Economists back call for energy efficiency investment

Economists have called for increased spending on home energy efficiency programmes, describing it as a “shot in the arm” that drives up economic activity while also tackling fuel poverty and climate change.

Investment in building efficiency boosts the economy by getting cash out into local communities and into consumers’ pockets as quickly as possible, said economists from the London School of Economics and the University of Strathclyde.

The economists were backing calls from the Existing Homes Alliance for a national infrastructure programme in Scotland to improve the efficiency of the nation’s homes.

They welcomed the recent announcement that £20m of post-EU referendum stimulus funds will be channelled into energy efficiency programmes across Scotland, and urged the Government to “build on this good start”.

Professor Karen Turner, director of the Centre for Energy Policy at the University of Strathclyde, said:

“Our own research shows that energy efficiency improvements free up disposable income for low income households to better heat their homes or to spend on other things. This helps reduce fuel poverty and drive new economic activity, delivering a long term and lasting boost to the economy on top of the infrastructure programme itself.

“With the UK economy still reeling in shock from the EU referendum, energy efficiency investment is a direct shot in the arm, delivering a relatively rapid economic stimulus.”

Dimitri Zenghelis of the London School of Economics added:

“Now is a good time for Government to borrow to invest; there’s no shortage of private money available with a glut of household savings making no real returns because of a lack of perceived investment opportunities. With real returns on government bonds being below zero, there’s strong evidence to suggest that returns generated on well-managed, carefully selected public investment projects such as smart investment to improve the energy efficiency of homes are likely to significantly exceed their financing costs.”

The Existing Homes Alliance is calling for a national infrastructure programme to help all homes in Scotland reach an Energy Performance Rating of at least C by 2025, funded with increased public investment and leveraged private funding.

“Such a programme would cut energy bills, helping the 845,000 households currently living in fuel poverty in Scotland heat their homes, as well as reduce climate emissions, prevent ill-health and create up to 9,000 jobs across the country,” said Lori McElroy, the new chair of the Existing Homes Alliance.

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