I've been thinking about this for some time and I've finally come to a conclusion. There are no credible arguments against the early adoption of a decarbonisation target for the UK's power sector. None, not one, nada.
If the UK is serious about decarbonisation, green growth and compliance with the legally binding Climate Change Act, then there is no argument that can be constructed that makes the proposed decarbonisation target for 2030 a bad idea.
To reject the bipartisan amendment put forward by Tim Yeo and Barry Gardiner is to accept firstly that we are on the brink of an unprecedented era of cheap and stable gas supplies, and secondly that either a) a remarkable technological breakthrough that makes carbon capture and storage (CCS) technology affordable and effective is imminent, or b) manmade climate change is not happening.
The initial assumption that cheap and stable gas supplies are just around the corner flies in the face of pretty much all the available evidence. As Ofgem's Alistair Buchanan made plain today, the next five to eight years will be characterised by an increasing reliance on gas imports that are likely to prove costly as global demand for gas soars.
There is an argument, apparently swallowed whole by the chancellor, that by the early 2020s the US shale gas boom will be being repeated in Europe, China, Russia and Australia, giving us a near inexhaustible supply of relatively cost-effective gas. But even if you ignored the counter-arguments that challenge this prediction – concerns over the impact on water supplies, methane leaks and the emergence of even more cost-effective renewables could all undermine shale investments – you still have to assume either that climate change is not a serious issue, or that CCS will be widely available by the late 2020s to construct a credible argument against a decarbonisation target for 2030.
The climate sceptic argument is the preserve of cranks and amoral vested interests. The alternative faith in CCS represents a reckless gamble with the UK's future energy and climate security. Remember, you don't just have to assume CCS at scale on gas-fired power plants will prove technically effective by 2030, you also have to assume it will be cost effective – so affordable in fact that gas remains cheaper than alternative energy sources even when the installation of CCS technology is taken into account.
Of course, if effective CCS technologies do emerge over the next 17 years (and I sincerely hope they do) then energy companies will have no problem complying with the 2030 decarbonisation target. If the gas industry and the chancellor were really confident in this CCS silver bullet, and saw a significantly increased reliance on gas as compatible with the UK's carbon targets, they would simply accept the decarbonisation target, start building plenty of new gas-fired power plants and then fit CCS in 2030. The fact they won't concede to the introduction of such a target confirms they do not have real confidence in CCS technology and fear they would end up having to shut down working gas plants in 2030.
There are actually two slightly more sophisticated arguments against the adoption of a decarbonisation target.
The first, as put forward by Policy Exchange's Guy Newey, is that a separate decarbonisation target is unnecessary. We already have binding EU emission reduction targets and the UK's Climate Change Act, Newey argues, so why do we need to succumb to "energy targetism" and adopt yet another sector-specific target? Wouldn't we be better off focusing on sorting out the EU emissions trading scheme and using the market to deliver emission reductions at the least cost?
The CBI has adopted a similar line and it appears to be a pretty strong argument. If it were a perfect world we would need no target as the entire economy would be on a lowest-cost decarbonisation path driven by a functioning ETS and the magic of the market. But it is not a perfect world. The EU ETS is on the brink of collapse and, while the Climate Change Act should give green businesses certainty that decarbonisation will continue, certain members of the ruling party have recently taken to booing whenever it is mentioned in parliament. Add in the fact the chancellor has made no secret of his desire to water down medium-term carbon targets and you can see why investors and developers have seen their confidence in the long-term low-carbon transition undermined. Many of them are telling the government a decarbonisation target would help restore it and allow them to move forward with investments in new clean tech factories. It is perverse a chancellor tasked with delivering economic recovery would deny them.
Moreover, if getting a decarbonisation target for the power sector agreed at a UK level is tough, getting an agreement on much-needed reforms to the ETS is near impossible. With a fully functioning EU ETS delivering a carbon price capable of driving sufficient investment in low-carbon technologies years away, a UK decarbonisation target seems an effective and necessary safeguard against the construction of an excessive number of gas power stations that would make future compliance with the Climate Change Act extremely difficult.
