Energy Performance Certificates

(asked on 18th April 2019) - View Source

Question to the Department for Business, Energy and Industrial Strategy:

To ask the Secretary of State for Business, Energy and Industrial Strategy, whether he has made an assessment of the cost to the public purse of heat decarbonisation of the UK not reaching the target of all homes to at least Energy Performance Certificate Band C by 2035.


Answered by
Kelly Tolhurst Portrait
Kelly Tolhurst
This question was answered on 1st May 2019

The Clean Growth Strategy set out our aspiration that as many homes as possible will be upgraded to an Energy Performance Certificate (EPC) Band C by 2035, where practical, cost-effective and affordable. BEIS estimate that the total investment cost of meeting this aspiration is in the order of £35-65 billion (undiscounted), with the actual cost dependent on a range of factors including the technology mix used in particular properties.

Further innovation in home energy efficiency measures could lead to cost reductions which reduce these estimates significantly. A key component of the Buildings Mission announced last year, is to halve the cost of retrofitting existing homes to a similar standard of new homes. We recently approved a £10 million innovation project for whole house retrofit, to demonstrate a cost reduction trajectory through retrofitting similar properties at scale.

Improving the energy efficiency of our homes reduces the overall energy system costs of heat decarbonisation. The level of additional energy efficiency required is dependent on the heat decarbonisation scenario.

Given the scale of investment required, financing these improvements will require funding from both public and private sources. In the Clean Growth Strategy, we committed to extend support for home energy efficiency improvements to 2028 at least at current levels of support through the Energy Company Obligation. This is equivalent to around £6 billion of investment. Additional investment in cost-effective energy efficiency measures will be needed from private sources, including owner occupiers, social landlords and private landlords. For example, landlords of the worst performing properties are already required to invest up to £3500 in improving their homes to a minimum EPC Band E before they let their property, where no third party funding is available.

Different parts of the UK have taken different approaches, reflecting the devolved nature of energy efficiency policy. In Scotland, for instance, zero interest loans are available to homeowners for energy efficiency improvements as well as equity loans where interest is repaid on sale of the property.

In other EU countries a range of approaches have been taken to support home energy efficiency improvements. These include low and zero interest loans, mortgage incentives, capital subsidies, tax credits and reduced VAT on the installation of energy efficiency measures. We are always looking to learn from international experience in developing policies which are right for the UK.

Given the importance of low cost financing, our Call for Evidence on Building a Market for Energy Efficiency sought evidence on different ways of financing energy efficiency, and other fiscal incentives. Different approaches will be appropriate for different consumer groups and tenure types and there is no one size fits all approach. We are currently analysing responses to this.

Financing these improvements presents real opportunities for green finance innovation, for example around green mortgage products or green bonds. The UK’s first ever Green Finance Strategy will also be published in the summer. This strategy will build on the recommendations of the Green Finance Taskforce report: Accelerating Green Finance and will set out the steps required to attract the investment we need into our clean economy, including around financing residential energy efficiency.

We will set out further details on how we will catalyse the market for energy efficiency later in the year and stimulate the required investment. This will take account of responses to our Call for Evidence alongside recommendations from the National Infrastructure Commission, and Committee on Climate Change.

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