Energy efficiency: building towards net zero Contents

2Delivering Residential Energy Efficiency

Ambition of residential EPC targets

13.The Clean Growth Strategy set a target to upgrade as many houses to EPC Band C by 2035 “where practical, cost-effective and affordable”, and for all fuel poor households, and as many rented homes as possible, to reach the same standard by 2030.55 Commenting on the Strategy’s targets, the Committee on Climate Change (CCC) said that the energy efficiency aspirations are consistent with meeting carbon budgets at least cost, so long as the conditions of “practical” and “affordable” do not substantially restrict “cost-effective” uptake.56 The Government itself admitted to us that 18 months after setting the EPC targets it has neither decided on the number of houses it deems “practical”, “cost-effective” and “affordable” to upgrade,57 nor defined what these terms actually mean.58 Without concrete, measurable ambition, the Government evades accountability on whether its policy aligns with what is required to meet its statutory climate and fuel poverty obligations.

14.It is unacceptable that 18 months after publishing the Clean Growth Strategy the Government is yet to define the condition of “where practical, cost-effective and affordable” that it pinned to the EPC Band C targets. This serious flaw creates policy ambiguity that requires clarification. We recommend that the Government in the first instance sets out the proportion of houses it deems “practical”, “cost-effective” and “affordable” to upgrade to EPC Band C, as well as clear definitions of what these terms mean to provide clarity and accountability.

Progress towards EPC targets

15.Only around 30 per cent of homes in the UK currently meet EPC Band C.59 The overriding message of witnesses was that UK Government policy in its current form will fail to upgrade the remaining 70 per cent; equating to around 19 million homes.60 The CCC told us that the UK Government is off-track to meeting the 2035 target, that progress has slipped, and major policy gaps remain.61 Figures 2 and 3 illustrate the number of homes improved with major energy efficiency measures, including heating upgrades, with government support across the UK, compared to the rate at which homes need to be improved to meet the EPC Band C target. The figures demonstrate that the current rate of renovation in the UK needs to increase by around 7 times. Behind this headline figure lies a variance between the increase in energy efficiency renovation needed in England compared to the devolved nations. For example, in England the rate needs to increase by a factor of 9, compared to a factor of 2.5 in Scotland.

16.Figure 2 also demonstrates a steep decline in renovation rates over recent years. This can be explained in part by a decrease in the availability of “low-hanging fruit”, with the remaining potential for energy efficiency interventions becoming more expensive, but also by a drastic cut in public funding for energy efficiency (discussed later in the chapter).

Figure 2: The number of homes across the UK improved with significant energy efficiency measures with government programme support compared to the rate required to meet the 2035 EPC C target.

Source: Based on BEIS, Home Energy Efficiency Statistics; Northern Ireland Housing Statistics; Home Energy Efficiency Programmes Scotland (HEEPS) evaluation reports; Nest evaluation reports; Annex A, Frontier Economics, Affordable Warmth, Clean Growth (2017)62

Figure 3: The rate of homes supported with significant energy efficiency renovations in 2017/18 across the nations of the UK, displayed as a share of the average annual rate needed to 2035.

Source: Based on BEIS, Home Energy Efficiency Statistics; Northern Ireland Housing Statistics; Home Energy Efficiency Programmes Scotland (HEEPS) evaluation reports; Nest evaluation reports; Annex A, Frontier Economics, Affordable Warmth, Clean Growth (2017)63

Deployment of insulation

17.The major gap is in insulation installation rates, which are at their lowest in ten years. As illustrated in Figure 4 the rate of loft and wall insulation measures going into houses under Government schemes is 95 per cent lower than what was delivered in 2012.64

Figure 4: Annual insulation installation rates under Government programmes (2008–2017)

Source: Committee on Climate Change, UK Housing: Fit for the future? (Feb 2019), p.29

18.The Energy Company Obligation (ECO) is the only public scheme currently delivering insulation measures into homes in England. The target for all homes to reach EPC Band C requires over 1 million insulation installations per year in England, but in 2018 only around 110,000 insulation measures were installed with ECO support, translating into an average of 2,100 insulation measures per week.65 Although it is difficult to track, we have found little evidence to suggest that there is a considerable amount of insulation deployment taking place outside of ECO in England, except for double glazing installations.66

