A Simple Assessment of Housing Retrofit Policies for the UK: What Should Succeed the Energy Company Obligation?

Abstract

Despite the need for large-scale retrofit of UK housing to meet emissions reduction targets, progress to date has been slow and domestic energy efficiency policies have struggled to accelerate housing retrofit processes. There is a need for housing retrofit policies that overcome key barriers within the retrofit sector while maintaining economic viability for customers, funding organizations, and effectively addressing UK emission reductions and fuel poverty targets. In this study, we use a simple assessment framework to assess three policies (the Variable Council Tax, the Variable Stamp Duty Land Tax, and Green Mortgage) proposed to replace the UK’s current major domestic retrofit programme known as the Energy Company Obligation (ECO). We show that the Variable Council Tax and Green Mortgage proposals have the greatest potential for overcoming the main barriers to retrofit policies while maintaining economic viability and contributing to high-level UK targets. We also show that, while none of the assessed schemes are capable of overcoming all retrofit barriers on their own, a mix of all three policies could address most barriers and provide key benefits such as wide coverage of property markets, operation on existing financial infrastructures, and application of a “carrot-and-stick” approach to incentivize retrofit. Lastly, we indicate that the specific support and protection of fuel-poor households cannot be achieved by a mix of these policies and a complementary scheme focused on fuel-poor households is required.