£5bn investment needed to meet energy pledges

Business and political leaders have called for government ministers to spend £5 billion towards meeting Conservative manifesto pledges on energy and insulation.

The coalition of over 100 Mayors and local government leaders, along with energy businesses Siemens UK and EDF, say that £5 billion of development funding would unlock £100 billion worth of schemes; including £40 billion for energy efficiency which would exceed Conservative manifesto pledge of £9.2 billion for retrofitting leaky homes.

The UK100 report has been sponsored by the Department for Business, Energy and Industrial Strategy, and will presented directly to Kwasi Kwarteng, Minister for Business, Energy and Industrial Strategy, at a meeting.

The call for investment in energy efficiency follows the Chancellor’s summer economic statement and the urgent need for a national programme of home insulation, which was a £9.2 billion Conservative manifesto pledge. So far, only £2 billion has been announced.

Retrofitting energy efficiency measures and clean heat technology will be a critical part of Net Zero, as homes account for 18 per cent of emissions, primarily from natural gas use for heating and cooking. According to the UK Green Building Council, to achieve net zero carbon by 2050, we will need to improve almost all of the UK’s 29 million homes, meaning we need to retrofit nearly two homes every minute between now and 2050.  

UK100 is calling for the establishment of a Net Zero Development Bank which would bring together all government financing for the transition to Net Zero and kickstart local energy schemes which are at too early a stage to be attractive to private finance. The Bank would provide a single gateway to government support, replace lost funding from the EU within a more stable regulatory regime.

A separate study for UK100 shows that 3.1 million jobs, approximately one in 10 in the UK economy, will need access to skills and training from government and industry as part of a green recovery.

Polly Billington, director of UK100 said: “If ministers are to meet their manifesto promise on energy efficiency in our homes, which are some of the leakiest in Europe, they need to kickstart a renewable revolution. This would help hard-pressed consumers save on their fuel bills, support hundreds of thousands of jobs and protect the environment. £5 billion now would unlock £100 billion to rescue the UK economy and deliver on the Prime Minister’s ambitions of levelling up and meeting Net Zero. The Chancellor’s statement, while welcome, should have had far more front-loaded investment.”

The report analyses the progress of the five regional energy hubs, set up by the government in 2018, which currently have a pipeline of 183 projects valued at £850 million. However, 90 per cent of these projects were still at an early stage of development and most of the projects are also relatively small scale, at below £5 million.

Analysis conducted by Siemens and UK100 shows that the potential pipeline could be increased by more than 100 times from £0.85 billion to £100 billion. It includes: £40 billion for energy saving and efficiency in homes and businesses; £10 billion for renewables such as solar, wind and biomass; £30 billion for low carbon heating such as district heating networks; £10 billion for smart energy systems; and £10 billion for low emissions transport such as electric and hydrogen vehicles.

Tim Bowles, the Conservative Mayor of the West of England, said: “Decarbonising our energy network is the sort of grand challenge that is central to tackling the climate emergency and making sure we meet our national, regional and local net zero targets. In the post- Covid-19 recovery and renewal of our economy, there is a real opportunity to make substantial progress towards marking this goal a reality.

“In the West of England, I’m already making sure we seize this opportunity. From making sure our skills programmes are providing the sort of skills the sector will need for these jobs of the future, to having a programme which supports local energy schemes to create a low carbon future for the region.”