Published by Bankers for Net Zero and the Green Finance Institute, the report considers what it will take for the retrofit supply chain to scale at the pace required to produce the breadth and volume of low carbon technologies needed to decarbonise our homes.
Overcoming demand uncertainty will increase jobs
Homes make up 23% of the UK’s carbon footprint largely through heating and powering them. Tackling this will lead to significant job growth across the UK, notably for small and medium-sized organisations (SMEs). The biggest barrier faced by the manufacturers, installers and lead contractors involved in the retrofit supply chain is uncertain demand and the report calls for a ‘clear plan’ for the industry to be introduced by Government. By delivering policies designed to stimulate demand, the resultant confidence will encourage public and private finance to support the massive scale-up of capacity in the retrofit supply chain that is needed.
With the majority of those in the retrofit supply chain being SMEs the industry is highly flexible and extremely responsive but with limited capacity to make a long-term investment. It is also risk-averse, especially after the negative impacts of shifts in demand experienced following the scrapping of the Green Home Grants.
The challenges are similar for installers and manufacturers alike – how best to scale up or pivot either production or skills. In order to scale up as needed, a huge investment is needed with the Climate Change Committee’s Sixth Carbon Budget, published December 2020, suggesting that investment in decarbonising homes will need to rise to a peak of £14 billion per year by 2028 and continue at a scale greater than £6 billion per year until 2048.
As for skills and employment, the CCC projects 200,000+ additional skilled workers being required by the late 2020s across the retrofit supply chain with the number of skilled workers required remaining above 200,000 all the way to 2050.
What are the barriers?
Clearly, greening the built environment presents a massive opportunity for the UK over the next three decades. It will create jobs, stimulate economic growth, reduce fuel poverty, improve health and wellbeing as well as contribute to the elimination of the 40% of UK greenhouse gas emissions that are produced by the sector so what is currently preventing this scale-up?
There is a lack of long-term clarity and certainty about the policy and regulatory strategy for decarbonising homes as well as a lack of trust due to previous policy failures and reversals.
There is also an economic disincentive to adopt green tech in the home. Costs will inevitably fall as new technologies are deployed at a greater scale but that creates a reluctance for businesses and households to be first movers, which in turn slows down the rate at which costs fall.
Awareness of what can be done in decarbonising homes is low among consumers coupled with less enthusiasm for green home technologies compared with other green products. For those consumers who are convinced it may prove difficult to find someone with the necessary training and experience to do the work with the majority of installers and contractors are still more familiar with the old technologies than newer ones such as heat pumps.
Creating the framework for success
With the right support from policy, regulation and finance, the retrofit industry has the potential to be a major green industrial success story for the UK.
Louise Kjellerup Roper, CEO of Volans and Bankers for Net Zero founding partner, says: “Retrofitting the UK’s outdated 29 million homes is an essential part of our fight against climate change. One which will address a massive 23% of the UK’s emissions while creating thousands of new jobs and driving down heating bills across the country. The retrofit industry – mostly made up of small and medium-sized businesses – will struggle to take on this challenge without investment and support. This is why we have offered six actionable solutions for finance and business to apply right now – tooling up the retrofit revolution for a prosperous, net zero emissions UK.”
Bankers for Net-Zero has previously told MPs that retrofitting the UK’s building stock with low-carbon solutions could reduce national energy costs by £7.5bn a year, create more than 150,000 jobs over a 10-year period and cut carbon emissions by 20%.
The Green Finance Institute’s programme director Emma Harvey said: “Addressing the £360bn investment gap to decarbonise the UK’s building stock requires innovative thinking on the funding models, business practices and policies that will drive retrofitting at scale.
“Today’s report outlines the practical solutions and initiatives that can catalyse rapid growth along the retrofit supply chain, support green collar jobs across the country, and reinforce the UK’s global position in the green finance landscape.”
With the long-overdue ‘Heat and Buildings Strategy’ eagerly anticipated the report calls for a bold package of policy and regulatory measures to drive demand for energy efficiency and low-carbon heating solutions across all parts of the UK built environment.
“This is not about eye-catching short-term commitments, but rather about putting in place credible long-term regulatory and policy frameworks that can provide confidence to the retrofit supply chain that demand growth is going to be consistent and resilient over the long term.”
The full report can be accessed here: https://volans.com/project/bankers-for-netzero/