Building an energy efficient future

Creating a sustainable future for our buildings

What's needed to improve the energy efficiency of our homes - those already standing and those yet to be built?

For the UK to successfully transition to a net zero future, the heating of our homes, businesses and public buildings will need to change now and throughout the next decade.

"We need a complete vision of where we need to get to by 2050; how the buildings standards need to evolve over that period; and how the tax system can evolve to deliver the hundreds of billions of investment we need," Michael Lewis, E.ON UK CEO, told a Parliamentary Select Committee last week that looked at how to improve the energy efficiency of new and existing homes.

The residential sector is the second highest emitter of the country's carbon emissions so improving the energy efficiency of homes will help us move towards a cleaner energy future and help achieve net zero. It will also help people to lower their energy bills and increase the comfort in their homes while reducing fuel poverty. This in turn leads to improved health and wellbeing and brings savings for the health and social care sectors. "Ratcheting up buildings standards, both new-build and retrofits, is absolutely critical." Michael Lewis told the committee.

Around 29 million homes in the UK currently have the potential to dramatically improve their energy efficiency through measures such as better insulation and by taking advantage of opportunities available through the Green Homes Grant (GHG) scheme.

With the right long-term investment framework, we can not only deliver this, but also insulation for the millions of homes built before 1919 with solid walls.

"The tax systems need to be aligned to incentivise the retrofit of energy efficiency measures. All elements of the tax system: whether it's a carbon tax on gas, council tax, stamp duty, VAT, they can all be mobilised to support low-carbon investments in existing housing," he said.

Widespread deployment of energy efficiency measures across the UK's building stock will be crucial to any credible and cost-effective strategy to meet net zero. This includes improvements to around six million cavity walls, six million solid walls and 21,000 loft insulation measures.

The Government has pledged £9.2bn in its manifesto to improve the energy efficiency of the UK's homes, schools and hospitals. But while incentives such as the GHG scheme can help environmentally-minded homeowners to implement energy efficiency changes, there has been some frustration over the lack of registered installers and how complicated it is for people to navigate.

Michael Lewis believes that, learning from our European neighbours, one of the most effective incentives to help homeowners is the KFW scheme in Germany, which promotes the construction of new energy-efficient homes and retrofit of older ones.

As part of the mortgage offer that people receive when buying older homes, they have an additional loan built into it that has to be used to renovate the building for energy efficiency using accredited standards and organisations to deliver it.

"That model is certainly one we can learn from. If you look at the transition we need to make, it's going to be extremely challenging. We have to realign a number of policies and bringing in the able to pay sector is absolutely critical and this will be unlocked by the mortgage market," said Michael Lewis.

He pointed out that the £275 billion being invested in the mortgage market each year is the paramount place to add on energy efficiency loans and that the trigger point is when the transaction is made. Offering lower cost loans that must be spent on improving the energy efficiency of buildings can achieve a lot quickly towards our net zero goals, but to do that, we need the skilled workers to deliver it, meaning investments must also be made into the workforce.

Another benefit of decarbonising our existing homes is that it's also an opportunity to build a domestic supply chain and skills base across the country, to drive much-needed economic growth in the wake of the COVID pandemic. "There is a significant gap in the skills base we have and where we need to be to deliver net zero." Michael Lewis concluded.

His vision sees the GHG, and its long-term successor, helping homeowners, particularly those unable to pay, to upgrade their homes. This will prime the system and train up the apprentices and engineers that can deliver, and maintain it, for all.