What are the next steps to improve British Green Deal?

energy efficiency, electricity consumption, fuel poverty, United kingdom, green deal

The Green Deal is a UK government policy which was adopted in 2011 in compliance with the 2008 Climate Change Act and implemented in January 2013. The policy aims at enhancing the energy efficiency of the building stock and relies on an innovative third-party financing scheme. While according to the Department of Energy and Climate Change (DECC), 450,000 households have already been affected by the programme, Secretary of State for Energy and Climate Change Edward Davey has been working on ways of increasing energy performance for over 30 million Britons by 2030.

Certification, one stop shop and third-party financing

More than one year into implementation, the numerous energy renovation works that have been undertaken have involved a whole host of Green Deal certified professionals. A Green Deal assessment is the first step for consumers to enter into a Green Deal plan, and can only be carried out by an authorised Green Deal Assessor, i.e. an organization in charge of auditing the building in order to determine the works that need to be carried out. The next step is the installation of the Green Deal measures agreed, which are carried out by Green Deal installers certified by the United Kingdom Accreditation Service.

All those publicly certified professionals must comply with the Green Deal’s “golden rule”, i.e. that the charge attached to the bill should never exceed the expected energy savings. In order for new energy efficiency solutions to benefit as many applicants as possible, the Green Deal provider can seek third-party financing from institutions such as the Green Deal Finance Company (Goldman Sachs, HSBC…) or the Green Investment Bank.

Lower-income households and bill-payer principle:

The government has tried to improve the Green Deal’s effectiveness, especially for socially disadvantaged citizens. The Energy Company Obligation scheme (ECO) places legal obligations on the larger energy suppliers to deliver energy efficiency measures to lower-income households. Parallel to that, a hotline was set up to provide users with neutral advice on renovation works.

Besides, the Green Deal wants to convince professionals of its merits. To that end, it follows the “bill-payer” principle: the person responsible for paying the electricity bill –usually the tenant – is responsible for making repayments for the improvements. According to Nicolas Chung, investment project manager at CDC Climat, “this helps secure loan recovery and makes the situation easier in case of a change of landlord or tenant”.

How can the Green Deal be improved?

On the occasion of the Ecobuild 2014 conference which took place in March, Edward Davey announced that there would be a consultation on the future of the ECO measure, whose costs “falls upon consumers through their energy bills”. Many people do find the scheme to be too costly, which is why the number of beneficiaries as well as the environmental impact fall short of the desired goals (2,349 renovation works instead of the 10,000 that were expected by the end of 2013). However, according to Mr. Chung, the Green Deal is not a burden on public finances, as “the government provided [only] 20 million pounds in junior and contingent capital, which is a relatively small amount”.

This is why a July 2013 report by the UK Green Building Council (UK GBC) insisted that it was necessary to increase public subsidies in order to reach significant results. The report also recommended a number of practical solutions, such as a bonus and penalty system for first-time home-buyers as well as variable Council tax and rebates for energy-efficient homes. Moreover, in August 2014, UK GBC director John Alker pointed out that DECC figures showed that the number of households taking advantage of the Green Deal and the ECO in June was the lowest in over a year; he also called once again on the government to provide households with additional support, tax incentives and subsidies.

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