To reach the net-zero goals set by governments across the UK, we urgently need to make progress on reducing carbon emissions from our housing. We know that the best way to do this is to change how we heat our homes, but take-up of green upgrades such as heat pumps, solar panels and insulation is low. For many homeowners, affordability is a barrier. To explore some possible solutions to the financing challenges, we worked with the Development Bank of Wales to gain a better understanding of the kinds of financial support needed to help encourage and support people to make green home improvements.

In partnership with the Development Bank of Wales, we conducted a randomised control trial involving 8,000 homeowners across the UK. Our main findings are below.

• 55% of people would make green home upgrades in the next three years if they had some financial support.
  
• Most people (72%-85%) think the government should offer ‘green finance’.
  
• Key features of a successful product would include a low interest rate, flexible repayment terms and a complementary support package.
  
• Providing support such as a home assessment, advice on which measures to choose and how to find competent tradespeople is equally, if not more, important than the details of a finance product itself.
  
• Over 50% of respondents would choose a financial incentive incorporating a low-interest loan and cashback. This could lead to CO2 savings of 1,429kg annually per home.

• A government-backed finance service, paired with good support, has the potential to succeed twice. Firstly by directly financing upgrades, but secondly by creating the right environment for homeowners to borrow with confidence from other lenders.
  
• We would like to see the UK government reenter this space, taking a more considered approach, rooted in behavioural testing.
  
• Finance for heat pumps should be a priority as this achieves the greatest decarbonisation impact.