Priority 5 - Reducing Carbon Emissions and Tackling Fuel Poverty

What the evidence says

‘Addressing the energy efficiency of the private sector housing stock will be critical to the achievement of national targets for the reduction of carbon emissions…..’

‘…..a significant proportion of the housing having been constructed pre-1919, the achievement of nationally set targets for de-carbonisation are made more challenging due to the likely levels of poor energy efficiency….’

‘….With 32% of the housing stock in Wales constructed pre-1919 the thermal efficiency of the housing stock in Wales is amongst the lowest in the UK and Europe.’

‘……absence of data reflects a wider deficiency of information on the condition and energy efficiency of private sector housing at a local level …’

‘. ..…..need for the council to respond to the considerable challenge set by Welsh Government for all social housing to meet EPC A thermal efficiency standards by 2033…..’

‘……we are already working to target standards for new-build dwellings under the Welsh Development Quality Requirement (WDQR)…..’

‘……the challenge of fuel poverty linked to poor energy efficiency and heating costs most immediately impacts on the health and welfare of our residents….’

‘…..study predicted up to 45% (614,000) of households could be in fuel poverty following the price cap increase of April 2022…..’

‘……the challenge of tackling carbon emissions and reducing fuel poverty in Pembrokeshire is a necessary one, but is significant and muti-faceted’

‘the information is incomplete and is currently insufficient to identify a clear and costed pathway to achieving de-carbonisation targets through on Optimised Retrofit Programme’

‘…..difficulties with the capacity of the building construction sector locally to respond to procurement and tendering processes……’

‘…….challenge of reducing carbon emissions and tackling fuel poverty in Pembrokeshire, therefore, exists on a number of fronts……’

Summary analysis

The strategic considerations for the Housing Strategy under this priority are twofold in that they seek to respond to the challenge presented for the housing sector in contributing to a reduction in carbon emissions whilst also seeking to address the impact of fuel poverty on local residents across both council owned stock and the private sector.

The significance of Climate Change is reflected in both international and national policy approaches, particularly following the Climate Change Act, with the UK government announcing a commitment to achieving a 78% reduction in carbon emissions by 2035 and Welsh Government targeting achieving 89% by 2040 and net zero carbon emissions by 2050. Specific legislation targeting energy efficiency obligations included the Environment (Wales) Act 2016 which builds on the Home Energy Conservation Act 1995 which required local authorities to report on their progress in improving the energy efficiency of residential accommodation in their areas and to identify further measures that could be taken. It places the duty on the Government to reduce carbon emissions.

Pembrokeshire County Council declared a Climate Emergency in May 2019 following the example set by Welsh Government and committed to support Pembrokeshire’s journey to net zero carbon by 2050 through the development of the ‘Action Plan Towards Becoming a Net Zero Carbon Authority by 2030’. Housing is a key area in terms of contributing towards achieving the target.

Our Well Being Plan 2023-2028 contains the following objectives that directly link to climate change and the impacts of fuel poverty on local residents.

A3 We will enable the delivery of affordable, available, adaptable and energy efficient homes.
A5 We will promote and support initiatives to deliver decarbonisation, manage climate adaptation and tackle the nature emergency.

Pembrokeshire County Council’s strategic priorities are aligned with and contribute towards the delivery of the overarching Well-being Plan for Pembrokeshire. Published in May 2023 the Pembrokeshire Public Service Board’s Well-being Objectives include key commitments relating to climate change:

Support growth, jobs and prosperity and enable the transition to a more sustainable and greener economy
Work with our communities to reduce inequalities and improve well-being
Promote and support initiatives to deliver decarbonisation, manage climate adaptation and tackle the nature emergency

Cabinet’s Programme for the Administration includes a commitment to Pembrokeshire’s net zero ambitions and includes a housing priority centred on decarbonising our own housing stock as well as supporting private householders to improve the energy efficiency of their homes. This reflects the need for the council to respond to the considerable challenge set by Welsh Government for all social housing to meet EPC C thermal efficiency standards by 2029 and have target energy pathways and an Affordable Warmth Plan by 2026 whilst also highlighting the need to consider the approach to addressing energy efficiency standards in the private sector where no specific targets have been set. As highlighted in our Corporate Plan, we will not deliver on our ambitions around climate change unless we improve the energy efficiency of housing overall, as 38% of electricity usage in the UK is from domestic users.

