Aligning Policy with Private Investment: Where are we Going Wrong?
Private sector bodies are currently calling on the UK Government to continue to prioritise energy efficiency as a core solution to the cost-of-living crisis. Housing Industry Leaders looks at how the private sector needs policies to secure their funds and a net zero future.
Currently, the UK is facing both a cost-of-living and energy crisis, and this has highlighted the urgent need for improved energy efficiency in homes. Energy efficiency retrofits have been identified as essential tools to deliver many of the UK Government’s goals, such as strengthening the UK’s energy security, lowering household energy bills, reducing the need for government borrowing to pay for energy bill support schemes, and boosting economic growth across the country.
Growing the energy efficiency market is also essential in ensuring the UK continues to lower its carbon emissions. However, the current market is not operating at the scale needed to address the UK’s energy demand challenges or to reach its net zero targets.
The Installation Of Energy Efficiency Measures Must Become More Attractive
A clear public policy framework from the UK Government is urgently needed to accelerate the growth of the energy retrofit market. Aldersgate Group, through the publication of its ‘Warming Britain Affordably’ report, and Energy UK, the Local Government Association, the Federation of Master Builders, and the National Housing Federation, are calling on the UK Government to prioritise energy efficiency.
These private sector bodies have stated that the government should make a string of interventions to create demand for energy efficiency retrofits, make retrofitting affordable to the public, and ensure that there are enough trained workers to deliver and improve consumer protections and trust.
The first step towards scaling up energy efficiency in the UK is to increase demand, with new regulations and fiscal incentives needing to be seen to unlock additional demand introduced. Clear fiscal incentives will make the installation of energy efficiency measures more attractive to both homeowners and landlords. To achieve this, Aldersgate Group has explained that the government needs to: “Transform and broaden existing government proposals for a minimum EPC in different types of property.”
A Long-term Skilled Workforce Is Needed To Transition To Net Zero
However, introducing policies that increase demand for retrofitting must be complemented by a framework to ensure that the demand is met by a supply of trained installers and appropriate materials, along with measures to build trust in the sourcing and installation of energy efficiency measures.
Chief Executive of the Federation of Master Builders (FMB), Brian Berry, expressed that to improve energy efficiency, the housing sector must retrofit its current homes: “Our country has some of the oldest and leakiest housing in Europe which makes them very expensive to heat.”
The government wants to reduce energy consumption and the best way to do this is to make our existing 28 million homes more energy efficient, which will help cut energy consumption and reduce energy bills.
Improving the energy efficiency of every UK building in need of retrofit will require 350,000 new full-time workers within the construction industry to be trained by 2028. Therefore, creating the right conditions to enable local areas to develop the long-term skilled and qualified workforce needed to deliver retrofit and energy-saving measures should be a key focus for the UK Government.
Brian explained that to apply energy-saving measures, it is crucial that the UK Government create these conditions: “Local builders are best placed to help householders insulate their homes, but they need certainty that there is a growing market for them to invest in the skills and training needed to deliver retrofit improvements.
“Funding announced to incentivise energy efficiency upgrades needs to be brought forward in time for this winter – not next – and the government should back industry efforts to accelerate the rollout of domestic energy efficiency programmes.”
Existing Public Funding Schemes Must Be Protected From Cuts
The report by Aldersgate Group also outlined that to secure a successful increase in energy efficiency demand and delivery, finance is vital. The government and financial regulators can play a key role in creating and backing innovative finance mechanisms which both utilise public finance to crowd in private investment into energy efficiency and increase the number of financial products available through lenders. To achieve this, the report recommends that the government should ensure that existing public funding schemes are not only protected from cuts by gradually expanded over time.
In addition, the UK Infrastructure Bank (UKIB) should offer innovative financial products to individuals looking to install energy efficiency measures. If the UKIB is unable to lend directly to customers, the report explains that a state-backed guarantee scheme to allow retail banks to fill this role would achieve a similar outcome.
Seeing the UK Government continue to prioritise energy efficiency in the housing sector is crucial to helping keep household bills down permanently while supporting the transition to net zero through reducing emissions and supporting the UK’s levelling up agenda through the creation of new jobs.
