How to Boost the Green Deal

19th August, 2013

Additional incentives to encourage the take up of home energy efficiency could increase the number of annual retrofits by up to 1.5 million.

The report – Retrofit Incentives: Boosting the take-up of energy efficiency measures in domestic properties – finds that introducing incentives such as reduced Council Tax payments or Stamp Duty for more efficient properties has the potential to significantly increase demand for retrofit, create economic growth, as well as rapidly reduce emissions from buildings.

The report follows the publication of last month’s Government statistics which revealed early take-up of the Coalition’s flagship energy efficiency policy the Green Deal has been much lower than anticipated.

Paul King, Chief Executive of the UK Green Building Council, 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 for UK Plc are just so great, that this is a nettle which needs to be grasped.”

Key proposals
Variable Stamp Duty
•    A Variable Stamp Duty-based scheme would see house buyers receive a discount if a property is above a given energy efficiency standard, or pay a higher rate if its performance is poor.
•    This is a strong option for incentivising retrofit because it impacts at the point of sale – a time when the majority of home renovations take place – and in time could strengthen the link between energy efficiency and house prices.
•    Analysis suggests such a scheme could deliver between 135,000 and 270,000 additional retrofits per year, annual carbon savings of between 209,000 and 417,000 tCO? and contribute £404m-£807m to GDP a year (with a near zero annual direct cost to Government).
Variable Council Tax
•    Council Tax rates could be varied according to the energy efficiency of a property, with discounts for high performance properties and higher rates for those with poor energy efficiency ratings.
•    This has the potential to be a significant incentive for driving retrofit due to the broad impact of Council Tax and its unpopularity, although one major challenge would be the requirement for all homes to have a valid Energy Performance Certificate.
•    Analsysis suggests such a scheme could deliver between 518,000 and 1,481,000 additional retrofits per year, annual carbon savings of between 812,000 and 2,232,000 tCO2 and contribute £1.5bn-£4.4bn to GDP a year (with a near zero annual direct cost to Government)
Energy efficiency Feed-in-Tariff
•    Just as renewable energy Feed-in-Tariffs made regular payments to households for producing clean energy, an energy efficiency Feed-in-Tariff would reward households for installing measures which would reduce their energy demand.
•    Spreading payments over time would provide households with an on-going reminder of the benefits of energy efficiency, which could motivate them to install additional measures, but there are issues over how savings would be calculated and how much such a scheme would cost Government.
•    Analysis suggests such a scheme could deliver between 65,000 and 169,000 additional retrofits a year, annual carbon savings of between 97,000 and 254,000 tCO2 and contribute £193m-£506m to GDP a year (but with an estimated direct cost of £52m-£273m to Government).

Phil Birch, Associate Director of Sustainability at Sweett Group which carried out the economic analysis for the report, 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.”


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