, for example – and we also need long-term certainty of demand.”
This article is part of our in-depth Energy efficiency briefing. See also:
The companies taking energy use from the boiler room to the boardroom
The man struggling to bring energy efficiency in from the cold