A Simple Assessment of Housing Retrofit Policies for the UK: What Should Succeed the Energy Company Obligation?

Abstract

Abstract:Despite the need for large-scale retrofit of UK housing to meet emissions reduction targets, progress to date has been slow and domestic energy efficiency policies have struggled to accelerate housing retrofit processes. There is a need for housing retrofit policies that overcome key barriers within the retrofit sector while maintaining economic viability for customers, funding organizations, and effectively addressing UK emission reductions and fuel poverty targets. In this study, we use a simple assessment framework to assess three policies (the Variable Council Tax, the Variable Stamp Duty Land Tax, and Green Mortgage) proposed to replace the UK's current major domestic retrofit programme known as the Energy Company Obligation (ECO). We show that the Variable Council Tax and Green Mortgage proposals have the greatest potential for overcoming the main barriers to retrofit policies while maintaining economic viability and contributing to high-level UK targets. We also show that, while none of the assessed schemes are capable of overcoming all retrofit barriers on their own, a mix of all three policies could address most barriers and provide key benefits such as wide coverage of property markets, operation on existing financial infrastructures, and application of a "carrot-and-stick" approach to incentivize retrofit. Lastly, we indicate that the specific support and protection of fuel-poor households cannot be achieved by a mix of these policies and a complementary scheme focused on fuel-poor households is required.

How to finance energy renovation of residential buildings: Review of current and emerging financing instruments in the EU

“…In the UK a Green Mortgage shows remarkable potential to address the main barriers to retrofit policies. This scheme supports the offering of re‐mortgage products which cover the financing of EE measures, while maintaining economic viability and contributing to high‐level UK targets (Miu et al, 2018).…”

Social and Infrastructural Conditioning of Lowering Energy Costs and Improving the Energy Efficiency of Buildings in the Context of the Local Energy Policy

“…Miu et al assessed three policies-variable local tax, land tax with a variable stamp duty, and green mortgage-proposed to replace the current large program of modernization in the United Kingdom, known as The Energy Company Obligation (ECO) [27]. They also demonstrated the need for a modernization policy that overcomes the key barriers to the modernization sector, while maintaining profitability for clients, funding organizations, and dealing effectively with the issues of emission reduction in the U.K. and energy poverty.…”

Increasing heat pump adoption: analysing multiple perspectives on preparing homes for heat pumps in the UK

“…The UK's National Audit Office's 2016 report on the scheme's first phase noted that the Energy Company Obligation failed to deliver cost-effective carbon reduction compared to previous schemes and pointed out that the focus on hard-to-treat properties meant it was difficult for the supply chain to maintain scale [61]. Miu et al [62] note that the scheme achieved less total carbon emissions reductions than previous schemes, failed to deliver its target for improvements to solid wall properties and was less cost-effective than expected. Katris and Turner [63] highlighted that the Energy Company Obligation had significant administrative and implementation costs that diverted funding away from retrofitting activities.…”