The Green Deal is a provision contained in the Energy bill that is hoped will cause a revolution in the energy efficiency of British properties. The Government is establishing a framework to enable private firms to offer consumers energy efficiency improvements to their homes, community spaces and businesses at no upfront cost, and recoup payments through a charge in instalments on the energy bill. This means consumers can see the Green Deal charge alongside the reductions in energy use which generate savings on their bill. This bill also states that if an individual moves out and ceases to be the bill-payer at that property, the financial obligation doesn’t move with them but moves to the next bill payer: the charge is only paid whilst the benefits are enjoyed.
There will also be a Green Deal provider who will offer a Green Deal plan to customers, which enables them to finance work recommended by an accredited adviser and undertaken by an accredited installer. These functions might be done in-house by the provider, or shared amongst other organisations, but the customer’s contractual relationship is with provider.
There are a number of important consumer protections which will be embedded into the Green Deal, which include the following prerequisites for all Green Deal plans:
1. The expected financial savings must be equal to or greater than the costs attached to the energy bill, known as “the golden rule” of the Green Deal.
2. The measures must be approved and the claimed bill savings must be those accredited through this process.
3. The measures installed must have been recommended for that property by an accredited, objective adviser who has carried out an assessment.
4. The measures must be installed by an accredited installer.
5. For householders, the Green Deal provider must give appropriate advice within the terms of the Consumer Credit Act and take account of the individual circumstances of the applicant.
6. The Green Deal provider must have consent from the relevant parties, including the express consent of the current energy bill-payer.
7. The presence of a Green Deal must be properly disclosed to subsequent billpayers (e.g. new owners or tenants) alongside energy performance information.
8. Energy suppliers must collect the Green Deal charge and pass it on within the existing regulatory safeguards for collecting energy bill payments – including protections for vulnerable consumers.
To qualify for the Green Deal, expected savings in typical properties consuming a normal amount of energy must be equal or greater than the cost of measure. However, actual cash savings cannot be guaranteed by government since no-one except individuals and businesses themselves can control how much energy they actually consume in their own property. Whilst the consumer has ultimate responsibility for reducing consumption after the Green Deal measures have been installed and energy advice will be given to users on how to change behaviour to maximise the benefits of better insulated, less wasteful properties.
Lower income and vulnerable households may not save money through energy efficiency because many do not have the heating turned on long enough to heat their homes sufficiently, so increased efficiency may mean they will enjoy warmer homes rather than cash savings. Likewise, homes which can only be made energy efficient through major measures which are currently more expensive will need additional support to bring down costs enough to meet the golden rule.
Alongside the Green Deal, the Government is planning to replace the existing energy company obligations. The new Energy Company Obligation (ECO) will focus energy companies on improving the ability of the vulnerable and those on lower incomes to heat their homes affordably, and on improving solid wall properties, which have not benefitted much from previous schemes.
The Green Deal will be designed to be available to businesses as well as households enabling smaller businesses to access funding for energy efficiency improvements, and larger businesses to meet their obligations under existing schemes at lower cost, such as Climate Change Agreements or the Carbon Reduction Commitment Energy Efficiency Scheme. The complexity of energy use in the business sector means that there will be a number of differences in the Green Deal for this sector, though the key principles set out here will apply to both businesses and households.
The Green Deal will enable many households and businesses to improve the energy efficiency of their properties without consuming so much money. At national level, the UK needs to become more energy efficient to reduce its greenhouse gas emissions which risk dangerous climate change.
Reducing demand for energy through eliminating waste cost effectively is one of the best ways to reduce emissions. Three quarters of the energy we use in our homes is for heating our rooms and water, most of which comes from gas-fired boilers. Together this accounts for 13% of the UK’s CO2 emissions while our workplaces are responsible for 20%. To help meet the carbon budgets we need to cut emissions in our homes and communities by 29% and by 13% in our workplaces by 2022 (on 2008 levels). To do this we need to make our homes, communities and workplaces more energy efficient and heat and power them from low carbon sources. Support through the Green Deal for implementing energy efficiency measures will play a key role here.
The Green Deal will deliver energy saving packages to millions of homes and businesses across the country. Consequently the scheme provides opportunities for skilled and unskilled labour; from assessment to installation, manufacturing to supply, over the length and breadth of Britain, for many years to come. By ensuring a high uptake of energy efficiency measures in households and business, the national demand for imported gas could be reduced considerably. With more than a third of our gas currently imported and UK gas production on a downward trend, the net result could be a saving on imports at a national level.