Research by the Centre on Innovation and Energy Demand has helped to inform the recently published UK Energy and Climate Change Select Committee (ECCC) report on Home Energy Efficiency. CIED originally responded to the ECCC call in 2015 for scrutiny priorities, listing Home Energy Efficiency as a key focus area. The centre later responded to the official inquiry on the subject, and in December 2015 CIED Senior Research Fellow Jan Rosenow, was called on to give evidence to the Committee. Jan’s oral evidence, and CIED written evidence is widely cited in the final report.
The ECCC report reveals that the frequent changes to government energy policies are denting consumer confidence in the sector and hampering the UK’s ability to improve energy efficiency. It calls on the government to make improving energy efficiency in new and existing homes a “top priority” and to identify ways to help poor households struggling to pay their fuel bills.
The report says that increasing energy efficiency is a “win-win” for UK households because, “It enhances the UK’s energy security, cuts the carbon emissions from our building stock, and reduces costs – the cheapest energy is the energy that we don’t use.”
Improving energy efficiency in homes
Energy efficiency policies have successfully reduced UK household energy consumption, with total household energy use decreasing by 19% between 2000 and 2014, despite a 12% increase in the number of households and a 9.7% increase in population. [PDF] On average, individual households now use 37% less energy than they did in 1970, with the bulk of this decrease occurring since 2004.
Despite the evidence, there is now very little support to help house owners who wish to install energy efficiency measures, but cannot meet the costs upfront. Jan Rosenow, speaking to the Committee, said if the government wanted to see a “scale up” in the energy efficiency market, subsidies should be provided to help people finance work to make households more energy efficient. He pointed out that without incentives provided to the private landlords improvements to rental housing won’t be made to make them more energy efficient. “I can’t see how landlords will be forced to improve their properties because there is no financing in place,” he said.
Proposed changes to houses include cavity wall insulation, which helps retain heat within the house, or the more costly and lengthy process of solid wall insulation – which involves insulating the house from either the inside or the outside. Typically homes older than 1919 need solid wall insulation.
Sudden policy changes
The energy efficiency supply chain has been badly affected by frequent policy changes and is identified as a key area of concern in the ECCC report: “In the last year the Government has announced an end to the Green Deal and it has reneged on a long-standing commitment to require all new homes to be zero carbon from 2016 onwards.”
The report includes a statement from energy giant E.ON: “Considered individually, some of the recent changes may appear reasonable, but the combination of so many changes in such a short period of time with limited or no consultation has left a void. Investors have been left questioning the future direction of Government policy and its commitment to long term targets.”
Targeting fuel poor households
Around 10% of all households in England in 2013 were found to be “fuel poor”, meaning that they spent over 10% of their income keeping their homes at a reasonable temperature. The government announced in its November 2015 spending review that suppliers would now be responsible for upgrading the energy efficiency of 200,000 homes per year.
The report says this is the “wrong approach”, saying that the funding was inadequate and “not ambitious enough.” It cites Rosenow, who suggested that the very idea of using suppliers to assist the fuel poor was questionable because suppliers focussed on low costs:
“Energy suppliers usually target those properties where they can achieve the highest amount of savings for the smallest amount of money. That is not the fuel poverty sector [ … ] I don’t think energy companies are the best actors to deliver on fuel poverty.”
No ‘silver bullets’
The report says there are no “silver bullets” for improving home energy efficiency, but identifies regulations, subsidy programmes, obligations, targeted grants and long-term structural incentives as potential solutions when used in combination.
It calls on the Government to:
- make energy efficiency a national infrastructure priority
- demonstrate a “renewed commitment” to energy policy through long-term ambitious policies which restore confidence in the industry
- reconsider its decision to use a supplier obligation to tackle fuel poverty and determine instead what the best mechanism is for tackling fuel poverty
- re-introduce a range of options and incentives for ‘able-to-pay’ households
- empower local authorities to deliver energy efficiency programmes and
- ensure new homes won’t require future costly retrofits by reinstating the zero carbon homes policy.