Government aims to cut CO2 from existing homes

Ambitious plans to improve the energy efficiency of existing homes have been published. But expectations that the consultation would outline solutions to promote renewable heat were dashed.

The government has outlined plans to reduce carbon dioxide emissions from existing buildings, including housing, by up to 50 million tonnes per year by 2020 compared with 2006.

The proposals for England and Wales come in the form of three interlinked consultations that tackle energy efficiency in buildings, the expansion of the Carbon Emissions Reduction Target (CERT) and a Community Energy Savings Programme (CESP).

The government has been criticised in the past for focusing its efforts to cut CO2 from the built environment on new developments. But these will comprise only a small fraction of the total building stock by 2050. The Communities Department (DCLG) and the Department for Energy and Climate Change (DECC) now say they want emissions from the existing stock to be "approaching zero" by 2050.

In the short term, the departments plan to expand CERT, as announced last autumn (ENDS Report 404, pp 13-14 ). Under CERT, UK energy suppliers must deliver quantified energy efficiency gains in their customers’ homes with measures such as installing loft insulation and giving away energy efficient light bulbs.

The overall CERT target is being increased by 20%, from about 154 to 185 million ‘lifetime’ tonnes of CO2 by 2011. Gas and electricity suppliers will now be able to use real-time energy displays and the provision of energy efficiency advice to meet these targets.

Each real-time display delivered to homes will qualify for a saving equivalent to almost one tonne of CO2 for 15 years. Advice would quality for almost 0.7t CO2 for 7.5 years and it must involve a face-to-face visit. The government envisages energy firms giving out two million real-time displays, and advising two million people. But there are doubts that either measure would lead to anywhere near such savings (ENDS Report 408, p 12 ).

DECC is allocating higher carbon savings for loft insulation to encourage energy firms to use these to meet their CO2 saving targets rather than the new "softer" measures. It is allowing energy companies to claim CO2 savings for loft insulation above what these achieve in real terms to encourage them towards these measures rather than the "softer ones" such as advice.

The department says the increased CERT target will lead to two million more lofts being insulated than would otherwise have occurred. But awarding the extra CO2 savings to loft insulation means CERT will actually achieve up to 7.4 million tonnes fewer CO2 savings than expected per year. Twenty four per cent of CERT’s expanded target is meaningless in CO2 terms.

The scheme will be extended from March 2011 to December 2012. It will be followed by the supplier obligation, the government’s next household energy saving scheme (ENDS Report 389, p 47 ).

The other strand of the government’s plans to boost home energy efficiency in the short term is the CESP. This £3.5 million programme will benefit about 90,000 low-income households by installing energy efficiency measures to whole neighbourhoods at a time.

The departments estimate that CESP will save nearly 4Mt CO2 , but spread over several decades, while also helping people in fuel poverty.

CESP’s overall CO2 saving target will be split equally between energy suppliers and electricity generators. They will work with local authorities to identify about 100 areas where the programme will be implemented on a street-by-street basis.

This approach is thought to be more effective than other energy efficiency programmes aimed at low-income households, because it does not rely on self-referral. It is also cheaper. The departments want to launch the programme this year.

Companies will only be allowed to use measures that reduce CO2 and reduce fuel bills. These include internal and external solid wall insulation, cavity wall and loft insulation, switching fuel to gas, connection to a district heating scheme, ground and air source heat pumps, microgeneration, home energy audits and replacing G-rated boilers with high-efficiency models.

Each CESP measure will be worth a particular points score related to its carbon savings. Companies may also score bonuses, where they deliver several measures in one home or treat many homes in one area.

The government is proposing to allow trading and potentially some transfer of credits and obligations between suppliers and generators. The programme could be up and running by the autumn and run until the end of 2012.

The departments see CESP as a pilot to a more coordinated approach to target all households in the longer term. It believes that all the easier measures, such as installing loft and cavity wall insulation will be achieved by 2015.

More substantial changes to homes, including small-scale low-carbon energy generation and solid wall insulation, will be needed to meet the UK’s statutory carbon reduction targets. In the third consultation - the Heat and Energy Saving Strategy - the government outlines how it will roll out a "whole house" approach to energy efficiency by 2020.

This will involve accredited advisers and installers visiting individual households. All potential improvements to the energy performance of a house are then considered and planned at the same time. The number of households targeted under this will be ramped up from 400,000 households in 2015 to 1.8 million by 2020. All homes will have received a "whole house" package by 2030, the government hopes. It believes the same approach could be used for other buildings, but does not provide any details.

The consultation considers various ways of financing packages. A household could be offered an energy efficiency package by its energy supplier or by another company working with it, taking out a loan in order to pay for it. This loan would be repaid through the energy bill. This model would be likely to need a significant subsidy, to ensure repayments are low enough to be offset by the annual energy bill savings achieved by the package.

A cheaper version of this idea could be to work with bodies that have a permanent link to properties such as Distribution Network Operators, the firms that own and manage the local gas and electricity networks. Householders could pay for energy efficiency steps through their network charge. This would overcome problems associated with householders moving or changing energy supplier, because the charge would be passed on to the new occupier.

Another option is for companies to install low-carbon energy generation and energy saving equipment and charge consumers for the use for their service over a defined contract period. The charge would be offset by energy bill savings. These ongoing charges could be passed on to future inhabitants of the property.

Finally, it says installations could be financed by loans linked to properties and paid back with the money saved on energy bills. At the launch event, Energy and Climate Secretary Ed Miliband said loans could be provided by councils, energy companies or even supermarkets. Kirklees Council in Yorkshire has received plaudits for a similar scheme where it provides loans to households to install microrenewables.

The strategy aims to reduce demand for electricity, gas and oil by up to 7% by 2020. Reducing overall consumption will also bring down the costs of meeting the UK’s target for 15% of energy to come from renewable sources by 2020, under the EU’s renewable energy Directive.

The potential for saving energy from Britain’s poorly insulated housing stock, and the upfront costs of doing so, are immense. There are still more than seven million cavity walls and seven million solid walls that could be insulated and 12.9 million lofts that lack the recommended depth of insulation - in a total England and Wales stock of more than 20 million homes.

The government says it wants to move beyond just energy saving for existing homes and find ways to decarbonise the way heat is generated (see p 4 ).

The consultation confirms that a renewable heat incentive will be introduced in April 2011. This will pay households for each kilowatt hour of heat they produce using microrenewables. Details of the incentive will be issued for consultation in the summer.

The government also says it supports district heating networks, but offers few suggestions on how to overcome barriers to their development. Last year’s call for evidence said the government hoped up to 6.5 million UK households could be supplied by district heating. This is a huge increase on the current 559,000 (ENDS Report 397, p 42 ).

The consultation says it wants local government to be fully involved in development of renewable and low-carbon heat and electricity. It plans a summit with relevant leaders to explore this.

It also offers nothing to promote combined heat and power plants, apart from the feed-in tariff. The Combined Heat and Power Association has long said the way to promote CHP is to extend its exemption from the climate change levy to 2037 (see back page). This is due to run-out in 2013.

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