19.Research undertaken by the Centre on Innovation and Energy Demand, Environmental Change Institute, the Regulatory Assistance Project, and E3G, shows that across homes in the UK there is remaining cost-effective potential for around 20 million insulation measures to 2035, and 17 million in England.67 Installing all of these measures would equate to billions of pounds of energy savings.68 For England, the 17 million measures is equivalent to around 20,000 insulation improvements being installed every week between now and 2035.69 The cost-effectiveness of measures is based on criteria used by the UK Government to appraise public policies and the rate of deployment is based closely on the CCC’s central scenario, for meeting the fifth carbon budget at least cost. As the CCC consider the Government’s energy efficiency targets to be consistent with meeting carbon budgets at least cost, we assume that these estimates broadly align with what is required to meet the Government’s EPC Band C targets.70 Figure 5 compares the current weekly delivery of wall, loft and floor insulation measures—the major contributors to the EPC Band C target where the delivery gaps are the largest—to the rate that needs to be deployed across England to 2035.71

Figure 5: Weekly insulation installations required in England to 2035 compared to the current rate of weekly deployment.

Source: Based on J. Rosenow.J., Guertler. P., Sorrell.S., Eyre.N., (2018) ‘The remaining potential for energy savings in UK households’, Energy Policy, Vol.121, pp. 542–552; BEIS, Household Energy Efficiency Statistics (2019)

20.The 95 per cent drop in insulation rates since 2012 demonstrates that progress has slowed to walking pace. The average annual rate at which homes undertake significant energy performance improvements in the UK needs to increase by a factor of seven. If the Government is serious about meeting the energy efficiency aspirations it set out in the Clean Growth Strategy, it needs to rapidly shift a number of policy gears in order to achieve this rate of acceleration.

Who should pay for domestic energy efficiency?

21.In principle, we believe that those who benefit from energy efficiency measures should pay for them. However, a combination of high upfront costs, long-term returns, split incentives between landlords and tenants, the ‘hassle’ of retrofit works, and a perception that energy efficiency investment is not captured by property prices, mean that asset owners are reluctant to invest in improvements even when it is cost effective to do so.72 The external benefits of energy efficiency are not reflected in market prices, so government intervention is needed to stimulate investment.73 The evidence submitted to our inquiry led us to the following conclusions about how costs should be distributed across residential tenures and sectors:

Current investment and the Devolved Nations

22.The financial support provided by central Government for domestic energy efficiency installations in England is drastically less than what is offered in the devolved nations. The main public scheme that directs funding to domestic energy efficiency measures in England is the Energy Company Obligation (ECO). This operates across Great Britain and currently targets low-income, vulnerable and fuel-poor households. The Government points to ECO as a show of its commitment to energy efficiency,77 but the scheme does not constitute Government spending. Instead, the scheme is supplier-led and funded via a levy on energy bills. ECO itself has had its funding cut in half over recent years, operating at £640 million per year, from an original budget of £1.3 billion.78 This is despite the Government accepting the link between the amount of money made available for energy efficiency and the rate of installations.79 While reduced levies lowers energy bills, without replacement funding, the consequential decrease in energy efficiency investment prevents long term bill savings through reduced energy demand.

23.In 2017/2018 UK-wide public investment amounted to around £0.73 billion, predominantly from ECO.80 This total does not include administrative costs, focusing instead on the amounts invested in deploying energy efficiency measures in homes across the UK. But the UK-wide picture masks a stark difference in the public spend per capita between England and the devolved nations, who all operate their own schemes to support households to make energy efficiency improvements. In Scotland and Wales, centrally funded schemes are delivered alongside ECO. E3G, an independent climate change think tank, told us that in 2017, average annual per capita investment was: £35 in Scotland, £23 in Northern Ireland, £17 in Wales and £8 in England.81 Table 1 provides a summary of residential energy efficiency schemes currently operating across the UK.

Table 1: Public support available for households to make energy efficiency upgrades across the UK

Funded via Public purse

Funded via Energy bills


The launch of a £5 million Green Home Finance Innovation Fund in July this year to encourage the private sector to pilot over 18 months green home finance products to incentivise energy efficiency retrofit, such as green mortgages.82

Great Britain

The Energy Company Obligation (ECO): ECO is a supplier led energy efficiency scheme, funded via energy bills, for Great Britain.

