Is the Green Deal getting greener?
The Energy Bill has had its second reading in the Commons this week, in a debate that was characterised by an amazing degree of cross-party consensus. Whilst most MPs were arguing over how to make the Bill stronger in one way or another, there was not a single dissenting voice disputing the need for energy efficiency. This is the beauty of energy saving, it is a win-win situation for all involved.
But most positive about the debate was the glimmer of hope that the Green Deal was about to start getting a bit greener. Right now I’d put it in the pale celadon category, which for those of you not expert in colour variations is the pale tint of green seen in spring; ie promising shoots, but a long way to go.
First was the announcement that the threshold on loans was rising from £6,500 to £10,000. This gives an opportunity for measures other than insulation to be included in the Green Deal. But for a household to be eligible for a measure it still has to abide by the golden rule, so the savings made on the bill will have to be able to cover the cost of the monthly payments for the retrofit (including a market rate of interest). So measures such as double glazed windows and boilers won’t be available for every house.
It’s good news that these more popular and visible measures will be eligible under the scheme – visibility especially will be very important for showing people that others are having retrofits; that they are normal and popular. But there needs to be a clear hierarchy of measures that ensures the most effective energy saving actions (such as insulation) are taken first- this will probably all be decided through secondary legislation.
Ambition, landlords and the not-so-golden rule
But we still have a beef with the golden rule itself, which limits the depth a retrofit can go to. It is likely to encourage easy measures such as cavity wall insulation, with householders then under the impression that they’ve ‘greened’ their homes, when in fact retrofitting the house properly will require further action down the line. People need to be able to go further than the golden rule allows if they wish to, with extra financing to make this possible.
Second was the announcement that private landlords will not be able to rent out homes below an E rating from 2018. Whilst most were pushing for a 2016 cut-off date, the principle of the battle has been won. The question now is how these regulations will be enforced.
Third tentative bit of good news was the announcement that there will be some kind of “ambition clause” in the Bill. This has been the main push of the demandabetterbill campaign which we are part of. We want government to commit to deliver policies that cut carbon by at least 42% (by 2020) and eliminate fuel poverty (by 2016). What has been offered – an aim to improve the efficiency of the residential sector by 2020 in line with the carbon budgets, with yearly reports to parliament on the contribution of the Green Deal and the new Energy Company Obligation (ECO) to these targets – doesn’t go far enough, as it doesn’t place what the Green Deal will achieve on energy efficiency within a broader strategy to ensure our carbon budgets are met. But it is at least the beginnings of an understanding that this is necessary.
So, promising beginnings, but there are some key areas still to be addressed- and most importantly, as we’ve discussed in a previous blog, is how demand for the Green Deal will be driven. Unless the government can find a way to make the Green Deal so compelling for households that they ignore the associated hassle of upgrading their properties, the Green Deal is unlikely to be the game-changer DECC wants it to be. So, what incentives will be offered to householders taking it up? Will the interest rates on loans be attractive?
Then there are numerous other uncertainties such as how ECO will work with the Green Deal. Will it be capped by the Treasury’s cap on levies being raised from consumer’s bills? And what will the detail of it look like? And what role will local authorities have in the roll out of the scheme? I could go on…
So, lots still to be decided and improved. I hope we’ll see some of these questions answered and the Bill becoming a brighter shade of vermillion as it goes through committee stage.