The second argument is that because the UK is part of the EU ETS any effort we make to cut emissions in the UK by decarbonising our power sector will simply result in more emissions elsewhere in Europe. Again, this sounds compelling, but on closer inspection does not really constitute an argument against a decarbonisation target. Crucially, the ETS emissions caps for post-2020 are yet to be set, meaning that if the UK were to adopt a decarbonisation target this goal would presumably be taken into account when the number of allowances that will be issued is calculated. Even if UK energy firms were handed too many carbon allowances allowing others to emit in their place, the UK's decarbonisation efforts would allow British-based companies to sell their excess credits generating more income. An imperfect scenario for the climate, but not a bad one for the British economy.
The arguments against a decarbonisation target really are this weak. They are built on either the reckless assumption that new CCS technology will make a large fleet of new gas-fired power stations compatible with carbon targets, or the reckless assumption that the under fire Climate Change Act and the flawed EU ETS will somehow stop the development of excessive numbers of gas-fired power plants.
But it is not the weakness of these arguments that is the real problem currently afflicting both the UK's energy sector and its green economy. It is what these weak arguments have enabled.
In his desperate desire to leave the door open for all the gas-fired power the industry could possibly want, George Osborne has not only embraced these reckless and flawed arguments he has insisted on a sad and ugly compromise that means the energy industry gets neither the certainty of a decarbonisation target nor the certainty of not having a decarbonisation target.
It has been said before and it will be said again, but in delaying a decision on a decarbonisation target until 2016 the government has thrown the energy industry into three years of limbo just at a time when, as Ofgem today attests, it urgently needs to be building new capacity. Thankfully, some new renewable energy and gas capacity will be built from 2014 once the Energy Bill's contract for difference and capacity mechanisms are finally sorted out. But the cost of capital for gas infrastructure is likely to be higher than it needs to be because of the looming 2016 decision on a decarbonisation target. Meanwhile, supply chain firms for both the renewables and the gas industry, including of course CCS, will be reluctant to move forward with any investment until the 2016 decision provides a signal as to whether it will be gas or lower-carbon energy sources that dominate the energy mix through the 2020s.
It is a mess. A mess that will only result in higher energy costs and greater energy insecurity for the UK. Any attempt to pretend otherwise is nothing but political spin.
In contrast, the passage of the Yeo-Gardiner amendment and the simple adoption of a decarbonisation target next year could have a transformative effect. It would provide greater certainty to renewables developers and clean tech manufacturers, it would provide a boost to the government's faltering nuclear programme, it would almost certainly lower the cost of capital for all energy projects, it would significantly increase the likelihood of the UK meeting its carbon targets and, yes, it would help accelerate the significant, but not excessive, investment in new gas infrastructure that is required to help ensure the UK's lights stay on.
With a clear-cut decarbonisation target in place for 2030, a stable incentive regime established through the contracts for difference and capacity mechanism, and ambitious new energy-efficiency programmes in the pipeline, the government would finally have delivered reforms that would keep the lights on while decarbonising our power network. It would also fire a starting pistol in the race to deliver low-carbon energy at the least cost. If renewables or nuclear want to dominate the energy mix in 2030 they had better find a way to reduce costs; if the gas industry wants to dominate then it needs to identify secure supplies and find a way to make CCS work.
The problem is that the Lib Dems and those Tories who are not so reckless as to have bought the gas industry's arguments already know all this. They know the energy industry will face crippling uncertainty until the 2015 general election is done and dusted; they know we have to decarbonise one way or another so a target does no harm and may do plenty of good; they know early action will enhance energy security and deliver green jobs. But it will still take an act of considerable political bravery to defy the sorry compromise agreed by their party leaders. Significant numbers are said to be sympathetic towards the decarbonisation target amendment, but they will not rebel unless plenty of their colleagues do likewise.
This is a genuine Westminster tragedy given that a government U-turn and the early adoption of a decarbonisation target would be good for pretty much everyone. It would be good for Labour, who could argue that they were among those pushing for a decarbonisation target. It would be good for the Lib Dems, who could demonstrate that they are delivering on their green agenda in government. And, yes, it would be good for the Tories, given that its electoral chances in 2015 rest to a huge extent on the materialisation of an economic recovery that would be aided significantly if the energy sector could get on with building new infrastructure as soon as possible. But most of all it would be good for the British economy, good for our energy security and good for the planet.
In fact, the only person it might be bad for is George Osborne, as any U-turn would again highlight how the man charged with delivering economic recovery and business investment is holding it up because of ideological reasons and his inability to spot a flawed argument when he sees one.
