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ACE’s response to the Mayor of London’s draft London Housing Strategy

Our response to the Mayor of London’s draft London Housing Strategy consultation can be read here. Further details about the draft strategy can be found here.

ACE welcomes the vision and principles of the draft London Housing Strategy and agrees with the Mayor that London’s housing crisis is a barrier to prosperity, growth, and fairness for Londoners.

Improving the energy efficiency of London’s housing can deliver prosperity and growth, by supporting economic growth in the environmental goods and services sector, supporting London’s transition to a zero carbon city; and fairness by lowering energy bills of both new and existing homes and eradicating fuel poverty across the capital. Action to improve energy efficiency can also support activity to improving air quality.

ACE’s response to this consultation focuses on four of the five priorities set out in the draft Housing Strategy:

  • Building Homes for Londoners;
  • Delivering genuinely affordable homes;
  • High quality homes and inclusive neighbourhoods; and
  • A fairer deal for private renters and leaseholders.

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ACE’s response to the Mayor of London’s draft London Environment Strategy

ACE welcomes the vision and principles of the Mayor of London’s draft London Environment Strategy and the ambition for London to be a zero-carbon city by 2050.

We agree that the city’s most pressing environmental challenges are harming Londoners’ health and the city’s economy, and that the current pace of change is too slow. The Mayor highlights that big problems need ambitious responses. Therefore, we would like to see the Mayor’s activity and focus on air quality continue, but also expanded in relation to improving the energy efficiency of buildings, improving the lives and reducing health inequalities of those households that are in fuel poverty, whilst supporting economic growth in the environmental goods and services sector.

Our full response to consultation on this strategy can be found here.

 

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ACE’s response to the Mayor of London’s draft Fuel Poverty Action Plan

ACE welcomes the publication of the Mayor of London’s draft Fuel Poverty Action Plan for London to help support the eradication of fuel poverty across the capital. We agree that fuel poverty remains at unacceptable levels and that it has not received the attention that the issue deserves.

ACE’s response covers four key topics:

  • Supporting the roll-out of borough referral networks.
  • Improving the energy efficiency of London’s homes, with a particular focus on improving standards in the Private Rented Sector.
  • Energy for Londoners.
  • How the Mayor should work with the UK Government.

Our full response can be found here.

 

 

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Mind the Gap

Higher energy efficiency makes mortgage repayments more affordable, because less money spent on fuel means more money available for other bills. This is the core message that inspired the LENDERS project to explore how the energy performance of a home could be included in calculations of mortgage affordability.

The UK has the largest mortgage market in the world, with £234bn lent in 2016. At today’s launch of the project’s final report, BEIS Minister Claire Perry urged the mortgage industry to maintain the UK’s leading reputation for financial innovation and grasp the opportunity that improved home energy performance offers. She pointed out that higher energy efficiency improves and protects the collateral against which mortgage providers are lending, and improves home-owners’ ability to repay their debt.

The project has developed a tool that estimates the energy costs of a given property more accurately than the methods currently used by the mortgage industry. The tool can be used to show home buyers how the energy efficiency of their chosen home will affect their monthly fuel bills, and it could also be used in full mortgage affordability calculations, potentially affecting the maximum amount people can borrow – increasing this for more energy efficient properties and decreasing it for those with worse energy performance.

The ability to borrow additional money on a more efficient property will only affect directly the minority of borrowers who actually borrow close to their maximum mortgage amount. But the bigger prize is the potential effect on homebuyer perceptions: the option to borrow more on a given property could increase its attractiveness to buyers, whether or not they actually take up the larger mortgage amount; this in turn could lead to faster sales of more efficient properties and eventually to higher prices.

The Minister is clearly looking to industry to play a leading role in building demand for energy efficiency investment. And – to an extent – industry is willing to respond, as evidenced by the active involvement of mortgage lenders in the project.

