Decarbonisation

A new scheme developed by the Housing Association Charitable Trust (HACT) in partnership with Arctica Partners may be of interest to councils putting together funding packages for energy efficiency and decarbonisation works.

Retrofit credits is a UK based carbon credits scheme that enables organisations to offset their carbon emissions by investing in social housing. The scheme involves using a tested methodology to measure both the carbon savings and social value created through retrofit activity. To ensure the environmental integrity of the issued credits, this has been developed under the Verified Carbon Standard, the world’s leading certification programme for emission reduction projects.

It is anticipated that the scheme has the potential to generate significant funding for retrofit schemes in social housing. The scheme is currently being piloted but will be formally launched in 2023.

This joint webinar included the following:

• Update from BEIS on current policy and funding
• Discussion of retrofit work and issues so far…
• Case study – Six Towns Housing
• Research Project Lewes and Eastbourne Councils

This meeting was an opportunity to take stock of the decarbonisation challenge facing councils and catch up on some of the current initiatives in this area. The two case studies from CWAG members (Nottingham CC and Manchester CC) covered different scheme types and funding routes and set out some of the challenges involved in delivering retrofit programmes in existing stock.

John Kiely from Savills set out the key question facing council – What standard are we aiming for? Is it achieving net zero by a particular date? or improving energy efficiency and focussing on EPC ratings to address fuel poverty?

Every landlord’s housing stock is different, and the decarbonisation response will depend on dwelling types, construction and age.  Council stock is already aging and the investment requirements around decarbonisation require a 60 – 70 year payback period. Landlords will therefore need to actively categorise their stock as some properties will not be worth investing in.

Current estimates suggest that the total bill for the social sector (4.3 million homes) is around £100 billion, to achieve an average 80% reduction in CO2. This is based on an average cost per dwelling of between £25k and £30k, although costs vary widely between individual properties. A flexible approach will be required with more limited investment in some older stock to achieve some level of decarbonisation at a reasonable cost for a more limited life.

In terms of funding, aside from the £3.8 bn Social Housing Decarbonisation Fund (SHDF) over the next 10 years, there is little extra money available. After taking this and existing business planning resources into account there will be a funding gap. A range of funding models and initiatives are being considered but these have limitations and will not achieve the level of investment required.

In summary councils currently need to:

• Choose the most effective decarbonisation measures and focus investment on the right stock.
• Understand the funding gap within the stock and be prepared to apply different solutions to different stock.
• Pilot different approaches and funding routes (and apply for funding initiatives when available).
• As a sector engage with government around access to a workable future funding model.
• Ensure joined up delivery and procurement strategies so investment is not wasted.
• Work to address current limitations in contracting capacity and supply chains in this sector.

Presentations from this event are available below.