Residential Decarbonisation: The UK’s Path to Clean Power 2030

With just five years to go, attention has turned to the question: how can the UK meet its ambitious Clean Power 2030 goal of achieving a decarbonised energy system?

Data suggests that one important way to increase the odds of success is to focus on residential decarbonisation. Residential buildings account for 17% of the UK’s total greenhouse gas emissions, with much of the housing stock among the oldest in Europe and heavily reliant on gas for heating.¹  This creates a significant burden. The Institute for Health Equity estimated in 2022 that each year, ill health caused by cold, damp homes costs the National Health Service £2.5 billion and results in more than 5,000 avoidable deaths.^2,3 Some of the poorest households in the country are paying £400 more than they should for energy, while the annual CO2 impact of avoidable emissions is more than 50 million tons.^4,5

The compressed timeframe of the Clean Power target adds urgency to the need to address these challenges through coordinated action on residential decarbonisation. While it will be a formidable undertaking, reducing demand where possible is a crucial component. It also presents a significant opportunity to enhance energy security and affordability for individual households—alleviating pressure on vulnerable communities while advancing the UK’s role as a leader in sustainable innovation.

Government initiatives are helping bolster this effort. Electricity networks are consulting on changes to the Energy Efficiency aspects of RIIO price controls under Ofgem, the UK’s energy regulator. While under the Department for Energy Security & Net Zero’s (DESNZ) Warm Homes plan, an estimated 300,000 households will benefit from home upgrades, including heat pump grants. Ensuring this funding is spent efficiently is not a simple task.

Finding a clear path forward

Meeting the nation’s legally binding net-zero targets poses a complex logistical challenge because it will require mass-scale retrofitting—including installing new insulation and low-carbon heating, storage, and energy generation technologies—for the 26 million homes that will still be standing in 2050.⁶  Residential decarbonisation also involves navigating a landscape of diverse and sometimes competing objectives, stakeholders, needs, and socioeconomic disparities.

For example, owner-occupiers often face the burden of upfront costs (which average £26,000) to retrofit a typical family home to a net-zero standard, whereas renters depend on landlords who lack incentives to invest as they don’t receive direct benefits from the improvements. With the UK’s energy costs higher than any EU country, more than 9 million low-income households are trapped in fuel poverty because they can’t finance or access the upgrades needed to break the cycle.^7,8 This all reinforces a pattern of inaction that requires developing a better path forward.

Historically, policy initiatives have failed to meet this challenge. For example, the Green Homes Grant—where £50 million from a £2 billion fund was spent on administrative costs—only delivered £250 million of support.⁹  Recent policy and funding approaches have been too siloed, risk-averse, and output-driven to meet the moment’s complexities—leading to a track record of limited delivery and inefficient spend.

As part of its successful 2024 campaign, the Labour Party has made making Britain a “Clean Energy Superpower” part of its core mission. The 2030 target means that retrofitting and ultimately decarbonising must happen quickly and at scale to minimise the volume of grid reinforcement needed while adding valuable demand-side flexibility.

A blueprint for residential sustainability

An effective blueprint for sustainable residential transformation needs to combine carbon emission reduction with the goals of job creation, economic expansion, and improved quality of life. It should be structured around the following three strategic interventions:

Robust digital tools to de-risk and monitor efforts. Digital tools should play an instrumental role in evaluating, tracking, and enhancing decarbonisation policy effectiveness. Digital monitoring systems improve accountability and give policymakers real-time, auditable insights into savings, emissions reductions, and adoption rates. Taking lessons learned from Canada and the U.S., leaders can combine traditional efficiency interventions such as insulation installation with digital infrastructure such as smart meters and cloud-based energy management systems to maximise benefits and accurately report programme-level impact. This can also help to mitigate both the real and perceived risks of fraud and non-delivery.

Blended financing options to maximise impact. Identifying which public funding streams are being used and then determining where private investment could act as a turnkey solution helps minimise risks and unlock scale. One way to do this is to move away from output- and technology-driven targets and instead encourage outcome-based financing, learning from examples such as social impact bonds. Complementing the secure foundation of public funding with private capital to accelerate the pace of retrofitting is an effective way to drive decarbonisation, economic, and equality outcomes.

Simplified, automated technologies to increase impact. Successful residential decarbonisation depends on streamlining and simplifying processes. One effective way to do that is to create single-touch delivery models—comprehensive access points where owner-occupiers, landlords, and renters can easily engage with assessments, financing providers, installers, and advisory support for households with complex needs. Integrated, automated technologies such as AI-enabled energy management systems and batteries funded through property-linked financing can reduce or eliminate the need for complex consumer decision-making. Providing customers with effective financing, technology, and automated efficiency will maximise the benefits. It also supports implementation across diverse housing needs and demographics and ensures an economically just transition for low-income and fuel-poor communities.

Identifying a central coordinator

The need for systemic action is the common theme that ties these three interventions together. It’s essential to create a central coordination role for balancing the opinions and needs of the multiple stakeholders who will deliver different aspects of the journey. Comprehensive residential decarbonisation will require input from policymakers, regulators, energy companies, local governments, capital providers, and customers. To distinguish this effort from previous ones and increase its chances of success, it will be crucial to identify, build, and operate a delivery-focused consortium of stakeholder representatives.

These three strategic interventions can form the foundations of a coordinated, forward-looking approach to residential decarbonisation—setting the UK apart as a leader in sustainable housing, economic resilience, and energy equity. Once in place, this initiative can act as the keystone for the UK’s clean power mission—providing confidence and momentum for the biggest infrastructure challenge of the century.