Feb. 12 (Bloomberg) -- The U.K., enduring its worst winter since 1991, is planning to save energy and cut residential greenhouse-gas emissions to almost zero through a “sustainable makeover” on each of the country’s 27 million households.

Utilities that operate in Britain such as Electricite de France SA and E.ON AG, other businesses and local government may fund installation of insulation and solar panels on U.K. homes, recovering the costs through utility bills, under proposals today from the Department of Energy and Climate Change. The plan has a three-month public comment period before a law will be drafted.

“We want to ensure that this great British ‘refurb’ is based on a plan which over time covers every area and every house in every area,” Energy and Climate Change Secretary Ed Miliband said today in a speech in London. “Families are losing up to 300 pounds ($428) a year from inadequate energy efficiency.”

The plan, described by Housing Minister Margaret Beckett as a “sustainable makeover for every home,” are intended to guide Britain to its national target of cutting carbon-dioxide emissions 80 percent from 1990 levels by 2050. Homes account for about 27 percent of the country’s output of global-warming gases.

The government aims to refurbish 7 million homes by 2020 and all U.K. households by 2030. About 61 million people live in the U.K.

Upgrading homes to make them more energy-efficient at a time when the U.K. has been hit by its worst winter storms in 18 years will require an annual expenditure of up to 6.5 billion pounds, according to the environmental group Greenpeace. Miliband twice declined to say how much it will cost to insulate every home.

‘Stick and Carrot’

Repayments for the insulation made through utility bills would be linked to the home rather than the person to encourage more people to take up the measures, which tend to generate savings over a longer period than the 7 to 8 years residents typically live in a home, Miliband said.

“This means that they make big energy bill savings and then part of that is offset -- and I emphasize part of it because they have lower bills overall -- by a repayment,” Miliband said.

Under a separate plan, suppliers will pay 350 million pounds to overhaul 90,000 homes in low-income areas and make them more energy-efficient, according to the department.

Today’s proposals will go through a public consultation period and after three months the government will use its findings to draft legislation, a process that could take a year, according to Marian Spain, director of strategy at the Energy Saving Trust.

“Heating has been the area that has been neglected,” Spain said in London. The government needs to use “a combination of stick and carrot -- requiring people to do some of this work but making it easier for them to do it.”

To contact the reporter on this story: Alex Morales in London at amorales2@bloomberg.net

Last Updated: February 12, 2009 12:07 EST