There has been a lot of confusion around the Green Deal and what it means for consumers, businesses and the energy industry. The main reason people are confused about the Green Deal is that the details have not been clarified yet. But what we do know is that it is now law and it will be in place before the end of the year.
So why the mystery?
Confusingly, the Department for Communities and Local Government recently proposed a change to building regulations, separate from the Green Deal. Nicknamed the "conservatory tax" by the press, the change would mean that, when households undertook something like a substantial extension, increasing the building's energy footprint, they would need to redress the balance by investing in energy efficient improvements. This negatively impacted the Green Deal, as the two measures became confused.
The premise behind the Green Deal is that it allows people to have energy saving work done at no up-front cost, with the cost recouped via their energy bills. In fact, the golden rule of the Green Deal means that the expected financial savings from any efficiency measures implemented must be equal to or greater than the costs of implementing these measures. In other words, the Green Deal won't increase your bill. In the worst case scenario, your bill will stay the same. But the aim of the Green Deal is to reduce energy bills for homeowners, along with energy consumption. Improvements such as loft insulation, for example, typically pay for themselves in as little as two years.
The mountain to climb...
To put it simply, to meet the UK's carbon reduction targets by 2050, we would need to improve one home every minute, equating to 26 million refurbished energy-efficient homes by 2050. The Green Deal is undoubtedly a step in the right direction and will help the Government to achieve these targets.
It includes some very good initiatives particularly around supporting small to medium sized businesses, and bringing nearly five million homes out of fuel poverty. Retro-fitting in particular, where energy efficiency technologies are installed in an existing building, plays an important part in the fight against fuel poverty.
A lack of understanding
There is still a widespread lack of understanding of how green technologies can help people improve their energy efficiency and reduce bills. For example, Rexel's recent energy efficiency survey found that over a quarter of Brits would be motivated to save energy if they had access to financial subsidies, yet 90% hadn't heard of schemes such as Carbon Trust Loans, which offer businesses an interest free loan of between £3,000 and £400,000 to reduce CO2 emissions through the introduction of clean technology. Similarly, measurable cost savings are what matters most to the British population, yet two thirds of those surveyed had not heard of or do not understand the roll-out of new smart meters, which will help consumers to understand their pattern of energy use and how changing these could reduce their bills. For the Green Deal to work, it's crucial that this "understanding gap" is addressed quickly!
To make this happen, the industry has a role to play to educate customers and the public about why the Green Deal is important and how it will benefit the whole country both in financial terms and the significant environmental benefits it brings. I am confident that, if the industry can really focus on education, and raise awareness of the energy and cost savings on offer, Green Deal deployments will rise significantly by the end of 2013.
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