Alongside efforts to improve the energy efficiency of housing across Pembrokeshire therefore, we also need to address the carbon footprint of all housing in Pembrokeshire. A key objective of the revised WHQS 2 is to improve the energy efficiency of social homes in Wales in order to ensure affordability and reduce fuel poverty, as well as improve environmental performance of homes. Through a range of low-carbon technology measures, retrofits and improvements, the Standard proposes that all social homes should achieve the highest Energy Performance Certification rating. Alongside increased energy efficiency, a key element of the proposed standard is the reduction of carbon emissions from homes. Whilst these standards focus on the approach to the existing stock of social housing we are already working to target standards for new-build dwellings under the Welsh Development Quality Requirement (WDQR) which applies to social housing developed with social housing grant by the council and our RSL partners. All new social and affordable housing, built through our Programme Development Plans using Social Housing Grant, are built to the latest WDQR standards and contain no fossil fuel heating systems. It will be important that learning from the operation, maintenance and efficiency of new heating systems is built into the development of our Optimised Retrofit Programme.

The Swansea Bay City Deal has established a project aimed at developing a ‘Homes as Power Stations’ (HAPS) approach the aim of which is to investigate the integration of energy efficient design and renewable technologies in new build and existing housing stock across all housing tenures. Pembrokeshire County Council is a partner on the HAPS programme through which it is hoped that additional resources and supply chain capacity will be drawn in. The City Deal is being funded, subject to the approval of project business cases, by the UK Government, the Welsh Government, the public sector and the private sector. The HAPS project aims to prove the concept in the public sector at a relatively small scale with the intention of then scaling up activity in other sectors across the broad Swansea Bay City Region. The project will be linked to other housing improvement programmes to optimise efficiency of delivery including the ORP, forming part of the Innovative Housing Programme, which will reduce the carbon footprint of existing social housing in Wales.

It is also important to reference Pembrokeshire’s Local Area Energy Plan LAEP, published in June 2022, which sets out a vision for what a zero carbon energy system could look like in 2050, and describes key immediate actions for the Council to support our journey. Although not specifically a carbon emissions strategy for the housing sector it sets a vision for Pembrokeshire’s future energy system to achieve a net zero emissions energy system by 2050. It also identifies a number of areas where co-operation between the council, RSL’s and other agencies connected to the LAEP can help deliver the Plan’s objectives for Pembrokeshire. Importantly, it highlights that large-scale low carbon interventions will be needed across housing, as well as transportation and energy supply, in order to completely transform Pembrokeshire’s energy system by 2050.

Whilst carbon reduction is primarily a target for addressing climate change, the challenge of fuel poverty linked to poor energy efficiency and heating costs most immediately impacts on the health and welfare of our residents. Fuel poverty arises when a household is unable to afford to heat their home to an adequate standard or is living in a home with inadequate insulation or heating. The effects can be far reaching and long-lasting including increases in respiratory and other illnesses, especially amongst children and the elderly with associated pressure on NHS and Social Services in responding to the medical consequences. Fuel poverty contributes to increased levels of debt, social anxiety and isolation and psychological stress and is estimated to contribute to 27,000 excess winter deaths each year across England and Wales. The Fuel Poverty Modelled Estimates for Wales, produced by Welsh Government in October 2021 estimated that 196,000 households in Wales were be living in fuel poverty, equivalent to 14% of households. A further 153,000 households were estimated to be at risk of fuel poverty, equivalent to 11% of households. Taking the 2021 modelled estimates of fuel poverty, revising them using fuel prices (electricity, mains gas, and heating oil) from 1 April 2022, and assuming all households are on the price cap the study predicted up to 45% (614,000) of households could be in fuel poverty following the price cap increase of April 2022.

