Energy efficiency has been the poor relation of British energy policy, according to Greg Barker, minister for climate change in the coalition government. Speaking in the debate on energy efficiency on 30 June, he outlined how he plans to raise its status. He will:

1.    Introduce the green deal, which is: “even more ambitious than Mrs Thatcher’s sale of council houses in the 1980s. Whereas that transformed the lives of about 2 million families, the green deal has the potential to touch more than 14 million homes around the country.”

2.    Extend and refocus CERT, the obligation on the big six energy companies to make British houses more energy efficient. The focus seems to be on insulation, insulation, insulation. He said “The new target on lagging lofts alone will be the equivalent to covering Wembley football pitch more than 35,000 times. I will insist that more than two thirds of this new carbon target must be delivered through approved, professionally installed loft, cavity wall and solid wall insulation.”

3.    Ban the distribution of lightbulbs to meet CERT obligations.

4.    Ensure that people in fuel poverty must account for 40% of CERT spending, and within that group, Barker will create a super-priority group of pensioners, people with children and the disabled who will account for at least 15% of the new programme.

The Green Deal has been much trailed, and Barker used the debate to give more detail about how it will work. He said: “The Green Deal will, we believe, unlock billions in new private capital to support energy efficiency, but that will not work effectively without the engagement and support of local communities. Local communities have a key role in driving this ambitious change.”

1.    Up to £6,500 per property will be available for energy efficiency measures.

2.    It will be paid back through savings in the energy bill over 25 years.

3.    If the occupant moves away, the cost will transfer to the energy bill of the next occupant.

4.    If the occupant changes energy company, the cost will transfer to the new energy company.

5.    It is not a “loan, a mortgage or a charge”, but “a form of bond with a 25-year life”.

6.    Microgeneration will not be included in the green deal: “the green deal financing we have been discussing and the £6,500 are for energy-efficiency measures”.

7.    It will apply to businesses too, especially small and medium-sized enterprises.

The form it will take seems to be still a work in progress, with DECC talking to energy companies, senior bankers, active participants in the capital markets, retailers such as M&S and B&Q, local government and installers. Barker said: “Some companies will choose to take the charge on to their balance sheets, but others will choose to participate in partnership with a financing company. I think there will be a real appetite among UK institutions—this is the game-changing element—to purchase what will in effect be a form of bond with a 25-year life. I think they will be securitised together and parcelled up, and will then make attractive investments for UK pension funds, which currently suffer from a relatively limited choice of secure, long-term investments from which to fund their annuities.”

You can download the whole debate as a pdf (see page 16 onwards). This is what we think about the green deal proposals.

Photo by Kevin Dooley

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