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You are here : Home > Comment > Green Deal needs to overcome barriers
Date today:   21 May, 2013 12:03:40 PM
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Green Deal needs to overcome barriers
By Paul King | 06 Dec, 2010
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The Energy and Green Economy Bill, which includes the Green Deal, should get its first reading in Parliament this week and is a once-in-a-generation chance to reduce emissions, says Paul King.

 The Green Deal is the most radical attempt yet to get to grips with the nation’s inefficient and leaky existing building stock. In the housing sector in particular, the upfront cost of getting refurbishment work done has always been the biggest barrier – and that is set to be overcome.

This is a once-in-a-generation chance to reduce carbon emissions, improve the fabric of our homes and workplaces and create potentially hundreds of thousands of new jobs in the green sector. But to meet these goals we need to see low interest rates on Green Deal finance and strong incentives for take up – for both homeowners and businesses.

There are three things to look out for:
  • What interest rates will be charged?
Interest rates will have an impact on likely take-up by householders. But also, interest rates affect the list of technologies that can be included within a Green Deal package. With higher interest rates, it is much harder to achieve the energy reductions needed. Government should consider using the Green Investment Bank to raise low-cost capital from institutional investors to disburse to the market, meaning that in turn the interest rates could be kept low for Green Deal customers.
  • What sort of take up is expected?
How many homes will be refurbished each year? Government has suggested 14 million by 2020, but to what level? Without clear targets, the construction sector cannot invest in the necessary skills and capacity to deliver the scheme. Also, how is that expected take up going to be driven?  How will householders be incentivised to undertake low carbon refurbishment? Government has said that private rented sector landlords will have to upgrade their property over time, which is a very welcome step forward. However, similar drivers are needed in the owner-occupied stock. This could include stamp duty based on energy efficiency and the introduction of minimum energy efficiency standards at the point of sale.
  • Is this also going to encourage businesses to reduce their carbon emissions?
The Green Deal could also apply to non-residential buildings, but won’t be enough on its own. We need to introduce minimum standards of energy performance, based on a roll out of robust Display Energy Certificates (showing actual energy use in an A-G rating). If a property doesn’t meet the standard, it must be refurbished before being sold or rented. This would send the clearest possible signal to building owners and investors as to what was expected by when and would lead to planned investment in the stock in order for it not to become, effectively, obsolete.

Paul King is chief executive of UK-GBC.


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