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Governments should be investing in home energy upgrades, now.

Improving home energy efficiency is a good investment at the best of times: it cuts power bills, makes homes healthier, and reduces emissions. But the Coronavirus pandemic and the job losses it has caused mean that now is a particularly important moment for governments to back home energy upgrades.

That’s why last month’s budget makes Victoria a serious model for others to follow.

Alongside a large-scale build of new social housing, Victoria will be investing $797 million on a home energy efficiency program including social housing retrofits and appliance upgrades for low-income households. Other states and territories and the Commonwealth government should follow suit.

If Victorians needed a reminder of how important home energy performance is, it came within a few days of the budget announcement. A heatwave pushed temperatures up across the state before summer had even arrived. Mildura hit a November record of 45.7 degrees.

Too many homes in Victoria are simply not up to scratch during extreme weather, which is particularly dangerous for older people and people with existing health conditions. Better energy efficiency can keep homes cool in summer and warm in winter, but the average NatHERS rating of homes built before 2005 is likely to be less than 2 stars. Meanwhile, many homes don’t even have the basic features required to be liveable: as of 2019, 14 per cent of renters did not have a heating system.

The costs of poor energy performance broadly track inequality in our community. People on low incomes are least likely to be able to afford the upfront costs of energy upgrades – even though these would save money in the long term – and more likely to ration their heating or cooling if available. Meanwhile, the 29 per cent of Victorian households who rent face particular structural barriers to reducing their energy bills.

In this context, energy upgrades for renters, public and community housing residents and households on low incomes are a vital way of addressing community need.

Under the package, rebates will be available for 250,000 low-income households to replace inefficient heaters with 4-star reverse cycle air conditioners (RCAC).

This will save money while also providing more homes with cooling options. Renew analysis finds that 4-star RCAC would save households 45 per cent on the costs of even efficient gas heating and 39 per cent on the costs of a basic 2-star RCAC system.

Up to 35,000 public and community housing homes will be eligible for energy retrofits that will reduce bills. These upgrades appear to be additional to existing renovations and the new homes built under the Big Housing Build package.

The government has committed to expanded minimum energy standards for renters, after previous regulations were delayed during the Coronavirus pandemic. The new commitment looks set to introduce efficiency standards for heating and hot water, as well as adding requirements for draught sealing and insulation.

Mandatory insulation in rental homes is a particularly significant step: while insulation requirements have been successful in New Zealand, no Australian state or territory has such a measure in place.

Further commitments include funding to support a transition to 7-star new home standards, increased solar rebates, hardship bill relief, and this week’s announcement of new Victorian Energy Upgrades targets to 2025.

A number of details will need to be addressed in implementing the package. Rebates to replace heaters will leave an expected upfront payment gap of $700 on average; further support or no-interest loans will be needed to address this gap, alongside protections for renters. Questions remain about what will be included in retrofits and whether public or community housing will be prioritised.

A key test will be the role of gas. Gas connections in new or upgraded homes would leave residents paying higher bills than in comparable all-electric homes. On top of the climate imperative to transition rapidly from gas to renewables, Victoria’s precarious gas supply means that reducing residential gas usage is an important part of ensuring energy security over the next decade. Alongside installing 4+ star RCAC systems, the government should rule out gas hot water systems in the upgrades and new gas connections to newly built social housing.

The programs come on the back of years of activism from renters, public housing residents, and climate groups. They also come following growing advocacy for a green pandemic recovery plan that can create jobs through programs that meet community need while driving down emissions.

Programs that address social and environmental need together are building new support and proving popular, here and overseas. A Green New Deal for housing has been promoted by Alexandria Ocasio-Cortez in the United States and by the Greens here in Victoria; Victorian Labor formally backed the principle in parliament shortly before the budget.

2021 will see the need for post-pandemic public investment that builds employment while taking action in the face of the climate crisis. Home energy upgrades deliver real benefits and can be rolled out now. State, territory and federal governments should prioritise them in the year to come.

Rob is Renew’s Sustainable Housing Advocate. He has worked on housing, homelessness and climate issues as a community organiser, caseworker and policy advisor.

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  1. Household energy upgrades have been on the rise for a decade now. There is an urgent need to encourage the business community for energy efficiency uptakes.