It aims to transform the energy efficiency of 14m draughty homes, cutting carbon and bills. But the cold wind of doubt remains strong
As the evenings grow cooler, what better time to launch the biggest transformation of the nation’s draughty housing stock ever attempted? The government’s “green deal”, which begins on Monday, aims to plug the gaps in 14m of Britain’s leaky homes, making them cosier, cheaper to heat and producing less climate-heating carbon emissions. Yet severe doubts are swirling around the programme like a bitter winter wind, some even whipped up by the government’s own analyses.
If the immediate prospects look bleak, Ed Davey, the secretary of state for energy and climate change, sees better weather ahead: “It will be a gradual roll out because it is a new market: we should be looking ahead two, three, four, five years.” Perhaps ministers’ desire to focus on the future is why the green deal launch is set to be quieter than mouse buried under three feet of insulation.
It does not lack for ambition being, not just new, but entirely uncharted territory. “It’s an experiment that has never been tested before,” said Oxford University’s Jan Rosenow. “It may work, but there is a high chance it will not.”
The current subsidies and legal obligations on energy companies to help people insulate their homes are being bulldozed away and a new approach, built on private-sector loans, is being developed on its foundations. The benefit of this is that it paves a way to accessing the many billions of pounds that will be needed to fund the country’s great green transformation. The risk is, that if these private deals are not attractive enough to persuade millions of people to open their doors and lofts to the builders, the grand plan will crumble to rubble.
The winds of doubt have not had to search hard for gaps in the green deal to whistle through. The government’s own impact assessment – even after revision – shows that loft and cavity insulations are set to plummet by 83% and 67% respectively after the green deal starts.
Andrew Warren, director of the Association for the Conservation of Energy, explains: “We are moving from a period where people were offered basic insulation at zero cost into a brave new world where you pay the full amount and a full interest rate on top.”
This predicted collapse in the cheapest and most effective energy efficiency measures means that the carbon emissions savings from newly-insulated homes are also set to plunge by 75%, according to Rosenow. His new study, with colleague Nick Eyre, lists another serious concern: “The current proposals indicate that fewer resources will be directed to address fuel poverty than under existing policies, making eliminating fuel poverty even less plausible.” Add to these the umpteen technical problems arising from setting up a new, national personal finance scheme and accrediting a whole new industry of supplier and installers and the uncertainty reaches gale force.
Yet ministers are not running for the storm shelters yet. They argue radical action was needed in order to deliver more expensive efficiency measures, such as solid-wall insulation, and argue that loft and cavity wall insulation now save money so quickly for homeowners that no subsidy should be needed.
So which way is the wind blowing for the green deal? Much will depend on the shelter afforded by government giveaways aimed at pulling in early adopters. This will involve £200m of cashback and ministers believe they can deliver council tax rebates too. Without good incentives, Rosenow said the take up will not be anywhere near the government’s hopes and he doubts those revealed so far are enough to rescue the policy.
Warren acknowledges that the government’s own data predict a “dire flop”, but is more optimistic. If the right incentives are in place, it is a completely different picture, he said.
“In the long run the green deal is a model which really should work, though what does concern me is the transition,” Warren said. “Ministers right across the government think this is a major policy and say they will make it work, and we’ve never had that before for energy efficiency.”
But David Kennedy, chief executive of the government’s official advisors, the Committee on climate change, has warned: “We think there is a significant risk in leaving it to the market, as that has never worked anywhere in the world and is unlikely to happen in the UK.”
The green deal matters. If successful, it could deal with the severe and pressing problem of soaring energy bills and fuel poverty, while making a huge contribution to the UK’s efforts to avert dangerous climate change. But will it work? The answer, for now, is blowing in the wind.
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