With UK floods and Californian wild fires causing devastation in recent weeks, the price of some climate change impacts can be clear to see – but others are not so evident. Severn Wye CEO Sandy Ruthven reveals how of a lack of transparency about the hidden costs of climate change is holding back the UK’s retrofit efforts.
Uninformed choices
The cost of retrofitting our homes is high – £360 billion by some estimates*. Not only is it expensive but it is also hard – the retrofit industry (of which Severn Wye is part) will tell you how difficult it is to get householders or governments to pay to insulate walls and roofs and fit heat pumps: expensive things which often can’t be seen.
But every time we choose not to spend on retrofit, other often hidden costs accrue.
These costs are often ‘externalities’ – we don’t pay them directly, but they take money from our wallets in other ways. And the externalities of climate change are becoming clearer year on year.
This is the irony: we are already paying more.
Not so hidden costs of climate change
Hurricane Milton, flooding and heatwaves in the UK – the costs are ever more apparent, and we are paying. The current estimated cost of adapting to climate change is around £22 billion a year (about 1.1.% of UK GDP). That includes measures like flood defences, installing air conditioning, and improving irrigation for farmers, to name just a few. This is expected to rise to around £66 billion a year by 2050 (3% of GDP).
Insurance premiums for vulnerable houses are predicted to be 20–30% higher too. And there are other costs not included in this calculation. The NHS estimates the effects of climate change will result in £15 billion additional burden on healthcare every year. Add in the extra £350 a year every uninsulated household pays for its energy (around £6.6 billion nationally) and the costs really rack up.
Already paying more
So this is the irony: we are already paying more. Climate change is imposing a huge bill on us both as a country and as individuals, and the cost is rising. Suddenly that £360 billion doesn’t look quite as big a number, especially if you spread it over ten or 15 years.
OK, retrofitting every home in the UK is not going to solve climate change, but it will contribute. Add in some good policies (like private rentals having to be at least EPC C, and all new homes requiring an A rating) and the private sector begins to contribute too.
Mortgage companies and insurers are also beginning to cost-in climate change to their policies, making retrofit more cost-effective for home-owners too.
Striking the right balance
All the ingredients are there to rebalance the costs of making our homes more energy efficient. We are already paying but we just don’t notice. Perhaps if those trade-offs were talked about more honestly more of us would take time to read that retrofit leaflet instead of filing it straight in the recycling bin.
* Cost of decarbonising all UK homes could run to £330bn | News | Housing Today
