The cost is going to be high…
Britain is in a tough spot regarding the cost of going net zero, according to Sarah Tucker (pictured), founder and managing director of The Mortgage Mum.
“The cost of going net zero is high, electric cars are expensive, not to mention installing charging ports, fitting solar panels, replacing windows and doors,” Tucker said.
She noted that all of these expenses add up and she believes it will take a long time before any financial return is seen on these products.
Why the problem?
The government has set a target to achieve net zero greenhouse gas emissions by 2050 – however, Tucker believes this will be difficult to achieve until prices for greener options come down. In order to achieve the government’s target, the country would need to almost completely ‘decarbonise’ housing stock in the next 30 years.
“Even when you consider green mortgages and the current incentives in play for the average household, it does not always stack up for our clients,” Tucker said.
She explained that the cost of going ‘green’ is high, and in a world where the cost-of-living has increased energy bills by 54%, Tucker said it is outpricing most households.
Read more: Net zero and the housing sector – how achievable is it?
To begin decarbonising housing stock, UK homes will need to shift away from using gas and oil boilers to produce heat, and primarily rely on electric systems like heat pumps.
Tucker said that while the government has good intentions with its ambitious green targets, “we can only afford what we can afford, as a country, and as people.”
“It is crazy to me that the increase of energy bills in the UK is expected to be 14 times faster than wages in 2022, and that households are currently facing the biggest decline in their income since the mid 1970s,” Tucker said.
According to energy regulator Ofgem, energy prices are expected to rise by over 50% during 2022.
Because of the energy bills crisis, which is being fuelled by the war in Ukraine, Tucker said that to prioritise money being spent on the net zero goal may be a bit ambitious. The pandemic too has had a lingering impact of the country’s financial position and the general public’s, therefore Tucker questions whether now is the right time to be pursuing net zero targets.
“Making changes is vital, but perhaps the timeline and expectations may need consideration - ultimately the UK may not be in a position to afford what they originally wanted,” she said.
The cost to go green is not only on the general public, but on the government too with it offering a £5,000 grant for homeowners to replace gas boilers with low-carbon heat pumps across England and Wales.
Read more: Govt offers £5,000 subsidies on heat pumps
“The goal posts may need to change. Finding the cash to invest in going green and pay for rising bills is a mammoth task,” said Tucker.
According to Tucker, the government has estimated that the total cost of going net zero is £1.5 trillion, and although that will in time deliver significant savings, a lot of the spending has to happen in the next decade.
“It is very similar to the green mortgages debate I have been a part of. The cost of going green outweighs the cost savings for some time and can take 25 years or more to see any kind of return on your investment,” Tucker said.
