Fuel Poverty and ‘Green’ Economics
[Author: Mark Smith, Aston University]
The estimated total number of households now predicted to be in fuel poverty due to the latest price cap rise from 1 April 2022 is 6.32 million. This could rise to 8.5 million by the end of 2022. Fuel poverty is a major cause of ill health and death from the physical and mental health impacts of respiratory infections, cold, poor child development and other issues. All of these are a significant burden on the NHS. What does this mean for households in this situation, and how does this relate to energy management and carbon reduction?
Fuel poverty has been a significant issue before the war in Ukraine. The UK government advisory body, the Climate Change Committee noted that most of the UK homes (more than 28.5 million) and other buildings (about 1.9 million) are heated by gas boilers, which also provide hot water – the bulk of the rest use petroleum for the same end. This makes buildings the second-largest source of greenhouse gases after surface transport (cars, trucks and trains). Nearly a fifth of all the UK’s emissions come from buildings, and that is before we even consider electricity used within buildings. The Committee also noted:
‘We cannot reach Net Zero if we continue to use gas for heat. Ending our reliance on gas can also help to reduce the cost of living through lower energy bills.’
This highlights some key facts about UK housing. First, our houses are about the worst insulated in Europe, with poor indoor air quality. Second, rising fuel costs expose more people to fuel poverty. Third, this leads to serious health impacts on those affected, and this problem is increasing. What can be done?
There has been an overwhelming fixation on supply side policies through new energy generation and new buildings, largely driven by short-term political discourse. There is little evidence of debate about how we can use energy (and resources) more efficiently and effectively, and how we can achieve net zero carbon emissions from the built environment from a demand reduction perspective. This is particularly relevant when addressing the nature of our homes and businesses. The great majority of our buildings predate 1950 and are generally poorly insulated. Most have an EPC rating of D or below. So, a focus on new buildings and energy performance, while important for the future, misses the problem of existing infrastructure. Demolition and rebuilding our housing stock are far too expensive, time consuming and resource intensive. And most carbon is already locked up in materials. This means that retrofit has to be a main plank for government policy, although the latest ‘strategy’ virtually ignores this. Retrofit is the approach to resolving all the above problems. This demands total refurbishment of all our buildings through a ‘fabric first’ approach to insulation and low carbon heating systems. This sounds simple in theory but is very complex and demands house-specific measures. How can retrofit be delivered?
The UK government has a market-based approach to energy ‘policy’ delivery. This has pros and cons. The track record on recent initiatives aimed at improving our built environment is poor. The Green Homes programme, and others including the Energy Company Obligation (ECO) programmes, highlights some of the weaknesses with this strategy. Although well intentioned, the Green Homes Scheme was poorly designed, implemented and monitored, and eventually scrapped. With more thought, it could have worked. However, future programmes will now be viewed through the experience of this failed policy and met with scepticism.
This undermines any attempts at introducing meaningful retrofit technologies, and glosses over the complexity of issues involved. This was a short-term policy with many obvious faults. For example, reliable, qualified installers had little incentive to apply for the programme due to the lack of guaranteed long-term investment. Why should a trusted installer recruit and train apprentices in retrofit when the programme only lasts 2 years, and then abruptly ends? Local authorities tasked with managing the scheme lacked technical capacity to deliver a quality service, and often awarded contracts with little or no scrutiny. As a consequence, many installers were unqualified cowboys who exploited the system, charging virtually what they liked (‘that’s paid for my holiday to Florida’), with no oversight or quality control, let alone post-installation evaluation. Worse, many operated far from their own communities and therefore had no incentive to ensure the job was delivered to an acceptable standard. It was designed to fail.
However, a reliable scheme could not only avoid these pitfalls, but also make a net contribution to the economy while reducing the burden of the consequences of fuel poverty on the already overstretched NHS and make a significant contribution to the net-zero objective.
First, a scheme needs to be sufficiently funded until at least 2030, and preferably far beyond. This would ensure that there is sufficient incentive to develop and embed all the skills needed for the sector.
Second, there is a need to recruit and train an army to specialise in all the competences of delivering retrofit; the PAS2035 standards set the skills for five new roles – Retrofit Advisor, Retrofit Assessor, Retrofit Co-ordinator, Retrofit Designer, and Retrofit Evaluator – in addition to the existing role of Retrofit Installer. This will at least ensure the job is done properly.
Third, retrofit could create over 500,000 high quality jobs in the very near future. The areas most blighted by fuel poverty are already affected by other social issues, including unemployment. These jobs ensure that local skills are developed and retained within a local community and are therefore more likely to rely on local materials and allied trades in the supply network.
The system results are all positive; job creation; reduction in energy costs; improvement in housing quality; carbon reduction; positive health effects. What is there not to like?