Transformation Moment

5. Energy efficiency: the key to connectedness

Britain has some of the most energy inefficient housing in Europe, and one of the highest rates of fuel poverty. The Green Building Council argues that 25 million homes need refurbishing to the highest standards by 2050 – at a rate of 1.4 homes every minute – if Britain is to seriously cut carbon emissions.[89]

This has to be the starting point for any radical reduction in the amount of energy Britain wastes. Politicians may argue about the rate of new house building but the more critical question is ‘what will Britain do with the 26 million homes it already has?’

Heating the buildings people live and work in accounts for over 60% of domestic energy consumption and 50% of UK carbon emissions. Energy conservation is the low-hanging fruit in tomorrow’s low-carbon economies. It creates jobs, saves lives and cuts carbon faster than any other measure. Moreover, one recent study estimated the size of


“… the EU energy renovation market at EUR 109 billion in 2015 and 882,900 jobs. It shows that the size of the EU energy renovation market could increase by almost half the current energy renovation market if a 40% energy savings target is adopted for 2030. This would lead to more than one million additional jobs.”[90]

Unfortunately, this is another policy area that seems to have been blindsided by BREXIT.

In April 2016, Ecofys produced a European analysis of recent progress made in energy efficiency policies across Europe.[91] Britain’s performance was sobering.

The paucity of the UK position – limited progress and even more limited new policies – was a combination of factors;

insufficiently robust building standards, patchwork home improvement strategies, and

– an enduring policy subservience to ‘lower standards’ demanded by Britain’s construction industry and private landlords.

Far too often, the U.K. addressed short-term conveniences measures rather than long-term consequences; reflecting a lack of political will more than a shortage of cash.

On 23 October 2015, Britain’s Communities and Local Government Minister made such short-termism unambiguously clear –

“As detailed in the Productivity Plan – ‘Fixing the foundations: Creating a more prosperous nation’ – the Government will not be implementing zero-carbon homes. The zero-carbon homes standard, in particular the ‘allowable solutions’ carbon off-setting element, would have placed a significant regulatory burden on the house building industry.”[92]

Britain’s abandonment of its zero-carbon homes standard (originally set to apply to all new housing construction from 2016 onwards), the collapse (in disrepute) of its Green Deal energy efficiency programme[93], and the low level/long lead-time of minimum standards set for the private rented sector, all sent out perverse signals about Britain’s commitment to reducing energy consumption. This was reflected in the low level of new UK initiatives in the Ecofys analysis.

Moreover, a disproportionate number of Britain’s fuel-poor households live in private-rented properties. These are the households most affected by regulatory standards rather than grant inducements. Now, local authorities seeking to set higher minimum standards for private rented properties have seen their powers reined in even further by Ministers. Local authorities

…”need to request permission from Whitehall if they want to introduce licensing schemes covering more than 20% of privately rented homes in their area.”[94]

Post BREXIT, it may cease to be relevant to ask how this squares with Britain’s legal commitments within the 2010 EU Energy Efficiency Directive. Under Article 7, however, Britain pledged legal improvement targets for existing buildings, specifying –

“That target shall be at least equivalent to achieving new savings each year from 1 January 2014 to 31 December 2020 of 1.5 % of the annual energy sales to final customers of all energy distributors or all retail energy sales companies by volume, averaged over the most recent three-year period prior to 1 January 2013.”[95]

And for all new buildings

“Member States shall ensure that by 31 December 2020 all new buildings are nearly zero-energy buildings; and after 31 December 2018, new buildings occupied and owned by public authorities are nearly zero-energy buildings”. Member States shall furthermore “draw up national plans for increasing the number of nearly zero-energy buildings”.[96]

When/if Britain leaves the EU such commitments may go out of the window. But – in or out – energy efficient buildings (and an end to fuel poverty) offers the fastest route into carbon reduction, and into markets delivering more jobs but less energy.

Germany offers one of the clearest frameworks for doing so. Central to their approach is the role given to their KfW Bank. This is Germany’s equivalent of the Green Investment Bank (only with real cash, and a much clearer ecological remit).

Germany’s energy efficiency programmes cut out power companies completely. Instead, the KfW Bank de-risks clean energy investment, then loans money directly for energy efficiency improvements… and does so at 1% interest rates.

