Comment

Domestic energy efficiency. What has that got to do with me?

Failure of the Green Deal highlights the disconnect between consumers and energy policy, says Antony Oliver

Antony Oliver, Infrastructure Intelligence editor

There was much scratching of heads when the Coalition launched its flagship Green Deal finance scheme eighteen months ago. Nice idea but could this scheme really deliver? The answer we now know is a resounding no.

Its intensions were laudable. A plan to reduce energy bills, cut carbon emissions and boost energy security by providing householders with loans to invest in energy efficiency measures that are repaid by money saved from reduced bills?

"Forget complex financing schemes. If boosting energy efficiency is the goal a simple, rapid, low cost grant-based scheme to incentivise and excite homeowners toward improving building efficiency would surely be a better way to focus government policy and spend public money."

Post-recession austerity meant pressure on family finances was starting to bite. Legally binding targets on carbon emissions meant action could wait no longer. The moment had surely come for government to lead. 

Yet head-scratching was certainly the order of the day once the Green Deal hit the streets and real people living in the real world attempted to negotiate the scheme and all its complexities, hurdles and contradictions.

I’ll try to summarise: 

Alongside Green Deal sits the Energy Company Obligation (ECO) comprising the Carbon Emissions Reduction Obligation, the Carbon Saving Community Obligation and the Home Heating Cost Reduction Obligation, each designed to ensure that energy companies do their bit to reduce energy wasted by their customers.

The idea was that energy firms invested in expensive solutions such as cavity wall insulation while householders use the Green Deal financing scheme to tackle the cheaper loft insulation and draft exclusion solutions which could be paid for through by energy savings.

Unfortunately public pushback over escalation in energy bills – in part due to the cost of these ECO measures – prompted government to scale back on the ECO targets and so the obligation and likely cost imposed on energy suppliers. 

And as a result the ECO, originally designed to tackle the solutions that were too expensive to be paid for by household savings, will now focus on installing the lower cost energy saving solutions. Precisely the kind of investment that the Green Deal was supposed to help home-owners pay for.

"In essence Green Deal is about boosting energy efficiency and reducing demand. So we must focus on that."

So if there was ever an incentive to: take out an expensive loan; which by being attached to your property might make it harder to sell; in order to pay for measures that save you money; which you will never see, it has certainly been reduced.

It will, therefore, be no surprise to read the damning conclusion by MPs on the Energy and Climate Change Committee who described the scheme in its watching brief report this week as a “disappointing failure”. Rather than empowering behaviour change the Green Deal simply caused “frustration and confusion for both consumers and businesses in the supply chain”, they said.

No surprise because it was very clear, very quickly that this was a scheme designed without reference to the real world. A scheme which, on paper ticked the ministerial boxes, but in reality simply didn’t meet the needs of the people that mattered – the consumers and the suppliers.

As a government-backed scheme it was poorly communicated, poorly executed and probably actually did more to discouraged the uptake of energy efficient products by the householder it was intended to inspire.

The critical need to reduce our energy consumptions and carbon emissions means that we really must do better than this. And that starts with being clear about what we are trying to achieve. 

In essence Green Deal is about boosting energy efficiency and reducing demand. So we must focus on that.

The UK housing stock is old and energy inefficient and while the ECO measures have prompted a start to improve this situation we need simplicity. 

Forget complex financing schemes. If boosting energy efficiency is the goal, a simple, rapid, low cost grant-based scheme to incentivise and excite homeowners toward improving building efficiency would surely be a better way to focus government policy and spend public money. 

Antony Oliver is the editor of Infrastructure Intelligence

If you would like to contact Antony Oliver about this, or any other story, please email antony.oliver@infrastructure-intelligence.com.