More details emerged Tuesday about the Government’s Green Deal. Michelle Ward asks whether the nationwide energy efficiency scheme will equal a good deal for small businesses.
Energy and Climate Change Secretary Chris Huhne set out his vision for Britain's transition to a sustainable economy earlier this week. Offshore wind and carbon capture and storage would be key players in Britain's future energy generation, Huhne said in his speech at the London School of Economics (LSE) on Tuesday. But he reserved the starring role of his speech to the
Green Deal, which he described as "a radical programme to bring our houses out of the dark ages". It would, he said give businesses the opportunity to take advantage of new green jobs. Not just homeowners, but businesses, meanwhile, would get access to loans to increase
energy efficiency.
"Over the next two years we expect to insulate 3.5 million homes, with a renewed focus on those in fuel poverty and those who need it most," said Huhne.
"We will look at how we can apply the Green Deal model to businesses, too, enabling them to cut carbon, and cut costs. The potential benefits are vast."
Impact on businessesExpected to launch in Autumn 2012, the Green Deal programme will help property owners make energy-efficient upgrades with no up front costs. Though most of the details currently available refer to houses and residential rental units, specifications for business involvement are expected to become clearer over the next few months.
"It very much depends on the details, which we will find out in the future," said a spokesperson for Aldersgate Group. "There is a lot of business interest in the deal though, and there are significant business opportunities. It is important that the Government does anything it can to encourage
SME (small to medium-sized enterprise) involvement."
The Federation of Small Businesses (FSB) said it supports the Green Deal, but is waiting to find out more about the opportunities for businesses. It warns Government to think through the bill very carefully and ensure that it allows SMEs to participate.
"We are concerned that businesses may be deterred from taking up the Green Deal if the financial arrangements behind the deal impinge on a small firms ability to raise
finance to grow their business and create jobs," said a spokesperson for the FSB.
"It is also essential that the roll-out of the Green Deal does not make the same mistakes as other green initiatives such as the Warmfront scheme – where local firms were often unable to access local Warmfront contract work. Ensuring local insulation firms are able to carry out local Green Deal work will also help drive the transition to the low carbon economy and deliver much needed growth for local economies."
Specifications of the Green DealThe Green Deal proposition, set to be introduced in Parliament next month, is a new financing structure, which will allow the owners of domestic and non-domestic buildings to install certain energy efficiency measures through a 'pay as you save' framework.
"This deal has the potential to be applicable to every building in the UK," said John Alker, director of Policy and Communication at the UK Green Building Council. "And it will help property owners install badly needed energy saving measures."
Owners can install energy efficiency technologies, such as loft or cavity wall insulation, through 'green loans' provided through companies accredited by the Government. They will then pay through the savings made in their energy bills over 20 years, with the savings being greater than the repayments.
"We look forward to seeing the detail of the Green Deal but feel it does have a lot of potential," said Alstair Harper, Senior Campaigns advisor for CBI. "Mainly, we need to know who carries the risk of these loans. I was at Chris Huhne’s talk at the LSE and, again, while I await the detail in the Energy Bill, I was pleased to hear him discuss how it can be made to work for tenants and landlords. This was of concern to a lot of SMEs."
The obligation to repay the costs of energy efficiency measures will be attached to the energy bill at a property, rather than to an individual. So if a property is sold, repayments will continue through energy bills paid by the new owner, who will in turn benefit from the reduced bills associated with the scheme.
The Government also announced Tuesday measures to improve the energy efficiency of the private rented housing sector.
The bill will create powers allowing any tenant asking for reasonable energy efficiency improvements to receive them from 2015 onwards. It will also allow local authorities to insist that landlords improve the homes that are performing poorly.
Process to obtain energy savingsHomes and businesses that use the Green Deal will follow a three-step process beginning with an independent energy survey of the property, designed to provide advice on the best energy efficiency options. Property owners will then be able to access Green Deal finance, provided through a range of accredited providers. Who will provide those loans is yet to be announced, but high street banks are in the frame. The Carbon Trust, which already manages interest-free loans to businesses for energy efficient upgrades, could also be a provider. In the third step, homes and businesses receive their energy efficiency package delivered by qualified installers, through accredited schemes overseen by Government.
Groups like the Electrical Contractors’ Association (ECA) are emphasising the importance of using qualified installers as part of the Green Deal.
"Consumer confidence will be key to the take-up of the Green Deal – confidence that energy-saving measures and
renewable technologies are fitted safely and correctly the first time round and confidence that the right solution has been recommended and fitted," said Steve Bratt, ceo of ECA.
"As electrical contractors are the front line troops who will be responsible for installing much of this technology, it is encouraging that Government has stipulated that under the terms of the scheme only 'appropriately qualified installers’ will be allowed to install energy-saving
technology."
Job opportunitiesIn addition to saving money and reducing energy consumption, the delivery of the Green Deal will create thousands of green jobs said Huhne. The insulation industry alone could see a boost in employment numbers from around 27,000 now to 100,000 by 2015.
British Gas has pledged to employ 3,700 green jobs by the end of 2012 and has already recruited 1000 of them. In September, the energy company announced plans to invest £30 million in installing energy efficiency measures in its customers’ homes at no up-front cost.
"At a time of increasing gas prices energy efficiency is a no-brainer," said Huhne. "It is also a massive economic and job opportunity which could help Britain's economy turn the corner. With up to 100,000 green jobs up for grabs over the next five years, and even more in the long-term, this is about growing our economy in a way that's good for jobs, the environment and energy security."
The UK also has to meet European Union targets to slash greenhouse gas emissions by 2020, while also boosting its energy security in the face of declining domestic gas reserves and rising energy prices. The Government said the Green Deal is one of the ways it hopes to achieve its environmental objectives.
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