The domestic buildings sector is a major contributor to total UK emissions and reducing emissions from this sector is a key priority for reaching Net Zero.

In addition to delivering on Net Zero, achieving higher levels of energy efficiency improvements in this sector also offers benefits to households in the form of lower bills and / or warmer homes. However, progress to date in the domestic buildings sector has been slow. As part of its Autumn Statement, the Government announced its ambition to reduce energy demand from domestic buildings and industry by 15% by 2030, against 2021 levels (a ‘15% energy efficiency target’).

Frontier Economics was commissioned by WWF and ScottishPower to assess: (i) the level of energy efficiency measures required to deliver the 15% energy efficiency target in the domestic buildings sector in Great Britain (as well as a more ambitious target of a 20% reduction) using the technology mix modelled in the CCC’s Sixth Carbon Budget (Balanced Pathway Scenario); (ii) the level of deployment implied by existing “committed” and “planned policies”; and (iii) to identify where more may be needed to deliver the target.

Our analysis finds that if all currently committed policies are implemented and perform as expected, there would be a significant gap to reaching the 15% target – and even when planned policies are also taken into account, there is still a gap.

Scaling up effective delivery of energy efficiency measures

Focussing on currently committed policies, we find that achieving the 15% target would require an additional 4.9m fabric efficiency retrofits, 1.5m heat pump installations and 0.6m heat network connections within the existing housing stock.

Thus, to maintain effective delivery over the decade, multiple co-ordinated policy interventions will be needed, and it is crucial that these are underpinned by a clear and stable framework. This is needed to give confidence to supply chains to scale-up and to support a sustained programme of retraining / upskilling of the current workforce, as well as attracting new entrants to the industry. This also needs to be complemented with smarter ways of engaging with households, including developing incentives to take steps to improve the energy efficiency of their homes.

Support beyond committed policies

The analysis shows that progressing towards the target will require timely and effective implementation of all currently planned policies envisaged in the UK Government’s Heat and Buildings Strategy (as well as the similar plans of the Scottish and Welsh Governments). In addition, further support and steps beyond planned policies will likely be required:

• a continued strong focus on and scaling up of government support for fabric efficiency upgrades for lower income households; as well as additional policies aimed at the non-fuel poor owner occupied sector;
• a public awareness programme to support widespread deployment of lower cost measures to all households such as draught proofing and hot water tank insulation;
• scaling up government support for low carbon heating such as support for heat pumps gradually replacing  fossil fuel boilers; re-balancing policy costs on electricity and gas bills to remove the disincentive effect to the take-up of heat pumps arising from policy costs falling heavily on the electricity side; as well as, supporting the development of the wider heat pump supply chain; and
• scaling up support for heat networks (e.g. through scaling-up / extension of existing heat network funds) alongside continuing to progress district heat zoning plans.

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For more information please contact media@frontier-economics.com, or call +44 (0)20 7031 7000.