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The Green Deal is the government’s flagship programme to reduce climate change emissions from all of the UK’s housing stock by a minimum of 60% over the next few decades. Its Energy Bill is currently wending its way through parliament, and the Green Deal should be up and running by the end of 2012.
A huge ambition, and one made all the more challenging because the government framework aims to enable private firms to offer consumers energy-efficiency improvements to their homes and businesses at no upfront cost, and recoup payments through a charge in installments on the energy bill.
At the heart of the proposals is the Green Deal plan, a new financing mechanism, which allows consumers to pay back through their energy bills. So even if they are making payments for their Green Deal, they will see this alongside their energy bill payments – which should be lower than they were before. So they’ll feel better off both physically and financially.
More importantly, if the occupier moves out and ceases to be the bill payer at that property, the financial obligation doesn’t move with them, but stays with the next bill payer: the charge is only paid whilst the benefits are enjoyed. In this way, the Green Deal differs from existing lending – it is not a conventional loan since the bill-payer is not liable for the full capital cost of the measures, only the charges due whilst they are the bill-payer.
Real benefits
For this to work – and most importantly, for it to be attractive to consumers – the scheme must deliver real benefits. Occupants must feel warmer and more comfortable, and see lower bills. For this reason, the government is developing a set of important requirements, among which are:
- The expected financial savings must be equal to or greater than the cost of repayment attached to the energy bill, known as ‘the golden rule’ of the Green Deal.
- The claimed bill savings must be verified.
- The measures installed must have been recommended for that property by an accredited, objective adviser who has carried out an assessment.
- The measures must be installed by an accredited installer.
- The presence of a Green Deal must be properly disclosed to subsequent bill payers (e.g. new owners or tenants) alongside energy performance information.
Alongside the Green Deal, the government is planning to replace the existing energy company obligations with the new Energy Company Obligation (ECO), which will focus energy companies on improving the ability of the vulnerable and those on lower incomes to heat their homes affordably, and on improving solid wall properties, which have not benefited much from previous schemes.
Business deal
The Green Deal will also be made available to businesses as well as households – enabling smaller businesses to access funding for energy-efficiency improvements, and larger businesses to meet their obligations under existing schemes at lower cost, such as Climate Change Agreements or the Carbon Reduction Commitment Energy Efficiency Scheme. The complexity of energy use in the business sector means that there will be a number of differences in the Green Deal for this sector, though the key principles will apply to both.
All of these proposals require a massive amount of work to make a fundamentally simple idea – helping households and businesses save energy, money and the planet in one fell swoop – a workable reality.
Four Green Deal forums have been set up to bring together consumer groups, industry and other interested parties to advise on the formulation of detailed policies. The Existing Homes Alliance is involved in these forums, and will be working hard to ensure that policies are workable, effective and meaningful. Watch out for our commentary on the process over the next few months in subsequent issues of Greenbuild magazine.
Liz Reason is MD of Green Gauge Trust and member of the steering group of the Existing Homes Alliance.
The full version of this article appeared in the April/May 2011 issue of Greenbuild magazine. For a free subscription click here.
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