It is clear, therefore, that the challenge of tackling carbon emissions and reducing fuel poverty in Pembrokeshire is a necessary one, but is significant and muti-faceted. We have specific challenges to address in terms of our stock of 5,700 homes but can invest directly in improvements within the confines of our annual capital programme whereas our reach and ability to effect change is less certain within the private sector. It is clear, however, that achieving Welsh Government’s challenging aspirations for improving energy efficiency and decarbonisation across all housing will require significant investment over and above current levels across both sectors.

In respect of our own housing stock we benefit from having better quality data on the current levels of energy efficiency but the information is incomplete and is currently insufficient to identify a clear and costed pathway to achieving de-carbonisation targets through on Optimised Retrofit Programme. Similarly, much of the technology associated with new systems that would form part of any retrofit programme is relatively new and untested and that creates risks in terms of ongoing maintenance programming and we need to understand the impacts for tenants. Furthermore, the costs are of an Optimised Retrofit Programme are expected to be significant and we need to understand the potential impacts of any Decarbonisation Programme on our overall HRA Business Plan ambitions. We also have a significant number of ‘hard-to-treat properties comprising non-standard construction types that are both energy inefficient but also present particular challenges in bringing energy efficiency levels up to target standards. Whilst our current housing stock meets existing WHQS we have to plan for significant investment to maintain that standard whilst awaiting the additional expectations that will emerge from the publication of WHQS2. We need to be mindful of the fact that inflationary pressures in the construction sector continue to have a marked impact on construction and building maintenance costs and therefore reduce the reach of capital improvement budgets. Similarly, we have encountered difficulties with the capacity of the building construction sector locally to respond to procurement and tendering processes which both impacts our current programmes but would certainly impact on any significant additional investment through future retrofit programmes.

In the absence of county level data on the condition and energy efficiency of private sector housing stock we have limited information against which to develop advice and investment strategies for the majority of homes in Pembrokeshire. It is true to say, however, that a large number of homes within Pembrokeshire were constructed pre-1919 and are likely to be poorly insulated. Such properties have a dually negative impact in that they are more likely to contain households who are fuel poor but they have a greater impact on climate change as they require greater levels of heating to keep them warm thereby consuming more carbon-producing fuel.

Alongside Welsh Government’s targets for addressing the energy efficiency of social rented stock it has set specific targets for addressing the broader scale issue of households in fuel poverty by setting additional challenging targets to be achieved by 2035.

No households are estimated to be living in severe or persistent fuel poverty as far as reasonable practicable;
Not more than 5% of households are estimated to be living in fuel poverty at any one time as far as reasonably practicable;
The number of all households “at risk” of falling into fuel poverty will be more than halved based on the 2018 estimate.

Clearly, an important first step in addressing the target will be in the identification of households that are likely to be fuel poor and Welsh Government has identified a number of criteria that will be used to both identify at risk households, prioritise interventions and address the cause. The approach includes a commitment by Welsh Government to use its influence to ensure that the UK Government, Energy Regulator and energy companies consider and meet the needs of people living in Wales.

Whilst there has been limited government funding directed to local authorities in Wales to address the challenge of fuel poverty the approach has been to rely on obligations placed on the Energy Companies to fund and operate energy savings initiatives for low income and vulnerable households. The ECO Flexible Eligibility Scheme (ECO4 Flex) is part of the Energy Company Obligation 4 (ECO4) government energy efficiency scheme. Local authorities can volunteer to participate in ECO4 Flex to identify eligible households (owner-occupied and private rented homes) that are not in receipt of a means tested benefit but meet the eligibility criteria. Pembrokeshire is a participating local authority in the scheme and identifies and verifies potentially eligible households who then can receive energy efficiency and heating measures. The energy efficiency measures that are permitted to be installed in a qualifying household are determined by the installing company or a lead generator and must be within the remit of the overall scheme. Examples of the measures that can be installed include air source heat pumps, solar photovoltaic panels, and the various types of insulation (e.g., loft, external wall, internal wall, and floor).

