Swift action to reduce energy demand could save households an average of £150 on bills and cut Russian imports by 80% this year, a report has found.
Report by climate think tank E3G urges government to cut VAT on insulation, launch major public awareness campaign on energy saving and change stamp duty to boost building works energy efficiency in homes.
They are among nine suggestions for action this year and through 2025 to reduce energy demand, which the report says is the fastest way to reduce exposure to soaring costs.
It comes as Russia’s invasion of Ukraine is already worsening soaring gas prices, pushing up energy bills as much of Britain’s home heating and nearly two-fifths of electricity generation come from gas.
The report urges the government to use the spring declaration and the energy supply strategy it is to announce to reduce household energy consumption through existing policies and mechanisms.
It calls for a public awareness campaign to promote simple measures such as lowering the “flow temperature” of condensing boilers to reduce the temperature of water sent to radiators and lowering the thermostat by 1C – without compromising heat and comfort.
VAT on green home measures should be removed or reduced, and funding for energy efficiency and electric heat pumps, which use less energy to operate than boilers, should be increased, he says.
The report also calls for efforts to accelerate the roll-out of highly efficient white goods, lighting and electronics, and accelerate the introduction of standards due in 2025 to end the installation of gas boilers in new homes. and make them very effective.
Accounting for the historical costs of ‘green’ policy, which currently fall mainly on electricity bills, in general taxation would ‘significantly’ reduce energy bills at once and encourage the switch to heat pumps in lowering the cost of electricity, according to the report.
The government should change the stamp duty so that energy-efficient homes pay a lower rate, with a rebate that can be claimed within two years to incentivize buyers to improve the energy performance of their homes.
The report also says a comprehensive training program for heating engineers to install heat pumps could train 10,000 installers for just £10.5million.
Energy efficiency action this year could save significant amounts of electricity, reducing gas use equivalent to 80% of Russian imports and saving households between £130 and £170 on average, according to the report.
This would cost £6.7 billion in public and private investment, but deliver up to £4.7 billion in lower annual energy costs to consumers, making the expenditure payback in less than two years.
Combined with a renewables drive, which the government has signaled it wants, Russian gas could be phased out of UK supplies altogether this year, E3G said.
Accelerating work to reduce energy demand and switch to clean heating systems over the next three years would save more gas per year than UK imports from Russia and save households between £145 and £240 a year on bills.
Although this would require more than £33 billion in public and private investment until 2025, the expenditure would be repaid in five to nine years and would generate savings for many years, the report said.
Colm Britchfield, a researcher at E3G, said: “With government support, ordinary UK households can play a huge role in shutting Putin out of our energy system.”
The home energy security plan outlined in the report would quickly boost investment in energy efficiency and heat pumps and help cushion the impact of rising energy prices, he said.
Pedro Guertler, Program Manager at E3G, added: “The UK government must act now to permanently convert fossil gas dependence and benefits into lower living costs for all.
“The government has the tools to make significant safety gains through household energy efficiency measures this year.”