Feeble progress on decarbonisation

Originally written as a column for Inside Housing.

The prospect of underspent decarbonisation funding for social housing being sent back to the Treasury is worrying enough in itself – and that’s before you consider the bigger picture.

The warning from a senior civil servant at the Department for Business Energy and Industrial Strategy was delivered at the Housing 2022 conference this week as he urged landlords to bid for the upcoming second wave of the Social Housing Decarbonisation Fund (SHDF).

In the wake of alarming lack of progress by councils who received funding from the Social Housing Decarbonisation Fund Demonstrator, the fact that the money is being released in one-year tranches may be part of the problem. There are also  still major concerns about skills and capacity to carry out the work.

However, at least the fund is there. The really alarming thing is that this is just about the only part of plan to decarbonise housing as a whole that is even close to on track to achieving the progress needed to achieve net zero.

A sobering report from the Climate Change Committee (CCC) published on Wednesday reveals the scale of the challenge and the lack of progress so far.

Absurdly, as CCC chair Lord Deben says in his introduction, we are still building new homes that will not meet minimum standards of energy efficiency and will require significant and expensive retrofitting. This is six years and counting after the original target for all new homes to be zero carbon.

The Future Homes Standard will not apply to new homes in England until 2025 and the CCC is ‘not confident’ that interim measures will drive sufficient change before then since they will still add to the stock of gas boilers that will need to be retrofitted.

But progress is even slower on existing homes and the vast majority of the housing stock that will exist in 2050 has already been built.

Much depends on the take-up of low carbon heat pumps. Although installations increased to 54,000 in 2021 that still needs to increase by 12 times to achieve the government’s target of 600,000 a year by 2028 and even that is less than the 900,000 the CCC says is needed for a balanced net zero pathway.

The picture is even grimmer on home energy efficiency installations like insulation that will be essential to meeting the government’s target ambition for all homes to achieve EPC C by 2035.

This graph from the report shows not just the gap between what’s being achieved now and what’s needed but also the scale of the slump after the government cut support for retrofits and cut the ‘green crap’ in 2012:

Another 12 months have ticked by on the road to 2050 since the CCC delivered a similar warning last year but surging energy prices mean the context for consumers has changed radically.

In the short term the cost of living crisis reduces the put the squeeze on spending on energy efficiency but in the longer term it strengthens the link between decarbonisation and consumers’ pockets and increases the viability of retrofit. ‘The value for money case of energy efficiency has never been stronger,’ says the CCC.

Equally, while there has been progress in decarbonisation schemes like the SHDF for fuel poor homes, far more households are now in fuel poverty (between two and four million depending on the definition used) and budgets will be stretched to breaking point.

However, the CCC says it is energy efficiency in non-fuel poor homes that represents the most significant gap of all.

Only the private rented sector is covered via the consultation on increasing the minimum standard for rental properties to EPC C by 2028, although it remains to be seen how that will be met without a reduction in supply.

For owner-occupied homes there is no funding to support retrofits, no regulations to drive improvements and only a vague prospect of targets on boiler manufacturers to drive more heat pump installations. The only other policy being considered by the government here is voluntary energy performance targets on mortgage lenders .

The CCC suggests that this policy gap needs to be addressed with credible policies and suggests requiring EPC C from 2028 at point of sale and/or a mandatory minimum energy requirement on mortgage lenders.

The impact of either of those measures on owners of older homes, and the likely headlines in government-friendly newspapers, perhaps tells you all you need to know about why that policy gap still exists.

And even if that political problem could be addressed, there are still major risks with public awareness (a comprehensive energy advice service is due to be launched this summer) and shortages of the skilled workers needed to do retrofits and install heat pumps. At the moment we don’t even count how many there are and how many are being trained and a net zero skills strategy promised by this Spring has still not been published.

The prospect of climate change already made an overwhelming case for housing decarbonisation even before the energy price crisis and surging fuel poverty added extra urgency. It’s way past time for government to step up to the challenge.  


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