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Long-term energy efficiency plan could eradicate fuel poverty in Wales by 2030

Updated: Jul 14, 2021

Fuel poverty could be eradicated in Wales by 2030 if Welsh Government commits to a long-term plan to improve the efficiency of our homes, says the Future Generations Commissioner for Wales.

A £15bn investment plan for housing is urgently needed and would, according to Sophie Howe in a new report, be a “game-changer” for the Welsh economy and – critically – help Wales and the UK meet their carbon emission targets.

The long-term plan to ‘retrofit’ homes to reduce heating/energy demand would create 26,500 jobs by 2030, saving bill-payers hundreds of pounds each year, while also improving and modernising Wales’ housing stock – and the commissioner wants Welsh Government and Westminster to take up the challenge together.

Wales has some of the oldest and least efficient housing in Western Europe and around 155,000 (12%) of Welsh homes are in fuel poverty, a figure which could even be higher, due to the economic impact of Covid-19.

More than 66,000 households in Wales have fallen behind on their energy bills since the start of the pandemic, says Citizens Advice, and disabled people are four times more likely to be in energy debt.

Vulnerable people living in a cold home have an increased chance of serious illness or death, according to the National Institute for Health and Care Excellence, and are at higher risk of heart attack, stroke, breathing problems, flu, depression and falls.

The commissioner’s new report, Homes fit for the Future: The Retrofit Challenge, in partnership with New Economics Foundation, finds that a Welsh housing decarbonisation programme could have a huge impact on Wales’ social, economic, environmental and cultural well-being by:

  • Eradicating fuel poverty and saving £8.3bn in energy bills by 2040.

  • Reducing the strain on health and social care services, particularly during the winter – generating a cost saving to the NHS of £4.4 bn by 2040.

  • Creating new industries, skills and jobs, based on local supply chains – 26,500 new jobs by 2030, helping to offset the economic impact and job losses of the pandemic. Jobs could include in areas such as installation of solar panels and ground source heat pumps, retrofit assessing and coordinating. Many are roles where existing trades can upskill/ retrain into, via ‘feeder trades’ such as electrician, plumber, plasterer.

  • Creating £19.32bn in additional GDP and £3.54bn of net tax benefit by 2030.

Welsh Government has a legal duty to reduce harmful greenhouse gas emissions to reach ***net zero by 2050 – and 10% of Wales’ emissions come from the residential sector, one of the slowest areas across the UK to decarbonise.

Wales’ Well-being of Future Generations Act requires Welsh Government to use joined-up thinking to develop long-term solutions and prevent problems, and a ‘Retrofit Plus’ approach, the commissioner said, should be used to improve communities in line with the Act, while housing investment should be treated as essential infrastructure – as important as public transport and power.

The poorest and most marginalised populations are least responsible for climate change but the most likely to be exposed to its negative effects, more susceptible to damage and have the least resources to respond, cope and recover, so Wales should target the worst homes first, the report finds.

Welsh Government also needs to urgently address the skills gaps in retrofit jobs, both in numbers and diversity, or risk having an ill-prepared workforce.

The report also suggests a new Welsh Energy Service Company is set up to coordinate and fund improvements, with new legal requirements for homeowners to bring their homes up to standard, alongside loans to support the improvements.

But Ms Howe said it was up to both Welsh and UK governments to fund the retrofit challenge. She wants both administrations to work together, using all financial levers available to them, to demonstrate their seriousness on climate action in the run-up to COP, the major UN climate conference in Glasgow this November.

Ms Howe said: “The climate emergency and fuel poverty are two parts of the same problem and if we are truly determined to solve it, we need ambitious and interconnected policy actions.

“Right now we have the chance to do something life-changing for the families, pensioners and people who simply cannot afford to heat their homes properly, and to eradicate fuel poverty for generations to come.

“The Well-being of Future Generations Act says that by law, the way we get to net zero has to improve Wales’ well-being as a whole.

“A long-term plan to decarbonise Wales’ housing stock isn’t merely an aspiration, it’s an absolute necessity – and it’s the only way to pull thousands of people out of fuel poverty as part of a true green, just and equal recovery – and show just how far we can go as a country as the world combats climate change.”

Lead author of the report, Donal Brown, sustainability director at Sustainable Design Collective, said: “This report makes the case for a ‘Marshall plan’ scale investment for Wales to get on track for housing decarbonisation. While we see a central role for government in reducing fuel poverty and helping those on low incomes, we also propose a major role for private investors in the form of green bonds and green mortgages. Importantly, finance alone will not solve this challenge with regulation, skills and coordination essential to deliver the vast benefits of this program over the next decade.”

Chaitanya Kumar, head of environment and green transition at NEF, added: “The housing stock in Wales is some of the leakiest in the UK and needs urgent upgrading. This comes at a cost but it also brings immense benefits by creating thousands of jobs, slashing energy bills and improving public health. Our report lays out a clear roadmap for the next decade that brings public and private finance together to help bankroll Wales’s ambitious decarbonisation targets but Welsh government needs to lead the way with urgent public investment at scale.”

Jack Wilkinson-Dix, Policy Officer, Energy Saving Trust, said: “We can reach Wales’ carbon emission reduction targets while improving the lives of all residents and tackling fuel poverty, but this will require significant investment in the improvement of home energy efficiency.

“The Future Generations Commissioner’s new report, Homes fit for the Future: The Retrofit Challenge report gives a clear picture of the scale of the challenge and sets out a series of suggested pathways to address it across different housing types and tenures in Wales with the costs not unfairly placed onto households.

“As well as improving our homes, reducing carbon emissions and lowering energy bills, investing in home retrofitting is projected to create tens of thousands of jobs and boost local economies across the country. This programme must be an infrastructure priority and we continue to look forward to working with Welsh Government to deliver the necessary improvements to homes across Wales.”

Andy Sutton, co-founder, Sero: “We welcome this report, which highlights that decarbonisation can deliver benefits for current and future residents beyond the climate emergency and net zero. Finding and reframing financial solutions is key to unlocking these, and we’re fortunate to be working with many social housing providers and financial institutions to explore the multiple routes that are needed.

Together these can align and support the necessary grants with public and private financial solutions to keep Wales leading the decarbonisation journey.”

Ben Saltmarsh, Head of NEA Cymru, said: “Everyone in Wales should be able to afford to enjoy a warm and safe home. This is a crucial decade, in which we can make serious progress. In the path to net zero lies a critical opportunity to improve the lives of fuel poor households as we decarbonise and upgrade the energy efficiency of our existing housing stock.

Whatever pathways are chosen, housing retrofit is of central importance. It sits at the heart of decarbonisation and tackling fuel poverty, is good for the Welsh economy, and will bring vital benefits not least to the well-being of low-income and vulnerable households.

We strongly welcome this report from the Future Generations Commissioner for Wales. Eradicating fuel poverty requires ambitious, joined-up policy action, with appropriate and guaranteed support for those who need it. Wales must target the worst homes first to ensure a just transition. We cannot afford to leave those most in need, behind.”

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