Myths versus facts: the real deal on the Green Deal

  • 16 May 2012, 15:30
  • Ros Donald

It's probably fair to say most people's understanding of the UK government's flagship energy efficiency policy, the Green Deal, is hazy at best - with a fair few myths popping up in the press to confuse the sketchy picture the government's given of the plan so far.

But now, Building Magazine has revealed that the government is consulting with critics to see how the plan to help householders improve their homes' energy efficiency could be improved following concerns about how many people will actually sign up to the scheme, and whether it will help those who need it most.

While there appear to be some real concerns with the plans, other objections have obviously been invented in the pub and leaked to the papers. Here's our assessment of what are the 'probably not real' objections to the scheme, and the 'real deal' questions that remain.

It'll be compulsory.

A few weeks ago the Daily Mail reported the government was consulting on what it called a ' conservatory tax', under which anyone wishing to improve their home must first agree to pay for insulation.

In reality, it's already compulsory to install energy efficiency measures when you build a large structure like an extension which requires planning permission.

The plan the Mail reported on, which is still under consultation, suggests homeowners should be required to install "proportionate" efficiency measure - for which they could cut out upfront cost by borrowing under the Green Deal - of around 10 per cent of the cost of the original work.

Forecasts for voluntary Green Deal take-up don't look great.

As the scheme is voluntary, the government's key problem in introducing the Green Deal is how to get people to buy in.

Making it compulsory to fit insulation in certain instances - such as when people want to build conservatories that could increase their homes' carbon footprint -  would at least make sure there is some level of takeup.

Chair of the Energy and Climate Change Committee, MP Tim Yeo, said any compulsion for people to insulate their homes would reduce public enthusiasm for the scheme. But, if other commentators are right, the biggest challenge is going to be creating that enthusiasm in the first place.

"I'll have to pay £10,000 for new efficiency measures if I want to change my boiler."

On the back of the 'conservatory tax' news, columnist Christopher Booker claimed that consumers would be forced to pay up to £10,000 to install efficiency measures when doing other work on their home. It's not totally clear where this came from, but we think Booker mixed up a compulsory payment with the maximum amount you can borrow, which is 10k.

As the consulation paper suggests that homeowners should spend 10 per cent of the cost of improvements on energy efficiency measures, Booker's calculation means you'd have to be spending £100,000 on home improvement; less a conservatory and more a new extension for Kew Gardens.

The Green Deal might not do much for fuel poverty.

There's controversy over whether the scheme will help the fuel poor - a key target group. As the BBC's environment analyst, Roger Harrabin, notes, those who can't install efficiency measures without extra financial help will receive subsidised insulation under a scheme called ECO.

But the government has decided to prioritise funding more expensive solid wall insulation over cheaper loft or cavity wall insulation, because, it argues, most homes are already insulated under previous schemes.

Critics say this will mean the government spending much more on insulation than it needs to - with those who apply for solid wall insulation doing comparatively better off. According to Harrabin, they also disagree with the government's reasoning - pointing out that 40 per cent of the UK's homes currently don't have loft or cavity wall insulation.

The 'great green myth'

According to the Daily Mail's article Great green myth, or how an eco home can end up costing you thousands, those who sign up to the Green Deal could end up "thousands of pounds out of pocket".

Citing "studies", the Mail said that instead of saving households money on their energy bills, consumers could end up paying much more due to faults in calculations used to work out what each house needs to do to increase its efficiency, and how long these measures should take to pay for themselves.  

But as we noted at the time, the article created the gloomiest picture possible on pilot Green Deal schemes' returns by cherry-picking the worst numbers from the reports it quotes, and ignoring the fact that many of the pilot households deliberately chose more expensive insulation.

Green Deal calculations need improving

But even if the Mail has overblown it, there might be a real problem at the core of this issue. Researchers and businesses that have studied Green Deal pilots say the government may have to go back to the drawing board if it's going to achieve the so-called golden rule - where the energy you save offsets the money you've spent on efficiency measures.

 Results of pilots show the government needs to improve the calculation it uses to estimate homes' actual energy use and the amount they can expect to save when they install efficiency measures. There also has to be a better awareness of how people behave when they have efficiency measures installed, the researchers concluded.  

So in summary, although a lot of strange arguments have been flung around on this issue, there are convincing difficulties the government's going to have to sort out if it wants the Green Deal to be a good deal, rather than no deal at all.

The reason the Green Deal is a central part of the government's decarbonisation strategy is that buildings are responsible for more than 40 per cent of UK emissions. The plan is also supposed to be core to ensuring UK consumers' energy bills don't skyrocket as fossil fuel prices become more volatile - which they're projected to do.

There's a danger people won't sign up to the deal because they're afraid of the cost, of letting energy companies undertake major works on their house, or because they just don't know about it. We think that's the real debate that should be going on at the moment. So even though the 'conservatory tax' perhaps wasn't the best contribution to a fact-based energy debate, it's probably still good that the government is going to re-examine its policy plans to make sure they actually get houses insulated and save people money.

UPDATE 16/05/2012 4.53pm: We corrected the second paragraph to note that Building Magazine broke the story.

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