UKERC highlights alarming omissions and inconsistencies in Green Deal consultation

The UK Energy Research Centre (UKERC) has today issued its response to the Department of Energy and Climate Change’s consultation on the Green Deal, highlighting key omissions and inconsistencies in the document.

The government’s Green Deal aims to reduce carbon emissions cost effectively by revolutionising the energy efficiency of British properties, but has been criticised by the Committee on Climate Change as being unlikely to deliver this objective. The government’s own impact assessment has also confirmed that the rate of energy efficiency improvement will be less than 25 per cent than is currently being achieved – in other words the proposed policy change will reduce policy effectiveness, not improve it.

The UKERC response, compiled by Dr. Nick Eyre (University of Oxford), Jan Rosenow (University of Oxford), Joanne Wade (independent researcher) and Dr. Charlie Wilson (University of East Anglia), welcomes the proposal within the Green Deal to stimulate the use of solid wall insulation, and praises the detailed consultation on some of the proposals. But it raises serious concerns that the rationale for some decisions has not been sufficiently well covered, and that key issues – such as how to prevent the “Big 6” energy companies from dominating the market, or overcome the barriers preventing local authorities from engaging in local partnerships – have not been addressed.

UKERC would welcome greater clarification as to how the Green Deal will fit with, and complement other reforms and initiatives being proposed, such as the Renewable Heat Incentive, and Feed-in Tariffs. Plans to end all subsidies under the Carbon Saving obligation of the Energy Company Obligation for demand side measures other than solid wall insulation, for example, are anomalous in the context of the planned Electricity Market Reform to introduce subsidies for all low carbon electricity supply technologies, and will create a market distortion between supply and demand.

The team calls for more to be done to use the existing evidence base in designing the Green Deal proposals. There is only limited use of analysis of how both the Carbon Emissions Reduction Target (CERT) or Community Energy Saving Programme (CESP) have worked, and almost no reference to the experience of other countries, which is surprising given that a number of European countries have developed successful policy approaches using CERT and its predecessors as evidence. The consultation document also fails to make any significant reference to the Pay As You Save (PAYS) pilots, or to publish their full results, despite these having been set up specifically to test some of the Green Deal mechanisms.

The proposals would also benefit from a more in-depth examination of alternative forms of Green Deal funding, such as the Green Investment Bank, or the potential to raise conventional housing finance through mortgage companies (especially given the influence the Government now has in the sector through its ownership of major institutions) or through the energy structure infrastructure.

The UKERC team is supportive of the proposal to use accredited assessors for grading the energy efficiency of buildings, but reminds the Government that its own research has shown that consumers would prefer this service to be independent, and free. A service that is subsidised, and delivered by an independent body or bodies rather than the “Big 6” energy companies, would increase consumer trust and respond better to consumer need.

The authors also call for the relaxation of the so-called “Golden Rule”, the principle which limits the amount of Green Deal finance that a provider can attach to the energy meter to the estimated energy bill savings that are likely to result from the installation. The Golden Rule, they argue, has on balance more risks than benefits, risks inflating consumer perceptions, and should be relaxed into a general guideline, with clear arrangements for top-up finance.

Dr. Nick Eyre commented: “We support the underlying idea behind the Green Deal – it’s a good idea to bring new sources of finance into low energy refurbishment of buildings and pay for the costs from reduced energy bills. But the detail of the proposals is very worrying – it will reduce rates of insulation and have a detrimental impact on the ability of the UK to meet its carbon targets. Subsidising energy supply, but not energy efficiency improvement makes no sense.”