Watching David Cameron hollow out one of the coalition’s few sensible climate policies would be funny if it weren’t so tragic.
In six months’ time the Green Deal was due to come into force. At the heart of the coalition’s ‘flagship’ green policy is a system of loans to households and businesses that invest in energy efficiency or – in plain English – get their lofts insulated.
However, with Chris Huhne gone from the Department of Energy and Climate Change to focus on problems closer to home, the Tories are trying to neuter the Green Deal before it has even been launched.
Late last night, the Guardian revealed the prime minster has decided to scrap the mandatory requirement that 10% of the costs of a home extension be additionally invested in energy efficiency.
The Telegraph had already reported at the weekend that influential Conservative policymakers were desperate to dismantle the Green Deal, with one senior Tory quoted as saying:
“The [policy] was Chris Huhne’s baby. He has gone now and this is the right time to kill it off.
“Forcing people to pay thousands of pounds extra for unwanted home insulation is the last thing hard-pressed families need at the moment. It’s madness.”
Let’s leave aside the senior Tory’s apparent enthusiasm for killing off a metaphorical baby. What is actually “madness” is conflating the myths surrounding ‘green taxes’ with a finance mechanism that lets people cut their own fuel bills.
• Green Deal without ‘nudges’ will fail 27 Jul 2010
The Green Deal, which was kicked off by the 2011 Energy Act (pdf), provides financing for households and industry to meet the upfront costs of wall insulation, loft lagging and other energy efficiency measures that cut your fuel bills and your CO2 emissions.
Its scope reflects the massive impact the UK’s housing stock makes on our national carbon footprint. There are more than 26 million homes in this country, which collectively emit more than 42 million tonnes of CO2 in a year – accounting for around 25% of total UK Green House Gas (GHG) emissions (see p3, pdf).
The perceived problem with the Green Deal is the expense to the homeowner.
Average household spend under the policy is expected to be around £500, which sounds like a lot. However, consider this in context: the average household energy bill is now £1,060. This has shot up by 75% since 2004, driven primarily by wholesale gas prices and energy firms hiking prices – not because of green taxes.
Labeling this as a one-off expenditure that hits ‘hard pressed families’ is disingenuous, particularly because a key reason families are so hard pressed is rising fuel bills. The investment a home makes in insulation is funded by a loan and repayments are attached to the household energy bill, which will reduce year-on-year as a result of the energy efficacy improvements.
Houses undergoing more comprehensive work will indeed face higher costs but the improvements and the Green Deal apply to the property rather than the homeowner, thus releasing value over the longer term.
Here we had a green policy, with a foundation in the coalition agreement (pp. 17-18, pdf) that made a meaningful start on addressing demand-side problems with energy consumption and started to tackle the problem of rising energy bills. It was by no means perfect, but a more sober analysis of its flaws focused on the complexity of the policy for homeowners rather than the underlying logic.
Twenty companies have already signed up to be suppliers and the government was aiming to have 14 million homes insulated by 2020.
Worryingly, however, according to yesterday’s Guardian:
“…some [Tory] ministers are opposed not just to any suggestion of a requirement to make a home more energy-efficient, but to the whole green deal itself.”
There are plenty of other grounds on which to be disappointed with the coalition’s record on energy and the environment. For starters an attempt to be the ‘greenest government ever’ is hard to square with a policy of junking subsidies for solar power or curbing the lending powers of the Green Investment Bank. And let’s not forget the government’s plan to redefine fuel poverty after having slashed the Warm Front scheme.
Yet when elements in the coalition do get it right we should say so. On this occasion it seems some Lib Dems are holding the fort against an increasingly reactionary and climate-sceptical Conservative insurgency.
Quite how Cameron thinks this can be the greenest government ever if he isn’t serious about household energy use is anybody’s guess.