The long-awaited Green Deal consultation

25 November 2011

Green Deal Consultation: UK Green Building Council’s, Policy and Campaigns Consultant, Richard Griffiths analyses what’s in the long-awaited paper...

The long-awaited Green Deal consultation was finally released on Wednesday, with organisations across the building industry keen to find out whether the proposals would live up to the DECC hype that has surrounded the development of the scheme so far. Much has been promised, with Chris Huhne and his ministerial colleagues repeatedly telling us all that the Green Deal would deliver "the biggest home refurbishment programme since WWII". And we all hope they are right. Done well, the Green Deal could be a true game-changer, helping us to refurbish millions of homes across our ageing housing stock - reducing emissions and fuel poverty, boosting the UK's energy security, and generating thousands of valuable green jobs.

So what does the consultation tell us? In actual fact, at least for those that have been relatively close to the policy development, there is not a great deal of new material to work with. Details of financial incentives to encourage take-up of the scheme are sketchy - while Danny Alexander announced £200m of new cash funding from the Treasury the day after the release of the consultation document, how this incentive will be delivered is yet to be announced. It could be fantastic - let's wait and see. The only clear statement on fiscal incentives in the consultation document itself is that Green Deal Providers will be able to offer up to £150 (or 5%) "cashback" to consumers, which will they will finance through adding it to the final Green Deal bill. It seems unlikely that many consumers will be drawn to the scheme with an incentive they effectively pay themselves, so much will depend on the alternatives the Government puts forward. Even the best designed scheme is good for little unless it is attractive to consumers, and without the probability of a sizeable market, the private sector will be reluctant to invest in making it happen.

The consultation has also now set out Government's aspirations for the Energy Company Obligation (ECO). A figure of £1.3 billion has been proposed for the ECO pot, with three quarters due to be dedicated to subsidising measures in "hard to treat homes" and the other quarter going to tackle fuel poverty through an "affordable warmth" target. This balance is likely to be quite controversial with fuel poverty campaigners, but wherever you sit in that argument, a key concern still remains that the proposals may not allow for a smooth transition from CERT and CESP - which could potentially be highly damaging for the UK's insulation industry. ECO is, though, going to play a huge role in helping to make the Green Deal market, and proposals such as the ECO "brokerage" (to give non-energy company Providers access to the funds, and drive competition in the market) must be welcomed.

Beneath these headlines here is plenty of detail in there for us to all chew on over the coming eight weeks, with 238 pages of consultation document and a whole raft of other documents to wade through. Perhaps the key thing now we all have in front of us is to examine whether the component parts of the proposals add up to a whole that creates a smooth and compelling customer journey that will be attractive to consumers, and a commercial proposition that is attractive enough to investors. If the answer to either of these questions is "no", we had all better hope that DECC is viewing this consultation as a genuine chance to gather and respond to the industry's ideas and concerns. Beyond the detail of the consultation, a wider question is on the table - is there enough confidence in the Government's long-term commitment to the scheme? The rapid and sudden changes to the Feed-in-Tariffs has left many uncertain of whether environmental schemes are really in the Government's DNA.

For all of those with a stake in the scheme, the next few weeks will be busy as we get further into the detail of the consultation and what it will mean for us all in practice. The fact remains that across the industry we all have a huge stake in making it a success, and DECC should be grateful at least that they have so much support for their ambitions, even if some doubts remain on the finer details.

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