Green Deal: Deal of the day or deal of the decade?
Posted by Adam Hewson on 24 January 2013 at 9:06 am
For those of you who are reasonably well read on all things energy efficiency and renewables, you could be forgiven for being confused about the success of the Green Deal. A simple search will give a plethora of articles, forum comments and blogs about the subject but my guess is that 80-90% would suggest that the Green Deal is not working, it's failing, it’s a disaster, the world is coming to end … and it's coming quicker!
But beware what you read online (the irony of how you are reading this view is not lost on me!). Might I suggest a couple of important considerations: firstly, the Green Deal has not been launched yet. Determining failure before launch is perhaps a particularly British trait, but the official launch date is Monday 28 January 2013. Secondly, prevailing opinion seems to be that unless a Government initiative is instantly available to every UK citizen, it has failed. But to launch a new scheme, particularly one that challenges people’s behaviour and asks them to borrow more money so soon after the biggest borrowing crisis since the Great Depression, would suggest a careful, phased or gentle roll-out might be more appropriate than a big bang.
And this is THE thing. The Green Deal is, at its heart, a lending scheme that facilitates the borrowing of money at no real or effective cost for the purposes of energy efficiency improvements. Wrapped around it are strong customer protections over advice and assessments, installations, product warranties and selling. But at its heart it is really all about borrowing money. For the scheme to work its needs people to “want” to borrow money, and it needs organisations to “want” to lend money.
In the current environment, neither of these should be assumed to be easy. People are cautious of taking on more liabilities; poor economic times do this to you. But banks are even more reluctant to lend money; they got into an awful lot of trouble doing this too freely and now are paying the price.
So is this likely to change? Of course it is. We are all the product of history, and history shows we like to improve our lives and are increasingly more comfortable borrowing money to do so. We have done so in the past and will do so in the future. And banks need to lend money to make money; they are commercial enterprises after all.
But will this happen on the 29 January 2013? I think not.
So in answer to the question, is this the Deal of the Day? No it is not. But is it Deal of the Decade? I think it really is. When Green Deal has some time underneath it, when we have stopped calling it the Green Deal because green has become mainstream, and when we have all found the cost of energy so extraordinarily expensive, I think we will look back and say “of course I borrowed some money to improve my house, why would I use my own cash?”!Photo Credit: lumaxart via Compfight cc
About the author: Adam Hewson is director of ReEnergise Ltd
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