UK-GBC: ‘Under delivering’ Green Deal makes energy efficiency a national infrastructure priority

The UK Green Building Council (UK-GBC) is calling for energy efficiency to be placed top of Britain’s infrastructure policy.

The move comes one year after the government launched its flagship energy policy the Green Deal  a policy billed as “the biggest home improvement programme since the Second World War”.

UK-GBC claims that the scheme has failed to live up the rhetoric delivered by the Department of Energy and Climate Change, with only 458 Green Deal plans ‘live’ by December 2013. In addition, the government pushed through cuts to its sister scheme the Energy Company Obligation (ECO) as part of its review of ‘green levies’.

The result has been a massive decline in energy efficiency measures installed across the UK. Paul King, chief executive of the UK-GBC, explained why energy efficiency is so important.

“Improving the energy efficiency of our cold and draughty homes is the only way to permanently cut households’ spiralling energy bills and will be a major driver of economic growth. Government must make energy efficiency a top national infrastructure priority, as important as decisions on HS2 or aviation expansion," he said.

“While the Green Deal is the cornerstone of the UK’s retrofit policy, it has so far massively under delivered. Government has to step in to create incentives that encourage homes into taking action and be prepared to prioritise capital spending on energy efficiency. Underwriting the Green Deal – as Government has done with Help to Buy  would provide a huge shot in the arm for the retrofit industry.”

UK-GBC recommends making Green Deal finance more attractive in order to significantly boost uptake of the scheme. In a report published today titled, Green Deal Finance: Examining the Green Deal interest rate as a barrier to take-up, the UK-GBC states that, although not the overriding issue that deters consumers from signing up to the scheme, lower interest rates than the current 8-10% could boost take-up.   

In addition, the report recommends a relaxing of the ‘Golden Rule’ which would allow households to choose to repay loans faster, reducing the overall amount repaid. The paper also believes that opening up alternative sources for finance could help further stimulate the energy efficiency market under the Green Deal scheme. For example, social investors or comunity funding could help offer finance at lower interest rates using EIS tax relief. This could reduce their cost of capital to 4-5%.  

Christoph Harwood, partner at Marksman Consulting who chaired the Task Group, concluded: “The report finds that while current interest rates are not the biggest barrier to take up of Green Deal finance, lower rates would make the scheme much more attractive to consumers.

“However, given the Green Deal requirements, this cannot be achieved through a standard market solution and so financial intervention at either a local or national level would be required to deliver a lower interest rate at the large scale required.”