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Energy Efficiency: building towards Net Zero
BEIS Select Committee

12 July 2019

 

The UK stands no chance of meeting its emissions reduction targets, including net zero by 2050, unless the Government takes urgent action to revive its failing energy efficiency policy and builders are compelled to deliver the latest energy efficiency standards, MPs have warned.

 

Climate Change

A new report from the BEIS Select Committee states that improving the energy efficiency of buildings is vital to meeting climate change obligations, eradicating fuel poverty and lowering home energy bills. Energy efficiency is the cheapest way of reducing carbon emissions, but public investment has shrunk, and the rate of installations has gone backwards – with insulation measures installed in houses under Government schemes now 95% lower than in 2012.

Summary

Widespread deployment of energy efficiency measures across the UK's buildings will be key to meet net zero greenhouse gas emissions by 2050, to tackle fuel poverty and cut energy bills. Energy efficiency investment also has the potential to unlock substantial, long-term economic returns. After a period of declining financial and policy support for energy efficiency, the Government published its Clean Growth Strategy in October 2017, which set new aspirations for energy efficiency.

An inquiry was launched to assess how the Government's energy efficiency ambition was being translated into action. The Committee concludes that the Government is off-track to meet its targets; major policy gaps still exist. The UK's building stock remains one of the most inefficient in Europe and the Government needs to back energy efficiency as one of the cheapest ways to reduce our carbon emissions.

Investment and infrastructure

The Committee finds that there is a disparity between the public money invested in residential energy efficiency schemes per head in England compared to that in Scotland, Wales and Northern Ireland. While there is a clear and substantial investment gap that needs addressing, it has raised concerns that the Government has set targets for energy efficiency without having a clear grasp of how much public investment is required to meet them.

Therefore, the Committee has recommended that Government sets out how much public investment will be required to meet its Energy Performance Certificate (EPC) Band C targets. It concludes that improving the energy efficiency of the UK's building stock is a national infrastructure priority and recommends that it should be designated as such by the Government.

Retrofitting homes

The report says that the Government's fuel poverty targets are expected to be missed. The Energy Company Obligation (ECO), a supplier-funded scheme that currently targets low-income, vulnerable and fuel poor households, has become the Government's key mechanism for alleviating fuel poverty through energy efficiency. However, the Committee found that ECO's lack of funding, its focus on low cost rather than need, and the requirement for top-up funds from recipients, make it unsuitable as the only fuel poverty scheme.

Following the example of the devolved nations, it recommendeds three tiers of funding consisting of ECO, centrally funded local authority schemes, and a further national funding safety net, to provide a comprehensive strategy for energy efficiency for fuel poor households. It recommends that this is combined with enforced high standards of installation and a comprehensive network of advice services.

The Committee concludes that the Government's recent announcement of a £5m Green Home Finance Innovation Fund is inadequate to stimulate demand for energy efficiency for those who are able to pay.

The Committee recommends that the Government publishes its energy efficiency 'Action Plan' to explain how it intends to meet its EPC Band C 2035 target and they recommend that the 'Action Plan' increases the £5m allocated to the Green Home Finance Innovation Fund. It needs to provide proper resources to underpin a demonstration that tests a wide package of incentives at scale, including a Stamp Duty enticement, for those able to pay.

The Committee welcomes the strengthening of the private rented sector regulations for energy efficiency, but their scope and impact is still limited. It recommends the Government increases the level of the cost cap attached to the regulations and properly resources local authorities to ensure they have the capacity to impose the standards. It states that the Government wants the social housing sector to be a "flag bearer" for energy efficiency standards but has failed to set out a delivery mechanism.

New Homes

The Committee concludes that the majority of large housebuilders will only raise the energy standards of their stock if forced to do so by regulation. Therefore, it recommends that the Government legislates for the Future Homes Standard as soon as possible and it further recommends that the Building Regulation regime is revised to close loopholes that allow developers to build new homes to outdated energy efficiency standards. The report highlights the Committee's disappointment that homes can also be legally sold that do not meet the advertised energy efficiency standards and recommend that housebuilders should have to test the 'as built' performance of new homes and be made to publish their results.

Commercial Buildings

The Committee has found that Government has failed to raise the prominence of energy efficiency within business and that most businesses are not aware of the Government's energy efficiency targets and those that are take the view that it will not be met. The report highlights that the market is not delivering change at the pace needed and neither is the regulatory framework. The Committee recommends a step-change in the Government's approach to regulating the sector, with the improvement of the minimum energy efficiency standards, the mandating of operational performance ratings, and improved standards for new commercial buildings.

The Committee concludes that the Government is presiding over a failing policy: progress is not stalling due to a lack of evidence on how to drive energy efficiency uptake, but a lack of political will. Its recommendations are based on tried and tested policies which, if taken, will put the Government back on track to meeting its energy efficiency targets.

 

See the full report.

 

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