The current iteration of ECO was refocused (which started in December 2018 and will run until March 2022) towards low-income, vulnerable and fuel poor households. In 2017/18 the budget allocated to ECO was £555m (which is £640m less £85m admin costs)83


Home Energy Efficiency Programmes Scotland (HEEPS) Area Based Schemes: The Scottish Government funds local authorities to develop and deliver energy efficiency programmes in areas with high levels of fuel poverty. This funding can be combined with ECO funding, owners’ contributions and funding from registered social landlords. An interest-free loan may be available to meet the cost of customer contributions. The budget for 2017/18 was £47m.84

Warmer Homes Scotland: For low-income private households who will not benefit from area-based schemes, a nationwide fuel poverty scheme, offering fully or heavily subsidised energy efficiency measures, is available. If a customer contribution is required for expensive measures, an interest-free loan may be available to meet the cost of the contributions. For 2017/18 the budget was £27.275m.85

HEEPS loans and cashback: The Home Energy Scotland Loan Scheme provides interest-free loans up to the value of £15,000 for energy efficiency measures, including a maximum cashback amount of £3,750. The 2017/18 budget was £30m.86

Scotland’s Energy Efficiency Programme pilots: Equity loans are also being piloted, with a budget of £2.5m, which allows homeowners to borrow against the value of their property to fund energy efficiency measures. There are no ongoing repayments. The loan is paid when the property is sold.87

The HEEPS programme also funds a free and impartial energy efficiency advice and support service to all householders in Scotland. The 2017/18 Advice and Support budget was £10.075m.88


Nest fuel poverty scheme: Provides free home energy efficiency improvements for people in receipt of a means tested benefit that own or privately rent a home in the least efficient bands E, F, G. In 2017/18 £19.5m was invested in the scheme.89

Arbed scheme: Strategic area-based fuel poverty scheme. Focused on improving the energy efficiency performance of homes living in severe fuel poverty, often in some of the most deprived areas of Wales. The scheme targets areas with high numbers of privately owned, off-gas or hard to treat homes. Arbed 3 will invest £54m over the lifetime of the project, which will run from 2018–21. Funding will come from a combination of: the European Regional Development Fund, Welsh Government, and ECO.90

Northern Ireland

Affordable Warmth Scheme: Delivered by the Northern Ireland Housing Executive in partnership with local authorities. Each council has a targeted area with high levels of fuel poverty, where low-income or fuel poor households are offered grants towards energy performance improvements. In 2017/18 £17m of works in private sector homes took place.91

Northern Ireland Housing Executive Grants: In 2017/18, the Housing Executive invested approximately £20m in energy efficiency measures within its planned maintenance programme across its own housing stock.92

Boiler Replacement Scheme: In 2017/18 £1.9m was invested in the installation of new energy efficient boilers.93

Northern Ireland Sustainable Energy Programme: Funded via a levy on energy bills, delivers various grants for energy efficiency to low-income households in social and private tenures, through a range of schemes to whom funding is allocated on a competitive basis. In 2017/18 around £7m was spent.94

24.When we raised England’s low annual per capita investment relative to the devolved nations with the Department for Business, Energy and Industrial Strategy (BEIS), we were told that the Government does not hold data on the devolved administrations spending for residential energy efficiency.95 In respect of ECO, while the Government does monitor the number and type of measures installed by location, it does not track the distribution of ECO spending between England, Wales and Scotland.96

25.The Government appears indifferent towards how public per capita spend in household energy efficiency in England compares to other parts of the UK. We note that Scotland’s investment of four times more than England cannot be explained by a less efficient dwelling stock: the latest housing survey data demonstrates that homes in Scotland actually have greater insulation levels than in England. For example, in 2017, 49 per cent of homes in England had insulated walls, compared to 60 per cent of homes in Scotland.97 For homes with lofts, 43 per cent in England were properly insulated (200mm or more) compared to 63 per cent in Scotland.98 The disparity in per capita spending suggests that the governments of the devolved nations treat energy efficiency as a much higher priority than the UK Government.

26.We recognise that the UK Government is investing in energy efficiency innovation,99 which undoubtedly plays an important role in driving up the performance of energy efficiency technologies and driving down their costs. But innovation funds should support, rather than lead, government policy. Funding for policies that provide businesses with a clear, coherent, and long-term framework in which to innovate is crucial.

27.It is unacceptable for the Government to use the Energy Company Obligation (ECO) to mask its lack of commitment towards energy efficiency. The disparity between the public money invested per capita in England to support households to make energy efficiency improvements compared to what is made available in the rest of the UK implies that the Government considers it less of a priority than its counterparts in the devolved administrations. We encourage the Government to view energy efficiency as a public good that can unlock a full suite of public benefits, rather than a cost to diminish or outsource.

Required investment

28.When discussing the expenditure needed for residential energy efficiency, stakeholders pointed to analysis conducted by the independent economics consultancy Frontier Economics on behalf of the Energy Efficiency Infrastructure Group (EEIG)100 set out in their 2017 report ‘Affordable Warmth, Clean Growth’.101 The report aimed to quantify the scale of investment required for all homes in the UK to achieve an EPC Band C by 2035 and for fuel poor households and rented homes to reach the same standard by 2030. Frontier excluded homes that would be ‘unaffordable’ to upgrade to EPC Band C by 2035, capping investment at £10,000 per dwelling, which resulted in 15 per cent of houses currently under the ‘C’ rating not achieving that band, though they would improve from their current level.

