Mr. Jim Gannon:

I thank the Cathaoirleach. I will make a couple of key points from the earlier slides and I will then delve into it in a little more detail as we move along. On the first slide, the key point is that Irish homes are about 7% less energy efficient than the European average, but we are approximately 58% worse off in terms of CO2 against the European average. As we look towards 2030, in particular, and our targets become more focused on CO2, we must look to decarbonise as we increase energy efficiency. The type of heat we use - oil, gas, moving towards heat pumps and other types - decarbonised heat becomes considerably more important.

It is important to consider how big housing is in Ireland. The two key points are that a quarter of all energy used in Ireland is consumed in our homes. Some 60% of this is space heating. The issue of heat in the residential sector and how we heat in terms of carbon comes into very stark relief as to how we decarbonise Ireland.

I will make two key points as we consider where we have come from. I will make two key points here. More than 400,000 homes have been upgraded through Exchequer-funded SEAI grants over 15 years. That is 400,000 people who made a decision to do something with regard to energy efficiency in their homes. That sort of bite-size chunk makes a material difference as to how we design future programmes and the fact we can have confidence that there can be a high-volume uptake. The second point relates to new dwellings. New dwellings are 70% more efficient than those built in 2005. It is important to make the point on the baseline of where we were and where we are with building regulations.

On SEAI programmes, I will take a quick look at 2018. Our different programmes look at shallow, medium and deeper retrofit. While our deep retrofit programme looks at where our housing stock needs to be by 2050, we need to be realistic and say that we are not going to get every home in Ireland to move to that in a single step. We need to look at how we can finance and technically deliver a smaller step-wise transition towards that level. There are varying levels of activity within that. People tend to do a greater volume of shallower retrofits.

Importantly, we funded the upgrade of approximately 21,000 homes last year. Separately and distinct from that cohort, motivated by the obligated parties, under the Energy Efficiency Obligation Scheme, EEOS, programme that sits under the stewardship of the Department of Communications, Climate Action and Environment, an additional 20,000 homes went under some form of energy retrofit, admittedly at shallow level. That is approximately 40,000 people who made a decision to upgrade their homes. How does one motivate these people to make it deeper and help them finance that, because the technology is there?

It is very important to understand some of the technical challenges that are there and I will speak about the supply chain later on. It is also important to consider that the opportunity is there too. Approximately 300,000 homes are heat pump ready as to their fabric. They do not have to do a deeper retrofit of their windows, walls or attics. They are ready to go. How do we locate these? Comparing the building energy rating database specifically with where the small area economic data of the CSO tells us we have people who can and people who have more difficulty paying is a powerful resource for the policy decision-making process that will follow.

In regard to new buildings, the trends are quite important. In 2010, there were oil boilers in 30% of all new builds while in 2018, it was approximately 3%. This year it has moved down to less than 2%. A negligible number of oil boilers are being installed. What interests me is that over the pathway from 2010 until now, for the first period, gas displaced oil, but for the latter half heat pumps have been displacing oil, growing to a point where they represent almost 50% in the first few months of 2019 in terms of what is supplying heat to new builds. The trend is there. We are moving in the right direction. The issue is how we increase the volume and how we finance that.

On the retrofit targets and challenges, the BER database shows that 94% of buildings are at B3 or less. Under the 2018 revision of the Energy Performance of Buildings Directive, we need to publish a long-term renovation strategy to upgrade our building stock to nearly zero-energy building, NZEB, by 2050. This is another leap altogether. These are the larger numbers mentioned earlier on by other people.

What is key is that many of the technologies and practices are available but not at the volume and skill level in terms of competency and supply chain required. Separately, we need to look at trigger points for those individuals to make a decision to spend that money on their home. Is it at the purchase of a house? Is it at a change in lease of a house? Is it during a typical renovation where we get them to go further?

Is it at the point where people receive their retirement lump sum? Again, the demographics we are involved with indicate that this is a particular point where we can engage people in improving their home.

On finance, it is very important to recognise what has gone before. The SEAI has tested employee incentive programmes and low interest finance with credit unions over a number of years. We are working actively with the European Investment Bank, EIB, and SBCI here in Ireland to look at that low finance loan offering. Those are all very important. If one takes the par of the personal finance loans being offered in Europe and de-risks it by about 4%, one might get to 2%. However, if one takes par here for what personal loans are offered at, it is naturally higher. With respect to an absolute target of 2%, instead of saying that in Europe the finance for this has been de-risked by about 3% or 4%, thus making it more appetising to people, the starting bar in Ireland is higher. It is, therefore, the differential that can be brought down. By de-risking it and using the EIB, it may be possible to reduce it to 3% or 4% instead of the 2% available in Europe because we are starting from a different baseline.

Similarly, we will see more of the pay-as-you-save approach as the obligated parties become more interested. The final piece is the sociological impact of deep retrofit. Our behavioural economics team is looking at the wider benefits and how people value them. For example, why do people do a cost-benefit analysis on insulating their attic but not on buying a Belfast sink or marble counter top?

On the building energy rating, a key point is that while more will be asked of the BER, it is a tool from which we can derive far greater value in terms of looking at people's homes and their value and advising them more explicitly on what they can do to their home and the payback. An extended and deepened advisory report will be produced with everyone's BER from the end of this year onwards.

A key gap is the supply chain. We have upgraded 400,000 homes at different levels of retrofit in the past ten to 15 years. We know where weaknesses in the supply chain are, including geographically. As a result, we work with the National Standards Authority of Ireland, NSAI, on developing specific national standards and also with the Wexford and Waterford Education and Training Board on developing that sort of supply chain. We agree with all stakeholders that there is a significant challenge in this regard, especially given the buoyant construction economy.

On SEAI priorities, in terms of alternative options for housing retrofit finance, we believe there is no single solution for all demographics. There may be a need for residual grants but that is not a preferred option because it becomes a structural market support and we do not want grants to become such a support. We need to look at low interest finance, tax rebates on the purchase of a home and the home renovation incentive, HRI, where a tax rebate is provided on renovation of a house.

In terms of a one-stop-shop for a homeowner journey, there are many different examples of how that has worked in different jurisdictions. We believe that for volume, aggregated demand and confidence, people need to be brought through that pipeline. It is important to offer that in the market. We caution that we need to try to remove, where possible, the adviser from procurement decisions that could influence their income. People must ensure they are getting truly objective advice in any such model so it cannot be sharpened, as it were.

Minimum performance regulation is essential. That is speaking to Teachta Ó Broin's point about considering phase-out dates. A method of dealing with that is to first consider the commercial sector where socially and politically one could become acclimatised to setting a performance target at change of lease. We would also need to provide some incentive or assistance to make that happen. We could then allow that to move to the residential sector, which is currently sensitive to that sort of market intervention.

Targeted communication involves finding the key decision point in a person's life or in the life of the building to provide him or her with the ability to do it, in other words, to finance it, and then the appetite to do it, which involves moving him or her to wanting to execute. I will finish on that point.