This month marks the six-month anniversary of the publication of Bankers for Net Zero’s ‘The Retrofit Conundrum’ report, which called on the Government for stronger policy clarity around built environment decarbonisation pathway. The report’s key recommendations included introducing a stamp duty incentive for energy efficiency measures, supporting households who can pay to retrofit their homes to a low carbon standard and providing long-term clarity for energy efficiency standards in rented and owner-occupied homes. 

 

Overview of the past six months 

In the Autumn Statement in November 2022, the Government showed its commitment to reducing energy consumption and increase energy efficiency. However, the specific policies to achieve this goal remained undefined, aside from the mention of establishing an Energy Efficiency Taskforce (EETF),  a long-term commitment to driving improvements in energy efficiency in order to bring down bills for households, businesses and the public sector to reduce energy demand. The EETF progress has been too slow, with its work having only started in March 2023. It is crucial that the EETF considers closely the importance of retrofit, possibly through a specific retrofit subgroup. 

The EEFT meeting was held following the Chancellor Jeremy Hunt’s announcement to move forward the energy efficiency target to reduce energy demand by 15% against 2021 levels from a target of 2035 to 2030 as part of the Spring Budget. However, the Government did not announce any new funding for renewables, hydrogen, efficiency and planning mechanisms. This leaves a policy gap in the progress of low carbon heat in non-fuel homes as well as in the rollout of heat pumps and heat networks.  

Nevertheless, responding to the Chris Skidmore’s Net Zero Review, the Government said that it will develop a hydrogen production delivery roadmap by the end of the year. The Government also said that it intends that from 2025, the Future Buildings Standard will produce “extremely efficient non-domestic buildings, which are ‘zero carbon ready’”.  Additionally, the Energy Security and Net Zero Select Committee has recently been created and we look forward to its upcoming work.  

 

More Government action is needed 

The recently announced Energy Security plan contains many positive measures such as the introduction of the Heat Pump Investment Accelerator and new Energy Company Obligation scheme, as well as the commitment to pilot digital energy advice service for small and medium-sized enterprises (SMEs), among others. However, the Government should also consider:  

  • A long-term policy plan: The priority for the UK Government should be to ensure greater certainty regarding retrofitting policy. By implementing a comprehensive, long-term package of incentives and regulations, the Government can not only deliver this much-needed certainty but also convey a clear message to homeowners, housebuilders, and the public. This message would underscore the Government’s commitment to lowering energy costs, enhancing energy security, and prioritizing the transformation of homes into energy-efficient spaces. 
  • The reliability of Energy Performance Certificates (EPCs): Improving consumer confidence in the effectiveness of home modifications that enhance EPC ratings relies on enhancing the reliability of EPCs. This entails ensuring that EPCs accurately measure the energy usage of a home. EPCs could also capture real-time updates on retrofit activities without requiring a comprehensive, physical EPC assessment that would incur additional costs for consumers. The principles put forth by the Green Finance Institute and the Coalition for Energy Efficient Buildings regarding the ‘Building Renovation Passport’ have the potential to facilitate the implementation of this approach. Nevertheless, existing EPC metrics do not effectively encourage the adoption of energy-efficient practices and heating solutions necessary to achieve the Government’s net-zero strategy. The Government should create rules and protocols to enable more accurate, real-time assessments of property performance as well as evaluate EPC methodology for EPCs certificates to properly reward households for switching to greener alternatives.   

The Autumn statement clearly expressed the intention to enhance energy efficiency by streamlining the net-zero strategy for the built environment. However, previous policy setbacks and feedback from the industry highlight the challenges that must be overcome in the process of decarbonizing the built environment and tackling fuel poverty. Without a sustained and comprehensive strategy that prioritizes the development of necessary skills for implementing energy-efficient solutions, as well as a transparent funding system, it is unlikely that we will witness the necessary surge in retrofit projects to achieve the UK’s net-zero targets. Nevertheless, the work of the EETF and the recently announced strategies indicate a strong willingness to take on a more proactive role. 

 

 

The Policy Rationale behind Perseus 

The UK Government has already recognised Perseus in its recently published Green Finance Strategy as a crucial part of the decarbonisation architecture required to ensure the UK reaches its emissions reduction targets.   

Despite over 5.9 million SMEs in the UK (employing 16.8 million and delivering £2.3 trillion to the economy), there is not yet a dominant standard for SMEs to report GHG emissions.  The importance of sustainability reporting has become an ever more crucial aspect of business operations in recent years. As society becomes more conscious of the impacts of human activity on the environment and social structures, companies must operate in a way that minimises their environmental impact and maximises their positive contributions. Open data is an essential tool in facilitating this reporting, allowing companies to disclose their impacts and progress in a transparent and accessible manner.  

Additionally, the UK’s Competition & Markets Authority (CMA) has found that 40% of green claims made online could be “misleading” consumers. The only way to tackle green washing is to have the right mechanisms to access assurable data. Engaging in Perseus is a unique opportunity to contribute to the creation of assurable ESG data. 

Sustainability reporting offers numerous advantages, such as enhanced risk management, optimization of costs and savings, facilitation of decision-making, and the promotion of corporate confidence and reputation among both customers and investors.