Barclays bank said this morning it plans to run a trial to pay back customers who install new insulation, heat pumps or solar panels, among other solutions.
Barclays will start paying up to £2,000 to its mortgage holders to help them green their home as three in four say they cannot afford the changes they want to make within the next five years.
The bank said that most of the homeowners it surveyed wanted to improve the energy efficiency of their homes.
But most are only making small-scale improvements which do not cost much up front. This can include changing old light bulbs for more energy efficient versions – something which has only a small impact on a home’s carbon emissions.
“There is a clear need to improve the energy efficiency of UK housing, but as our data indicates, cost remains a barrier to turning desire into action,” said Barclays chief executive C.S. Venkatakrishnan.
“We hope this pilot will go some way towards encouraging consumers to make energy efficiency-related home improvements.”
The work will have to be performed by a TrustMark-registered business or tradesperson, Barclays said. TrustMark is a Government-backed scheme.
The bank said that it would use the data that it collects during the pilot project to help roll-out wider home improvement support measures in the future.
Its initial research found that the best way to drive more energy efficiency improvements in people’s homes was simply to give them cash to do so.
The bank said that the cost was the main thing holding back 73% of homeowners from retrofitting their houses, while 56% do not have enough cash up front at all.
Not prepared to spend up front
Around a quarter of people said that the payback period on the investment puts them off spending the cash up front.
Dr Pete Brooks, a behavioural economist at Barclays, said: “When weighing up the costs and benefits of retrofitting, a behavioural bias called ‘hyperbolic discounting’ often comes into play, which in essence means that we tend to prefer smaller, immediate rewards over larger payoffs further down the line.
“With the expected payback period for some home improvements clocking in at over a decade, these larger options may be overlooked.
“Even if the long-term benefits might be greater, the end result is often inaction.”
The full £2,000 will be available for homes installing heat pumps, while those opting for solid wall insulation or solar panels will be able to get £1,000 and a smaller £500 payment will be available for loft insulation or new windows, among other initiatives.