Energy Saving Trust's response to the Department of Business, Energy and Industrial Strategy's Inquiry into energy efficiency.
The Energy Saving Trust warmly welcomes this report from the BEIS Select Committee’s inquiry into energy efficiency.
We agree wholeheartedly with the overall assessment:
‘the Government is off-track to meet its targets; major policy gaps still exist… If the Government will not back energy efficiency, one of the cheapest ways to reduce our carbon emissions, it will not bode well for the other, costlier actions required for decarbonisation.
As the report starkly sets out, if we fail to retrofit our existing homes to a reasonable standard it will increase the cost of heat decarbonisation (widely acknowledged as a key challenge in getting to Net Zero), by around £6.2 billion per year. We cannot afford to fail and the forthcoming 3-year Comprehensive Spending Review will be a litmus test for the Government’s intentions.
We urgently need a step change, our housing stock is amongst the leakiest in Europe with seventy per cent falling below a reasonable ‘C’ Band rating. The formal classification of energy efficiency as ‘infrastructure’ would enable spending to be classed as investment rather than as expenditure, and put it on a level playing field with other infrastructure projects.
The Energy Saving Trust is pleased with the focus on the devolved nations. We welcome the recommendation to extend their best practice to England in the form of three tiers of funding (ECO, centrally funded local authority schemes, and a further national funding safety net) combined with enforced high standards of installation and a comprehensive network of advice services. Local Authorities are best placed to tailor and target support where it is most needed and a funding formula would provide for this.
Energy Saving Trust’s 25+ years of experience has shown us that access to tailored advice facilitates householder action and ensures efficient targeting of public investment. From 1992 until June 2018, when the government replaced it with a website, we ran a publicly funded service providing householders across the UK with access to trained advisors able to discuss specific home energy advice, reflecting their individual circumstances — whether that be an unusual home heating system, a hard-to-insulate home or difficult family situation.
We are pleased that ‘multiple stakeholders’ recognised the lack of such provision in England to be a key barrier. We support innovative Local Authorities who have secured funding for and deliver their own services, often funded via the Supplier Redress Fund. However, we believe that the demand for these services does not meet current provision. Moreover, this individual support should be available to all - as it is in Scotland.
The Committee on Climate Change has been clear that over 60% of the activity required to get us to Net Zero will involve behaviour change throughout the population. Tailored advice provision that helps householders with heating, renewables, electric vehicles and how all these areas interact, is pivotal to building public engagement and consumer trust.
Current installations rates of energy efficiency measures are just 5% of 2012 levels – this needs to ramp up nine fold in England to meet Government aspirations. We agree with the Committee that the Government’s £5 million funding for a new Green Housing Finance and Innovation Fund is ‘woefully adequate’.
While the Government has neither assessed the cost of getting to ‘C’, nor defined what would count as cost effective, since it published this aspiration in the 2017 Clean Growth Strategy, the Department of Business, Energy and Industrial Strategy (BEIS) has estimated investment will be in the region of £35-65 billion. Much of this will come from asset holders and private finance; however, there is a consensus that we will need increased public investment of around £1 billion per year to 2035 to stimulate this and to support investment in both social and fuel-poor homes. £5 million is certainly ‘woefully inadequate’ in this context.
The report also confirms that the often-quoted solution of Green Mortgages has not materialised – it’s currently restricted to an offer from one provider targeting new build not existing homes and completely misses the mark. The Government cannot rely solely on market mechanisms to bridge the gap. BEIS accepts that there are significant long-term returns on energy efficiency investment and that incentive schemes, such as the German KfW scheme, can largely pay for themselves in increased VAT returns. We urgently need new incentives bought forward for the able-to-pay sector, plus a trajectory of minimum standards for social and privately rented homes, with proper enforcement across the board.
It is hard to avoid the conclusion of the Committee that:
'the Government is presiding over a failing policy. It needs to be revived. Progress is not stalling due to a lack of evidence on how to drive energy efficiency uptake, but a lack of political will’.
The past six months have clearly demonstrated the public appetite for action on climate change. If we are to ensure a fair and ‘just’ transition, this action must start with our homes.