BEIS confirms Green Deal replacement abandoned as industry welcomes private sector lead

The Department of Business, Energy and Industrial Strategy (BEIS) has confirmed that it has scrapped plans for a new energy efficiency scheme to replace the Green Deal.

The government will now instead rely on the performance of the private sector and its one remaining home energy efficiency scheme, the Energy Company Obligation (ECO), to meet the Conservative Party’s manifesto pledge of improving one million homes by 2020.

It was announced two weeks ago that the Green Deal Finance Company (GDFC) had been acquired by City investors, who took over the scheme’s existing loan book while preparing to offer new loans to homeowners.

Commenting on the sale, energy and industry minister Jesse Norman said: “…the government has committed to improving the insulation of more than one million homes over this Parliament. This deal will help us to reach that goal.”

When asked if the government had now abandoned new policy in favour of using the achievements of the newly privatised GDFC to prop up the government’s manifesto pledge, a spokesperson said: “I don’t have anything additional to challenge that.”

This brings an end to the government’s attempts to resurrect what had been its flagship energy efficiency policy, which was closed in July 2015 by then energy secretary Amber Rudd after failing to build any momentum.

Rudd had promised a new replacement scheme would be unveiled in early 2016 before Lord Bourne, then serving as parliamentary under-secretary, said on 19 January 2016 that a “set of principles” for new legislation would be published by the end of 2016.

The government will instead now use only the ECO, or Help to Heat, scheme to promote energy efficiency. The cost of this scheme, which requires energy companies to install measures, is met by increased consumer bills, with the government now failing to make any direct expenditure on domestic energy efficiency.

Despite this retraction of support for the sector, industry has been broadly supportive of the privatisation of the Green Deal, not least due to the repeated failures of government to build take-up of energy efficiency measures.

Joanne Wade, director of the Association for the Conservation of Energy (ACE), said: “The energy efficiency supply industry is excited about the potential for working with this new finance provision organisation.

"Industry recognises and is entirely comfortable with the need for the private sector to play a bigger role in delivering energy efficiency.”

However, there remains considerable concern that even a private sector led initiative could face failure without government backing, particularly in ensuring homeowners are aware of the benefits of energy efficiency.

Wade continued: “The issue is that no matter what the private sector does, we will not get the levels of refurbishment needed to meet government climate and social targets without a government policy framework that supports it.

“If there is not consumer demand for energy efficiency, we won't deliver.”

Neil Marshall, chief executive of the National Insulation Association, added: “I think government could and should provide some facilitation of the market. They could help by undertaking some promotion of energy efficiency through a public information [drive] and high level assurance; they could put in place some targeted regulations [to] supplement the regulation for the private rented sector with consequential improvements; then you've got some targeted incentives for things they could do that wouldn't cost them any money on stamp duty and council tax.”

“Without that whole suite of policy that says the government is serious about this, it's not going to happen. That's my concern,” Wade concluded.

The government has yet to provide any clarification of any support it could provide to the new iteration of the Green Deal, instead focusing on the new ECO scheme, the details of which were published yesterday (30 January).

However, the new owners of the GDFC have stated their intention to make the scheme a success by “improving awareness by investing in better marketing and educating of consumers” but it remains unclear if the government will support this strategy.