The Green Deal

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The Green Deal was launched by DECC on 1 October 2012 to permit loans for energy saving measures for UK properties. The loans are repaid through energy bills and transfer with the property rather than those who took out the loan, this means new tenants or owners become liable for a debt they did not enter into, a novel concept in English law[1]. The loans became available on 28th January 2013. Though assessments could be conducted before that date only five have had been nationwide by that point[2]. The scheme requires an assessment of £150 or more to determine what if any work can be done. The cost of this has been suggested to deter many people[3]. The Government believes Green Deal loans will be repaid at a rate no more than 6.92%, This is significantly higher than average household loans. On a loan of £5,000, the overall rate that is repayable is just under 8% over 10 years, or 7.7% over 25 years[4]. Further to these charges there will be an initial set up charge followed by a £20 annual fee, failure to repay a Green Deal will lead to disconnection of gas and electricity supplies. Recent surveys have found little awareness among the general public for the Green Deal[5]

How it works

The registers of Green Deal Installers, Green Deal Advisors and Green Deal Providers became active at the launch. Property Assessments can now be undertaken by Green Deal Advisory Services and Installations under the Energy Company Obligation can now take place. Following this, the first Green Deal Plans will be available from 28 January 2013. [6] Although the Department for Energy and Climate Change (DECC) has stated that the first Green Deal plans will not be confirmed until January 2013,[7] Green Deal Assessments performed by Green Deal Advisors took place from 1 October 2012. DECC proposes tying low interest loans of estimated 7%, issued by Green Deal Providers for energy efficiency improvements to the energy bills of the properties the upgrades are performed on.[8] These debts would then be passed onto new occupiers when they take over the payment of the bills. However, recent reports show a high number of UK energy customers are in considerable debt.[9]

A Green Deal Advisor will perform an inspection of the property to provide a report on advised energy improvement measures. The funding for these measures is then issued by the Green Deal Provider and a Green Deal Installer will then install the measures. It is hoped the Green Deal will lead to the renovation of the UK's housing stock with an estimated 14 million homes seeing energy efficiency improvements ranging from; double glazing, cavity wall and loft insulation through to gas and oil boilers, and renewable technologies such as solar PV, solar thermal and heat pumps.[10]

The Green Deal was included in the Energy Act 2011 and came into force on 1 October 2012. DECC announced a list of pioneer Green Deal providers in April 2012. Twenty two providers, including three of the biggest six energy companies and B&Q, (the only high street name) have signed a declaration stating they intend to become Green Deal Providers, once DECC had appointed the Green Deal Oversight Body. Other expected providers such as Tesco, Marks and Spencer and the other three major energy companies were missing from the list.[11] Fears of low take up of the Green Deal has led Government to budget £200 million to encourage early uptake.[11] The policy caused a rift in the Coalition Government in April 2012. Senior Conservative ministers, including Eric Pickles ( Communities and Local Government Secretary), called for the scheme to be scrapped as it could cost the so called "squeezed" middle, thousands of pounds.[12][13] The Green Deal will rely on the Consumer Credit Act to provide safeguards for those taking out green deal loans.

The Green Deal oversight body has been confirmed as Gemserv, who also maintain the Microgeneration Certification Scheme(MCS). On 8 August 2012, the Green Deal Oversight Body website went live, with a register of approved Green Deal Certification Bodies, Green Deal Providers, and Green Deal Installers and Advisors. This has proved controversial as Gemserv has been criticised in its delivery of the MCS scheme [14] and it is also owned by the big 6 energy companies and has faced allegations of bias particularly against small businesses[15].

Following the Renewable Heat Incentive announcement and three consultations which were published by DECC in September 2012, it is proposed that the RHI will be linked to the Green Deal if a property does not meet the minimum energy efficiency requirements to have a renewable heat technology installed ie. a property could then look to use the Green Deal to achieve this standard.