However, the report acknowledges that making changes to affordability calculations is a significant process change and could take the industry some time, although promotion of the existing stand-alone tool by lenders and estate agents could begin now. The key question is: will either of these things happen?

Is the potential for additional mortgage lending to those who currently take up the maximum loan available to them a big enough financial incentive for lenders? Probably not.

Is the longer-term increase in lending on higher value energy efficient homes (together with a possible decrease in lending on less valuable inefficient properties) any incentive at all?

And is the ‘improvement in, and protection of, collateral’ that the Minister identified a clear enough motivator for lenders to invest time and money in promoting this new information to home buyers and in changing their systems?

If the answer to any or all of these questions is ‘no’, then there may well be a large gap between government’s expectations of an industry response and what actually happens, which would be a real opportunity missed. The questions then are: how do we close this gap? And whose job is it to do this?

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Our response to Public Accounts Committee Inquiry into Household Energy Efficiency Schemes

In 2013, the Department of Energy and Climate Change (DECC) launched two complementary schemes—the Green Deal and Energy Company Obligation (ECO)—to improve the energy efficiency of the UK’s housing stock. ECO obligates energy suppliers to install efficiency measures, such as loft or wall insulation, with the cost passed on to energy bill payers.

Through the Green Deal, homeowners funded installations by taking out loans, which they repaid through their energy bills. The Department of Energy and Climate Change made the decision in July 2015 to not invest further public funds in Green Deal loans.

The National Audit Office (NAO) examined what the schemes have achieved, and at what cost, the design and implementation of the schemes and whether DECC is learning lessons to feed into future energy efficiency schemes. The Public Accounts Committee have followed this up with an inquiry, to which we have provided a concise response.

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data,Energy Company Obligation,Green Deal

DECC’s Household Energy Efficiency Statistics: the good, the bad and the whaa…?

Liz Warren is a founder and director of SE2, a small consultancy helping individuals, communities and organisations build their capacity to respond to climate change. You can find out more about their work at www.se-2.co.uk.

DECC recently published statistics on the take-up of energy efficiency measures by households during 2015.  In this blog post, we unpick some of the data, exploring the good, the bad and the frankly baffling within the rich data set provided. How did policy announcements affect the market? Have whole-house energy assessments unlocked energy efficiency opportunities? And could we have found the elusive answer for improving the private rented sector?

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Treasury slammed following 9,000 cold home deaths

The Treasury was strongly criticised this week after a Panorama investigation revealed that over 9,000 people in England and Wales died from living in cold homes last winter.

The Panorama programme, ‘Too Poor to Stay Warm’, broadcast on Monday, cited research by academics at UCL which shows that a fifth of the 43,900 Excess Winter Deaths in Winter 2014/15 were due to people living in cold homes.

Yet Government support for energy efficiency has crashed by 80%. Making homes energy efficient is considered by experts as the only long term solution to fuel poverty, which affects over 4 million households in the UK.  The UK has one of the oldest and least energy efficient building stocks in Europe.

In our own research published earlier this week, also reported in The Guardian, we found that:

  • the number of energy efficiency measures installed in British homes has fallen by 80% since 2012
  • the number of households helped with energy efficiency measures has crashed by 76%
  • investment in home energy efficiency has declined by over 50%

We also found that the very low level of energy efficiency support now on offer is set to continue for the rest of this Parliament. During the last Parliament 5 million households were helped but we estimate that only 1.2 million households will receive energy efficiency measures this Parliament.

The Government axed Warm Front during the last Parliament, and the Green Deal and Green Deal Home Improvement Fund last year.  It also axed the UK’s zero carbon policy for new homes. Only the Energy Company Obligation is left, a levy on energy bills that was slashed in the Spending Review in December 2015.

A major alliance of 200 organisations and businesses under the Energy Bill Revolution banner is calling on the Government to make home energy efficiency an infrastructure priority. It is the most popular energy solution in the UK today with support across Parliament.

