How should a national energy efficiency policy be targeted ahead of winter?

Rising gas and electricity prices have affected millions of UK households and increased rates of energy poverty. Energy efficiency policies should make a priority of support for the most vulnerable, particularly low-income households and those with disabilities or long-term illness.

Enhancing the energy efficiency of homes across the UK is one of the fundamental goals of the recently established Department for Energy Security and Net Zero (DESNZ). In doing so, it aims to align decarbonisation efforts with initiatives to combat energy poverty and its associated health consequences.

Energy poverty occurs when households struggle to afford their energy bills, pushing them below the official poverty line. At one point in 2022, it was projected that rising energy prices could push over eight million people into energy poverty (National Energy Action, NEA, 2022).

While this number may not have been reached, the past winter has been challenging for many. In 2022, around 3.2 million individuals in the UK were unable to afford to recharge their energy meters, leading to disconnection from their energy supply (Citizens Advice, 2023).

Ofgem, the regulatory agency for gas and electricity markets, has announced a decrease in the energy price cap – the maximum price that suppliers can charge customers for each kilowatt hour of energy they use. From 1 July, this will be set at £2,074 per year for a dual fuel household based on typical consumption (Ofgem, 2023).

Nevertheless, many of the structural issues that cause energy poverty will remain present as we move into the winter of 2023/24. There is no promise of a return to lower energy bills any time soon.

Around 78% of households in the UK use gas central heating to keep warm, and they remain vulnerable to future price rises (Department for Business, Energy and Industrial Strategy, BEIS, 2022). Our homes also leak heat – an average of 3°C of heat over five hours, compared with 1.5°C in Italy and 0.9°C in Norway (tado, 2020).

Figure 1: Home temperature loss after five hours, with a temperature of 20°C inside and 0°C outside

Source: tado, 2020

While temperatures are high in the summer, the coming months give an important opportunity to protect households against the short days and cold weeks of winter. Cohesive, targeted government action is needed to support those most vulnerable to future price rises.

Who should energy policy protect?

The recently established Energy Efficiency Taskforce is responsible for achieving government ambitions of reducing total national energy demand by 15% by 2030. The focus of this work is on retrofitting domestic and commercial buildings, or installing energy-saving technologies such as insulation and solar panels.

This is no small task. The residential sector was responsible for 17% of all carbon emissions in the UK in 2022. It is likely that £55 billion of investment will be needed to improve energy efficiency by 2050. The government has been sluggish in making such investments – with the National Infrastructure Commission highlighting unfulfilled ambitions earlier this year.

Future energy efficiency policies should be further targeted to take account of energy poverty. Recent interventions, such as the ECO+ scheme, have pledged financial support to hundreds of thousands of homes deemed the least energy efficient. These include homes on lower council tax bands (taken as a proxy for income) and those with lower ratings on their energy performance certificates (EPCs).

This is a good start. Addressing energy poverty offers the opportunity to enhance the lives of vulnerable and marginalised individuals affected by previous policies. These include austerity policies, which had a disproportionate impact on people with disabilities.

Today, people with disabilities are also more likely to be affected by energy poverty, which can exacerbate pre-existing illnesses and symptoms. In addition, energy poverty can complicate the use of at-home medical equipment, such as items to assist with mobility or for at-home oxygen therapy.

Covid-19 has exacerbated previous patterns of inequality: government data on mortality rates show that the pandemic hit England’s most deprived areas the hardest. It is in this context that new energy policies must be introduced.

This requires addressing the energy ‘trilemma’: to ensure energy availability (linked to the security of supply), accessibility (ensuring that everybody can afford energy financially) and sustainability (reducing emissions).

Energy poverty in the UK is not spread evenly. Rather, it is closely intertwined with the vulnerability of specific social groups and not always defined by council tax bands or EPCs that aid our understanding of homes’ energy efficiency.

Individuals on lower incomes who are forced to allocate a larger portion of their spending to essentials are the most vulnerable to price increases (Office for National Statistics, ONS, 2022). In 2022, approximately 2.8 million older households in the UK (30% of all households) were driven into energy poverty, with their incomes after paying energy bills falling below the national poverty line (Age UK, 2022).

