Both decarbonisation and energy efficiency retrofits were emphasised in a recent UK Parliament Energy Security and Net Zero (ESNZ) Committee report published in May. The report called on the government to provide longer-term certainty for its retrofit support schemes, launch a national warm homes advice service and introduce a carbon metric to certify the energy performance of homes.

The Committee said that, since four in five homes that will be occupied in 2050 have already been built, most will need retrofitting with low-carbon heating systems and energy efficiency improvements for the UK to achieve net zero emissions. That amounts to 29 million homes that need retrofitting by 2050 to achieve the UK government’s emission reduction targets.

According to the Select Committee, upgrading all homes to at least Energy Performance Certificate (EPC) level C would deliver £40bn in economic benefits in the next five years alone, and up to £100bn in further benefits over the following decade. It would also make homes warmer, healthier and potentially cheaper to heat, reducing levels of cold-related illnesses and mental health conditions.

Bill Esterson MP, Chair of the ESNZ Committee even questioned the value of EPCs in decarbonisation. ‘Based on the costs of heating a home rather than its carbon footprint, they often recommend consumers install a new gas boiler rather than a heat pump.’

The authors also complained that there are far fewer energy efficiency measures being installed in homes compared to the trajectory the UK was on in 2010. Key to restoring consumer confidence is to bring down the cost of electricity relative to gas, they say. Reducing the proportion of energy policy costs levied on electricity bills is the most immediate and simple way to achieve that, they add.

The authors of the report point out that the typical household pays roughly the same amount for gas as electricity, despite using four times more gas. They add: ‘While this rebalancing must be done sensitively to accommodate those remaining on the gas network, many of the poorest consumers, using direct electric heating, would benefit most from this change.’

Supporting the report was UK policy lead Will Walker at climate solutions charity Ashden. ‘The Committee’s call for long-term funding, locally-led delivery and a joined-up skills plan [for retrofit] exactly matches what’s working on the ground today,’ he says.

‘Millions of people are still living in cold, leaky homes – endangering their health and costing them money many can’t afford. We urgently need the government to honour its manifesto commitment to a £13.2bn Warm Homes Plan’ – the UK government’s policy to make homes warmer and more affordable to heat. Keeping the manifesto commitment for the full £13.2bn is crucial, adds Walker. Doing so could fund the retrofit of 5 million homes.  

Also responding to the report was UK trade body BEAMA. It argued that engaging users in the subject of decarbonised heating is the critical issue, along with providing better advice. It referred to its April report on the subject, What should I do: Accelerating heat electrification by providing customer choice.

Decarbonising the workplace
Turning to decarbonisation of UK workplaces, recent evidence also suggests that the desire among small businesses to become energy-efficient is being held back by the high up-front cost of green investment. Half of small businesses (51%) say that sustainability is a high priority for their business, but only a quarter (25%) expect to transition their own business to net zero by 2050. So finds New growth: How to support small businesses to cut carbon and costs on the road to net zero, published this week.

The Federation of Small Businesses (FSB), which commissioned the research, says that is a worrying gap, partly because small firms contribute about half of the UK’s total business emissions.

Two in five small firms (38%) cite a lack of capital as a barrier to transition, while a third (33%) say the return on investment for green tech is too long. Only one in eight small firms (13%) say they have the appropriate finances to transition to net zero, while under a fifth (18%) say they have the right skills to make the change, and only a quarter (26%) have the right knowledge.

Lower energy bills were the most popular incentive to get small firms to install low-carbon improvements, selected by three in five small firms (61%). When FSB asked small businesses a similar question in 2021, energy costs only made third place.

Energy poverty factors in Europe
Broadening the scope to Europe might help put issues into perspective. A recent study led by Dr Georgia Makridou, Associate Professor in Energy Management at ESCP Business School, and researchers from Toyo University and the Technical University of Crete, provides an in-depth analysis of energy poverty across 32 European nations, including the UK.

While the study found the UK’s level of energy poverty on the low end, at 6%, it was still three times greater than in Finland, Sweden, Luxembourg and Norway. (In the report, the most precarious nations were generally to the south and/or east: Bulgaria topped the list at more than 45%, and those between 25–30% were Latvia, Portugal and Cyprus.)

