The year 2015 started with promising developments for energy efficiency policy. For example, the Coalition Government announced in February that Private Rented Sector tenants will be able to prompt (from 1st April 2016) landlords to install energy efficiency measures deemed cost-effective. Beyond that, a minimum standard of an ‘E’ Energy Performance Certificate (EPC) rating was also mandated, or that all measures which can be installed within the parameters of the Green Deal’s Golden Rule (i.e. pay for themselves) are duly adopted. This minimum standard (often referred to as the Minimum Energy Efficiency Standard (MEES)) is to be enforced from the 1st of April 2018 on the granting of a new tenancy agreement and comprehensively to all properties from the 1st of April 2020.
This regulatory bundle was a useful step toward tackling fuel poverty- in 2013 just 2% of social sector dwellings were in the most inefficient EPC bands F and G, compared with 7% of owner occupied and 9% of private rented dwellings.
However, energy efficiency policy is in turmoil; right now the ‘able to pay’ sector has been confronted with the 23rd July announcement that the Government would cease funding to the Green Deal Finance Company. The Government did not close the Pay as you Save framework, meaning that another financial provider could come forward to engage with energy efficiency improvements as an investment opportunity for homeowners, but for the moment this announcement has left the able to pay sector in the doldrums.
There has been some gnashing of teeth amongst industry commentators following this announcement, particularly given it has come in close succession with the scrapping of the Zero Carbon Homes regulation from 2016 and alterations to policies supporting solar technologies too.
However, it should be noted that the MEES regulations specifically stated that, in the future, other mechanisms than the Green Deal could be utilised to deliver ‘cost-effective’ measures which landlords would be mandated to install. The cuts to the GDFC combined with the remaining PRS framework exemplify the fact there are now ‘gaps’ in UK energy policy which have been created by recent Government announcements. No competent Government could leave such a policy vacuum in place without ceding political capital to their opponents however: energy efficiency and the manner in which energy measures in buildings are supported is a policy space which must be filled.
But filled with what? Amber Rudd, the Secretary of State for Energy and Climate Change explicitly stated her current energy policy priorities- energy security, energy affordability and carbon reduction- whilst giving evidence to the Energy and Climate Change committee in Parliament. She has also repeatedly stated that fuel poverty will be a target issue for the Conservatives.
Our housing stock can be an enabler to delivering these priorities; or an obstacle. A fully-functioning able to pay mechanism meshing fiscal support together with regulation like the PRS stipulations mentioned before could be a powerful driver to generate increased volumes of energy efficiency installations and multiply the benefits these technologies deliver. Equally, it is only just for policy to assist the most vulnerable- those who need assistance to insulate themselves from the cold. This would require a second policy pathway to follow on from ECO2, ending in March 2017.
Amber Rudd’s speeches indicate she understands the importance of securing the benefits energy efficiency and energy measures in buildings offers – in terms of carbon reduction and energy affordability. Now, it is essential industry makes the business case across Government departments that policy interventions (including subsidy) should be used strategically- and over the medium term need to be designed to push ‘green’ technologies to cost competitiveness.
The Government’s review of the energy efficiency policy framework should be welcomed with regard to energy efficiency and heat. This period of policy metamorphosis can usher in a new era of shrewd, astute governance of energy efficiency and heat; let’s hope the Government produces a strategy appropriate for such an ambition.