29.Frontier estimated that total capital investment averaging £5.2 billion every year to 2035 would be required. After accounting for current funding, this leaves an annual gap of £4.5 billion. It was calculated that £1 billion a year further government investment was needed, totalling £1.7 billion (mostly towards low-income households) which would leverage, with a package of incentives and regulation, £3.5 billion of private investment from owner occupiers and landlords. Table 2 outlines how Frontier recommended the money is allocated. While there are upfront costs, BEIS itself recognises that there are substantial returns on energy efficiency investment.102 The recommended level of funding would see a return to the public expenditure of 2009–2014, where Government and supplier obligation investment in home energy performance averaged nearly £1.64 billion per year across the UK.103

Table 2: Frontier Economics’ recommendations on how public money for energy efficiency is allocated to reach the Government’s 2035 energy efficiency target

Target group


Energy bill-paying beneficiaries

Current public investment

Private landlord subsidy (low-income tenants) and incentives (better off tenants) for private rented sector


Mostly low-income households: £1.10bn

Current public investment straddles these target groups:

Social landlord subsidy (low-income tenants)


Subsidy for low-income owner-occupiers


Incentives for better off owner-occupiers


Better off households: £0.60bn





Source: Based on: Frontier Economics, Affordable Warmth, Clean Growth (Sept 2017)

30.The Committee on Fuel Poverty (CFP) also undertook an analysis of the funding gap for households in England living in fuel poverty.104 After accounting for the two policies currently approved—ECO3 (2018 - 2022) and the private rented sector regulations that require Band E by 2020—the CFP estimated a cumulative funding gap of £15.1 billion to meet the Fuel Poverty Strategy’s 2030 target, and 2020 and 2025 interim milestones.105 The CFP calculated that if implemented, the Clean Growth Strategy proposals could realistically reduce the shortfall to £8.9 billion.106 Even after including this assumption, a gap of over £0.7 billion per year to 2030 remains.107

31.There is a clear and considerable investment shortfall to meeting the Government’s energy efficiency targets. If the Government does not address this deficit, it is likely to end up in contravention of statutory fuel poverty and climate targets. The Government cannot rely on market mechanisms alone to bridge the gap. There are upfront costs, but BEIS itself accepts that there are significant long-term returns on energy efficiency investment.

Government’s assessment of required investment

32.When discussing the investment shortfall with the Minister of State for Energy and Clean Growth, Rt Hon Claire Perry MP, we were informed that BEIS estimate the total capital cost required between now and 2035 to meet domestic EPC Band C targets to be between £35 billion and £65 billion.108 The Government explained that the range represents different scenarios with varying thresholds for its caveat of where “practical, cost-effective and affordable” that it attached to its EPC Band C targets.109 We are concerned that the Government will use its undefined caveat as a means to minimise upfront costs (see Para 13 for more detail). If the Government pursues the scenario that requires £35 billion of capital investment, equal to around £2.3 billion per year, it is likely to fall well short of upgrading the number of homes anticipated in the CCC’s net zero scenarios.110 The £65 billion scenario, amounting to £4.3 billion per year, is more aligned with Frontier’s estimates but still represents less investment than it calculated necessary to upgrade 85 per cent of homes in the UK currently under EPC Band C.111

33.When asked for estimates of how much public money will be required to meet the Government’s EPC Band C targets, we were told “We do not currently have an estimate of how much public money would be required to unlock enough private investment. We intend to set out our plan to improve the energy performance of homes, as well as an updated fuel poverty strategy, later this year.”112 While we welcome the Government’s forthcoming plan, it is poor policy making to set a target without knowing how much it will cost the public purse to meet it—especially in view of the upcoming Comprehensive Spending Review. The Spending Review later this year or in 2020, depending on the decision of a new Prime Minister, is expected to cover at least a three-year period of departmental spending. It will be crucial for determining energy efficiency policy and how it evolves over the next decade. Only through HM Treasury backing will sufficient upfront investment be provided to meet the EPC targets set out by BEIS. But we cannot see how BEIS can make a persuasive bid for funding if it does not know what investment is required.