Unless, that is, the chancellor has a compelling argument as to why we don't need a decarbonisation target that I may have missed – because if he does, now would be a good time to share it.
13 Feb 2013
Is there a more fatuous, ill-informed and illogical criticism of the green economy than the accusation that China's immense carbon footprint makes other nations' attempts to curb their emissions pointless? If there is I'd like to hear it. Actually, scrap that, I would not like to hear it.
You will no doubt be aware of the "China trope" that has been pushed remorselessly by critics of the green economy in recent months. It comes in many different shades, but it essentially boils down to the tired argument that "the world does not have a climate change problem, it has a Chinese coal problem". The emerging superpower's reliance on dirty coal to power its economic miracle is so pronounced and its emissions are rising so fast that attempts by the UK, the rest of Europe, even the US, to curb their greenhouse gas emissions are doomed to failure because they will never be able to compensate for China (and to a slightly lesser extent India's) spiralling carbon emissions.
Leaving aside the fact that this argument is often presented by people who do not think greenhouse gas emissions cause climate change (I do sometimes wonder why they concern themselves with China's carbon footprint when they don't think it is a problem), there is undoubted truth in the contention China's coal industry represents a grave threat to the global climate. No attempt to resolve the climate crisis will succeed without tackling the fast-increasing emissions of China and other emerging economies. In case you had not guessed, the headline to this post is wilfully provocative - in many respects China's carbon emissions matter immensely.
But the suggestion that the challenge presented by China's economy makes green policies in countries such as the UK pointless or in some way doomed to failure is an argument of such stunning irrelevance that it falls apart on the most cursory of examinations.
The most widely adopted response to the "China argument" is that it is based on the false assumption China is not trying to do something about its unsustainable coal habit. Both David Cameron and Ed Davey have offered an eloquent summation of this counter-argument in recent weeks, noting that the UK is in a "global race" where numerous rivals, including China, are investing heavily in clean technologies and green energy. As Davey observed yesterday, "those who advocate the view that "no one else is doing anything, so why should we" have not opened their eyes to the real world".
He could have quoted reams of evidence to demonstrate how China is the world's leading investor in wind energy, among the leading investors in solar, nuclear, and CCS, and boasts some of the tightest fuel efficiency standards and ambitious clean car programmes on the planet. China's leaders, for all their myriad faults, understand the importance of green growth - and if they didn't before, the worsening smog crisis afflicting the country's capital has certainly hammered the point home.
The suggestion that China is in reality striving to tackle the climate crisis is complemented by the ethical argument that the UK and other industrialised nations have a responsibility for emerging economies' emissions. Numerous studies have noted the recent decline in emissions in Europe and the US has been aided by the migration of dirty industries to emerging economies - China's emissions are rising, in part, because the country is manufacturing goods for us in the West. We have both a moral and an environmental responsibility to develop the technologies that will allow China and its peers to decarbonise.
Both of these arguments are compelling enough, but they are also slightly flawed. Because while it is evident emerging economies are trying to drive green growth, businesses and NGOs cannot credibly argue China and co are yet doing enough to tackle climate change. Emissions are continuing to rise at a rapid pace and Chinese coal power plants are one of the primary causes of this deeply worrying acceleration. As long as this remains the case, contrarians will continue to argue against UK action to tackle climate change with a weary "what is the point?"
As such those arguing that UK efforts to tackle emissions are pointless should be engaged with on their own terms, not with a quibbling over the facts relating to Chinese energy policy. Thankfully, their arguments are not just factually wrong, they are also just plain daft.
Consider, if you will, precisely what those advocating the scrapping of the UK's green ambitions on the grounds that China's emissions are continuing to rise are calling for. They are essentially saying that we should not try and develop the solutions to a global problem, because there is a global problem. It is like telling the Silicon Valley whizzkids of the 1970s "there's no point inventing these new computers, because no one in China will be able to use them". Or telling the British industrialists of the 19th Century, "don't bother investing in new infrastructure, it costs too much and your competitors overseas aren't doing it".
It is the policy embodiment of Henry Ford's famous old assertion that "if I had asked people what they wanted, they would have said faster horses".
There are legitimate arguments to be had about carbon leakage and how best to manage the transition to a low carbon economy in a manner that minimises short term impacts for established industries. Equally there is a lot of work to be done on how the roll out of clean technologies in a handful of pioneer economies can be replicated globally in a few short decades. But the suggestion that the UK should not pursue green growth because emissions in other countries are continuing to rise is plainly ridiculous.
