Every government comes in with good intentions on energy saving, and leaves having made only a marginal impact on UK energy demand. This government has ambitions to change that with the Green Deal.
The Green Deal certainly has great potential. But as governments in other countries have learnt, removing the upfront cost of insulation and other energy efficiency measures doesn’t mean that people will install them.
One American study of over 150 energy efficiency loan schemes in the US found that most of the programs reached less than 0.1 per cent of their potential customers in 2007. Not quite game-changing.
Neither carrot nor stick
The problem is that a loan for energy efficiency is neither a carrot nor a stick for householders. It only removes a financial barrier. To get widespread take-up of the Green Deal beyond a small engaged minority, government knows that it needs to design a scheme that works well, but also put measures in place to drive demand for it using “triggers and nudges” as Chris Huhne says.
There are many possibilities for driving demand, including stamp duty rebates, regulating private landlords or linking the Green Deal to the roll-out out of smart energy meters. As our recent report Bringing it home argues; the government also needs to give clear signals that every household should consider taking up energy efficiency measures, that these investments have lasting value and that their actions are adding up to something bigger.
Designing for success
To get these kind of measures introduced will require greater political support across government than DECC has been able to harness so far. Whilst a stamp duty rebate was mooted in March, it was nowhere to be seen when George Osborne stood at the dispatch box to announce the budget.
A strong Energy Bill, with a clearly stated ambition for how the Green Deal will help to meet targets set by the Climate Change Act, would help give strength to the arguments across government for these kinds of supporting measures.
Making clear the amount of carbon savings to be delivered by the Green Deal would also make obvious any shortfall, and would quantify the carbon savings that other policies, such as the new Energy Company Obligation, will have to deliver.
Only with this kind of ambition in the Energy Bill will government break the historic trend of energy demand and set us on a path to successfully meeting our carbon budgets.