Drawing from data from the EU Statistics on Income and Living Conditions (EU-SILC), the study, Evaluating the energy poverty in the EU countries, published in the journal Energy Economics, identifies key factors driving energy poverty and presents evidence-based recommendations to mitigate its impact across Europe’s energy markets.

First, the study found that housing quality is a key driver. Poor insulation and inadequate infrastructure are strongly linked to energy poverty, particularly among low-income households.

Second, renters are disproportionately impacted. With limited ability to invest in energy-efficient upgrades, tenants remain highly vulnerable to rising energy costs.

Third, urban areas face heightened challenges. Major cities (such as London) experience compounded risks from high energy prices, limited access to energy-efficient housing, and deep-rooted socioeconomic inequality.

Fourth, financial security reduces exposure. Households with greater financial resilience are better equipped to adopt energy-efficient technologies and manage increasing energy costs.

Makridou says: ‘The findings showed a positive association between energy poverty [in other words, a reduction of energy poverty] and factors such as urbanisation, tenure, overcrowding, electricity prices, and GDP.’

On that last point, Makridou also says: ‘Energy poverty is linked to wealth and reflects regional disparities in living standards. However, the relationship is also shaped by how wealth is distributed, housing conditions, and policy effectiveness – not just GDP alone.’

In contrast, Makridou’s research found that variables such as dwelling quality, room availability, leaks, ability to make ends meet, noise, pollution, crime, household size, income, wealth, renewable energy use, employment and greenhouse gas emissions had negative coefficients.

‘These results suggest that households living in poor housing conditions or challenging environments, and those with limited financial resources, are more vulnerable to energy poverty.’

‘Addressing energy poverty effectively requires confronting high energy costs, poor housing conditions and income disparities.’ – Dr Georgia Makridou, Associate Professor in Energy Management at ESCP Business School

But what doesn’t appear to matter is the type of fuel used. ‘Energy poverty appears to be more strongly linked to housing conditions and structural factors than to whether households use gas, electricity or other heating sources. Improving the energy performance of buildings, especially in vulnerable areas, is key to long-term solutions.’

On this topic, Makridou admits being surprised by one particular finding. ‘Although the shift to renewable energy is essential for combatting climate change and advancing the energy transition, our results show that it has not yet contributed to reducing energy poverty in Europe. The lack of a strong correlation implies that renewable growth by itself is insufficient to tackle this issue. Without focused social policies, improvements in housing energy efficiency and fair access to clean energy, the transition risks overlooking the most vulnerable populations. Therefore, addressing energy poverty effectively requires confronting high energy costs, poor housing conditions and income disparities.’

This perspective puts her firmly in the fabric-first camp. She adds: ‘Although this topic falls outside the direct scope of the study, I would argue that if the aim is to reduce energy poverty, priority should be given to enhancing the physical condition of homes – the building “fabric”. Upgrading heating systems should come afterward, once the home is properly insulated and capable of retaining heat effectively.’

Another interesting finding was that, taking Europe as a whole, since 2012 energy poverty has declined continuously from 12% to about 8% in the latest figures in 2021. Asked what might be responsible for the trend, she proposes coordinated policy actions, economic growth and modernisation of energy infrastructure.

She adds: ‘Enhancements in home energy efficiency lowered the amount of energy needed for comfortable living, thereby cutting household energy costs. At the same time, market liberalisation, a more diverse energy mix – including renewables – and stronger consumer protections contributed to greater price stability and affordability.’

‘Investments through structural and cohesion funds also helped narrow regional inequalities, especially in newer EU member states, offering improved assistance to those most at risk.’

In summary, the research calls for various actions to fight energy poverty:

• Scaling up energy-efficient retrofitting, especially within the rental sector.
• Providing targeted financial support such as subsidies and tax credits to households most at risk.
• Enhancing regulatory frameworks to require landlords to meet minimum energy performance standards.

• Further reading: ‘Community-led home energy efficiency – why it might work in the UK’. Heating leaky homes is a major and persistent source of UK carbon emissions, yet this problem has never been fully addressed. Maybe it needs a new, community-based business model, argues Kit Evans, General Manager of SaveEnergy, which offers green homes services in the Maidenhead, Berkshire, area.
• Most people think we should reduce the amount of energy it takes to heat our homes. However, most UK homeowners have never quite got round to tackling the issue. Find out about the many contributing factors in this pernicious problem.