It not only fails to take account of the kindergarten ethics lesson that states just because someone else is doing something bad does not mean you should as well, it also completely ignores the way in which cultural, economic, and technological transitions happen. The industrial revolution, the post war consumer revolution, the IT revolution, they all started around breakthroughs in a handful of regional and national hubs that demonstrated the benefits of the new technologies and business models, before paving the way for a global roll out. Are those who argue against the UK's green ambitions really so insecure about our place in the world that they do not think us capable of fulfilling this vital role?
The debate about the UK's green policies should be about how we become one of these green economy hubs, not whether or not our efforts are capable of countering China's emissions. Not least, because if we get it right and demonstrate that sustainable green growth is both possible and attractive China will look after itself as clean technologies, many of them pioneered in the UK, become the new normal.
And in that respect at least, China's carbon emissions do not matter.
07 Feb 2013
I eat pens. Literally eat them.
As you'd expect a pen and pad are the basic tools of my particular vocation, and as a result I always have them to hand. But at the same time I have a fidgety tendency to chew on said pen at every opportunity. I might like to think this particular idiosyncrasy makes me look pensive, but in truth I look like a stressed smoker who is increasingly desperate for a nicotine hit.
The problem, as my fellow pen chewers will tell you, is that if you gnaw on a biro for any length of time they break. I'm lucky if a pen purloined from the office stationary cupboard lasts a week. If I'm having a busy few days a standard ballpoint pen can be destroyed within a matter of hours. My desk typically looks like a plastic and ink war zone.
Every few months, however, I break this cycle. I'll be rushing to a press conference or interview and will realise that I do not have a pen on me. Bereft of anything to write with I am forced to duck into the nearest newsagents and buy a pen, and it is at this point that I always eschew the cheapest option that's available and buy myself a slightly nicer pen. Not a fancy and expensive fountain pen, just a more durable version of the cheap as chips plastic pens I tend to destroy so quickly. The net result is not only that my notes immediately improve (short hand is a lot easier with a decent pen) but the pen will last. Not forever, I continue to chew on it and it gives up the ghost eventually, but certainly a month or so.
With just a fraction more thought I could make my life easier, save my employer a few pennies on its office expenses, and of course reduce the environmental impact of my very own desk-based plastic landfill crisis. But I am that unique modern combination of lazy and busy, so when my sturdy pen eventually breaks I head back to the stationary cupboard and pick up a new cheap and cheerful generic ballpoint pen that is destined to be reduced to shards of plastic within a few short days.
All of which begs the question why is anyone allowed to make such rubbish pens, why do people continue to buy them, and why do they continue to uncomplainingly use them? They are awful, horrible things, they are rubbish in every sense of the word.
If it sometimes appears that they designed to break easily, a cynic might suggest that is because they are. It is possible to make significantly more durable pens that are only fractionally more expensive than their pathetically weak cousins, but countless offices around the world are locked into the false economy of purchasing cheap and disposable pens, which are then unsurprisingly thrown out in double quick time. As a result the manufacturers have a perverse incentive to continue to produce a rubbish product, safe in the knowledge that its inherent weakness will result in a continuing stream of new orders as people break their pens well ahead of the end of their intended lifespan.
Obviously, breaking this dysfunctional and illogical cycle would only deliver fractional emission and resource savings. But the problem is that it is replicated by thousands, if not millions, of different products. Shoddy and inefficient designs are everywhere you look. For all the countless examples of innovative design genius, there is plenty more evidence that entrenched irrational thinking dominates the worlds of product development and consumer purchasing.
From the in-built obsolescence of the gadget industry to the plastic cutlery brutally ridiculed by one of the best environmental posters of all time (you know the one, the image of a plastic spoon above the text: "It's pretty amazing that our society has reached a point where the effort necessary to extract oil from the ground/ship it to refinery/turn it into plastic/ shape it appropriately/truck it to a store/buy it and bring it home/is considered to be less effort than what it takes to just wash the spoon when you're done with it) staggering resource inefficiency and crap design is all-encompassing.
It is hard to know what the answer is to a problem that is in danger of sleepwalking the global economy into a resource crunch. It would nice to think that more desirable green products and more informed consumers would result in more people taking product efficiency and durability into account when making purchasing decisions. It certainly helps, but let's not overstate the potential of this consumer-led approach. After all, I can't even be bothered to spend a couple of quid on a decent pen.