34.Only with HM Treasury backing will enough upfront investment be made available to meet the UK Government’s EPC targets. We are concerned that BEIS will fail to secure investment for energy efficiency at the forthcoming Comprehensive Spending Review if it does not have a sufficient grasp of what its own EPC targets mean in practice, nor the required costs to meet them. We are also concerned that the Government will use the caveat of where “practical, cost-effective and affordable” that it affixed to its EPC targets as a vehicle to circumvent upfront costs. If the Government will not back energy efficiency, one of the cheapest measures to reduce emissions, it will not bode well for the other, costlier actions required for decarbonisation. The Spending Review will provide a litmus test for whether the Government is serious about energy efficiency, and in turn net zero.

35.We recommend that BEIS sets out with greater precision how much total capital investment will be required to meet its EPC Band C targets, as the range of the current estimate is too wide to be helpful. We strongly recommend that the Government does not use the caveat it attached to its EPC Band C targets as a means to minimise costs, and instead the Government’s ambition should meet what is required to reach the goals of the Paris Agreement.

36.We also recommend that BEIS determines how much public funding will be needed to leverage enough private investment and to consider the available evidence which indicates that a minimum of £1 billion per year of additional public capital investment will be necessary. We further recommend that BEIS strongly makes the case for energy efficiency and negotiates with HM Treasury ahead of the Spending Review to guarantee that adequate investment is secured to resuscitate the Government’s efforts to meet its EPC targets.

National Infrastructure Priority

37.Contributors to our inquiry agreed that improving the energy efficiency of the UK’s building stock is a national infrastructure priority and should be designated as such by the Government. This was the view of industry, businesses, local authorities, the Committee on Climate Change, leading academics, think-tanks and charities.113

38.BEIS, however, told us “Energy efficiency is already a major priority for this Government [..] We are not clear on what additional action treating this as a major national infrastructure priority would achieve.”114 We have found that energy efficiency is not the priority it is for the devolved administrations. The Government’s reluctance to position energy efficiency at the heart of its infrastructure strategy is out of step with the pace and scale of change required to abate carbon from buildings.

39.Buildings have not traditionally been regarded as part of the nation’s infrastructure. This has prohibited energy efficiency upgrades from being funded via government’s infrastructure investments. But the evidence clearly shows that energy efficiency meets the Government’s own criteria for infrastructure priorities.115 Research demonstrates that when compared to other mainstream infrastructure projects like the first phase of High Speed 2, Crossrail, and the smart meter rollout, energy efficiency offers equivalent monetary returns.116 Not including energy efficiency in major infrastructure priorities thus far would therefore not appear to have been a rational economic or evidence-based choice.

40.The UK’s National Infrastructure Plan comprises commitments for (largely private) investment in infrastructure projects. The plan assigned £256 billion to energy infrastructure projects, but no funds were allocated to making buildings more energy efficient.117 Investment was instead geared towards supply-side projects including nuclear, offshore wind, electricity transmission and distribution upgrades, and oil and gas production.118 We believe that the Government needs to take a more systems-based approach to infrastructure investment.119 This is also the view of the National Infrastructure Commission (NIC) who highlighted energy efficiency as a vital component to the “most effective and cheapest total-system-cost approach to decarbonising the energy system”.120

Lessons from Scotland

41.Scotland classified energy efficiency as a national infrastructure priority in 2015.121 This has provided a strong foundation for Scotland’s energy efficiency programme which is being co-ordinated through the Energy Efficient Scotland (EES) route-map.122 The EES is a 20-year programme designed to make Scotland’s existing buildings near zero carbon wherever feasible by 2050, bringing the provision of energy efficiency and low carbon heat together under one umbrella, to be overseen by a dedicated delivery agency. The EES is a product of ongoing pilots, public consultation, and multi-year funding commitments.123 The Scottish Government has backed up their EPC targets, which are summarised in Figure 6, with a range of centrally funded schemes that provide property owners with a route to making energy efficiency upgrades (see Table 1 for details). The Scottish Government is also consulting on whether to bring forward its domestic energy efficiency targets of EPC Band C for all homes from 2040 to 2030.124 The weight of stakeholder evidence suggests that Scotland designating energy efficiency as a national infrastructure priority has helped to improve its policy impact, making energy efficiency policy better designed and funded, longer-term, as well as more comprehensively governed and targeted, than in England.125

Figure 6: Scotland’s domestic energy efficiency programme summary as part of Energy Efficient Scotland.

Source: The Scottish Government, Energy Efficient Scotland (May 2018)

What difference would it make?

