IPPR - UK is falling billions short of investment needed in current parliament for energy efficiency and clean heat

18 Jan 2023 02:17 PM

• Call to bring forward £5.8 billion of investment from 2025 to this parliament
• New research finds retrofitting homes would save the average household £500 a year after energy price cap raised
• Call for ‘GreenGo’ one-stop shop to help households source information and support for switch to cleaner energy
• UK government also falling £2.6 billion short of its energy efficiency manifesto commitment

The government’s ambition to reach net zero, become energy independent and improve the country’s housing stock is being critically undermined by the lack of public investment in retrofitting homes, according to new analysis of government spending by IPPR.

According to new IPPR research, a further £5.8 billion planned investment should be brought forward from 2025 to provide better insulation and new heat pumps sooner, to address the cost-of-living crisis and to boost the UK economy.

This follows the release of Conservative MP Chris Skidmore’s independent review for the government of the UK’s progress towards net zero. The review argued for the UK to go “further and faster” to seize the opportunity in the years immediately ahead.

An estimated £12.7 billion of public funding is needed to boost home insulation by 2025, says the report, of which there is currently a shortfall of at least £2.4 billion. Furthermore, while £5.1 billion of government spending is needed on heat pumps, there is a shortfall in planned spending of £3.4 billion - 67 per cent.

IPPR analysis shows that the government is also falling short of its own manifesto commitment to spend £9.2 billion during this parliament on energy efficiency, by £2.6 billion.

Retrofitting homes with a combination of energy efficiency measures like insulation and low carbon heating would save the average household £500 on energy bills after the new £3,000 Energy Price Guarantee comes into effect in April.

A previous report released by IPPR in September showed that almost all of England’s 24 million homes need to be upgraded with either energy efficiency measures, low-carbon heating or frequently both. A nationwide scheme to retrofit all homes would not just help the UK reach its net zero targets, but it would also create up to 2.7 million direct and indirect jobs, boosting growth and supporting the levelling up agenda.

IPPR is now calling for the creation of a new ‘GreenGO scheme’ – a one-stop shop to provide the information and financial support to deliver energy efficiency and clean heat to households right across the country. Key features of the scheme should include:

• GreenGo funding: to consolidate existing schemes and provide grants to upgrade homes with insulation, good-quality ventilation, and low-carbon heating
• GreenGo communication: to raise awareness nationwide, with information about access to funding and a properly resourced energy advice service
• GreenGo skills: to work with unions, businesses, and workers to develop high-quality job standards and provide training for both existing workers and new labour market entrants
• GreenGo standards: to introduce regulations requiring an EPC rating of C by 2030 for homeowners and confirm government plans to require an EPC rating of C by 2028 for privately rented properties, and confirm and oil and gas boiler phase outs
• GreenGo street-by-street: to determine the most appropriate heat technologies for different areas, to identify and prioritise where improvements need to be made and to audit stock and monitor retrofitting activity

Luke Murphy, associate director of the energy, climate, housing, and infrastructure team at IPPR and head of the Fair Transition Unit, said:

“It takes an average of 28 years from oil and gas exploration licences being granted to production commencing. We could retrofit every household and decarbonise the entire power grid before even a drop of new oil or gas is produced. If the government wants to take energy independence and net-zero seriously, then it must start looking at common-sense solutions.

“Creating a scheme like GreenGo, a one-stop shop for grants and loans, and for advice, is a no brainer. It could help Rishi Sunak deliver on his key objectives of reducing inflation, tackling the cost of living, and growing the economy as well as reducing carbon emissions.”

Josh Emden, senior research fellow and lead author, said:

“A genuine commitment to a comprehensive retrofitting programme can help the government meet multiple objectives. Insulating and decarbonising our leaky homes can cut bills, create jobs, level up the country, reduce energy demand and improve energy security.

“In the current cost of living crisis, the scale of investment now urgently needs to be commensurate with the scale of the benefits on offer as well as the crises we face.”