More transformative models, such as the fledgling collaborative consumption, product rental approach touted by the likes of B&Q and Zipcar or the circular economy promoted by Ellen MacArthur, are fascinating and have huge potential. But the sad reality is that many incumbent businesses will fight tooth and nail to protect flawed consumption models that favour the bulk shipping of fragile, disposable, and obsolescent products. The emergence of a circular economy will become inevitable as resource constraints worsen, but it is a long way off.
The approach touted by the new Friends of the Earth Make It Better campaign offers a potentially interesting avenue that attempts to bring public and potentially legislative pressure to bear on manufacturers and designers to quite simply deliver better products. For obvious publicity reasons the NGO has kicked off the campaign by focusing on the well-documented environmental problems associated with the materials used to make smartphones, but there is a complementary push for better and potentially binding product standards to tackle unsustainable designs and processes.
It is an idea whose time has come that has the potential to build support from across the political spectrum. You do not need to be a current affairs junkie to have noticed that there is mounting public hostility towards corporations that provide flawed products and services. From burgers tainted with horsemeat to online service providers who lose your passwords and banks that mis-sell you financial products, there is huge frustration with companies that short-change their customers. The case for more demanding product standards and tighter consumer protection has never been stronger, and politicians on both sides of the political divide are edging in that direction, be it through Ed Miliband's calls for better and more responsible corporate behaviour or the "pro-consumer Conservatism" touted by modernising Tories such as Laura Sandys.
Do we really want to see regulators ban products for no greater sin than their being a terrible use of resources? Do we really want to raise the ire of those libertarian types who regard any restrictions on a free market as the work of satan? Well, it would certainly be better to accelerate sustainable design through consumer pressure and astute executives who recognise the long-term benefits of resource efficiency. But as climate change impacts worsen and resource crunches become more common the likelihood of regulators taking a dim view of wilfully crap products grows ever greater.
The past decade has seen a steady cranking up of binding and non-binding environmental and efficiency product standards for the automotive industry, the electronics industry, and the white goods industry on both sides of the Atlantic and powerful emerging markets like China. It is a trend that is only going to accelerate and intelligent manufacturers and designers will want to be pre-empting these standards rather than playing catch-up. And, yes, that includes manufacturers of crappy breakable pens.
This afternoon's Energy Efficiency conference may have started with a rather bizarre video message from Arnold Schwarzenegger, replete with a couple of Terminator gags and a giant ring in the shape of a skull, but it was the Prime Minister's commitment to the green economy that received the Terminator-style resurrection.
In his pre-recorded message, Schwarzenegger praised David Cameron and Climate Change Minister Greg Barker for their commitment to green businesses, recalled how California had embraced policies that ensured it is 30 per cent more energy efficient than the rest of the US, and, perhaps most importantly, reminded everyone that centre right politicians can win elections with an unashamedly pro-green agenda.
Then it was over to Cameron for what was undoubtedly his most important public intervention on the green economy since taking office. The short speech had echoes of last summer's address during which he declared his "passionate belief" that renewables are "vital to our future". But this was a significantly better speech, more bullish in its support for the entire green economy, and more explicitly building on work undertaken by Green-minded Conservatives to highlight the financial, economic, and security benefits that flow from clean infrastructure.
The explicit integration of the need for a greener economy and the need to ensure the UK is more competitive in what the Prime Minister repeatedly refers to as "this global race", only served to demonstrate how central the low carbon agenda is to Cameron's long term thinking.
Equally, the focus on the "opportunity" presented by green industries and the need for businesses and government to work together to promote the many environmental and energy policies that are now in place also hinted at a desire to pick up on the message green business leaders have been pushing for months - namely, that the green economy can deliver some much needed growth to the wider economy.
Finally, it was a speech with real political backbone. Cameron did not exactly slap down his Chancellor and those backbenchers who have taken to booing the Climate Change Act in Parliament. But despite the oh so reasonable tone he always deploys, the audience was left with no doubt that he disagrees fundamentally with those voices in his own party who regard the green economy with disdain.
