Meeting the UK's energy efficiency goals: securing greater wider economy benefits through longer term programmes

We use an economy-wide computable general equilibrium (CGE) model to investigate how the implementation of residential energy efficiency programmes over different timeframes, targeted at different low income and/or more 'able to pay' households, may impact employment and GDP across the wider economy depending on the approach to funding. This involves simulating the impacts of first a 4-year programme involving a total of £4billion of retrofitting spending, then a larger one, £68.5billion, over 15 years (both starting in 2021). We find that energy efficiency improvement programmes can trigger sustained household income and economy-wide gains. Retrofitting programmes provide an important transitory boost to the economy, and more so the longer and the programme is expected to last. But it is real household income gains from reduced energy bills that trigger a sustained expansion of the economy, with the key driver being the level of real spending power freed up.