42.We agree with stakeholders that treating energy efficiency as an infrastructure priority is more than just semantics. It would embed energy efficiency as a structural long-term benefit to the UK and one which requires a public investment framework that lasts beyond typical five to ten-year policy cycles.126 It would increase the likelihood of energy efficiency being consistently classified as ‘capital’ investment, which increases the value of infrastructure, rather than ‘resource’ expenditure in Government accounting.127 This would make energy efficiency policy less likely to be vulnerable to annual spending decisions which is key to ending a history of stop/start policy-making in this area.128 If energy efficiency spending were to be consistently treated as ‘capital’ infrastructure investment, Government’s appraisals would be more likely to take account of all its benefits (discussed in Para 6) such as increased productivity, health benefits and creation of jobs.129 This would allow energy efficiency investment to be assessed on the same basis as other forms of infrastructure.

43.The long-term strategic commitment would also send a clear message to investors and consumers as to the direction of government policy,130 thus helping to rebuild badly bruised consumer confidence and industry capacity. We believe that it would provide a solid foundation to develop incentives, minimum standards, regulations, advice, consumer protection and a monitoring and evaluation framework.

44.We also share the concerns of stakeholders that the cross-departmental nature of energy efficiency has meant that crucial elements of its policy have been lost between departmental remits, allowing departments to shift accountability amongst one another.131 Although BEIS is the lead department for energy efficiency, the Ministry of Housing, Communities and Local Government (MHCLG) makes decisions on Building Regulations and social housing, while HM Treasury has powers over fiscal levers and Exchequer revenue. But the benefits of energy efficiency investment span across departments, strengthening the case for a joined-up approach. Treating energy efficiency as infrastructure would also position it within the infrastructure governance architecture and the Government’s overall infrastructure planning: The National Infrastructure Strategy and annual National Infrastructure and Construction Pipeline reports. Designating energy efficiency as a national infrastructure priority should help drive the necessary cross-Whitehall coordination and attention over the long-term and help prevent departments avoiding their specific responsibilities on the issue.

45.The ambition of the Paris Agreement obliges rapid intervention in almost every building in the country. We do not see how a task of this enormity can be accomplished without energy efficiency being designated as an infrastructure priority. The Scottish Government recognised this in 2015 and is already delivering energy efficiency improvements through a long-term and properly funded infrastructure programme.

46.Treating energy efficiency as a national infrastructure priority is more than just signalling. It can transform the mindsets of policymakers and position energy efficiency as a public good that requires clear, coherent, coordinated governance arrangements, targets, a long-term action plan as well as sustained Government funding. It would ensure that energy efficiency is consistently classified as investment rather than expenditure in Government accounting, allowing for appraisals that put it on a level playing field with other infrastructure projects. It is crucial to overcoming a disjointed policy landscape and would signal to the market that energy efficiency is a wise long-term investment.

47.We recommend that the Government follows the advice of the Committee on Climate Change—and almost all stakeholders in the sector—to treat the energy efficiency of all buildings across the UK as a national infrastructure priority and implements the policies to reflect this.

The National Infrastructure Commission

48.The National Infrastructure Commission (NIC) plays an influential role in ensuring the Government builds the right infrastructure for the future.132 We are therefore pleased that its 2018 National Infrastructure Assessment recognised the critical role of energy efficiency in the future low carbon energy system.133 We are nonetheless concerned that the NIC has not clarified in the National Infrastructure Assessment the full level of investment necessary to meet the Government’s energy efficiency targets.134 Based on the Assessment, it would be difficult, if not impossible, for the Government to target accurately the allocation of resources to energy efficiency measures in order to meet its EPC targets.

49.A more comprehensive assessment by the National Infrastructure Commission is required on the funding needed to deliver an energy efficiency infrastructure programme. It is crucial that this assessment takes into account the Government’s fuel poverty and carbon reduction targets. We recommend that the Government asks the National Infrastructure Commission to produce a dedicated report on energy efficiency that quantifies the investment needed to meet its EPC targets.

57 Q458 [Golding]

60 For example: Q279 [Hill; Lord Deben]; Q38 [Dr Wade]; Q39 [Billington]; Q93 [Lewis]; Q95–96 [Matthew]; E.ON UK (ENE0027); National Energy Action (NEA) (ENE0025); Committee on Fuel Poverty (CFP) (ENE0035); UCL Energy Institute (ENE0039); Energy Efficiency Infrastructure Group (EEIG) (ENE0041); UK Green Building Council (ENE0042); Energy UK (ENE0059); Mineral Wool Insulation Manufacturers Association (MIMA) (ENE0037); Citizens Advice (ENE0032); Electrical Contractors’ Association (ENE0073); Rockwool Ltd (ENE0038); Recoup Energy Solutions Ltd (ENE0046); Association of Local Energy Officers (ENE0048); Calor Gas Ltd (ENE0049); WWF-UK (ENE0051); Gemserv (ENE0053); Regulatory Assistance Project (RAP) (ENE0064); Royal Institute of British Architects (ENE0070); (ENE0074); Association for Decentralised Energy (ADE)