Another energy scheme available to residents in Pembrokeshire and operated under the Welsh Government Warm Homes programme is the Nest scheme which provides funding for energy efficiency improvements to low income households and those living in deprived communities across Wales. It supports the Welsh Government’s commitments to reduce climate change, help eradicate fuel poverty and boost economic development and regeneration in Wales. The scheme considers a whole house approach to home energy efficiency improvements. This helps to tackle harder to treat homes where the impact of fuel poverty tends to be most severe. The Nest scheme offers a range of free, impartial advice and, subject to eligibility, a package of free home energy efficiency improvements such as a new boiler, central heating, insulation, solar panels or a heat pump. The scheme is available to home owners and private sector tenants and is available to households in receipt of means tested benefits or where someone in the household meets the health based criteria.

In June 2023, Welsh Government announced its New Warm Homes Programme policy statement on its long-term ambition to improve the energy efficiency of Welsh homes and drive de-carbonisation. The new Warm Homes Programme is set to continue to act as the Welsh Government’s primary mechanism to tackle fuel poverty whilst contributing towards achieving targets for a net zero Wales by 2050. The policy statement sees an opportunity with the creation of the new Warm Homes Programme, to develop an integrated approach which responds to the current cost of living crisis, promotes sustainable Welsh materials and provides trusted energy efficiency and decarbonisation advice. The plan aims to support Welsh skills and jobs and learn from the experience gained through the delivery of the Welsh Government’s Optimised Retrofit Programme on social housing. It sets out a commitment to bring forward the procurement of a replacement demand-led service, providing continuity to assist those least able to pay and providing an affordable transition to low carbon homes. Welsh Government hopes the integrated approach will develop from the experiences of Optimised Retrofit Programme and other Welsh housing initiatives. Under the plans all households in Wales, regardless of their tenure or whether they are in fuel poverty, will continue to be eligible to access the Warm Homes Programme for advice and support on how best to improve the energy efficiency of their homes, and how measures can be funded. In relation to the installation of energy efficiency measures, the Welsh Government believes the Programme should focus effort, and where required, investment, on improving energy efficiency for households who are least able to pay for improvements themselves (i.e. households in, or at risk of, fuel poverty and those in severe fuel poverty) in the owner occupier, private rented and housing co-operative sectors. The new Warm Homes Programme looks set, therefore, to be the primary delivery mechanism for delivering future energy efficiency improvements and carbon reduction measures in the private sector.

The Swansea Bay City Deal The challenge of reducing carbon emissions and tackling fuel poverty in Pembrokeshire, therefore, exists on a number of fronts. Our intelligence on the levels of energy efficiency across all tenures needs to be improved in order to fully scope the extent of the challenge being faced and the level of investment required to meet improving standards. There are funding uncertainties in terms of achieving the level of improvement required although it is likely that direct intervention in our own housing stock via Optimised Retrofit approaches will require significant funding through our HRA Capital Programme. Furthermore, using untested new technologies in new heating/retrofit systems and concerns regarding capacity constraints and rising costs within the construction sector create forecasting uncertainties for the future. Whilst standards for new build housing have risen and are likely to increase for social housing in particular, existing private sector housing remains the most significant challenge in meeting our priority objectives, with funding for advice and improvements delivered into the future through government and energy supplier-led schemes and little scope for local-level intervention.

Our approach

The Housing Strategy is framed within the context of the council’s widely stated commitment to take positive action in support of reducing carbon emissions as well as tackling the issue of fuel poverty. We will be taking positive action to invest in the de-carbonisation of our own housing stock in meeting updated Welsh Government WHQS targets for social housing but will seek to scope the investment required through improving our understanding of our own housing stock through a Whole Stock Assessment. This will inform the development of Target Energy Pathways for our homes as part of the Optimised Retrofit Programme (ORP) approach. We are anticipating the announcement of the revised WHQS which is expected to confirm targets for EPC improvements to EPC C for all our housing stock fabric by 2029. Within 3 years we will be expected to have developed Affordable Warmth and Decarbonisation Plans for our stock that will also include Target Energy Pathways for our stock towards EPC A. The Housing Strategy approach to the objectives for the decarbonisation of the council’s housing stock is as set out in the HRA Business Plan.