The effects can also be concentrated within certain neighbourhoods, exacerbating the disproportionate impact of energy price increases on those residing in these areas or lacking the financial means to improve their homes' energy efficiency. Energy poverty is more common in urban areas, where residents are also often affected by other inequalities, such as a lack of access to transport (Robinson and Mattioli, 2020).

What does this mean for future energy efficiency interventions?

Government aspirations for net-zero carbon emissions together with the intent to protect households from energy price rises require action to improve energy efficiency. The past two years of energy insecurity show that future energy efficiency policies should have interventions against energy poverty as a priority, transcending a sole focus on decarbonisation.

This shift requires acknowledging that energy poverty is context-specific and demands targeted strategies and interventions. Current policies are starting to adopt such an approach.

In 2022, the government launched funding for energy efficiency upgrades for 20,000 social housing properties. This is a positive move. The social housing sector encompasses 17% of households in England, with social renters typically having the lowest incomes, a higher likelihood of rent arrears, and limited savings. And over half of social renters report a household member having a long-term illness or disability.

Retrofitting these properties can be relatively low-hanging fruit for local authorities seeking to fulfil their own net-zero targets. In Bristol, for example, social housing will have new insulation fitted.

Policy interventions should recognise vulnerability as a multidimensional issue linked not only to income but also to property characteristics and tenure. The newly formed Energy Efficiency Taskforce should make multidisciplinary collaboration a priority, combining the conceptual framework of restorative justice with statistical approaches to energy poverty. This requires bridging gaps across various policy domains to identify areas where energy efficiency interventions are most needed.

To ensure a restorative justice approach that benefits those most in need, future DESNZ energy efficiency policies should consider the following areas.

Households with pre-payment meters (PPMs)

Approximately four million people in the UK use pre-payment meters for electricity and gas. The higher rates associated with PPMs have led to instances where 3.2 million households were unable to afford energy costs at some point in 2022, resulting in energy deprivation.

Targeting energy efficiency policies to help people on PPMs would address the specific needs of a vulnerable group of people who often struggle to afford energy costs, ensuring that they have access to affordable and efficient energy services while mitigating the risk of energy poverty and disconnection.

Private rental properties

Around one in five households in England live in private rental properties, with 11% of these homes reporting damp-related issues in 2021. Tenants often require landlords' permission to install energy efficiency measures, and landlords may be less inclined to invest in such upgrades.

Supporting private renters to lobby landlords to install new upgrades (or install their own) would address the challenges faced by tenants who often lack control over energy efficiency measures in their homes, ensuring that they have access to healthier living conditions.

Interwar housing

The Royal Institute of British Architects has argued for interventions to target the 3.3 million homes built between 1918 and 1939, as 17% of households in these interwar suburbs experience energy poverty. Further, these houses contribute approximately 12% of England’s total carbon emissions.

By making a priority of interventions in interwar housing, policies can rectify historical disparities and promote equity by improving energy efficiency, benefiting both the residents and the climate.

Individuals with long-term health problems or disabilities

People reliant on electricity for at-home medical equipment or mobility aids face energy poverty due to their continuous need for a secure energy supply. Energy efficiency policies can be tailored to assist those who are most vulnerable to future energy price fluctuations. For example, expanding NHS prescriptions of warmth to patients, initiated in 2022, would offer support to individuals with health problems or disabilities that require increased energy usage.

Conclusion

A restorative justice approach to energy efficiency policy in the UK is important for addressing energy poverty and correcting broader patterns of exclusion and inequality. By focusing on targeted interventions, understanding vulnerability in multiple dimensions, fostering collaboration and supporting the most vulnerable populations, national energy efficiency policies can effectively combat energy poverty and ensure a just and sustainable energy future for all.

Where can I find out more?

The Energy Saving Trust explains the financial support available for installing home energy efficiency measures.
The UK Climate Change Committee writes about heat and energy efficiency in buildings.
The Royal Institute of British Architects details the importance of retrofitting interwar housing.
Shalanda Baker describes the importance of restorative justice in energy transitions.
How to transition homes to energy efficiency: an experimental systems map of the barriers and pathways to change: Analysis by the International Public Policy Observatory.
This article is based on a recent policy briefing written by Ed Atkins for Policy Bristol. Ed Atkins is publishing a book on this topic in July 2023.