"My argument today is not just about doing what is right for our planet, but doing what is right for our economy too," he said. "The economies in Europe that will prosper, are those that are the greenest and the most energy efficient... To those who say we just can't afford to prioritise green energy right now, my view is we can't afford not to... Far from being a drag on growth, making our energy sources more sustainable, our energy consumption more efficient, and our economy more resilient to energy price shocks - those things are a vital part of the growth and wealth that we need... When I become Prime Minister I said I wanted Britain to have the greenest government ever and I am as committed to that today as I was then... Together we can make Britain a global showcase for green innovation and energy efficiency."
The contrast in both tone and content with George Osborne's Party Conference argument that environmental regulations are a "burden" and the UK should not lead Europe in the pursuit of emission reductions could not have been starker. At a time when the Tory right is bruising for a fight with the Prime Minister over his support for gay marriage, this speech was a brave, timely, and hugely welcome restatement of his modernising credentials.
There was also plenty to cheer green business leaders, not least in Cameron's response to a question on when a big set piece speech on the environment could be expected. He got a laugh for suggesting he had "learnt his lesson" about pre-advertising big speeches, but he went on to make the important point that thanks to the UK's policy landscape low carbon energy investors in the UK can be 100 per cent confident in the returns they will generate over the next 20 years. "What other industry or business anywhere in the world has got that sort of certainty?" he asked.
The big question now is whether this represents a one-off bit of red meat from the Prime Minister for green business leaders or whether his actions will now match his green growth rhetoric.
Cameron, Barker, and those Lib Dems who have made a similar point over recent months are right to argue that the coalition has underplayed its green policies and achievements over the past two years. But ultimately they only have themselves to blame for not presenting a more unified front in support of the green economy and not trumpeting the opportunities offered by policies such as the feed-in tariff, the Green Deal and the Green Investment Bank. Even today's speech was not press released by Number 10, no copy of the speech was made available, and hardly any of the influential lobby journalists were present (they were probably too busy engaged in paroxysms of schadenfreude over Chris Huhne's guilty plea).
If Cameron wants to attract international green investors and help the UK win the global race, then both he and other senior figures within the government now have to talk up its green economy at every opportunity and simplify a green policy environment that is often too complex and diffuse. A few more set piece green interviews, speeches, and Lobby briefings would be a good place to start, while at a practical level the Department of Energy and Climate Change's new Energy Efficiency Mission needs to be replicated for all aspects of the low carbon economy.
More important still, Cameron's public commitment to green growth needs to be backed up with more ambitious policies and much greater consistency across government.
Green businesses and NGOs frustrated by Cameron's silence on these issues over the past year will welcome this speech, but they will be forgiven asking how, if the Prime Minister regards green investment as critical to our economic and environmental health he won't follow the Committee on Climate Change's advice on decarbonisation of the power sector; continues to sign off on tax breaks for fossil fuels; can appoint Ministers to the departments of environment and energy and climate change who clearly disagree with his stance on green growth; and, most important of all, is failing to orchestrate a response to climate change that is any way commensurate to the scale of the threat we face.
These questions and many more need answering. But for today at least, green business leaders should celebrate such an unequivocal commitment to the low carbon economy and such a clear indication that Cameron is willing to face down his anti-green detractors. They should also reflect on the Prime Minister's argument that government cannot deliver green growth alone and that the onus is on them to start igniting low carbon investment.
There is a long way to go for the government to fully restore green investor confidence after the battering it has received from numerous mixed messages and policy U-turns, but for now it looks like the Prime Minister has said "hasta la vista" to his reticence on the green growth. And for that, it is not just the "Governator" who should be grateful.
29 Jan 2013
The Green Deal launched yesterday to an all too predictable and yet still rather disappointing reception. Almost every aspect of the launch came in for criticism from media outlets and the Twitterati. Barbs were aimed at everything from the Photoshop-happy print adverts to the somewhat aggressive "Green Deal With It" tagline and the seven per cent plus rates of interest.
As I argued yesterday, much of this criticism contains a fair degree of validity. The interest rates are almost certainly too high for the scheme to have the kind of transformative impact the government hopes for and the advertising campaign is undoubtedly lacking in sophistication. The scheme could of, and should have been better.
However, households, businesses and the press would be completely wrong to write the whole thing off at this stage. The basic principle of shifting away from grant-based energy efficiency schemes to a financing model remains sound. The simple fact is that without an unexpected national windfall of unprecedented proportions the UK will never be able to deliver the much needed overhaul of our building stock through ever greater use of grants or impotent pleas for people to take efficiency seriously. An attractive financing model is the only way to make national scale building improvements a reality.