61 Q279 [Hill; Lord Deben]

62 Assumptions made to avoid double counting.

63 Assumptions made to avoid double counting.

64 Committee on Climate Change, UK Housing: Fit for the future? (Feb 2019) p.28

65 Department for Business, Energy and Industrial Strategy, Household Energy Efficiency Statistics (May 2019)

66 ECO loft and cavity wall insulation rates are broadly aligned with the year on year reduction in uninsulated lofts and cavity walls seen in the English Housing Survey.

67 Rosenow et al, (2018) The remaining potential for energy savings in UK households, Energy Policy, Vol. 121, pp. 542–552. The data discussed was provided by post communication with one of the authors. England’s share of remaining potential was calculated by assuming 83 per cent of potential in the UK relates to England (i.e. proportionate to households split). Thus, a more granular assessment is needed.

68 As above

69 As above

71 Data provided by post communication with one of the authors of the paper: Rosenow et al, The remaining potential for energy savings in UK households, Energy Policy, Vol. 121, Pp 542–552. Not published.

72 This is not an exhaustive list, other barriers to investment also include: lack of awareness of the benefits of retrofitting; lack of information about options for retrofitting; lack of interest in energy efficiency; preference for investment elsewhere; concerned that the property may be ‘damaged’; lack of financial incentives for owners; lack of trust in those undertaking the work. For a more detailed discussion on the barriers to retrofit see: Centre on Innovation and Energy Demand, Warm Homes for All A comprehensive policy approach for residential energy efficiency retrofit in the UK (2018), p.9; Q88 [Bray]; Rockwool Ltd (ENE0038); Chartered Institution of Building Services Engineers (ENE0045); Canetis (ENE0068); Royal Institute of British Architects (ENE0070)

73 Regulatory Assistance Project (RAP) (ENE0064); Sustainable Energy Association (ENE0062); Leeds Beckett University (ENE0007)

74 For example: Mineral Wool Insulation Manufacturers Association (MIMA) (ENE0037); Energy Saving Trust (ENE0067); Regulatory Assistance Project (RAP) (ENE0064); Citizens Advice (ENE0032); National Energy Action (ENE0025)

75 For example: National Housing Federation (ENE0058); E3G (ENE0014); National Infrastructure Commission, National Infrastructure Assessment (July 2018); Frontier Economics, Affordable Warmth, Clean Growth (Sept 2017)

76 For example: Sustainable Energy Association (ENE0062); Energy Savings Trust (ENE0067); E.ON (ENE0027); Energy UK (ENE0059); UK Green Building Council (ENE0042); NAPIT Certification (ENE0019); Regulatory Assistance Project (RAP) (ENE0064). For international experience (discussed in more detail in Chapter 4), see: E3G, Silver Buckshots: Opportunities for closing the gap between ambition for, and policy and investment to drive, UK residential energy efficiency renovation (July 2018)

77 Q402 [Perry]

78 Department for Energy and Climate Change, Final Stage Impact Assessment for the Green Deal and Energy Company Obligation (June 2012)

79 Q388 [Perry; Golding]

80 Based on E3G (ENE0014)

83 Department for Business, Energy and Industrial Strategy, Energy Company Obligation ECO: 2018–2022 Final Stage Impact Assessment (Oct 2018)

85 Scottish Government, Warmer Homes Scotland Annual Review 2018 (June 2019)

87 As above

88 As above

90 Welsh Government, Arbed programme (Dec 2018)

92 As above

93 As above

94 As above

96 As above

97 Ministry of Housing, Communities and Local Government, English Housing Survey 2017–2018 (Jan 2019); English Housing Survey headline report 2017 to 2018; section 2 housing stock tables (Jan 2019); Scottish Government, Scottish House Condition Survey: 2017 key findings (Dec 2018)

98 As above

99 For example, Department for Business, Energy and Industrial Strategy, Thermal efficiency innovation funds (Nov 2017); Department for Business, Energy and Industrial Strategy, Whole House Retrofit (WHR) competition (May 2019)

100 The Energy Efficiency Infrastructure Group is a collaboration of leading industry and trade bodies and consumer groups, think tanks, environmental NGOs and major engineering, energy, construction and insulation businesses.

