Making Sense of the Clean Growth Strategy

Clean Growth Strategy

INCA Executive Chairman, Mitch Gee

Government’s Clean Growth Strategy

The government published its Clean Growth Strategy on the 12th October 2017. An exciting and ambitious document, it sets out plans for cutting greenhouse gas emissions without impacting on Gross Domestic Product (GDP) – in fact, contributing to growth in GDP whilst ensuring affordable energy.

The Climate Change Act committed the country to reduce greenhouse gasses by at least 80% by 2015 when compared to 1990. The government has good reason to be pleased with itself as we have managed to cut emissions by 42% since 1990, while the economy has grown by 67%. It may be argued that the low hanging fruit has been plucked, with 21% of these reductions from the power industry, which has benefited from the switch of solid fuel to gas. With further enhancement from renewable energy this looks set to continue.

There has been a contribution from household energy where carbon emissions have fallen by 17%. This is reasonably impressive considering the number of homes has increased by approximately a quarter. Unfortunately so far, this has only contributed to a 3% reduction in carbon emissions since 1990, but it is important to remember the emissions created by heating our homes is 13% of all emissions. Focusing on homes gives a triple blessing in reducing emissions, lowering bills and creating healthier homes. The Government recognises there is a direct link between cold, damp homes and ill health. The Building Research Establishment has estimated that these homes cost the NHS £760 million per year. We can already count the financial benefit of the policy in this area. In 2016 the costs per household of the current policy was £147, with the average household benefit being £161.

How will the Clean Growth Strategy drive the market for external wall insulation (EWI)?

There are a number of elements of the strategy that will have a positive impact on our industry:

  • The UK has led the way in developing green finance. The strategy includes working with mortgage providers to develop green mortgage products that take account of lower lending risk and enhanced repayment associated with more energy efficient properties.
  • There is £3.6 billion of investment to improve the efficiency of a million homes and extend support for Energy Company Obligation (ECO) until 2028.
  • It is the governments’ ambition to up-grade all fuel poor homes to a minimum Energy Performance Certificate (EPC) of C by 2030, and where practical, all homes by 2035.

Looking further ahead, the government identifies a need to consult on strengthening energy performance standards for new and existing homes under building regulations. The strategy will continue to develop, and one of the next steps will be making the private rented sectors’ energy efficiency regulations more effective, setting longer long-term energy performance standards. Claire Perry, Minister of State at the Department for Business, Energy and Industrial Strategy has stated that the government were looking at a ‘carrots and sticks’ approach and may be considering linking stamp duty with the energy efficiency of homes.

The Clean Growth Strategy will have a positive impact on the macro economy, influencing the uptake of solid wall insulation. However, without greater incentives and an increased focus on the hard to treat homes within ECO, it may remain a slow burner. EWI may not be impacted until late in the cycle.

If you have an opinion on the strategy then we would be pleased to hear it.