A sharp rise in gas and electricity bills means energy efficiency has never been more topical. The UK desperately needs to better insulate millions of old homes to save energy and reduce emissions, while supporting a transition to low carbon heating like air source heat pumps, yet so far policies have mixed results. The Green Homes Grant, for instance, which offered support in these areas reached as little as 5% of its desired targets.
While there are already energy efficiency regulations for homes that are rented out, the government’s recent Heat in Buildings Strategy includes no requirement for people who live in their own homes to improve their energy efficiency. This creates a gap in the policy landscape, since owner-occupiers make up about two thirds of the UK housing market.
The Heat in Buildings Strategy for “new” technologies such as heat pumps is to try to encourage change at “natural trigger points where possible … such as when heating appliances come to the end of their life or homes are sold”. However, as the strategy points out, boilers last around 15 years and homes are sold on average every 18 years. That means this sort of deployment can be slow, with some technologies taking “more than 30 years to reach near saturation”. When viewed from the perspective of a climate emergency, this seems far too little too late.
This creates a mismatch between decarbonisation timescales and what the government wishes to risk at the next election. If it pushes through the required changes in the required timescale, which is this decade, without taking the public along then it is playing with political fire.
Only 18% of the public trusts politicians, which may explain why the government’s strategy is to encourage business to find and then meet the need of the marketplace. In theory, this creates a new messenger for engagement, letting the government effectively pass on responsibility by having private sector firms act as the delivery arm of the state.
Previous policies predominantly took the form of financial incentives such as the renewable heat incentive, feed-in tariffs or the Green Deal Home Improvement Fund, all of which have now been cancelled. The most successful scheme led to 863,177 solar power installations across almost a decade, but even this represents only 5.5% of the UK’s 15.6 million owner-occupied homes.
From April 2022 a boiler upgrade scheme will replace the defunct renewable heat incentive, but it continues in the same vein of simply offering funding support: in this case £5,000 towards the predicted installation cost of a heat pump. As such it is not offering any new solutions to replace the old failed policies. This matters because if financial incentives alone worked for this market, then they would have worked by now – and they haven’t.
Nudging is needed
Since all the above has failed to deliver the scale required, we need a new approach. This should be a variant of enlightened self-interest, whereby through acting in a self-serving manner to benefit themselves, owner occupiers are ultimately benefiting the greater community.
One method would be if the “nudge unit” – a UK government spin-off properly known as the Behavioural Insights Team – designed a social education and motivation campaign to make home energy efficiency a desirable social norm. This would expand on the team’s original interventions, which included simplified home energy-performance certificates which showed buyers more directly the financial benefits of energy efficiency measures – the property’s real running cost over three years. This was then linked to research showing that improving the certificate rating meant sellers could charge more for their products, thereby creating desire on both sides of the equation.
This new campaign would aim to empower a sense of agency and tap into the non-financial motivational drivers of this core older audience. In the case of an older demographic this may be stability, better long-term health or social peer approval for “doing the right thing”.
The campaign would need to educate and support this social group in understanding that a warmer, more energy efficient home environment would provide these things while also creating a socially positive narrative that by doing so they are helping general society.
Nudging isn’t enough by itself of course. We will still need more funding support and policy levers such as reducing VAT on energy efficiency products and electricity, but we also need people to have a reason to want to make a change.
If we can achieve associating a well-insulated roof or a new heat pump with being smart both for consumers and also positive for society then we may well stimulate the market growth needed across this relatively stagnant housing sector. Who knows … the UK might then hit its targets after all?