Our HRA Business Plan 2023 – 2053 sets out our plans to invest nearly £10 million in our housing stock over the next 5 years to improve energy efficiency levels through allocation of funding towards an ORP. We have invested in capacity to understand the technologies available in support of de-carbonisation investment and will work in partnership in developing the appropriate approach for social housing in Pembrokeshire and, by extension, support the ambitions of the Pembrokeshire Local Area Energy Plan. The level of investment required in delivering ORP in our housing stock is likely to be significant therefore we will engage with Welsh Government on funding requirements alongside regular reviews of the overall HRA Business Plan capital investment programme. For 2022/23 through to 2025 Welsh Government has allocated funding for ORP works on a pro-rata basis according to the level of social housing stock.

We also recognise the potential capacity constraints within the construction sector in delivering a significant programme of retrofit across social housing in Pembrokeshire and will need to identify commissioning and supply-chain approaches, in partnership with our RSL partners and the construction sector, to increase delivery capacity in the county. Early frameworks expressions of interest have identified a lack of specialist consultants in Wales with the expertise, knowledge and correct accreditation to undertake the required works and we will need to work in partnership with other local authorities, RSL’s and Welsh Government in securing an approach to developing sufficient capacity to deliver de-carbonisation works at scale.

We welcome the ongoing commitment by Welsh Government to support the Warm Homes Programme in tacking fuel poverty and addressing climate change, particularly across the private sector and will actively promote the programme across our communities where vulnerability or income levels indicate the risk of fuel poverty and potential qualification for available support. In view of the cost of living crisis on the associated impacts on energy bills it is likely that a higher proportion of local residents are experiencing, or are at risk of experiencing, fuel poverty. We will target help and advice towards those households across our own housing stock and across the private sector, including through our engagement with private sector landlords. In supporting that objective we will continue to use our local knowledge and data to identify areas where fuel poverty is likely to be prevalent and where advice or the retrofitting of low carbon heating systems and energy saving measure will have greatest impact. Many of these approaches will support the PLAEP and it will be important to ensure that we monitor the impact of local area interventions to measure success, inform learning and guide future investment of e.g. Warm Homes Programme initiatives.

Key achievements

Pembrokeshire County Council declared a Climate Emergency in May 2019
We have developed the Pembrokeshire Local Area Action Plan which incorporate housing-related actions towards the achievement of net zero carbon by 2050
We have employed a Decarbonisation Manager who is responsible for managing our council housing stock route to decarbonisation.
All new social and affordable housing, built through our Programme Development Plans using Social Housing Grant, are built to the latest WDQR standards and contain no fossil fuel heating systems.
We referred over xxxxx households to the ECO-Flex scheme for energy efficiency advice and improvements during 2022/23
We have delivered a programme of staff training to develop staff skills across related skills including domestic energy assessment and retrofit
In 2021/22 we secured £387,500 Optimised Retrofit Programme funding form Welsh Government towards a £750k capital programme including Photo-voltaic and battery storage systems in 25 properties.
Tenant engagement has been increased with establishment of a Tenants Panel with regular sessions held.

Our priority actions

P5.1 Deliver the planned HRA Business Plan 2023-2053 investment programme 5-year forward plan relevant to reducing fuel poverty, cutting carbon and improving health outcomes in our council-owned housing stock.
P5.2 Support the delivery of the housing-related objectives of local and regional de-carbonisation plans and partnerships including the Pembrokeshire Local Area Energy Plan (PLAEP) and the Swansea Bay City Deal ‘Homes as Power Stations’ (HAPS) project.
P5.3 Improve our understanding of the energy efficiency of private sector housing stock in Pembrokeshire including levels of fuel poverty
P5.4 Support and promote the availability of funded energy advice and financial support schemes including ECO-Flex, NEST and future schemes emerging from the Warm Homes Wales programme.
P5.5 Develop a programme of fuel poverty awareness training across health, social care, voluntary sector and other public facing services in developing a referral pathway system for fuel-poor households to access energy advice and improvements

