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Properly funded green homes scheme could deliver multiple benefits

A properly funded and ambitious programme to insulate homes and swap gas boilers for low-carbon heating sources, such as heat pumps, could deliver huge economic and social benefits, according to a new report from Greenpeace UK: The economic impact of decarbonising household heating in the UK. Nearly 140,000 new jobs could be created by 2030 if the government was to deliver a strategy for decarbonising homes that significantly increased the deployment of heat pumps and energy efficiency measures, with grants to cover the costs.

These findings come ahead of the publication of the government’s Heat and Buildings Strategy, which is expected to set out plans for decarbonising homes and buildings, perhaps next month.

The report and analysis – which was produced by Cambridge Econometrics – used macroeconomic modelling to assess the impact of three housing decarbonisation scenarios. The central scenario, taken from the Climate Change Committee’s (CCC) central pathway for delivering net zero, aims to install just over 1mn heat pumps per year by 2030 and upgrade all buildings to EPC 'C' standards within the next 10–15 years.

The other two scenarios were also based on the CCC’s pathway but one used the government’s current, less ambitious plans to install just 600,000 heat pumps per year by 2028. The other had the cost of heat pump installations rapidly falling to £5,500 in line with industry estimates.

The analysis found that all three scenarios would provide a significant boost to the economy, both in terms of job creation and GDP. However, the greatest benefits would come from the more ambitious rollout of low-carbon heating technologies and energy efficiency.

The modelling showed the government’s current, less ambitious plans would add £3.9bn to the economy and provide 71,500 new jobs by 2030, whereas the scenario based on the CCC’s pathway, which sees significantly more heat pumps installed, would inject £4.8bn into the economy and create 84,700 new jobs by the same year. 

In all three scenarios the analysis assumed that the government would provide £4,000 grants for households to install heat pumps over the first three years, with grants then falling over time to ensure the cost of installing a heat pump matched that of replacing a gas boiler. It also assumed that the government would cover 45% of energy efficiency improvement costs.
In addition to the economic and environmental benefits that such a programme would deliver, the report also highlighted a range of social benefits that would come from greening the UK’s homes. They include lower bills, reduced fuel poverty and a reduction in health impacts related to cold homes.

Meanwhile, the National Audit Office (NAO) has heaped criticism on the government’s now closed Green Homes Grant Voucher Scheme.

The Department for Business, Energy & Industrial Strategy (BEIS) ran the scheme between September 2020 and March 2021 as part of government’s ‘green recovery’ from the COVID-19 pandemic. It offered homeowners up to £5,000 funding, or £10,000 for low-income households, for the installation of energy efficient improvements.

BEIS originally expected the scheme to support up to 82,500 jobs over six months, and enable up to 600,000 households to save up to £600 on their energy bills. It did not. BEIS now estimates that it will spend £314mn of the £1.5bn funding available, of which £50mn (more than £1,000 per home upgraded) was spent on administration, says the NAO. BEIS forecasts that the scheme will eventually support efficiency measures in 47,500 homes, and create up to 5,600 jobs over 12 months.

Gareth Davies, Head of the NAO commented: ‘The aim to achieve immediate economic stimulus through the Green Homes Grant voucher scheme meant that it was rushed. As a result, its benefits for carbon reduction were significantly reduced and ultimately, it did not create the number of jobs government had hoped for. Decarbonising our homes is a key element of the government’s net zero strategy. It is vital that future schemes learn from this experience.’

News Item details

Journal title: Energy World

Countries: UK -

Organisation: Greenpeace

Subjects: Space heating - Gas - Boilers - Heat pumps - Net zero - Decarbonisation - Carbon emissions -

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