Reaching Net Zero: We need to better address weaknesses in the residential sector

We are all aware that unprecedented climate change is the greatest social challenge we’re facing today. Northern Ireland must play its part, and the Northern Ireland’s Climate Change Act 2022 commits to a 48 per cent reduction in emissions by 2030, and 100 per cent by 2050, writes Mark Graham, Chief Executive Co-Ownership

The impact will be seen right across the economy. Residential properties, which are responsible for 14 per cent of all carbon emissions in Northern Ireland, will need a once in a generation change.

There are two problems we need to solve. Firstly, the primary method of heating our homes is still through oil (68 per cent) or gas (26 per cent) central heating. The second problem is that many of our homes are poorly insulated. The solution is therefore a combination of more energy efficient homes and heating systems that use non-carbon energy.

It cannot, however, only be about the carbon emissions and hitting legislative targets. Many people are already struggling to afford their energy costs. With some people not heating their homes as it’s a choice between turning on the heating or feeding their family, we must find a way of reducing emissions whilst making it cheaper to heat homes.

We have about 820,000 homes in Northern Ireland. Around 72% are in the owner-occupied sector, and rest split between social housing and the private rented sector. While each of these sectors have specific challenges, the owner-occupied sector, the biggest part of the residential sector, may be the most difficult to address. This is the sector Co-Ownership operates in.

The energy efficiency of new build homes should be the simplest issue to address. These homes are already very energy efficient, and it’s good to see some housebuilders develop energy efficient passive houses. While these homes will cost more to build, in the long run it should feed into their value.

Developers need clarity from government on heating systems. It seems a no brainer that we install heat pumps in new homes, and whilst we don’t have the electricity grid capacity to do this right now, I think it may become the main solution. There is still a case to continue to utilise the capacity of the gas network through biomethane gas and hydrogen, especially in existing homes where heat pump installation may not be practical.

The bigger challenge is the existing 590,000 homes in the owner-occupied sector. We know what needs to be done – replace the oil and gas heating systems and make homes more energy efficient primarily through better insulation. The question is how we persuade and incentivise homeowners to make the change.

At Co-Ownership, we have a share in over 10,000 homes across the region and buy hundreds of homes each year – both new build and existing homes. We have been talking to our new customers about their EPC rating and their feedback has been very interesting. They tell us they want to reduce energy bills and are happy to take simple measures such as low energy lightbulbs.

When it comes to making changes to fabric of the building however, our customers find it confusing. What should we do? Can we afford it? How do we get a company to do it we can trust? The starting point must be making it easier to get good advice and a supply of trusted companies to do the work. For the people who cannot afford to make the changes required, or the payoff is often too far in the future, there will need to be government grants and other financial incentives to see real change.

There are also homeowners who decide that even though they can afford to make the changes required, it’s too disruptive, or they simply never get around to it. I suspect that mortgage lenders will also have a role here. Through regulation, and concerns about maintaining the value of their balance sheet, lenders will be less willing to fund low energy efficiency homes and are likely to price this into the interest rates they charge. This will create an incentive for home owners to make improvements.

None of the challenges are insurmountable and we have demonstrated what can be achieved if the public and private sector work together with the rollout of the gas network. In Co-Ownership we will continue to play a role in supporting our customers with the journey to net zero homes as we await government publishing its strategy for the residential sector.