The German programme has been underpinned by formal Bank targets/priorities to deliver

a 50% reduction in primary energy consumption by 2050 (20% by 2020)

doubling the refurbishment rate of existing buildings, and

cutting the primary energy consumption of ‘buildings’ by 80% by 2050.

The KfW Bank reinforces its low interest loans with long payback periods and partial debt relief/write-off. The higher the standard of energy efficiency a home is improved to, the higher the portion of the loan (up to 17.5%) the Bank is prepared to write off/convert to a grant.

The effectiveness of the programme can be seen in the outcomes table presented by the Bank itself.[97]

Bank officials proudly point out how much of these costs come back in taxation.

Some 2/3 of the jobs created in the German Energiewende programme are now in energy efficiency and installation services, all within the domestic economy – feeding income, consumption and taxation back into domestic circulation.

The practical consequences of this can be seen (creatively) in every town and city in Germany.

Blocks of flats in Hamburg have had conventional balustrades replaced by solar ones, flats provided with curtains and wall coverings that are ‘phase-change materials’ – absorbing heat during the day/releasing it at night – and solar thermal systems on the roofs.

In Munich, the Akermanbogan estate’s solar thermal roofs have been linked to a sealed (and landscaped) reservoir that supplies several apartment blocks, cutting heating bills in half. Surpluses are ‘pooled’ within their district heating network.

In Freiberg, ‘energy-plus’ housing supplies more electricity to the local grid than they consume.

The KfW de-risked much of this investment by taking responsibility for designing the loan protocols; training High St bank staff to deliver loan approvals quickly… and with a minimum of fuss; a far remove from the bureaucracy and delay wrapped up in a succession of UK housing and fuel poverty programmes.

In addition, the KfW finances work on ‘whole area’ strategies as well as improvements in individual homes. In 2012, the Bank

“…started a special and successful support scheme entitled “Energetische Stadtquartiere” that provides financial incentives to municipalities to plan, organize, and implement district-wide retrofit schemes and to implement district heating networks. In addition, within the urban development promotion programs and another programs targeted towards municipalities, efficiency measures and the installation of renewable and district heating infrastructure is funded.[98]

Fundamentally, what Germans have grasped (and what Britain has not) is that the gains from such programmes can be socialised, not just the costs.

For all the fuss Britain makes about ‘expensive’ energy in Germany the reality is that energy efficiency and clean energy policies form just 0.5% of average German household spending.

The key lies in grasping that joined up strategies – rather than individual technologies – is the key to a different economics; one that can deliver jobs, skills, innovation, economic gain, security and ‘smart’, all in one go.

Britain’s has showed little interest in following the German model, extending the remit (and resources) of a Green Investment Bank, or the Danish/North American models (driven by higher regulatory standards). Nor has parliament driven a meaningful national energy efficiency programme or set demanding requirements that power networks reduce annual energy consumption.

Yet this is the change in energy thinking Britain must somehow engage with.

A ‘smart cities’ movement needs to be at the heart of this, demanding not only devolved powers but also devolved carbon budgets to operate within. This is would put energy efficiency and energy saving at the centre of the transformation process. Such additional duties are also the key to democratic renewal.

Leading voices in commerce and industry have been making their own efforts to go carbon-neutral[99]. Many already invest in on-site, clean-energy generation. Many more would welcome integrated policies that incentivise energy saving, waste reduction, recycling and re-use. In energy terms, all are constrained by the rigidities of UK energy thinking.

Pioneers within the Smart Cities movement have grasped that this is what invites them to become drivers (and co-ordinators) of a much bigger change agenda.

The leadership of a UK transformation movement will be found in towns and cities whose Leaders shift their focus from ‘ownership’ to ‘partnership’. For some, it will be a bridge too far, for others it will bring about the most rejuvenating democratic change in over a century.

Localities will need powers to set grid-performance (and demand-reduction) targets for energy distribution networks; opening up new possibilities for co-financing energy efficiency programmes. Local (not-for-profit) energy companies can become vehicles for developing smart systems for energy storage, clean generation and cross-sector use … all at lower costs to consumers. And these partnerships will need to include communities and community co-ops that have often been held at arms length from local decision making.

And one way or another, all of us will have to learn how to ‘dance differently’ with the Grid itself.

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