The Coalition for the Energy Efficiency of Buildings (CEEB) has made it clear that the UK must increase the pace and scale of investment into the energy efficiency and resilience of UK residential buildings and maps out a set of financial solutions to boost take-up on a national scale, with the potential to contribute substantially to a post-Covid-19 green and inclusive economic recovery.
In its report, Financing Energy-Efficient Buildings: a path to retrofit at scale, CEEB argues that as the UK’s building stock is responsible for approximately 30% of the country’s total greenhouse gas emissions a failure to decarbonise the built environment could result in a 40% shortfall to its economy-wide decarbonisation targets by 2030. To reach the target of as many homes as possible to have an Energy Performance Certificate (EPC) rating of C by 2035 will require energy efficiency upgrades worth up to £65 billion.
The CEEB, set up by the UK Government and the City of London Corporation-backed Green Finance Institute (GFI), published its report on Wednesday, 20 May. It found that for each housing tenure – owner-occupied, private-rented, and social-rented – the main barrier to retrofit is the lack of attractive or available finance.
Owner-occupiers can experience long payback periods on investment and a limited impact on property valuations, which means households are put off by the upfront costs required. For the private-rented sector there is an incentive split: the landlord pays for energy efficiency improvements and yet tenants accrue the benefit through reduced energy bills. In the social-rented sector, the short-term nature of grant schemes can prevent more ambitious retrofit projects, and private leaseholders and occupiers within blocks of flats and terrace rows can prevent social housing providers from undertaking large-scale retrofit projects. However, the report also highlights that as well as access to financing, better data, trusted measurements of effectiveness, a depth of supply chain and incentives and regulation for both borrowers and lenders to act are also needed. For low income and fuel-poor households, public capital and government guarantees have a larger role to play.
CEEB’s response is a portfolio of 21 ‘demonstrator’ financial solutions that are commercial, scalable and mobilise capital flows towards the retrofit of UK homes to improve energy performance standards. These demonstrators include financial, data and standards-based solutions to overcome barriers to scaling up finance, as well as assessment and policy levers that could bolster the commerciality and scalability of these solutions.
Alongside the Green Finance Initiative, the CEEB will now take forward a selection of these pilots, enabling a practical demonstration of their viability in a launch later this year. Andy Sutton, Co-Founder at Sero said:
“UK homes are responsible for emitting a significant proportion of the UK’s carbon emissions, which by law we must reduce to net zero by 2050. Delivered the right way, tackling our homes will also make them easier and cheaper for the residents, to make decarbonisation a progressive step. We have the technology and know-how to deliver this and are delighted to be the Green Finance Institute’s pilot to evidence how this can work with finance to achieve large scale decarbonisation. The team at Sero will be sharing the appropriate data from our own trials around energy service products and we look forward to working with the CEEB to help show that solutions can be delivered. This report is just the beginning.”