UK Government slammed for continued ‘lack of ambition and funding’ for energy efficiency

Less than half of UK homes currently meet the EPC's 'C' efficiency grade or higher

Sunday (11 September) saw the Institute for Government (IfG) publishing a new report on ‘what the Truss Government should learn from other countries’ on energy efficiency amid the ongoing price crisis.

The report states that Truss’s confirmation that annual, dual-fuel household energy bills will be frozen at £2,500 for two years from October is a move that “matches the scale of the crisis, providing certainty” to energy users. Truss also confirmed a price cap for business energy for a minimum of six months.

However, the paper warns that the intervention does not consider what happens in the longer term, with gas prices set to remain high into the late 2020s and with the UK exposed to fluctuating prices due to its gas-fired electricity stock, gas heating and inefficient buildings. The Office for Budget Responsibility (OBR) has stated that natural gas is likely to remain at least three times the average pre-February-2022 price until 2027. The IfG calls the Government’s current approach one of “necessary but suboptimal policies” from economic, social and environmental perspectives.

Highlighting past research from bodies including the UK Government’s advisory body, the Climate Change Committee, the report highlights how the UK’s housing stock is one of the oldest and least energy-efficient in Europe. It states that rapid action on the issue, including a nationwide retrofitting scheme for insulation and behaviour change communications, could reduce domestic energy bills across the UK by £27bn per year.

“Gas prices are set to remain high throughout 2023, and be volatile beyond that, which suggests that the UK will remain vulnerable as long as it is highly dependent on gas,” the report summarises. “Improving energy efficiency could make a much bigger difference than energy supply measures in the medium term.”

When the UK Government published the Energy Security Strategy in April, under Boris Johnson, several green economy experts and civil society groups criticised it as a “generation strategy”. Much was said about energy generation in the medium to long-term, including nuclear and offshore wind, but there were no new measures on the demand side in the short or medium term. These criticisms have only intensified as forecasts for energy bills in 2023 have increased in light of the latest market trends.

The IfG report criticises Johnson and his predecessors for overseeing a “decade of failure” to deliver energy efficiency improvements at scale, noting the failure of the hastily designed 2020 Green Homes Grant and its predecessor the 2012 Green Deal. These failures, the report argues, directly correlate to drop-offs in levels of home retrofit.

The Government has maintained since Truss was elected last week that it is not set to develop and launch any new national schemes on energy efficiency based on improving building fabric. This is in contrast to the approach being taken by the EU and by several member state governments.

Greener Vision

A similar report to the IfG’s has been published by not-for-profit Greener Vision, urging the UK Government to ensure that its responses to the cost-of-living crisis also contribute to a credible net-zero transition.

The ‘Pathways to Net-Zero’ report, like the IfG’s, outlines how the UK will continue to be exposed to high gas prices through to the late 2020s, meaning that the Government response so far will not provide certainty to energy consumers beyond October 2024 as will likely be necessary.

Beyond the fact that the price freeze is a short-term intervention, the Greener Vision report questions how the bill will be footed and argues that the bailout is “not well targeted”, arguing the case for more targeted interventions for the fuel poor and other vulnerable groups.

It also questions how it is aligned with the UK’s medium and long-term emissions ambitions, highlighting previous research on how a long-term energy demand reduction strategy would enable a faster, fairer and more affordable transition to net-zero. It proposes an energy efficiency strategy funded by a carbon price that would apply to all products and all sectors. The price, it states, would hit higher-income homes more, as these homes consume more products and services – and more higher-carbon options – than low-income houses.

Greener Vision’s founder and chief executive Claire Haigh said: “If we are to wean ourselves off fossil fuels, we must reduce energy demand and ensure that net-zero is at the heart of all public policy decision-making. We cannot afford any backsliding on decarbonisation.

“We urge the new Prime Minister to tackle the worst cost-of-living crisis in a generation in a way that will accelerate the transition to net-zero and enhance our energy security.”

Truss, who worked for Shell before her political career began, had been vocally pro-fossil-fuel and anti-solar during her campaign to become Conservative Party leader. She stated in passing during hustings and TV debates that energy efficiency is necessary, but had not promised any additional interventions.

This, combined with her choice of Cabinet Ministers, has sparked debate about the future shape of the UK’s net-zero transition and its social impacts.