101 Frontier Economics, Affordable Warmth, Clean Growth (Sept 2017)

102 Q405 [Golding]

103 UK Green Building Council (ENE0042)

104 Committee on Fuel Poverty (ENE0035); see also: Committee on Fuel Poverty, Third Annual Report 2018 (Nov 2018)

105 As above

106 As above

107 The £6.2 figure is based on assumptions from the Committee on Fuel Poverty that the Clean Growth Strategy proposals would entail £2.1 billion for extending ‘ECO funding’ to 2028, £2.7 billion for extending the PRS trajectory to Band C in 2030 and £1.4 billion for making social housing achieve Band C by 2030.

110 Frontier Economics, Affordable Warmth, Clean Growth (Sept 2017); Committee on Climate Change, Net Zero Technical report (May 2019)

111 Frontier Economics, Affordable Warmth, Clean Growth (Sept 2017)

113 Q29 [Slade; Sellwod; Vyas]; Q41 and Q48 [Rodrigues]; Q43 [Wade; Simmons]; Q137 [Bray]; Q93 and Q127 [Lewis]; Q95 [Matthew] National Energy Action (ENE0025); CBI (ENE0074); Association for Decentralised Energy (ENE0013); Policy Connect (ENE0009); Royal Institute of British Architects (ENE0070); Canetis (ENE0068); Energy Saving Trust (ENE0067); IPPR (ENE0066); Regulatory Assistance Project (ENE0064); Plymouth Energy Community (ENE0063); Sustainable Energy Association (ENE0062); Canetis (ENE0068); Kingspan Insulation (ENE0060); ROCKWOOL Ltd (ENE0038); Sodexo (ENE0034); Dr Steffi Harangozo (ENE0021); WWF-UK (ENE0051); Tyndall Manchester (ENE0057); Gemserv (ENE0053); Environmental Industries Commission (ENE0071); Plymouth City Council (ENE0047); UCL Energy Institute (ENE0039); Welsh Government (ENE0033); Chartered Institution of Building Services Engineers (ENE0045). This is also the view of the Committee on Climate Change, UK Housing: Fit for the future? (Feb 2019), p.13; Committee on Climate Change, Net Zero – The UK’s contribution to stopping global warming (May 2019), p.200. For an alternative view see for example: Energy and Utilities Alliance (ENE0026); Electrical Contractors’ Association (ENE0073); National Landlords Association (ENE0018); TechUK (ENE0036)

114 Department for Business, Energy and Industrial Strategy, (ENE0069), para 42

115 Frontier Economics, Energy efficiency: an infrastructure priority (Sept 2015)

116 As above

117 HM Treasury and Infrastructure and Projects Authority, National Infrastructure Pipeline Spring 2016 (March 2016)

118 As above; see also: Regulatory Assistance Project (RAP) (ENE0064)

119 Chartered Institution of Building Services Engineers (ENE0045)

120 National Infrastructure Commission, National Infrastructure Assessment (July 2018); National Infrastructure Commission, Congestion, Capacity, Carbon: Priorities for National Infrastructure: Consultation on a National Infrastructure Assessment (Oct 2017); Q311 [Graham]

121 Scottish Government, Infrastructure Investment Plan 2015 (Dec 2015)

122 Scottish Government, Energy Efficient Scotland (May 2018)

123 The Scottish Government, Scottish Budget: 2019–20 (Dec 2018)

124 The Scottish Government, Greater ambitions for energy efficiency (March 2019)

125 For example: Q98 [Matthew]; CBI (ENE0013); UK Green Building Council (ENE0042); Mineral Wool Insulation Manufacturers Association (MIMA) (ENE0037); TechUK (ENE0036); E3G (ENE0014); National Energy Action (NEA) (ENE0025; Gemserv (ENE0053); (ENE0074); Association for Decentralised Energy (ADE)

129 As above

130 CBI (ENE0013)

131 The Energy Efficiency Infrastructure Group (EEIG) (ENE0041); Policy Connect (ENE0009); Q43 [Simmons]

132 The National Infrastructure Commission (NIC) was established in 2015 as an executive agency of the Treasury to provide impartial, expert advice and make independent recommendations to the Government on economic infrastructure. The Commission produces the following: a national infrastructure assessment once in every Parliament, setting out the NIC’s assessment of long-term infrastructure needs with recommendations to the Government; specific studies on infrastructure issues challenges – these will be set by the Government; and an annual monitoring report, taking stock of the Government’s progress in areas where it has committed to taking forward the recommendations of the NIC. The Government will lay the NIC’s reports before Parliament and will respond to the NIC’s national infrastructure assessment and specific studies. The Government must respond within a year.

133 National Infrastructure Commission, National Infrastructure Assessment (July 2018).

134 As above

Published: 12 July 2019