Retrofit Credits: it works!

This time last year we went to Housing22 with an idea for a new service that we believed could be a gamechanger for social housing’s journey towards decarbonisation. We had recently teamed up with Arctica Partners to bring forward the first carbon credit in the world for retrofitting housing. By the time we returned to our desks, we were convinced that the idea could become a welcome reality for our social housing colleagues. We just needed to make it happen.

Later in the Autumn, with pilot funding from the Energy Redress Scheme, we launched Retrofit Credits. Now, twelve months on, we can confidently say that Retrofit Credits works.

Twenty-two social housing organisations have benefitted from the first crediting cycle, ranging from a small housing co-operative in Bristol to a G15 housing association in London. We have a partnership of housing associations in Hertfordshire, a rural based association in Yorkshire and three local authorities. The diversity in our pilot has enabled us to test the approach with different providers.

The credits originated through the pilot will generate about £100,000 in revenue this year. Over the next twenty years, we forecast that the credits generated through the pilot will raise over £7 million that can be reinvested back into retrofit works.

Developing, testing and demonstrating the veracity of the Retrofit Credits methodology to originate the carbon credits has been one part of the pilot. The verification stage of the carbon crediting process – which included site visits to the homes of some of the participating organisations – has now been completed, with independent auditors signing off the approach with confidence that emission reductions are being achieved.

The successful completion of this verification audit means that we can now issue the first credits at Verra Registry. Ultimately this verification audit assures participants that our service is achieving high standards of integrity and transparency and that the resulting credits are of the highest quality.

This successful audit demonstrates not only that our concept for creating domestic voluntary carbon credits works, but also allows us to confidently begin scaling the project to support the sector with the size of the challenge in the retrofit space.

This, though, was just one part of the pilot. The other part was to identify buyers of the credits who met the conditions of the ethical framework that participating social landlords developed with us during the pilot.

And it’s great news. We have sold all the credits generated through the pilot, with The Economist Group, Berkeley Group, Unity Trust Bank and Ibstock securing significant tranches. A range of other organisations also wanted to show their support for the service by purchasing smaller numbers, including Igloo, Hunters, and Kinovo.

But this is only the beginning.

We are working with over 100 housing providers and local authorities to help them finance their retrofit ambitions. We already have over 100,000 homes enrolled in the service from providers across the UK.

Retrofit Credits are already being extended to the wider residential housing market. We are developing an approach to securitisation, that will enable the income generated from Retrofit Credits over future years to be available up front. And we are exploring how a place-based approach can work where local authorities and housing providers engage with local businesses to help offset carbon and deliver improvements in housing.

All of these developments are an opportunity for social housing organisations to turn their planned or even completed retrofit activities into income streams. We are running our next crediting cycle later this year and are inviting organisations to send us details of their retrofit works completed since January 2023.

My lasting impression from last year’s Housing conference was the excitement we all felt about the potential to make an impact for landlords and their residents by supporting the delivery or warm, comfortable and energy-efficient homes.

My hope is that this year, having proved it can work, we can get the whole sector engaged in the programme. It really is a no-brainer and has the potential to lever in even more resources for us to achieve net zero and deliver homes that we can be proud of.