It’s time for a new direction on home energy efficiency policy: Phil Levermore, Ebico

Reading time: 3 minutes
7 April 2016

Phil Levermore, Managing Director of Ebico Limited, and Chairman of The Climate Group talks about scaling up the UK’s residential retrofitting – and making it accessible for all. This is part of The Climate Group's project Home2025.

With 25% of the UK’s carbon emissions resulting from home energy use, for the country to have a realistic chance of meeting its carbon goals, energy efficiency in the national housing stock will have to be transformed.

Given that over 70% of the properties that will be in existence in 2050 are already standing, this essentially means a comprehensive nationwide program of energy efficiency retrofitting. 

Since 1994, a core principle of government intervention has been that it is the companies that supply households with their energy that should be responsible for funding improvements to home energy efficiency. The preferred mechanism has been to give these companies targets for achieving aggregate household emissions or cost-saving measures and then, largely, leave it up to them as to how they meet them.

It has now been announced that the latest of these interventions, the Energy Company Obligation, will end in 2017 to be replaced by a very substantially reduced program. Unfortunately, there is no suggestion there will be any public money to take up the slack or drive the transformation forward.

And with the Green Deal, the previous government's flagship 'pay as you save' home retrofit strategy, also having closed, the UK’s energy efficiency policy is at a crossroads.

I'd like to make a couple of suggestions for a new direction. 

Focus energy company funded initiatives exclusively on the fuel poor – and transfer the responsibility to energy distribution companies. 

The fuel poor, who rarely self-declare and are difficult to find, can't afford the energy efficiency measures that would reduce their bills and would, in any case, quite properly take the benefit of the measures in warmer and healthier homes.

Whoever is responsible, long-term strategies are needed to build the local-level relationships with local authorities, health organizations and charities that are key to both identifying fuel poverty and building confidence, trust and effectiveness.

This cannot be done against a background of constantly changing three-year targets to be implemented by short-term cash flow-focused energy supply companies responsible for measures across the UK.

Instead, a long-term requirement should be placed upon the electricity distribution companies (DNOs) to ensure all fuel poor households in their area receive the necessary retrofitting and achieve EPC Band C by 2030.

Not only does the capital-intensive nature of these businesses mean they are familiar with longer investment or payback timescales, but they have regional focuses and operate local, regulated, monopolies.

Economies of scale – and street-by-street work – are part of the DNOs’ regular business and they already have a commercial interest in reducing the demand on their networks as a cheaper alternative to network reinforcement. 

The Great British Refurb on national television: Encouraging, supporting (and enforcing) the use of private capital. 

The failure of the UK’s Green Deal showed what a ‘tough sell’ energy efficiency retrofitting is. The expenditures are significant while the annual amounts of money saved are small, and spending thousands of pounds on a long-haul holiday would be much more fun. All the talk of kWh and W/m2K remind the householder of falling asleep in school science lessons. In short, energy efficiency just isn’t sexy.

A different approach to promoting retrofitting is necessary. The ‘Great British Refurb’ would be a national program, initiated by government but franchised to the private sector, which would harness Britons’ enthusiasm for home improvement to the task of a national home make-over.

The benefits of ‘refurbing’ to lifestyle, in terms of comfort, style and family health could be highlighted, with features and exemplars by famous interior designers, architects and DIY gurus.

The energy cost and carbon saving aspects would also be described, but more as a back-up.  Essentially, this would be a television program designed to appeal to British householders lifestyle aspirations.

To support this campaign, and to align heads with hearts, the government would introduce ‘Right to Refurb’. In a similar way as the current Right to Buy initiative offers mortgage lenders a government guarantee against a portion of private mortgage borrowing, so the Right to Refurb scheme would enable lower interest refurb loans or higher loan-to-value limits for extending existing mortgages. 

Government would then leave it to the market to promote to potential customers the finance packages and Great British Refurb work packages. Work packages would, of course, have to result in minimum levels of property energy efficiency improvement.

The third strand of the Great British Refurb would be statutory requirements. The ‘Decent Homes’ Programme, introduced in 2000, placed a statutory requirement on social housing providers to achieve particular thermal standards by 2010.

As a result, sector SAP (a standardized energy efficiency assessment methodology) ratings have improved from 50 to 66 and the incidence of fuel poverty is now half that in the private rented sector.

In short: rules work. So, introduced alongside the Great British Refurb campaign, would be a progressive set of EPC national energy efficiency rating minima – rising from E in 2020 to C in 2030 – below which properties could not be sold or let.

This would create an ambitious, but achievable, path to national energy efficiency improvement and create demand over a timescale that private enterprise can plan for and respond to.

Placing the responsibility clearly on property owners would also incentivise them to seek to identify and qualify themselves, or their tenants, as fuel poor in order to benefit from the consumer-funded retrofitting schemes operated by the DNOs (above) – addressing one of the great challenges to anti-fuel poverty campaigns.

Clearly some flexibility would be required in this statutory improvement regime, for instance a cap on the cumulative cost a property owner is expected to pay, but this combination of inspiration and legislation is, in my view, required for the UK to realize the significant carbon reduction potential inherent in its housing stock.

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