As the Government prepares to publish its Clean Growth Plan, a major alliance has called for an ambitious new infrastructure programme to help to decarbonise the UK’s buildings and, in the process, boost the economy.
With one-third of UK carbon emissions coming from buildings, the report, “Affordable Warmth, Clean Growth”, recommends a comprehensive Buildings Energy Infrastructure Programme and dedicated delivery agency to achieve major energy savings and de-carbonise the UK heating supply. Prepared by leading consultancy Frontier Economics, it sets out an action plan to make all homes energy efficient within 20 years.
Achieving this goal will require the adoption of world-leading quality standards for retrofitting and constructing homes, area-based schemes led by local authorities, additional funding sources that won’t raise energy bills and financial incentives to encourage households to take up energy-saving measures.
Key recommendations include:
- A target for all homes to be brought up to an energy performance rating of C (on the A to G scale) by 2035, with all low-income households achieving a C rating by 2030
- A requirement for new homes to be constructed to a zero-carbon standard by 2020
- Subsidies for all low-income home-owners to make energy efficiency renovations to their properties
- A demonstrator programme to test the most attractive schemes to unlock able-to-pay households’ investment in energy saving renovations, including zero interest loans, low interest equity loans you don’t have to pay back until a home is sold and salary sacrifice schemes like those for childcare vouchers
- Changes to Stamp Duty to encourage renovations when people move home
- Tax allowances for private landlords and 50% subsidies for social landlords to undertake energy efficiency renovations
It also recommends strengthening regulation in the private rented sector from 2025 to prevent landlords from renting out homes which have below average energy performance, and applying sensible minimum standards when homes are sold to help address health risks and deaths caused by excessive cold. The regulations and minimum standards, properly enforced, can significantly bring down the cost of the programme to the public purse.
There are 19 million homes in the UK with needlessly poor levels of energy performance (below a C rating). Up to a quarter of the energy consumed in homes could be saved cost-effectively, with the technical potential for energy use in homes to be cut in half. Despite this, the level of funding for energy efficiency measures has been cut by 50% since 2012 and the number of major insulation and efficient heating measures being installed has crashed by 80%. The alliance is calling on the Government to reverse that fall and to make buildings’ energy performance a capital infrastructure investment priority.
The Rt Hon. Lord Deben said in support of the report: “This is market failure at its most pernicious and the Government needs to intervene to make the free market work. This is a properly constructed infrastructure programme that provides a cost-effective way of meeting our climate change objectives while significantly reducing the cost of living for a huge proportion of the population”.
Claire Thornhill, an author of the report from Frontier Economics said: “Buildings are an integral part of our energy infrastructure system. If we are to de-carbonise in a cost-effective way and keep energy bills as low as possible we need an integrated and ambitious infrastructure programme to de-carbonise our buildings.”
The Plan would require public investment in household energy efficiency to be increased by £1.1 billion per year – from £0.6 billion today to £1.7 billion. A previous Frontier Economics report that analysed Government data found that an energy efficiency programme achieves comparable economic returns to other infrastructure programmes.
The Government plans to spend £170 billion on housing, economic infrastructure and R&D programmes up until 2021/22. However, buildings energy performance does not yet feature in the Government’s infrastructure plans despite the fact that it would help households to save on average £270 every year off their energy bills, boost the economy and reduce the need for new energy supply infrastructure investment elsewhere. The Building Energy Infrastructure Programme is designed to leverage in £3.9 billion of private investment per year.