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Retrofitting ‘Revolution’ could save British households £7.5bn a year in bills and create 150,000 jobs

  • Government support for deep retrofitting will also reduce fuel poverty, with average energy savings of £270 per household per year if energy use is cut by 25%
  • Around 89% of the energy we pay for is lost in an inefficient home, wasting money and reducing the value of our homes
  • Government urged to make it pay to ‘go first’ and ‘go deep’ to seize major economic and environmental opportunity for the UK

15 March, 2021. Following a presentation to ministers and MPs last week, Bankers for Net Zero will publish a set of recommendations to MPs that the UK government seize the major economic, environmental and political opportunity presented by deep retrofitting to save at least £7.5bn a year on energy costs for UK households, create over 150,000 jobs in ten years, and end fuel poverty, all while meeting ambitious emissions targets.

The initiative, which brings together banking leaders, businesses, local and national government and civil society, has recommended a long term strategy to seize the opportunity of a ‘Retrofit Revolution’ – deep retrofitting the nation’s homes and offices to deliver at least a 50%, and up to 100%, reduction in their energy and carbon footprint.

Crucially, Bankers for Net Zero warns that a piecemeal, short-term approach won’t work and could hinder growth and reduce the amount of private finance mobilised. Instead what is needed is a bold, long-term national retrofit strategy that drives down the costs of deep retrofits, drives up the value of retrofitted properties, and incentivises more private finance to provide the capital needed.

The opportunities in deep retrofits have been clearly laid out by the Green Finance Institute, the Energy Efficiency Infrastructure Group and others:

  • Cost savings: Investment in home renovation for net zero will reduce household energy costs by £7.5 billion per year
  • Enhanced property valuations: Retrofits increase both the sale and rental value of homes and buildings.  Properties with an EPC rating A sell for 14% more than equivalent properties with an EPC rating G.
  • Higher economic growth: Lower energy bills for households and businesses inspires consumer demand and higher investment. An investment of £8.5 billion in energy efficiency would deliver economic benefits totalling £92.7 billion in jobs created, manufacturing and the energy savings being reinvested into other sectors of the economy
  • Lower GHG emissions: Fully decarbonising homes and buildings would address more than 20%[2] of the emissions reductions needed to get the UK to net zero
  • Jobs: Over 150,000 skilled and semi-skilled jobs can be created by 2030 
  • Less fuel poverty: Reducing total energy use by 25% by 2030 would lead to average energy savings of roughly £270 per household per year
  • Health and wellbeing: Retrofits can save the NHS £0.42 for every £1 spent on energy efficiency measures, reducing yearly costs of around £1.4 billion in England alone

In order to achieve this, the Bankers for Net Zero initiative argues it is critical that we move from ‘tinkering’ to transformation. Through focused work with banks and businesses in the sector it identified key policy and regulatory strategies that would allow the government to accelerate the benefits of retrofitting and seize the opportunity to boost the UK economy, level up and lead the way globally on climate through energy efficiency.

Bankers for Net Zero participating banks include Barclays, Tridos, ClearBank, Ecology, Handelsbanken and Tide.

Munish Datta, Director of Membership & Operations at UK Green Building Council “UKGBC firmly supports holistic building retrofit as a national priority and is convinced that the combined total benefit of the recommendations set out in this paper could be significantly greater than the sum of their parts. We look forward to continuing working with our >530 members and Bankers for Net Zero to keep demonstrating the ever strengthening case for building retrofit.”

Louise Kjellerup Roper, CEO of Volans adds “We know that deep retrofitting is one of the most efficient ways to reduce emissions, but it comes with so many other benefits such as improved living standards, healthier and more resilient communities, and new jobs. Our talks with banks and businesses, through the Bankers for Net Zero initiative, has shown us that everyone is ready to take step up and mobilise funding and technology quickly, but we need the support of government to make it a commercially viable solution. But they must go all in, early – piecemeal measures will not get us anywhere. Britain has the opportunity to be a global leader in decarbonising homes, as it has done with our energy sector. A retrofit revolution for British homes is the next obvious step.”

