Andrew Selous, MP for South West Bedfordshire, talks energy efficiency...

Upgrading owner-occupied homes is the quickest route to decarbonising the UK’s housing stock – so why aren’t we doing it?

Energy Performance Certificate Band C has become the clear marker for the UK’s energy efficiency ambitions. Indeed, the very prospect of all homes reaching this goal ahead of this winter may seem like a pipe dream, but we are much closer to this milestone than it might initially appear.

Over the last decade, the proportion of homes rated as Band E, Band F and Band G has plummeted from 39 per cent of all homes in England to a lowly 10 per cent. But curiously, Band D has hardly dropped, with Band D homes remaining the largest remaining chunk of any single EPC Band, at a very significant 43 per cent. So, why the gap?

There are many factors at play here, but one of them is that, quite rightly, the focus of energy efficiency policy historically has been on upgrading the country’s very worst homes first. This has led to energy efficiency policies in the past almost exclusively focusing on homes at risk of fuel poverty, across both the private rented sector and the social housing sector.

Owner-occupier homes make up two-thirds of homes in the UK, but fortunately, only eight per cent of them are estimated to be in fuel poverty. This means that owner-occupied Band D homes not in fuel poverty, numbering in their millions, have never had any policy incentive to upgrade their energy efficiency credentials (if you exclude the brief exceptions of 2013’s Green Deal and 2020’s Green Homes Grant).

The remaining 92 per cent of those homes that are not in fuel poverty are extremely varied, including both those who own their home outright and those on mortgages, as well as both those households without any savings to their name and others that make up the wealthiest echelons of British society.

So what’s to be done for this critical and sizeable wedge of the housing sector? First, more research is required to figure out who is truly ‘able-to-pay’ for energy upgrades, and who is unable to pay, beyond being in fuel poverty. Second, the Government must develop a twin-track approach for owner occupiers, developing a new subsidy scheme for the poorer and more vulnerable households, whilst providing an easy access route to green finance for those classed as able-to pay.

With new green mortgages, green equity, green bonds and more, the world of finance grows greener by the year, but a persistent barrier to the adoption of such financial instruments is that homeowners have no clear route or incentivisation to transition to them. Clearer guidance and competitive rates from the Government, as well as the prospect of minimum energy efficiency standards on new properties, could give the green finance market enough attention to blossom, as well as give homeowners enough help to allow all parties to benefit.

With millions of owner-occupier homes having received relatively little attention over the last decade, this is a key opportunity ahead of this winter to deliver a relatively easy win through energy efficiency, and to save these households from higher energy costs during the bitter gas crisis. With war in Ukraine fuelled by Western demand for gas, and the consumption of that same gas contributing to wildfires and drought around the globe, there has never been a more visible need or obvious time to urgently transition away from our dependence on the fossil fuel.

The Government is committed to Net Zero, is committed to decarbonising heat, is committed to energy efficiency – and so in turn must commit to viable options to deliver energy efficiency at scale. Perhaps that pipe dream, if not this winter, is closer than we think.

This article was co-authored with the ADE.