British Gas has today called for a greater investment in improving the energy efficiency of the existing housing stock, arguing that the current government focus on building "zero carbon" homes, while welcome, could undermine the UK's chances of hitting its target of reducing carbon emissions by 60 per cent by 2050.

The government has introduced new regulations demanding that all new homes be "zero carbon" by 2016, but according to its own projections less than a quarter of the housing stock in 2050 will have been built after 2007.

"While strict standards on new build are needed, most of the energy being consumed is in the ageing homes we live in today," observed Phil Bentley, managing director of British Gas. "It is making changes in these properties that will give us the biggest carbon emission reductions."

A British Gas spokesman said that currently £2 in every £5 spent on domestic energy bills in the UK is wasted, and despite the availability of grants and loans for those who invest in energy-saving measures, efficiency improvements are making slow progress.

To help tackle the problem, British Gas is to launch a new initiative designed to demonstrate the energy and cost savings that can be achieved through investments in energy-saving measures. Under the new Green Streets scheme, British Gas has selected eight streets in eight major cities and is to give each street a budget of £30,000 to invest in energy-saving kit ranging from insulation and energy-efficient light bulbs to solar panels and heat pumps. The homes that deliver the biggest cuts in carbon emissions will win £50,000 worth of energy-saving kit to invest in community projects.

A spokesman for British Gas said that the aim of the initiative was to assess how much energy and carbon can be saved with a relatively affordable investment of £3,000 per home.

He added that retrofitting energy-saving technologies to existing homes was likely to be particularly attractive to the growing numbers of people who work at home. "Average energy bills are £900 a year per household, while carbon emissions are around five and a half tonnes, but both those figures almost double for home workers," he said. "As such if you do work from home, investments in cutting energy use become even more attractive."

He also argued that businesses that allow home working needed to consider the impact of home workers when developing their climate change strategy. " Employers should look at every component of their carbon footprint, and where they have home workers they should be factored in."