Winter is the time of year when outdoor temperatures plunge and thermostats in homes get turned up. But the image of cosy homes, protecting people from the cold, is too rarely a reality in the UK. We have some of the most draughty and inefficient housing stock in Europe. The most recent government statistics show that 31% of homes with cavity walls have no wall insulation; 33% of homes with lofts have no loft insulation; and 92% of homes with solid walls have no wall insulation.
Yet, since the ending of public funding for the Green Deal and the scaling back of the Energy Company Obligation (ECO), there has been a policy vacuum for incentivising non-fuel poor households to invest in energy efficiency measures. The withdrawal of a supportive policy framework is starting to have an economic impact. Figures published by the Office for National Statistics (ONS) last month revealed that the number of people employed in the energy efficiency sector had fallen from 155,000 in 2014 to 143,000 in 2015.
In the past month, however, there have been some positive signs that the energy efficiency policy log-jam could be about to end.
EU 2030 energy strategy
In the EU’s 2030 energy strategy, published late last year, the EU Commission proposes a binding target of a 30% reduction in energy use relative to a business-as-usual scenario. They endorse the concept of ‘efficiency first’, which prioritises cheap efficiency upgrades over building expensive, new generation capacity. Jan Rosenow, a senior associate at the Regulatory Assistance Project (RAP), has described this principle in an essay for our Green conservatism project.
The strategy includes a set of policies to drive ‘eco-design’ (amending product regulations so that they are more energy efficient), retrofit of existing buildings with insulation, better energy performance labelling, and access to finance for energy efficiency measures. But, following the UK’s vote to leave the EU, it is unclear whether these measures will be transposed into UK law prior to our formal departure in 2019. While it seems likely that the UK will be able to miss this target with impunity if it wishes, it may begin implementing the EU legislation before Brexit is completed or choose voluntarily to continue with the target.
After many months of delay, the government-commissioned Bonfield review was published last month. When Amber Rudd, the then Energy Secretary, announced the end of the Green Deal in 2015, she appointed Dr Peter Bonfield, CEO of the BRE group, to lead an industry review of consumer protection and standards in the energy efficiency industry. This followed reports that some Green Deal installations had been poor quality, undermining consumer trust in the industry. Our recent report on the Green Deal, Better homes, cited evidence that around 11% of Green Deal assessors and 14% of Green Deal installers were suspended from the scheme because of poor workmanship.
The Bonfield review makes a number of recommendations: a new information hub to explain the different measures to consumers and help them navigate the complexities of the supply chain, which was something we called for in our Better homes report; a new ‘quality mark’ so that companies installing energy efficiency and renewable measures conform to a framework of robust standards; and a new ‘data warehouse’ so that information about how individual properties consume energy can be better utilised by installers.
Emissions Reduction Plan
Detailed work is now underway on the government’s Emissions Reduction Plan, which is expected to be published in the first few months of 2017. This will set out the policies to enable the UK to meet the fourth and fifth carbon budgets. The fifth carbon budget was passed into law in July 2016, and requires a 57% reduction in greenhouse gas emissions by 2028-2032, from a 1990 baseline.
A recent report by the Association for the Conservation of Energy has assessed whether the current energy efficiency policies will be sufficient to achieve the emission reduction pathway recommended by the Committee on Climate Change (CCC) as being the most cost-effective. They find that there is a 12% gap between the reductions that current policies will deliver and the cost-effective CCC scenario.
The authors call for new policies in the forthcoming Emissions Reduction Plan to close this gap: in particular, they propose new regulation to ensure homes that are sold meet minimum energy performance standards, which we called for in our Better homes report last year. In a recent speech, Baroness Neville Rolfe, the former Energy Minister, hinted that the Government was considering such a policy: “We should ask whether we can do more to encourage home owners to improve their properties when they buy or when they move.”
Energy bills are likely to start rising again soon, as a result of higher wholesale costs. The Government’s response to this must not be to scale back energy efficiency programmes, as happened in 2014, but to scale up ambition. Energy efficiency measures will cut bills in the long-term, giving people permanently warmer and more comfortable homes for less money each month.
Following the EU 2030 energy strategy and the Bonfield Review, Ministers should use the opportunity of their forthcoming Emissions Reduction Plan to drive a major uptake of domestic energy efficiency measures. The prize is warm, comfortable homes that actually keep people warm in winter.
Sam Hall is a researcher at Bright Blue