Government is planning a new industry group to find ways to boost demand for the Green Deal

10th July, 2013

The government is to look at fresh ways to boost demand for the Green Deal, in what will be seen as a tacit admission that the flagship energy efficiency scheme is struggling. The move comes a week after the first official Green Deal figures showed just four Green Deal finance plans had been signed nearly five months after the scheme launched, and amidst a flurry of calls from industry for greater action.

In Greg Barker’s response to industry figures he said he was working with the Green Deal Oversight and Regulation Body (Green Deal ORB – http://gdorb.decc.gov.uk/) “to establish a new Green Deal Provider Forum”.  This forum will look at ways the government can better work with those in the industry to increase demand, remove barriers and ensure that all parties can work together to shape the future direction of policy. Barker said “We will be announcing more details on this new group and how it will engage with ministers in the coming weeks.”  He also said he had had “positive discussions with a senior industry figure who has offered to play a strategic role in leading the group”.

The response addresses issues raised in a letter from the UK Green Building Council (UKGBC), signed by a host of industry figures;
•    Paul King - Chief Executive, UK Green Building Council
•    James Cameron - Chairman, Climate Change Capital
•    Mark Clare - Group Chief Executive of Barratt Developments Plc
•    John Frankiewicz - CEO, Willmott Dixon Capital Works
•    Peter Hindle - General Delegate, UK, Ireland and South Africa, Saint Gobain
•    Ian Marchant - CEO, SSE Plc
•    Gene Murtagh - CEO, Kingspan Group Plc
•    John Sinfield - Chief Executive, Knauf Insulation
•    Russell Smith - Managing Director, Parity Projects & Acting Chairman of RetrofitWorks
•    Nigel Taylor - Chief Operating Officer, Services, Carillion Plc
•    Peter Walls - CEO, Gentoo

In that letter the industry leaders demanded “urgent action” to boost take-up of the Green Deal, including greater incentives for people to take-up the scheme as well as a cut in the interest rate offered on the Green Deal finance packages.  However, in his response, Barker ruled out the possibility of further incentives or a cut to Green Deal interest rates.  He said: “We are operating against a backdrop of budget cuts across government, hence further government subsidies to interest rates or otherwise are unlikely to be possible in the short-term. With the pressure to close the deficit, and a desire to reduce complexity, even revenue neutral mechanisms are difficult.  Overall, with the Green Deal, our aim is to establish a self-sustaining market mechanism – that will grow to meet demand without the need for the heavy subsidies that previous initiatives were based upon.”

Separately, Carillion chief executive Richard Howson has urged the government to “put more effort in” to the Green Deal after its “disappointing start”. The contractor signed its first customer to a Green Deal under its Birmingham Energy Savers contract last month, five months after the deal, worth up to £1.5bn, was launched.

Mr Howson said Carillion was “disappointed with the slow start” to the scheme and said the government should “broaden support through subsidies to incentivise the early adopters”. Carillion was this year appointed by the Association of Greater Manchester Authorities to its ’Get Me Toasty’ retrofit scheme, using funds from the Energy Company Obligation to provide energy-saving home improvements for those most in need. It is also one of three in the running for West Sussex County Council’s Green Deal programme, worth up to £750m.

Mr Howson said Carillion has invested “quite heavily” in the Green Deal and that “something has to be done in order to really kick-start the new sector”.  He added: “Awareness needs to be raised more centrally by government, who can’t just rely on providers.”  He also insisted that the government “has to put more effort in” to the programme. Mr Howson’s call for action came the same day the UK Green Building Council issued a report stating that two million retrofits could be delivered annually if three incentives were adopted.

The UK Green Building Council’s report said the moves would add hundreds of millions of pounds could be added to the UK economy, alongside millions of additional retrofits. These incentives were variable stamp duty, variable council tax and an energy efficiency feed-in tariff, according to a task group comprising representatives from companies including Carillion, Keepmoat, Saint-Gobain, Sweett, Willmott Dixon and WSP.

A variable stamp duty scheme, with buyers receiving discounts for high-performing properties, was estimated to be able to deliver up to 270,000 extra retrofits each year, along with up to £807m in GDP. Making council tax rates variable according to energy efficiency, meanwhile, was found to have the potential to create demand for up to 1.5m extra retrofits annually, alongside carbon savings of up to 2.2m tonnes of CO2 and creating £4.4bn in GDP. Additionally, an energy efficiency feed-in tariff could create demand for 169,000 retrofits each year and boost the economy by £506m annually, the report found. All the proposals were estimated to have minimal costs for government.

retrofit_incentives

The report – Retrofit Incentives: Boosting the take-up of energy efficiency measures in domestic properties – follows the publication of last month’s statistics which revealed early take-up of the coalition’s flagship energy efficiency policy the Green Deal has been much lower than anticipated – with just four customers signing Green Deals.

UK-GBC chief executive Paul King said: “This sends a powerful message to government that there are viable policy options available to boost demand for the Green Deal and help tackle the UK’s energy efficiency crisis.  The research shows not only the impact additional incentives would have on carbon savings, but how they could breathe new life into the construction sector and boost economic growth. There are some tough political choices to be made, not least in using the tax regime to nudge householders into action, but the opportunities are so great that this is a nettle that needs to be grasped.”

Sweett Group associate director of sustainability Phil Birch said: “The results indicate that well-designed incentives could effectively stimulate extensive retrofit take-up without creating unreasonable complexity or cost for government.  Further work would be needed to translate these proposals into policy, however this analysis provides a robust and encouraging starting point.” 

For further details regarding the proposals of the task group visit; http://www.ukgbc.org/resources/publication/uk-gbc-task-group-report-retrofit-incentives

Many of the challenges relating to the Green Deal uptake will also be covered in a range of Retrofit Roadshows taking place in the last quarter of 2013.  These events will address national issues and regional economic opportunities – www.retrofit-roadshow.co.uk 

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