Improvements covered

Heating, ventilation and air conditioning

  • Condensing boilers
  • Heating controls
  • Under-floor heating
  • Heat recovery systems
  • Mechanical ventilation (non-dom)
  • Flue gas recovery devices
  • Ground and air source heat pumps

Building fabric

  • Cavity wall insulation
  • Loft insulation
  • Flat roof insulation
  • Internal wall insulation
  • External wall insulation
  • Draught proofing
  • Floor insulation
  • Heating system insulation (cylinder, pipes)

Lighting

  • Lighting fittings
  • Lighting controls

Water Heating

  • Innovative hot water systems
  • Water efficient taps and showers

Fenestration

  • Energy Efficient Glazing and Doors

A further 15 Green Deal measures [16] have been confirmed and include;

  • Chillers
  • Duct Insulation
  • HVAC Controls
  • Hot Water Controls
  • Hot Water Showers
  • Hot Water systems
  • Hot Water taps
  • Pipework Insulation
  • Roof lights, lamps and luminaires
  • Radiant heating
  • Sealing improvements
  • Solar blinds, shutters and shading devices
  • Transpired solar collectors
  • Variable speed drives for fans and pumps
  • Water Source Heat Pumps

Criticism

The Green Deal has been criticised by a broad range of groups such as Consumer Focus, Friends of the Earth and the Smith School of Enterprise.[17] These criticisms have ranged from a fear that it will increase fuel poverty to concerns over the viability of the bundled loans as securities following the similar financial products that were created from US housing which led to the 2008 financial crisis. The building industry has raised concern about the lack of stimulus to drive demand for the uptake of the Green Deal.[18] Other worries include its limited projected coverage to consumer protection, its treatment of non-domestic buildings and lack of competition among suppliers.[19] Government has confirmed the Green Deal for business has been put on hold for the foreseeable future.[20]

There has also been doubts cast over whether the central tenet of the scheme - a so-called "Golden Rule" whereby the cost of repayments never outweighs the savings on the bill - will actually be successfully implemented.[21] There is also criticism that it will only benefit the middle class and not be of any help to those most in need and the working class.[22][23] The policy has also been criticised by senior Conservative MPs, when it was revealed that for any work on a property to get planning permission it would also be forced to take on a Green Deal. This has been dubbed a 'conservatory tax' by the media.[12][13]

While The Green Deal is primarily concerned with buildings' energy efficiency, it is often associated with reducing carbon emissions, and mitigating climate change. However, the effects of Jevons Paradox, and cash savings being spent on other products and services with associated carbon footprint, means that The Green Deal may not reduce carbon emissions, unless there is a corresponding supply-side constraint, keeping coal, oil and gas underground.

The choice of Gemserv as the certification body has also provoked criticism as it is owned by the 6 largest energy companies in the UK and so will act as a barrier to small businesses being certified and thus benefiting from the green deal. This would undermine DECC objective of promoting green growth with the scheme.

Energy Company Obligation

The Department of Energy and Climate Change (DECC) wants energy companies to make improvements to some homes at no upfront cost to the consumer. So the Energy Company Obligation (ECO) is aimed at helping those in disadvantaged and hard-to-treat homes. ECO will be funded by the big energy suppliers and they look to implement measures worth around £1.3 billion every year. This cost will be passed onto all consumers through their energy bills. Where the cost of the work outweighs the savings, or people need that financial help, energy suppliers may be able to top-up that loan. The ECO takes over from existing obligations which are due to end in December 2012. The Carbon Emissions Reduction Target (CERT) is a requirement for domestic energy suppliers with a customer base larger than 250,000 to reduce the carbon emissions made by householders. Also the Community Energy Saving Programme (CESP) targets the 4,500 eligible households in the UK with occupants living on low incomes. These were also funded by energy suppliers. The two measures will now be incorporated and will address energy efficiency in the domestic sector.

There are four main energy efficient measures which the ECO will look to implement, but not all households will be eligible.

• Those measures include cavity wall insulation, external or internal solid wall insulation, loft insulation and heating improvements.

• People on certain low income benefits may qualify for all four in they live in a private property.

• Those on low income and living in social housing in a rural community and people living in a low income community may qualify for all three, apart from heating improvements.

