Reducing energy usage in UK homes: why we need new incentives and an effective supply chain

11 February 2015

With a Government consultation on the Green Deal currently on the go, Mark Thompson asks why it didn’t work for him or his neighbours and what is needed to improve the energy efficiency of all our homes.

 

When the UK Government announced its ‘Green Deal’ in late 2012, I was excited. Somebody was going to help pay to insulate and weather-proof my leaky Edwardian semi – enabling me simultaneously to salve my environmental conscience, reduce my energy usage and bills as well as boost the comfort and value of my home.

 

It looked like a win-win, but it didn’t turn out that way. Even looking through my green-tinged specs, I could see that the scheme (which encouraged households to take out loans to fund energy-saving improvements and then pay the money back in instalments) wouldn’t appeal to most of my neighbours.

 

Sure enough, after 18 months, only 4,000 households had signed up.  In September 2014, MPs on the Energy and Climate Change select committee dubbed the scheme a ‘disappointing failure’.

 

The root causes of the Green Deal’s failure weren’t hard to identify.  Indeed, they’d been pinpointed more than a year before its launch, in a research report entitled Material gains in sustainability that we published jointly with the Construction Products Association (CPA). That study highlighted two major prerequisites for mass take-up of energy-saving improvements to Britain’s homes; effective incentivisation of homeowners and the creation of a supply chain with sufficient capacity. Nearly four years on, neither is in place.

 

Why does this matter? Because, in my view, the UK (and the world) – urgently needs to drive a dramatic increase in the scale and pace of action on climate change.

 

Households produce around 25% of the UK’s current emissions,with the rest of the built environment accounting for another 15%. The technologies and materials needed to deliver an 80% reduction in emissions from these buildings are available now. All we need is a way to apply them at scale.

 

Changes to the way new houses are built will help. But 80% of the homes that Britain will have in 2050 already exist. This means the only way to achieve the target is to retrofit the current housing stock.

 

So, what’s needed? As we highlighted in our report with the CPA, two things. The first is incentives to overcome most householders’ ingrained inertia and stimulate mass demand. The Energy Company Obligation (ECO) – introduced in early 2013 to work alongside the Green Deal – requires large energy suppliers to deliver energy-efficiency measures to domestic energy users, particularly for vulnerable groups and hard-to-treat homes. The latest consultation period on the ECO closed on 21 January but, the equivalent exercise on the Green Deal closes on 28 February - so there is still time to make your views known by clicking here.

 

On the Green Deal itself, MPs on the select committee proposed discounts on council tax or stamp duty for homeowners who invest in energy efficiency. They might also need to consider whether – though no doubt unpopular in some quarters – there might need to be a stick alongside the carrot, with penalties for the most energy-inefficient homes.

 

The second prerequisite for large scale energy efficiency improvements to UK homes is a better value chain for ‘green’ materials and retrofitting work. This involves not just materials, but also skills and companies ready and willing to apply them. However, if the mass demand is there, the industry will grow. Given that the UK needs to retrofit around 20 million homes by 2050, the commercial opportunities and likely jobs impact, are huge. 

 

 

Positively, some action is under way. In summer 2014, the Government introduced the Green Deal Home Improvement Fund (GDHIF), whose initial £120m of vouchers went within weeks. In December, a further tranche of £24m was snapped up in the first 24 hours. While these measures look popular, they still represent a ‘boom-and-bust’ approach to incentivisation. What’s needed is a more long-term and sustained approach to encourage mass take-up by homeowners and a matched response from the supply chain.

 

Put simply, Britain set a lead for the world by adopting legally-binding emissions targets and now it needs to set a lead in working out how to meet them. The question remains, have I insulated my loft yet? I’m afraid the answer is no but perhaps we all need a bit more incentive to push it to the top of the ‘to do’ list.