Climate change delivery: what needs to be done

The Cassandras of climate change - crying doom but fated to be ignored - are finally being listened to.

Human-induced climate change is happening and, according to Hoesung Lee, Chair of the Intergovernmental Panel on Climate Change, it is ?a grave and mounting threat to our wellbeing and a healthy planet?. Policymakers accept this and the need to act. The question is not whether temperatures will rise, but by how much.

Our new report on green finance and climate risk sets out the political, regulatory and legal position. The UK government has a strategy for net zero greenhouse gas emissions by 2050, so we arguably lead the world in ending our contribution to climate change. The Heat and Buildings Strategy describes how it intends to decarbonise our homes and commercial, industrial and public sector buildings by 2050 (the Scottish government's similar Heat in Buildings Strategy aims to do it by 2045). The mortgage lending industry supports these ambitions. What we don't have however is a clear, step-by-step, fully funded plan for delivery.

We ae still waiting for the government to respond to its consultations on improving the energy performance of privately rented homes and how to encourage action by mortgaged home-owners by improving home energy performance through lenders. We?re also anticipating further details on how 'trigger points? in the home ownership cycle can encourage investment by all homeowners, including those without mortgages. Without these there's a lot of detail still missing on what exactly we?re going to be asking homeowners to do.

What we do know is that there are a lot of things that need to be in place if homeowners are going to stand a chance of greening their properties in the timely fashion the government clearly wants it to (and our climate obligations demand). Mortgage lenders can support the delivery of some of these.

  • A major government-led awareness-raising and communications plan needs to be launched, which lenders will play a part in with their own customer communications, so that property owners know what they need to do and when.
  • The EPC system needs to improve so the homeowners have high-quality information on their property. Assessments need to be carried out more frequently, ideally cover the whole housing market, and data sets need to be more readily available (and more frequently updated). It could then be used alongside lender data to truly understand how to achieve our targets.
  • The retrofitting industry needs to gear up and be able to deliver at speed, in volume and to a high degree of quality. Newer technologies, such as heat pumps and, potentially, hydrogen, need to be properly factored into the timeline.
  • All this needs to be underpinned by finance. Mortgage lenders are already playing their part here, delivering products which support investment in green property and enable additional borrowing for the greening of browner homes. This market will undoubtedly grow in the coming months and years, but government needs to look at its own levers. Nothing should be off the table, including direct grants and financial support for consumer and incentives delivered through the taxation system.

None of this is easy. However, it is very necessary. We support the end goal of Net Zero. We want to see a just transition where no-one gets left behind. We, and the lending industry are willing and ready to work with government to develop and support a plan to ensure it happens.

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Climate change delivery: what needs to be done

01.04.22

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