• People living in older properties may benefit from cavity wall, external or internal solid wall insulation.

In April a pilot scheme was tested by a partnership consisting of the Centre for Sustainable Energy, Scottish and Southern Energy, and Sedgemoor, Taunton Deane and West Somerset local authorities. The “Somerset West Hard to Treat” pilot scheme was so successful it led to the creation of a much larger programme aimed at better understanding of the Green Deal and ECO[citation needed]. In a speech about the ECO programme Deputy Prime Minister Nick Clegg said: “It is shameful that the UK still has so many families unable to heat their homes.” The government has now passed a legal obligation onto the energy companies to meet the full costs of implementing the ECO[citation needed]. DECC has stated that the emergence of a competitive Green Deal Provider market is likely to lead to cost efficiencies, lowering the cost of delivering ECO.

See also

References

  1. ^ http://www.mortgagefinancegazette.com/legal/the-green-deal/
  2. ^ http://www.bbc.co.uk/news/uk-21226042
  3. ^ http://www.guardian.co.uk/environment/2013/jan/06/green-deal-upfront-fees-upgrading
  4. ^ http://www.bbc.co.uk/news/uk-21226042
  5. ^ http://www.guardian.co.uk/environment/2013/jan/23/not-heard-green-deal-poll
  6. ^ "DECC commits to Autumn launch of Green Deal". Greendealcertified.com. Retrieved 9 September 2012.
  7. ^ "Green Deal Set for Low Key Start". Endsreport.com. Retrieved 9 September 2012.
  8. ^ "BBC News - UK government's Green Deal to cut fuel bills". BBC.co.uk. 23 November 2011. Retrieved 12 February 2012.
  9. ^ Radnedge, Aidan. "British families owe nearly £500m to energy suppliers after price hike". Metro.co.uk. Retrieved 5 September 2012.
  10. ^ "The Green Deal?". Greendeal.co.uk. Retrieved 15 May 2012.
  11. ^ a b Cuff, Madeleine (4 April 2012). "M&S and Tesco missing from list of first green deal providers". The Guardian. London.
  12. ^ a b Carrington, Damian (16 April 2012). "Green deal plot reveals new levels of idiocy from Tory climate sceptics". The Guardian. London.
  13. ^ a b Hennessy, Patrick (14 April 2012). "Top Tories try to torpedo Green Deal". The Daily Telegraph. London.
  14. ^ http://www.clickgreen.org.uk/news/national-news/123807-gemserv-storm-grows-as-it-sits-on-millions-of-green-energy-cash.html
  15. ^ http://www.clickgreen.org.uk/news/national-news/123806-%5Cindependent%5C-green-deal-regulator-is-owned-by-the-big-6-energy-firms.html
  16. ^ "DECC gives clarification on Green Deal". Retrieved 1 July 2012.
  17. ^ Juliette Jowit (24 November 2010). "Green Deal is not a good deal for all homeowners | Juliette Jowit | Environment | guardian.co.uk". London: Guardian. Retrieved 12 February 2012.
  18. ^ "Greg Barker clashes with building industry over coalition's Green Deal plans - 01 Mar 2011 - News from". BusinessGreen. 1 March 2011. Retrieved 12 February 2012.
  19. ^ "Green Deal proposals for home upgrades still lack credibility". Endsreport.com. Retrieved 9 September 2012.
  20. ^ "Green Deal delayed for Commercial Buildings". Endsreport.com. Retrieved 9 September 2012.
  21. ^ "Industry warns of rocky road to Green Deal success - 20 Oct 2011 - News from". BusinessGreen. 20 October 2011. Retrieved 12 February 2012.
  22. ^ Monbiot, George (13 January 2012). "The green deal is a useless, middle-class subsidy | George Monbiot | Environment | guardian.co.uk". London: Guardian. Retrieved 3 March 2012.
  23. ^ "Green Deal Stops Short of Bill Guarantee". Endsreport.com. Retrieved 9 September 2012.

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External links

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