Wednesday, March 02, 2011

DECC minister Barker attacked over retrofit financing

DECC Minister Greg Barker came under attack yesterday for the confusion at the heart of Government attempts to improve energy efficiency in the domestic sector. He was being quizzed at the Ecobuild exhibition in the ExCel Centre, London.

The method of financing the Green Deal programme to retrofit the country's 28 million homes is still unclear and there are reports that potential backers are unsure about jumping on board.

In this context Kevin McCloud, presenter of TV's Grand Designs, and Robert Peto, president of the Royal Institution of Chartered Surveyors, suggested that another way to stimulate interest would be to reduce VAT on energy efficient products for refurbishment.

“The government should be focused on VAT if they want to engage with the public," said Mr Peto. "The knock-on effect of increasing work in the building industry would be £2.50 into the economy for every £1 spent on retrofit but all the conversations I have had with ministers are them saying we can't afford it.”

UKGBC chief executive Paul King said that the Energy Bill should be used to force people in the owner-occupier sector to retrofit.

Barker rejected both approaches, saying that the financial deficit couldn't support a VAT cut and that home owners would be "pissed off" if they were forced to improve their properties to a certain standard before they could be sold.

Peto therefore accused the government of an absence of long-term thinking when it came to green building policy, echoing the CBI, which warned recently that the scheme risked becoming a "lame duck" unless the Coalition improved the incentives.

The Green Deal is to be bolstered by two others policies in the Energy Bill. The first will compel landlords to use the Green Deal to improve their domestic and commercial properties.

Secondly, an Energy Company Obligation (ECO), to replace the current Carbon Emissions Reduction Target (CERT) from 2013-20, will compel gas and electricity suppliers to deliver set levels of CO2 savings and home energy efficiency improvements through grants to fuel poor households funded, like Feed-in-Tariffs, by a levy on all customers' bills.

Richard Baines, environmental consultant for the Black Country Housing Association, questioned Greg Barker over how much of the £1.3 billion which Baines expects to be raised from ECO (the Government hasn't admitted a figure yet) will be in addition to or included in the money accessible under the Green Deal.

Barker said that DECC was still working this out, but tentatively mentioned that it was at least above the 20% mark.

Baines, speaking at a later seminar on retrofitting for energy efficiency, expressed further concern that there won't be sufficient finance available for 'The Great British Refurb'.

He said that the social housing sector and local authorities were in a double bind. "They fear that if they accept Green Deal cash, they will not be able to access other sources of funding under state aid rules. Secondly, as the value of their properties is already used as guarantees for other loans, they cannot raise further cash for these improvements themselves."

He continued, "The Green Deal, worth perhaps £6,000, will take care of the 'low hanging fruit' - efficient boilers, cavity wall and loft insulation. The ECO scheme should be used to tackle those jobs with a longer payback that won't result in the quick returns on investment expected under the Green Deal, such as external wall insulation, airtightness and window or door replacement.

"However, I have calculated that to raise homes to the necessary 80% CO2-saving standard, which may be £20,000-£50,000 per home, using a cut of everyone's energy bills, the bills would have to rise by over 40%. Clearly this wouldn't be popular!"

The Government still envisages a wide range of companies and public bodies being involved in the Green Deal & DIY chains such as B&Q, retailers like Marks & Spencer, gas and electricity suppliers, banks, local councils, housing associations and builders, plumbers and gas installers.

DECC's own impact assessment forecasts that up to six million home packages could be installed by 2020 at a cost of £21bn. Benefits are put at £33bn from energy savings, reduced CO2 emissions, improved air quality and more comfort inside homes. The accumulated CO2 savings for 2013-20 are put at 5.9 million tonnes.

European action for energy efficiency

Meanwhile, at the European level yesterday, EU diplomats said that 20 states have so far submitted their energy efficiency National Reform Programmes ahead of an April deadline.

The chair of the European Parliament's Environment Committee also told the EU executive that the Committee will fight to make enforceable the 20% energy-efficiency improvement target by 2020. This is the only one of the EU's three 2020 targets that is not currently compulsory, and the only one not on track to be met. Instead, savings of just 9-11% are forecast based on the current levels. Even with the submitted national plans this rises only to 14% savings.

A published draft of the Commission's Energy Efficiency Action Plan says that for the next two years, the Commission will only monitor the implementation of voluntary national efficiency targets.

"If, nevertheless, the 2013 review shows that the overall EU target is unlikely to be achieved," the document states, "then as a second stage the Commission will consider whether to propose legally binding national targets".

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