The Green Deal - a very complex response to a complex problem

27/Aug/2013
Guest Blogger

It is easy to criticize the Green Deal, and many people have done, but it is a very complex response to a complex problem - how to make the UK's housing stock more energy efficient.  It is inevitably a camel - that is to say a horse designed by a committee.  

We need to use this first phase of implementation, and let's face it we are only in month 8, to measure results, learn and improve the system.  It is now generally agreed that the most cost effective way of addressing the pressing issues energy issues of high costs, energy security and emissions, is by improving energy efficiency and this is undoubtedly happening at an increased rate due to high energy prices.  

Even this week we had statistics that showed average household energy use has gone down by 25%, most of this is probably due to economizing - switching things off more often or turning thermostats down - but some is due to previous energy efficiency programmes such as CERT and CESP (now replaced by ECO). Our challenge is how to improve the rate of improvement of energy efficiency beyond its "natural" rate and the Green Deal is a serious attempt to do this in the residential sector, possibly the hardest sector to address.  To improve the rate of energy efficiency improvements we need to build demand for greater efficiency, build supply of efficiency goods and services and build the flow of finance into energy efficiency investment.  The Green Deal attempts to do all three.  

The problems include; we don't know how to build demand for efficiency - despite high prices people don't wake up and say I want to buy an energy efficiency retrofit for my house (or building).  Behavioral economics, changing local social norms and identifying the factors that really push people to make such a major decision is critical factors on the demand side.  On the supply side we need to improve the accuracy of energy modelling -the approach taken by Green Deal just isn't good enough.  Other countries have similar problems - in California research shows that a frighteningly high proportion of energy surveys get the savings wrong by 50% - a major error especially if you are investing yours or someone else's money.  

Accessing the right kind of finance is critical - the Green Deal's 6.9% interest rate is too high for home-owners with good credit ratings.  Those with cash in the bank may use that rather than borrow.  

We need to use the public money put into Green Deal into better research on all three aspects, demand, supply and finance - rather than on marketing campaigns that are doomed to only push a few people into action.  We need to learn how to create market pull.  Of course the number of people having Green Deal assessments is much higher than the 132 signed up for implementation - we also need to see how many of the others have taken action on their own without further involvement from the Green Deal. Then we will get a better idea of what is working and what is not.

This guest blog was written by Dr Steven Fawkes, www.onlyelevenpercent.com.

Comments

 

It is certainly a complicated issue, many are looking at improving energy efficiency because of rising energy costs, ironically some of which are a result of the ECO levy.
Many are indeed looking to fund the improvements without Green Deal and Green Deal is not yet functional as a scheme and after almost a year of delivering Zero there needs to be some level of honesty from DECC as to why this is.
We then need to encourage installer engagement as it is sole traders and micro-businesses that have the greatest potential to promote Green Deal but unless we can convince them of the merits of the scheme they will, as recent figures confirm, take a step back and wait to see what happens, unfortunately that will be the demise of Green Deal.
Green Deal got off to a bad start, played into the hands of the critics and given DECC’s track record including the PV debacle is set to fail without a significant charm offensive to re-engage installers who were at the outset quite positive about the scheme

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