About 10 per cent of our greenhouse gas emissions come from households, mainly in keeping ourselves warm. Switching our homes from oil or gas to green electricity is one part of the solution, another is insulating our homes so they don’t lose heat (or enable us stay cool in a heatwave). Both may take decades to achieve at scale, and will be quite costly.
While new homes are built to high insulation standards and minimise carbon emissions, retrofitting the existing housing stock is a major challenge. We need enough skilled building workers to match the ambition of our retrofit targets, while simultaneously trying to address a major housing shortage. Given labour supply issues, it may take us to 2050 to get the job fully done.
Even with grants, modifying one’s home is expensive. Younger households may be able to reap the savings in their energy bills over a long period. However, these households rarely have much surplus cash. Pensioner households are more likely to have a savings nest-egg, but may not be around long enough to get the financial return on their outlay. And the work itself may be quite disruptive.
A recent report from the Climate Change Advisory Council sets out the magnitude of the challenge, and identifies the policies that need to be adopted.
They recommend, among other strategies, district heating projects in urban areas. This involves a central boiler producing hot water for surrounding houses and apartments. The central boiler may often use waste heat from other industrial processes, such as keeping data centres cool, or burning city rubbish at high temperatures.
An advantage of district heating is that the water comes in insulated pipes at a high enough temperature to keep traditional houses warm. So it works even without wrapping the fabric of the building, unlike heat pump technology, which uses water at lower temperatures and requires top-notch levels of insulation. So it’s cheaper and less disruptive for households.
Public authorities should spell out urgently what areas will get a district heating system. Spending a lot on retrofitting buildings in those areas would not make sense. Instead, those efforts should be targeted where district heating is unlikely to be feasible, including rural areas and smaller settlements.
Another reason to target rural areas for retrofitting is they are more likely to use oil or solid fuel to heat their homes, which have higher greenhouse gas emissions than gas-fired heating systems, which are the norm in urban areas. Each rural household that is able to convert their heating to green electricity from oil will produce a bigger reduction in emissions than a gas-fired home. When the bulk of rural/oil households have been converted, the focus should then shift to urban/gas households.
The existing programme of incentives for retrofitting probably needs to be more targeted, firstly to focus efforts where the biggest reduction in emissions will be achieved, and second to make it financially worthwhile where this is a real obstacle for homeowners
The public sector is the largest landlord in Ireland, with about 150,000 local authority homes let to tenants. Only a quarter of these have sufficient insulation to be suitable for conversion to electric heat pumps. So the State, on behalf of public-sector landlords, has the responsibility to upgrade the rest of this housing stock, and a programme of work is already in train.
The climate council has recommended this programme be expanded. Of course, it is more costly for the State to retrofit council homes, where it foots the full bill, than to subsidise private households to tackle their own homes, where owners pay a high share of the cost. But as council tenants have lower than average incomes, retrofitting their homes and cutting their heating bills will be socially progressive, even if some of the reduced energy bills are recouped in slightly higher rents.
But there is little incentive for private-sector landlords to undertake retrofitting works. Any lower heating bills will be recouped by their tenants, not themselves. If rent rises are capped, they won’t get higher rental income from letting out cosier homes.
Thus the existing programme of incentives for retrofitting probably needs to be more targeted, firstly to focus efforts where the biggest reduction in emissions will be achieved, and second to make it financially worthwhile where this is a real obstacle for homeowners.
To date, while progress on retrofitting is less than one would like, it is actually greater than I expected. It is easier for small builders to undertake retrofits than to build houses, as they don’t have to tie up large amounts of capital in buying and holding land. Hopefully, this progress on retrofitting hasn’t held back our housing programme too much. That’s the tricky trade-off we face.
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