CHC countdown to COP: Are we spending enough on decarbonisation?

Housing associations leading the way

We are all increasingly aware of the energy our homes use - and housing associations are no different. As COP26 is around the corner and increasingly in the news gathering momentum and recognition of the need to drive progress can only be a good thing.

Wales is committed to net zero by 2050, with social housing on an ever faster track, so we cannot waste any time.

Decarbonising our homes is an investment. It makes sense for people, the economy and the planet. However, it doesn't come cheap. Recent estimates put the cost of decarbonising existing social homes at between £4-5bn. Finding a funding solution to decarbonise our homes and build new energy efficient ones is a big priority for Welsh housing associations. Ninety-six percent of housing associations responding to a CHC survey agreed that working to secure a sustainable funding and support package for retrofit activities should be a top priority for CHC 2021/22.

The prize of success is huge, but so are the challenges

The Welsh government has committed to build 20,000 low carbon homes for social rent by the end of this Senedd term. This is a big and challenging ambition, especially when considered against a backdrop of rising material prices and supply chains under pressure.

And then there’s the challenge posed by the current state of housing stock in Wales. We know that over 150,000 households are in fuel poverty in Wales. The Welsh government’s Optimised Retrofit programme seeks a ‘test then do’ approach which will help us understand the measures that will bring a home as close as possible to EPC A before we scale up our work.

In addition to tackling the climate emergency, we have the opportunity to further improve the quality of our homes and to provide energy efficient homes for people on the social housing waiting list. Jobs and investment in the foundational economy are up for grabs, and the way we work with tenants and communities can help build trust and satisfaction.

What do we need to do now?

Housing associations are independent, not for profit organisations funded by affordable rents, grant funding from governments (UK, Welsh and local) and private finance borrowing.

We are calling on Welsh and UK governments to deliver sustainable investment to fund decarbonisation activity. A 10-year, £4bn stimulus package, backed by a mix of public and private funding, to retrofit social homes We also need to ensure that housing associations are well placed to access funding from lenders interested in social and environmental investments.

We recognise that this is a big number and a difficult question. Our financing decarbonisation task and finish group identified four principles which we think should underpin thinking on financing decarbonisation:

• Long term: a long-term grant funding stream that can be relied on

• Certain: based on a new Welsh Housing Quality Standard

• Learn then do: A 10-year programme based on the learning from the Optimised Retrofit Programme

• A mixed funding model: we need to consider off balance sheet options alongside grant.

There is much to do to turn these principles into reality and CHC and housing associations are keen to play their part to ensure that the funding framework for energy efficient homes is appropriate, certain and gives us the framework we need. The publication of the Net Zero Wales plan provides us with clear ambition. We now look forward to the forthcoming Welsh government budget to better understand how we can collectively put this plan into action.