But the Treasury has refused to allocate one penny of the £120bn infrastructure budget to make homes energy efficient, despite the fact energy efficiency is classified as infrastructure by both the International Energy Agency and the European Investment Bank. According to the Government’s own economic data, making homes energy efficient also provides comparable economic returns to other infrastructure projects like roads and railways.

Jenny Holland, Head of Campaigns at ACE, said: “Our research findings are truly shocking. The UK has some of the worst housing stock in Europe, with levels of fuel poverty unheard of in much colder countries like Sweden. And UCL’s findings make clear that our cold homes were responsible for 9,000 avoidable deaths last winter. But Treasury help to upgrade our freezing homes has been slashed to the bone. The Government has pledged to make all fuel poor homes energy efficient by 2030, but without new funding, it will take them 94 years to meet their pledge. This is simply not good enough. By making energy efficiency an infrastructure priority, the Treasury could transform the lives of some of our most vulnerable citizens, making their fuel bills affordable and greatly reducing the risk of cold-related illness.

Ed Matthew, Director of the Energy Bill Revolution alliance said: “The decision by Treasury to decimate energy efficiency support will cost lives. Yet making UK homes energy efficient provides strong economic returns, as much as any other infrastructure project. But Osborne has chosen to invest £50 billion in HS2, £30 billion in road building and not one penny of the infrastructure budget in retrofitting the crumbling UK building stock. Perhaps he thinks there are more votes for the Conservatives by shaving a few minutes off a railway ride than saving the lives of the fuel poor.

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Latest developments in energy efficiency financing

Dr. Steve Fawkes is the founder of EnergyPro Ltd which provides advisory services in energy efficiency financing and incubates new ventures. He is Senior Adviser to the Investor Confidence Project and sits on the Investment Committee of the London Energy Efficiency Fund. His blog onlyelevenpercent.com covers energy efficiency financing and related matters.

For many years the energy efficiency industry has complained of lack of finance as being a barrier – but the truth is more complex. The industry has always focused on capital cost and energy cost savings, usually expressed as payback period. It is time to move beyond this simplistic model. In the last few years the existence and value of non-energy benefits such as increased productivity, better health, increased revenues and many others has started to be recognized. The International Energy Agency estimated that non-energy benefits could be worth four times the value of energy savings. Recent work by the UK Green Building Council, Marks & Spencer and others, has looked at valuing these benefits in the retail sector. As well as financial value these non-energy benefits are much more strategic than simple energy savings, if retailers can increase sales or reduce employee turnover, those are strategic issues in way that energy savings will never be. The energy efficiency industry needs to learn to identify and value the strategic non-energy benefits in business cases for investment, whether it be internally or externally funded investment. It also needs to learn to build better business cases.

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Display Energy Certificates,Energy Performance Certificates,European Energy Performance of Buildings Directive,Zero Carbon Homes

Our response to the European Commission’s consultation on the Energy Performance of Buildings Directive

This consultation forms part of the evaluation of the Energy Performance of Buildings Directive. Under the terms of the Directive, the Commission is required to carry out this evaluation by 1 January 2017, with assistance from a Committee of Member States’ representatives. The evaluation should reflect the experience gained and progress made since the adoption of the Directive. If necessary, the Commission should make proposals on the basis of the evaluation.

The evaluation also follows on from the Energy Efficiency Communication of July 2014, which indicated that additional measures to be introduced to improve energy efficiency would need to primarily address the energy efficiency of buildings and products if progress is to be made by 2030. The Energy Performance of Buildings Directive is the main legislative instrument in force at EU level covering the energy efficiency of buildings.

With a primary focus the UK energy efficiency market, our response to the consultation highlights: the uncertainty following the abandonment of the zero carbon trajectory; the missed opportunities with respect to driving higher rates of renovation; the low level of compliance with EPBD’s provisions and the virtual absence of enforcement; the question marks hanging over Display Energy Certificates; the need to make EPC data more widely accessible; and the need to plug skills and capacity shortages in the energy services and energy auditing sectors.

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