Rapid moves to cut energy demand ‘will curb bills and Russian gas imports’

Rapid moves to cut energy demand could save households an average of £150 on bills and reduce Russian imports by 80% this year, a report has said.

The report by climate think tank E3G urges the Government to cut VAT on insulation, launch a major public awareness campaign on saving energy, and make changes to stamp duty to boost energy efficiency work on homes.

They are among nine suggestions for action this year and up to 2025 to reduce energy demand, which the report says is the quickest way to reduce exposure to soaring costs.

It comes as Russia’s invasion of Ukraine worsens already soaring gas prices, pushing up energy bills as much of the heating for UK homes and nearly two-fifths of electricity generation comes from gas.

The report urges the Government to use the Spring Statement and the energy supply strategy it is due to announce, to cut household energy use through existing policies and mechanisms.

It calls for a public awareness campaign to promote simple measures such as turning down the “flow temperature” on condensing boilers to reduce the temperature of the water sent to radiators and turning down the thermostat by 1C – without compromising on warmth and comfort.

VAT on green home measures should be removed or reduced, and there needs to be a boost to funding for energy efficiency and electric heat pumps, which use less energy to run than boilers, it says.

The report also calls for efforts to speed up deployment 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 highly efficient.

Taking historic “green” policy costs, which currently fall mostly on electricity bills, into general taxation would lower energy bills “noticeably” at a stroke and encourage the switch to heat pumps by lowering the cost of electricity, the report said.

The Government should change stamp duty so energy efficient homes pay a lower rate, with a rebate that can be claimed within two years to incentivise buyers to improve the energy performance of their homes.

The report also says a comprehensive training scheme for heating engineers to install heat pumps could train up 10,000 installers for just £10.5 million.

Energy efficiency action this year could save significant amounts of electricity, cutting the use of gas equivalent to 80% of Russian imports, and saving households between £130 and £170 on average, the report said.

It would cost £6.7 billion in public and private investment, but deliver as much as £4.7 billion in reduced annual energy costs to consumers, delivering payback on spending in less than two years.

Combined with a renewables drive, which the Government has signalled it wants, Russian gas could be eliminated from UK supplies completely this year, E3G said.

Ramping up work to cut energy demand and switch to clean heating systems over the next three years would save more gas annually than the UK imports from Russia, and save households between £145 and £240 a year on bills.

While it would require more than £33 billion in public and private investment up to 2025, the spending would be paid back in five to nine years, and delivering savings for many years, the report said.

Colm Britchfield, researcher at E3G said: “With Government support, ordinary UK households can play a huge role in cutting Putin out of our energy system.”

The home energy security plan the report sets out would quickly boost investment in energy efficiency and heat pumps and help cushion the impact of rising energy prices, he said.

Pedro Guertler, programme leader at E3G added: “The UK Government must act now to permanently convert fossil gas dependency and profits into reduced living costs for all.

“The Government has the tools to make big gains on security through energy efficiency measures for households this year.”