Recovering Progress on Energy Efficiency

Written by Mitesh Dhanak

The coronavirus pandemic continues to wreak havoc on our lives. But amid the social and economic turmoil there is a small chink of light. At the height of the lockdown, UK carbon emissions fell by around 31%, the steepest drop in output since records began.

Social distancing has prompted us to rethink how we travel around cities, causing our footpaths and roads to be filled with walkers and cyclists. Last month, the concept of introducing a cycle path to London’s Park Lane became reality four days later. Restrictions may have limited us, but they have forced us to live more sustainably.

A cleaner, greener world is possible beyond Covid-19, but it is by no means guaranteed. History tells us that emissions rebound as economies recover. The challenge will be for society – and ultimately, for governments – to maintain lower emissions, and to capitalise on broad public support for an economic recovery with sustainability at its core.

In his capacity as COP26 President, the Business Secretary Alok Sharma recently called on the world’s leading economies to consider, “ambitious long-term strategies, and actually to step up action to help the most vulnerable in society to adapt to the changing climate”. His opposite number, Ed Miliband, is using the language of the American left and its Green New Deal – calling for a ‘zero carbon army’ to leverage green jobs, technologies and industries in response to the pandemic.

Both parties agree that our recovery must be built on policies that benefit society as a whole. With that in mind, the Government could make progress towards its stated goal of levelling up – and simultaneously reduce our carbon emissions – by committing to a comprehensive retrofitting of the UK’s housing stock. The Committee on Climate Change (CCC) has argued that this is imperative: failure to tackle millions of inefficient homes will see the UK fall short of its legally binding climate change targets.

Domestic energy efficiency has undoubtedly improved in recent years, with upgrades delivered to homes up and down the country through the Government’s flagship Energy Company Obligation, or ECO. Since 2013, Cenergist has installed measures that will save around 800,000 tonnes of CO2 over their lifetime and reduce utility bills by up to £520 per year. With one in eight UK households living in fuel poverty, that is a vital saving, though research by Populus has shown that Covid-19 has caused household energy bills to increase by an average of £32 per month during the lockdown. Future policymaking must be designed to bring down both emissions and costs.

ECO has been a qualified success in this regard, and we have held constructive discussions with BEIS about how the next iteration could do an even better job of driving domestic efficiency upgrades. We have argued that ECO could be more effective, and reach even more people, in two specific ways.

First, by widening its scope. Many thousands of fuel poor households are currently excluded from ECO, an unintended consequence of an attempt to focus on the most inefficient properties in the private sector. Pensioners struggling to keep warm are told they cannot receive help because 30 years ago there had been a warm air system in their property. The fact the unit has been decommissioned and removed makes no difference. ECO should be there to support households based on the current condition of their property, whether they live in private or social housing. 

Second, by increasing the type of works permitted. The present scheme has a very strong focus on external wall cladding and first-time central heating. In doing so it misses that for many households in need, the solution is to improve the efficiency of their existing heating system or to move them to renewable ground source heating. By excluding smarter solutions, the overall cost of ECO is increased and fewer households are helped. 

With the rescheduled COP26 on the horizon and the opportunity to redefine our National Determined Contributions (NDCS), now is the time to look closely at our overall approach to domestic energy efficiency to ensure we can reach net zero by 2050.  In particular, the concept of offsetting emissions should be applied more imaginatively. Rather than planting ever more acres of forest, we should encourage businesses to offset their emissions by improving the energy efficiency of homes and buildings. This would drive the uptake of low-cost technologies and deliver carbon savings.

Retrofitting existing homes is a relatively straightforward move with substantial benefits: generating high quality jobs, further driving sustainability, and combatting fuel poverty. It represents an obvious starting point on the long road back from 2020.

Mitesh Dhanak is the founder and managing director of Cenergist