I was asked to speak at an annual strategy meeting for a building society recently. Like many financial institutions they are keen to see as many homes retrofitted as possible – cheaper energy bills means more people keep up their mortgage payments in difficult times! But less cynically, they are truly committed to reaching net zero and, with homes being their business, they are keen to encourage retrofit as much as they can.
The discussion was fascinating and we explored the financial products and services that might encourage more people to retrofit their homes. But the reality is, right now these are limited; at best they offer reduced interest rates for a few years when a household has invested in energy efficiency measures, and take up is limited too.
This is the stark reality: retrofit is expensive. The cost for the average home is £18,000 and this sort of money is simply beyond most people, even when they have access to a loan.
This leads us inexorably to one conclusion: retrofit in the UK has to be driven by government funding and legislation. And in this regard we are sadly lacking – the graph from @BloombergUK below says it all.
Government investment in retrofit was significant until 2012 but cuts since then mean the number of home retrofits has fallen from nearly 1.5 million measures a year to around just 40,000 – far short of what we need to improve the energy efficiency of the UK’s 19 million leaky homes by 2030.
And here lies the danger. The headline (and legally binding target) is net zero by 2050. The closer we get to 2050 there is a real danger that government only focuses on decarbonising our power system and less and less on energy efficiency – because it could prove too costly and too difficult.
I believe there is a real danger that, in the rush to net zero, we won’t retrofit our homes and fuel-poor households will continue to be left behind.
We need to make sure we leave no one behind as we bring our economy and society into balance with our planet.
Neglecting retrofit will miss a unique opportunity to make the energy landscape fairer. Poorer people pay a far higher proportion of their income on fuel bills than the wealthiest and many more live in badly insulated homes. So retrofitting has a big impact on the disposable incomes of the poorest. If, in our rush net zero, we pull back from retrofit, the fuel-poor will continue to need more energy to heat and power their homes, leaving them spending an even greater amount of their income on energy.
Environmentalists and politicians talk about a just transition to net zero – this means we need to make sure we leave no one behind as we bring our economy and society into balance with our planet. Yes retrofitting can be difficult and is currently expensive, but it’s a vital part of the mix. We must keep the pressure on our politicians to make sure our transition is truly just and equitable.
But before people plunge in they need to understand why energy prices are going to stay high for a long time. It helps to make those big decisions when we have more certainty about the future.
