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Carbon counters: the noble engine that empowers energy watchers at home

Nordic domestic energy watchers might rightly say: “this is our moment.” Energy prices are steep and temperatures are cold. Reducing electricity demand saves money and weakens Russia’s influence over the West. Turning off the radiator in an empty room is just the beginning. Insulation in the house takes the fight to the next level — the loft.

The UK is a good test case. Many of its 28 million homes are old and drafty. They account for 25% of total energy use and 15% of emissions. The burden needs to be drastically reduced by 2030 to match the path to net zero.

Lex chart showing much higher carbon dioxide emissions Existing Housing – Estimated average CO2 emissions for new and existing homes, as of March 2022Bills will increase more in locations lower energy efficient buildings – UK household energy bills by building energy efficiency in summer 2019 and October 2022 Primary gas prices remain the average source of heating fuel most popular – Primary fuel used in central heating, England and Wales, as of March 2022

Big country numbers are a boring one. Break them down to the household level and they start to mean something. A good starting point is the average UK home, which consumes 12.2 MWh of natural gas a year and 2.9 MWh of electricity, for a total pre-crisis energy bill of £1,200. By 2023, that figure will triple to £3,600, split almost equally between gas and electricity.

An investment of £700 in loft insulation could reduce gas demand by 25%, or about 3MWh — a saving of £430 in 2023 costs.

What about the long term? Assume energy prices return to pre-crisis levels by 2026 and savings stabilize at £110 per year. Lex calculates that the “present value” of those savings – using a 7% discount rate – would be around £1,700. That makes it worth the £700 investment.

The internal rate of return would be more than 30% — compared to the 14% this investment would have seen at 2021 prices. No infrastructure investor would ever turn that down. So are the residents of 33 Omdurman Gardens.

Reducing gas demand by 3MWh would cut a household’s emissions by 0.7 tons of CO₂ a year — or about 20 tons at the national level. That’s about 6% of emissions with negative mitigation costs, meaning you make money by reducing them.

FT readers often have nice houses, or at least old ones. These tend to leak heat faster than new builds. Readers also have a higher-than-average rating of the importance of IRR. The heat is ramping up – quite literally – to deal with that abandoned loft or driver’s house spewing energy into the winter sky.

The Carbon Counter is a series of occasional articles by Lex that quantify the costs and savings of carbon from different lifestyle choices. Other articles are here.



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