Changes required to achieve Net Zero

The disengagement of UK consumers towards the energy market is a well established fact. A recent study by Citizens Advice found that 38% of households think they’ll need to change how they heat their home to achieve net zero. The true figure? 90%. Considering the existing disengagement levels, the structural changes required to our homes and our usage behaviour; achieving Britain’s net zero target represents a massive challenge that the current plans do not address. 

The use of gas heating systems is another key area of disconnect. A recent FT article disclosed that half of consumers don’t think their gas boiler contributes to climate change at all, when in fact it represents approximately 20% of the UK’s emissions profile. 

Consumers will need significant support to change their perspective and action the changes required. Below, we review these adjustments, discuss issues surrounding them and provide our view on how the solutions will be found. 

Consumer Understanding

For consumers, the problem begins with determining the optimal solution for their specific home and budget. Ground source and air source heat pumps, new age boilers, home batteries and old fashioned insulation (63% of energy used is space heating) are all viable options to enhance and replace current systems, but which is right for the consumer? For many of these higher ticket items, funding the upfront cost coupled with limited understanding of the long term payback, complicates the matter. 

Citizens Advice have found consumers benefit from impartial intermediaries making recommendations, detailing funding options and completing installations, in order to increase understanding and uptake. The entire consumer journey from research to installation needs to improve, as well as clearer guidance on what the costs and benefits are. Likely additional government funding will be required to support households with limited means, and the lack of clarity around responsibility and process between tenants and landlords needs to be addressed. 

Behavioural Change

The second part of the problem is the need to change consumer behaviour. This involves consuming less energy (85% of smart meter users reduce energy consumption), having a better understanding of a personal carbon footprint, knowing how to reduce it and importantly, engaging with emerging technologies like batteries and smart appliances.

Whilst the culture wars behind the reality of climate change have faded with cross-party consensus, it remains wishful thinking to believe that unless there is a range of incentives and innovative approaches, we will see full scale behavioural change required to achieve the government target. 

Our view

As with all challenges, it brings the opportunity for new solutions and different ways of thinking. 

To achieve the UK’s net zero target, we need to see government support going well beyond previous grant schemes. We also agree with Citizens Advice’s call for a Net Zero homes commission aimed at improving the full customer journey for upgrading homes. As a consequence we expect to see more partnerships between incumbent finance providers, hardware manufacturers and suppliers.

More broadly, key stakeholders need to be involved early, ideally now, to help identify how they can contribute. These groups also need to be incentivised from a Government level. Furthermore, we believe technology platforms at the intersection of these stakeholder groups have an important role to play in catalysing consumer uptake and ensuring engagement is timely and highly personalised to a consumer’s circumstance; all of which can be better facilitated through the growth in open data networks.

One thing’s for sure, only by working together across industry and heavily mandated by government support will the UK reach its net zero goal. The recently announced plans are a good first step, but as the battle for engagement in retail energy markets has shown, identifying the problem and finding the solution are two very different journeys.