The green conveyor belt

Making social homes environmentally friendly is about to become big business.

Last week the government launched a new ‘warm homes’ standard for social housing which covers insulation and low carbon heating systems in England, Wales and Scotland (although not Northern Ireland). All social homes will need to meet the standard by 2020. In addition to this it wants up to 7 million households in the private, owner-occupied and social rented sectors to have an eco-upgrade - such as solid wall insulation, or ground source heat pumps.

According to the Energy Saving Trust - the government chose to launch its strategy at the trust’s stand at last week’s Ecobuild conference - the last ambition alone will require retrofits to take place at a rate of 13,400 homes a week.

The government expects energy companies to provide up to two-thirds of the overall cost - which the Communities and Local Government department says will be £19 billion. And it insists that it won’t cost social landlords a penny.

Overall it says the plans will see carbon emissions from housing reduced by 29 per cent by 2020. But with such a high cost programme and with so many homes to be improved, how likely is it that the government can hit the target and how much help are energy companies likely to give?

Ann Cousins, head of sustainability at consultancy Arup’s Bristol office, says it has already carried out research about cutting carbon emissions from housing in the city. Its calculations suggested that it could get a 30 per cent cut in emissions if it gave ‘50 per cent of Bristol’s housing stock these improvements’, she said.

There are 22 million homes in England, Scotland and Wales - so the 7 million is roughly a third of the overall total. What makes this an even more ambitious target is that the country’s housing stock is, at present, still largely untouched in terms of retrofitting.

The EST’s estimate that retrofits will need to take place at a rate of 13,400 homes a week was contained in a report it published last week.

Matt Coleman, head of housing at EST, says these figures are possible: ‘It is going to be a push but it is attainable, one of the barriers to getting things off the ground has been funding, which the government has addressed in the household energy management strategy announcement.’

Mr Coleman acknowledges that there does need to be a significant gear change if the 2020 target is to be met. The EST estimates that the current rate of refurbishment is only a few hundred each week.

Social housing will be at the centre of this acceleration, as DECC and CLG believe the sector will initially provide the scale of work to stimulate a green housing industry which will then be capable of rolling out refurbishments across the residential sector.

Christoph Sinn, policy and practice officer at the Chartered Institute of Housing, doubts implementing the standard will cause as much disruption as the race to meet the decent homes deadline in 2010, as installing many of the measures will not mean tenants have to leave their homes.

So what do the energy companies think of this announcement? The big six - British Gas, e.on, EDF, npower, Scottish Power and Scottish and Southern - say it did not give enough detail to know how much they will have to shell out, but a high level of spending is nothing new to them. Over the past three years, an obligation to fund energy efficiency works under the carbon emissions reduction target has meant energy companies have spent an estimated £3 billion either subsidising or funding entirely measures such as cavity wall and loft insulation.

If figures currently touted by the CLG are anything to go by, energy providers could spend around £12.7 billion over the next decade. That’s still only a fraction of the companies’ combined annual UK turnover of £24 billion.

If the companies don’t comply with the new obligation to fund two-thirds of the strategy they could get fined up to 10 per cent of their global turnover, the government says. Again, this is an issue that the energy companies are so far remaining tight-lipped about.

Another idea that could leave them feeling uncomfortable is the proposal to make the supplier obligation succeeding CERT more transparent. At present energy companies do not have to disclose how much they spend on the obligation, what they are spending it on, or where. This means certain parts of the country have received more attention than others - with rural communities receiving less than easier to reach urban communities, according to the Local Government Association.

The ‘warm homes, greener homes’ strategy promises ‘energy companies will need to provide much greater clarity about how much they spend, on what and in which parts of the country to help the regulator oversee the process and better understand the costs’.

When he launched the strategy, energy and climate change secretary Ed Miliband said consumers’ fuel bills would not rise as a result of this new obligation on fuel companies. But could landlords increase rents for homes which have received particularly high levels of eco-upgrades? Sally Hancox, manager of Gentoo Green, thinks this is possible. Gentoo believes that some of its tenants could be happy to pay additional charges to their rent in return for eco-improvements.

Broadly, the new standard meets calls that social landlords have long been making to improve the heat and energy efficiency of homes, which they have consistently said they would be unable to fund themselves. But there is still a long way to go - and a huge production line of work to set up - before Britain can truly claim to have a sustainable housing stock.

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