And for all the justified reservations about the scheme the Green Deal could yet prove attractive. The over-arching consumer principle of caveat emptor obviously still applies - the small print needs to be checked, the potential impact on any resale value needs to be considered, a number of competitive quotes need to be sought - but there are still plenty of good reasons to at least consider getting a Green Deal package.
Firstly, all serious projections for energy bills suggest they are going to rise over the next decade. So a £5,000 Green Deal loan being repaid at the Green Deal Finance Company rate of 7.67 per cent may mean the £480 a year you save on your energy bills is immediately redirected to pay for the interest payments, leaving you neither better or worse off. But if the cost of energy increases so do the savings, while at the same time Green Deal repayments remain the same leaving you better off. Admittedly, this calculation could work in reverse if your circumstances change (the children move out for example) and you find yourself using significantly less energy than the base line calculation. But for the vast majority of people the scheme's golden rule will hold and they will find themselves better off as energy prices rise.
Secondly, it is worth stating yet again that Green Deal packages are an unsecured loan attached to the property rather than the individual. Some critics have raised questions over whether taking out a Green Deal package will make it harder to sell a property, given that repayments will be attached. But if the "golden rule" holds and net savings are delivered then most people will find that Green Deal improvements should add to their value of their home. After all, would you prefer to buy a house with appropriate double glazing and insulation, or one where you have to go through the hassle of getting it all fitted?
Thirdly, the wide range of technologies on offer under the Green Deal provides people with the chance to install an array of genuinely exciting clean technologies. The phrase "eco-bling" might be rather crass, but here is an opportunity for those people who love the idea of solar panels and heat pumps to potentially install these technologies at no upfront cost. At the moment the link between the Green Deal and both the feed-in tariff incentives and the promised Renewable Heat Incentive is as clear as mud. The Energy Saving Trust FAQ states that "you will not be able to use expected income from the Feed-in Tariff to help you meet the Golden Rule", while "Renewable Heat Incentive payments will be conditional on making 'Green Deal-able' thermal efficiency improvements to the property, so that renewable heat is not wasted".
It sounds as if you will not be able to use renewable energy incentives to then repay your Green Deal loan, but there are circumstances where you will be able to use the Green Deal to deploy these exciting clean technologies and generate energy bill savings in the process. I am also told by DECC that the department is in talks with the EU about getting state aid approval for tighten links between the Green Deal, the feed-in tariff and the RHI. The possibility remains that the scheme could get more attractive still.
Finally, and most importantly, the government's cashback offer is promising households that take undertake Green Deal upgrades offers worth over £1,000. Currently, you can get £250 for installing cavity wall insulation, £650 for solid wall insulation, £100 for loft insulation, £320 for double glazing will get £320, and £270 for condensing gas boilers. It is reminiscent of the previous government's highly successful scrappage scheme, and if I were the wannabe Don Draper tasked with developing the government's communications campaign I would have made these generous offers the central component of the adverts.
Of course, once you have considered these benefits you might still decide the Green Deal is not for you. You might not have the appetite for the risks the high interest rates have introduced into the scheme, you might still not want to undergo the hassle of significant home improvements, or you might decide that paying for the work yourself, extending your mortgage to cover the costs, or taking out a standard loan will offer better returns (this last point is particularly important for business customers, who are likely to be able to access energy efficiency loans at a significantly lower rate of interest than seven per cent). But if you are interested in curbing your carbon emissions, potentially reducing your exposure to rising energy bills, and making your home more comfortable then the Green Deal should not be dismissed out of hand.
Meanwhile, those businesses looking to offer Green Deal services need to take the unsurprisingly negative response to the scheme's launch on the chin and redouble their efforts to get the positive message about the Green Deal's potential benefits out to prospective customers. They need to look at the government's Green Deal adverts, and ask themselves if they could do better. They need to consider which customers are most likely to want Green Deal services, and work out how best to target them. And most of all, they need to demonstrate how the cashback offer and the "golden rule" will make early Green Deal adopters better off.
The Green Deal is far from perfect and should have been made more attractive to consumers, but it is both unfair and counterproductive to write it off altogether at this early stage.
ABOUT JAMES' BLOG
Previously known as the BusinessGreen Blog, James' Blog features musings, observations and occasional rants from BusinessGreen editor James Murray