Kevin Hollinrake MP, Co-Chair of the APPG on Fair Business Banking, commented: “The UK has an immense opportunity and must do all it can to unleash a retrofit ‘revolution’. The strategy set out by Bankers for Net Zero shows that an ambitious front-loaded and long term investment strategy will deliver hundreds of thousands of jobs in the next ten years, greatly reduce energy costs in the home and kickstart the wider retrofits economy. We all have a part to play in delivering on this opportunity, especially the banks who will need to be reactive and ensure the small businesses who will be on the ground installing these retrofits have the funding and support they need to deliver.”

Paul Ellis, Chief Executive at Ecology Building Society “This important briefing shows how, with COP26 taking place later this year, a Government-led National Retrofit Strategy is urgently needed to kickstart the retrofit revolution required to reach the UK Government’s goal of net zero emissions by 2050 and help create jobs.  We’d like to see this deliver a wide-ranging package of measures to support green building including: fiscal incentives such as stamp duty reform to incentivise greener homes; slashing VAT on renovations; tightening building regulations; building the retrofit supply chain and driving the market for green finance.”

Simon Crichton, Head of Relationship Management at Triodos Bank “The combined social and environmental benefits of energy efficient homes and workplaces, and the associated job creation not be overstated, however, interventions to date have been piecemeal and unable to stimulate the huge change of pace required to meet this need. The recommendations put forward in this briefing provide policy makers with a long-term cohesive approach to unlock the potential of retrofit, and with COP26 on the horizon, it would give the UK a unique opportunity to demonstrate to a global audience what leadership on tackling climate change looks like.”

Richard Winder, Head of UK External Affairs – Handelsbanken in the UK “Our Scandinavian property customers are increasingly engaged in climate adaptation and transition, and we are keen to help catalyse similar action here in the UK. For owners to prioritise retrofit, they need to see clearly what’s coming down the road and that the system rewards rather than punishes early action. We believe the measures set out in this report offer the long-term regulatory certainty, investment rationale and basic tools required to drive customer action on net zero transition”

About the Bankers for Net Zero

The All Party Parliamentary Group (APPG) on Fair Business Banking, Volans and Re:Pattern have together launched an ambitious programme of work to develop a set of policy recommendations ahead of COP26 designed to create a regulatory environment that enables banks to play their part in financing the net-zero transition. These recommendations will be based on input from a wide range of stakeholders across the business, financial, regulatory and political communities. The lessons learned from this approach will be valuable for audiences within the UK and beyond. With the pledged participation of UK banks, this project will be the first of its kind to look at the ground level, regulatory and legislative challenges financial institutions face in implementing the Principles. Findings will be presented at a special high-level event at COP26 and in Parliament during the autumn.

It is not just about financing green or greening finance – this is about how banks and businesses interact and work together to ensure that the transition to net-zero is efficient, rapid and fair. We investigate how financial institutions can take leadership and which legislative and regulatory frameworks are required to support this ambition. And crucially – how we ensure that business – particularly the UK’s 5.9m SMEs – are equipped for that journey.

The recommendation was put forward by the Bankers for Net Zero retrofits working group, established in September 2020, in partnership with the UK Green Building Council. The ideas and recommendations are the product of a series of working sessions involving banks, businesses in the real estate sector, and representatives from both local and central government.

The APPG on Fair Business Banking is one of the largest and most influential APPGs in parliament, the group has 17 officers and has a membership of over 116 MPs and peers. It has led the field in the creation of a dispute resolution service for businesses, and works effectively at executive level with industry, government, parliament and regulators to facilitate and implement changes that foster improvements in trust, co-operation and productivity between businesses and the banking sector.

Volans is a think-tank and advisory firm operating at the leading edge of sustainability and innovation to catalyse systemic change. Founded by the ‘Godfather of the Sustainability movement’ John Elkington in 2008, Volans helps business leaders make sense of the emergent future to unlock the potential of their organisation and create opportunities in the face of exponential planetary challenges.

Re:Pattern catalyses business model innovation for sustainability by working across diverse networks and stakeholder ecosystems – creating new pathways for the flow of finance. Led by the former Strategy Director for Triodos Bank and Banking Board member of the UN Principles for Responsible Banking, Re:Pattern develops strategies, policies and practices to support sustainable finance globally.

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