by Mike Thornton OBE, Chief Executive of Energy Saving Trust
Green stimulus and ideas of a green recovery from Covid-19 have reached government. Both Chancellor Rishi Sunak and Business Secretary Alok Sharma are said to be looking hard at investment in sustainable energy jobs and infrastructure as a central part of the Covid-19 recovery package. And everyone from Nobel winning economist Joseph Stiglitz, to Lord Stern and Sir John Armitt, Chair of the National Infrastructure Commission, have highlighted home energy efficiency as a key opportunity.
Homes account for just under 30% of energy use and around 20% of greenhouse gas emissions in the UK. A robust government programme to significantly reduce carbon emission from homes could generate 200,000 jobs. But what would that ambitious package of green stimulus measures for home energy efficiency look like?
At Energy Saving Trust we have over 25 years’ experience in housing retrofit. Working with governments across the UK, we are at the forefront of progressive programmes to deliver energy efficiency and renewable heat in homes.
We have identified three areas of opportunity for Covid-19 recovery stimulus:
1. Energy efficiency
Improve the efficiency of up to 18 million homes currently below an adequate thermal efficiency standard of Energy Performance Certificate (EPC) ‘C’. EPC ‘C’ is the level of energy efficiency we need to hit in our homes by 2030, if we’re stay on track for net zero in the buildings sector. Yet, nearly two-thirds of homes are below this standard. At an average cost of £4,600 per home, a programme to upgrade these homes to the ‘C’ standard will mop up the basic energy efficiency measures that every home needs to have. These include cavity wall insulation, loft insulation top up, draught-proofing, heating controls, double glazing and in some cases (c.2million) solid wall insulation. Grant funding should prioritise the worst homes, and households in fuel poverty.
2. Support for next step technologies with wide appeal
Technologies that can deliver a major carbon benefit are becoming more accessible and cost-effective, for example, electricity storage batteries and smart thermostats. Households need to be helped to choose these products. Green stimulus could involve investment in energy advice and loan programmes that support people to invest their own money in these measures. And the programme could support jobs and supply chain development to create new businesses and opportunities promoting these products.
3. Install 3.3 million ‘no regrets’ heat pumps
The low carbon heat transition will see new heating technologies installed in our homes. In off-gas-grid situations, and in new build, the economics and practicalities of heat pumps are at their most apparent. The Committee on Climate Change identifies the potential for 3.3m heat pumps in this category. We need robust and suitable policies and investment to kick start installations at this scale.
Together these opportunities could generate around £120 billion of additional investment into the economy (at least three-quarters of this from the private sector) by 2030; generate 200,000 new skilled jobs across the country and exceed the reduction required from homes in the UK’s statutory Fifth Carbon Budget.
The benefits to the UK Treasury of this programme will go beyond direct jobs, growth and cutting carbon emissions. Taking action on home energy could save much of the £1.4 – £2 billion annual cost to the NHS treating health conditions made worse by poor housing. Homes that are affordable to heat will cut the average household energy bills by a quarter, putting £7 – £8.5 billion a year back into consumers’ pockets. This could significantly reduce the £2.3 billion annual welfare payments made to help vulnerable people with their heating costs (£320 million from the Warm Home Discount, £130 million from cold weather payments and £1.8 billion in winter fuel payments).
We are in a time of crisis and there will be many calls on public money as we move into the post-crisis period. Investment in home energy efficiency is emerging as the big opportunity to help the UK recover economically and build a low carbon future.