Is a ‘green recovery’ the key to post-COVID housing stimulus?
Economic stimulus measures that support transitions to more energy efficient housing and lower carbon outputs can offer social, economic and environmental benefits.
29 Jul 2021
Internationally, improving the environmental sustainability of residential property has been identified as an important way to ensure that economic stimulus spending is invested wisely. It can reduce energy bills and greenhouse gas emissions, improve comfort and health and support employment in the construction sector.
Green recovery policies
Overall, the OECD estimates that 17% ($336 billion USD) of recovery funding worldwide was spent on ‘green recovery’ policies. Spending on the ‘buildings’ sector accounted for a relatively small proportion of those environmental initiatives. The ‘American Jobs Plan’ proposed in March 2021 includes building, preserving and retrofitting two million homes as a priority, with an emphasis on the provision of quality public housing and affordable housing.
Thirty per cent of the €750 billion NextGenerationEU coronavirus recovery fund, agreed to in July 2020, was earmarked for spending on climate protection and EU emissions-cutting goals. The EU published a strategy for a ‘Renovation Wave’ to prioritises the upgrade of existing buildings to better energy efficiency standards. This strategy aims to increase the rate of ‘green’ renovation of existing housing stock from 1% to 3% across the EU.
Participants in the Policy Exchange noted that investment in Spanish public housing is largely dependent on European funding to speed up the energy transition of housing stock. Spain’s Green Recovery Deal is considered one of the world’s best, and incorporates social inclusion into its recovery through a ‘just transition’, targeting sectors such as sustainable mobility or energy efficiency in building and construction. As the overarching scope, the Ecological Transition foresees three important segments: 1) mobility, 2) rehabilitation and building refurbishment and 3) deployment of renewable energies, mainly photovoltaic and wind power in the short term.
Overall, the OECD estimates that 17% ($336 billion USD) of recovery funding worldwide was spent on ‘green recovery’ policies.
Retrofitting social housing
Ageing social housing stock has been a particular focus of efforts to upgrade residential housing in the UK. Improving energy efficiency standards in social housing has long been a focus of policies in Scotland, where traditional tenements are identified as significant carbon emitters (through their inefficient heating and insulation). Across the UK there are calls for an active research agenda on how retrofits in older homes can be achieved, with attention to social equity issues, and not increasing rent in social tenancies.
In the UK (facing post Brexit labour force issues) retraining for the purpose of retrofitting housing was also framed as a workforce initiative. In a dual stimulus/environmental sustainability initiative, the UK government launched a £2 billion Green Homes Grant Scheme, enabling homeowners and landlords to receive up to £5,000 in government grants to cover up to two-thirds of the cost for energy efficiency improvements to residential dwellings.
The UK Government is also initiating a £50m demonstration project for retrofitting social housing in 2020–21, with press reports suggesting measures could include insulation, double glazing and heat pumps. The government says it will help social landlords improve their least energy efficient properties. There is also a £1bn programme to make public buildings, including schools and hospitals, greener through funding energy efficiency and low-carbon heat upgrades.
In Ireland, the government has made a commitment to raise the energy rating of 500,000 homes by 2030. The stimulus plan announced in July includes a ‘retrofit skills training initiative’ and significant additional funding for the Sustainable Energy Authority of Ireland to support expansion of the national retrofitting program in 2021.
New Zealand’s COVID-19 Response and Recovery Fund provides a NZ$56 million dollar boost to the Warmer Kiwi Homes insulation and heating programme, which is estimated to cover 9,000 additional homes.
There is a wealth of evidence internationally on how investment in improving the energy efficiency of residential housing can contribute to economic recovery from COVID-19 as well as addressing environmental challenges. AHURI’s upcoming Inquiry into housing in a circular economy will provide insight into how we might begin to make inroads on these issues in Australia.
This is the fourth and final AHURI Brief from our series outlining the learnings from the AHURI-HUD led International Housing Policy Exchange in late 2020. The Policy Exchange opened a dialogue on international COVID-19 housing policy responses, with participants from Austria, Canada, England, Ireland, Scotland, Spain, Germany, Japan, New Zealand, Australia and the United States. It considered emerging evidence about the impact of the pandemic, and how each country was approaching housing issues generated or exacerbated by it.