Reframing policy for the energy efficiency challenge: Insights from housing retrofits in the United Kingdom

Noam Bergman and Tim Foxon

This paper examines the challenges associated with stimulating large-scale investment in energy efficiency and demand management measures, using residential energy efficiency-improving retrofits in the UK as a case study. We consider how issues of energy policy, consumer choice and financial systems intersect, drawing on recent literature including energy policy documents and research reports, and on interviews with stakeholders from the finance sector, energy efficiency practitioners and more. We suggest that following the withdrawal of the Green Deal, there is a need to reconsider the framing of policy for household energy efficiency improvements, moving beyond addressing barriers and market failure. We examine three potential aspects of a new policy framing: energy efficiency as infrastructure; new business and financing models for energy efficiency provision; and decentralised financing institutions for energy efficiency investment.

This would require a long-term commitment from government on energy efficiency, and a need to ensure that projects are attractive and investable from both householders and investors’ perspectives. We conclude that there are important roles for government in any large scale initiative for energy efficient retrofitting of UK homes, even if the mechanisms are market based. These include signalling long-term policy consistency and reducing risks for financial investment, and supporting industry innovators and decentralised actors.

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