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Government to end funding for Green Deal 24 July 2015

The Government announced yesterday in this press release that, in light of low take-up and concerns about industry standards, there will be no further funding to the Green Deal Finance Company.   The Green Deal Finance Company, which describes itself as a “not-for-profit” company set up by industry participants and other stakeholders to deliver the Green Deal, says on its website that is no longer accepting any new applications for Green Deals.

The Government says in a new blog article yesterday (artfully entitled “Changes to green home improvement policies announced today“) that the Green Deal’s framework remains in place should other finance providers wish to come forward to enter the market.  If the Green Deal did not work successfully using Government funding, it seems unlikely that any other organisation would wish to step in to fund it.

The Government says that it will work with the building industry and consumer groups on “a new value-for-money approach”.  However, future schemes must provide better value for money, supporting the goal of insulating a million more homes over the next five years and the Government’s commitment to tackle fuel poverty.

This decision has no impact on existing Green Deal Finance Plans or existing Green Deal Home Improvement Fund applications and vouchers.  The Energy Company Obligation (ECO) will continue to run as planned until March 2017, to provide support to low-income households.

This announcement is applicable only to domestic properties, as Green Deals for non-domestic (commercial) properties have never been introduced.

To be honest, this decision has come as no surprise, given the low take-up of the Green Deal and the current (not-in-any-coalition) Government’s obvious disdain for the energy-saving agenda.  Green enthusiasts have had a bad few weeks.  Last month it was announced that the subsidy scheme for onshore wind farms will be closed from next April, one year earlier than planned, and on 10 July the Government said that it is scrapping the rules that will require zero-carbon homes from 2016 and zero-carbon non-domestic buildings from 2019.

You can read an article about the ending of the Green Deal on the Guardian’s website here.

UPDATE: There was a discussion about the Green Deal on Radio 4’s You and Yours today which you can listen to on iPlayer here (starting at about 15:00).  It’s entitled “Bothies, Rail passenger assistance, Choose what you pay” (no mention of the Green Deal).

Effect on Minimum Energy Efficiency Standard (MEES)

I have not yet seen any discussion of how the end of the Green Deal will affect MEES.  As originally conceived (as set out in this undated Government policy document), MEES relied entirely upon the Green Deal.  The obligation on landlords (domestic and commercial) was to have been to carry out any works that entailed “no upfront cost”.  In practice, that would mean works that satisfied the Green Deal’s “Golden Rule” – that the energy efficiency improvements would pay for themselves in energy-savings over their expected lifetime.  No Green Deal – no need to carry out any energy efficiency improvements.

This rather neat policy worked satisfactorily for domestic properties, but could not be extended to non-domestic (commercial) properties because of the absence (now and in the foreseeable future) of any commercial Green Deal system.  This led to the seven year payback alternative for MEES as it applies to commercial properties.

So, in theory, MEES should still be workable for commercial properties even after the ending of the Green Deal.  But I think that MEES for domestic properties still relies entirely upon the existence of the Green Deal.  So without a Green Deal, is there any future for MEES for domestic properties?  I am not sufficiently familiar with how MEES is intended to apply to domestic properties to be sure of the answer to that question, but I have my doubts.  I am also unclear whether the new procedure (taking effect next year) under which a residential tenant will be able to request consent to install energy efficiency measures at a property will make any sense without the Green Deal.

Please let me have your thoughts.

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One thought on “Government to end funding for Green Deal”

  1. Nigel Madeley says:

    Aren’t feed-in tariffs going to be reduced as well?
    I agree with reducing the green levy on fuel bills. After all, that’s just one more species of regressive taxation, imposed because UK governments run scared of setting progressive direct taxes at the necessary level, and the UK electorate doesn’t understand the issues.
    But this government (in particular) won’t do the other half of the job and properly regulate the mismanaged private energy sector to raise the money to do the job. Inadequate regulation (in the form of allowing excessively high rates of blended equity returns) created an industry that syphons money out by way of dividends and exective pay that should have been invested in energy research.
    But then I suppose we have half re-nationalised the sector – just look at how much of it is owned by the French state (EDF). Instead of training and employing our own engineers, we use theirs. No wonder bright people end up thinking that financial services is the only place to go.
    Better an engineering-led CEGB than the privatised mess we created in the 1990s. It will haunt us in coming years when we don’t have adequate generating capacity or the technological base to build new-design power stations.

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