Challenges to delivery

Our understanding of the energy efficiency of housing across the private sector is limited.
We need to undertake a Whole Stock Assessment before we are able to develop detailed target energy pathways for council-owned stock.
There is no dedicated decarbonisation and renewables framework in place to procure consultancy services and installation contractors
There is evidently a lack of capacity and expertise within the consultancy and construction sectors in the region to support the future likely scale of de-carbonisation and related works across the social housing sector
There is a lack of funding capacity to support direct significant investment by PCC in improving the energy efficiency of private sector housing creating a reliance on national and utility-funded energy schemes
The scale of funding required to deliver a significant Optimised Retrofit Programme in Pembrokeshire to WHQS targets is likely to be significant and the level of ORP funding available from Welsh Government is uncertain.
The impact on HRA Business Planning future spending plans is therefore uncertain.
Inflation within the construction sector continues to impact on the cost of retrofit programmes
Ongoing restrictions to rent uplifts will limit the scale of investment possible through the HRA Business Plan.

Detailing the actions

P5.1 Deliver the planned HRA Business Plan 2023-2053 investment programme 5-year forward plan relevant to reducing fuel poverty, cutting carbon and improving health outcomes in our council-owned housing stock.

P5.1.1 Undertake a review of HRA Business Plan planned investment to take account of any changes to targets and standards set out under WHQS 2023. (Year 1-5)
P5.1.2 Undertake a whole stock assessment from which Target Assessment Pathways can be developed. (Year 1-3)
P5.1.3 Work in partnership with Welsh Government, neighbouring local housing authorities and local/regional Registered Social Landlord partners in developing capacity, skills and expertise in the supply chain for consultancy services and installation contractors. (Year 1-3)

P5.2 Support the delivery of the housing-related objectives of local and regional de-carbonisation plans and partnerships including the Pembrokeshire Local Area Energy Plan (PLAEP) and the Swansea Bay City Deal ‘Homes as Power Stations’ (HAPS) project.

P5.3 Improve our understanding of the energy efficiency of private sector housing stock in Pembrokeshire including levels of fuel poverty

P5.3.1 Undertake a Whole Stock Assessment of social housing and extend reach into the private sector where feasible. (year 3)
P5.3.2 To utilise available data in support of developing a targeted approach to the delivery of energy efficiency advice and financial support through Welsh Government and Utilities-funded grant schemes (Year 1-5)

P5.4 Support and promote the availability of funded energy advice and financial support schemes including ECO-Flex, NEST and future schemes emerging from the Warm Homes Wales programme.

P5.4.1 Develop a programme of fuel poverty awareness training across health, social care, voluntary sector and other public facing services in developing a referral pathway system for fuel-poor households to access energy advice and improvements. (Year 2-3)
P5.4.2 Develop a communications strategy for the promotion of Energy Efficiency schemes to target households. (year 1-2)
P5.4.3 Engage with Warm Homes Wales and Energy providers to ensure the establishment of mechanisms for recording the individual and overall impacts of energy efficiency schemes delivered in Pembrokeshire. (Year 1-3)

Consultation Feedback

Two member seminars and stakeholder meetings were held to inform the development of the Strategy. These sessions were well attended with numerous valuable contributions which have been incorporated into the Strategy.

The results of wide ranging engagement carried out in developing the Pembrokeshire Wellbeing Assessment 2022 identified a number of key housing-related concerns that are important to reflect in setting the scene for the Housing Strategy. The concerns identified clearly remain relevant.

Housing Availability and affordability of housing in Pembrokeshire is felt to be a barrier to staying in the county by young people.

There are a significant number of second homes in the county, particularly in rural areas.

There is a lack of affordable homes in the county.

The need for affordable homes is projected to increase.

We are seeing an increasing number of families presenting as homeless in the county.

The growing ageing population is and will continue to put pressure on the demand for specialist accommodation.

Action plan

Following the agreement of the priorities contained within the Housing Strategy, a detailed Action Plan will be developed including measureable performance indicators and measures.