Energy Efficiency (March 2023)

Thank you for contacting me about energy efficiency.

Buildings are responsible for around 30 per cent of our national emissions, and I know the Government recognises that upgrading home energy performance is crucial if we are to meet net zero greenhouse gas emissions across the UK economy by 2050. Not only this, but ministers are clear that one of the principal ways in which we can tackle high energy prices in the long-term is to improve the energy efficiency of homes.

Most recently, the Government has announced a new long-term commitment to drive improvements in energy efficiency to bring down bills for households, businesses and the public sector with an ambition to reduce the UK’s final energy consumption from buildings and industry by 15 per cent by 2030 against 2021 levels. New funding worth £6 billion will be made available from 2025 to 2028, in addition to the £6.6 billion provided in this Parliament. To achieve this target, a new Energy Efficiency Taskforce will be charged with delivering energy efficiency across the economy.

I welcome the publication of the Heat and Buildings Strategy, which signals a step change in improving the energy efficiency of our buildings and how we heat them, while also supporting 175,000 green skilled jobs by 2030 and 240,000 green skilled jobs by 2035 while delivering £6 billion additional GVA by 2030.

While I appreciate that you would like to see the Strategy go further, I think that it is an ambitious step to making buildings energy efficient.

The strategy announced the Government's ambition that by 2035, no new gas boilers will be sold. All new heating systems installed in UK homes will either use low-carbon technologies, such as electric heat pumps, or will support new technologies like hydrogen-ready boilers, in line with the natural replacement cycle, and once costs of low carbon alternatives have come down.

Furthermore, the Government will invest over £4 billion of new funding for decarbonising heat and buildings from this year to 2025. This includes a new £450 million three-year Boiler Upgrade Scheme which will see households offered and grants of up to £5,000 for low-carbon heating systems, such as a heat pump, so they cost the same as a gas boiler now. I am encouraged that £1.75 billion will be provided for the Social Housing Decarbonisation Scheme and Home Upgrade Grants, with £1.425 billion for Public Sector Decarbonisation which has the aim of reducing emissions from public sector buildings by 75 per cent by 2037.

At the Spring Statement 2022, the Government announced an extension to the VAT relief available for the installation of energy saving materials (ESMs) in homes. This will mean wind and water turbines will be added to the list of ESMs and the complex eligibility conditions will be removed. Moreover, this relief is also being increased further by introducing a zero rate on VAT for the installation of ESMs for the next 5 years. A typical family having roof top solar panels installed will save more than £1,000 in total on installation, and then £300 annually on their energy bills.

In addition, as included in the Clean Growth Strategy, the Government set out its aspiration for as many homes as possible to be Energy Performance Certificate Band C by 2035 where cost effective, affordable and practical, and to reach this standard by 2030 for fuel poor homes. To achieve this, it will need to mobilise up to £65 billion for upgrades, which will put us on a path to net zero, significantly reduce household energy bills, and improve our health and wellbeing. It will also create new opportunities for the energy efficiency sector, currently the largest part of the low carbon and renewable energy economy.

New homes are now expected to emit 31 per cent less CO2 and, in addition, a Future Homes Standard will be introduced in 2025. This will see new build homes future-proofed with low carbon heating and world leading standards of energy efficiency to produce 75-80 per cent less CO2 emissions.