1 Introduction
1. The Green Deal is the Government's flagship
initiative to help households and businesses increase their energy
efficiency. The policy has formed a central part of the Coalition's
commitment to be the "greenest government ever" and
has been frequently cited by the Prime Minister and Deputy Prime
Minister (as well as DECC Ministers) as one of the main ways in
which the Government is helping households to tackle rising energy
bills.[1] For example, Mr Cameron
recently told the Liaison Committee:
I do support further steps on energy efficiency and the green
deal is an enormous commitment by the Government to help bring
that about. In most areas of policy, politicians are accused of
making too many speeches and not actually doing anything. I think
in this area of policy, we've got the opposite problem. We have
actually got, as I hope I have described, a very aggressive, very
progressive, very forward-looking green energy policy.[2]
2. As a committee, we have consistently stressed
the importance of improving energy efficiency.[3]
Greater efficiency will bring benefits for energy security and affordability
as well as helping to reduce carbon emissions. As such, it is truly
a "no regrets" option.
3. During our inquiry into consumer engagement with
energy markets, we raised concerns that there were a number of
barriers to uptake of the Green Deal that DECC had failed to address
adequately. We were also worried that the Minister was not able
to give us a clear response when we asked what criteria DECC would
use to monitor the success of the Green Deal.[4]
As a result, we launched this inquiry into the Green Deal with the
intention of monitoring the progress of the Green Deal as it is
rolled out; to assess whether its core aims are being met, and to
identify any opportunities to make improvements in the future if
necessary (or indeed to offer praise, should expectations be exceeded).
In this report, we hope to help clarify what a successful roll out
would look like and to identify key elements that will contribute
to success. It is our intention to return to these indicators in
future to examine how well the scheme is progressing. This will
be done in the spirit of trying to maximise the efficacy of the
Green Deal, since its overall aim—to improve energy efficiency
in homes and businesses—is one that we very much support.
4. We launched our inquiry on 6 December 2012 and
received 34 submissions of evidence. We also held two oral evidence
sessions. A full list of witnesses can be found at the end of
this report.[5] We are very grateful to all
those who have contributed towards this inquiry.
Box 1: What are the Green Deal and ECO?
The Green Deal
The Green Deal is a market-led framework that is intended
to allow individuals and businesses to make energy efficiency
improvements to their buildings at no upfront cost. The
costs will be repaid in instalments through the electricity
bill for the property.
The Golden Rule
The ‘Golden Rule’ of the Green Deal states that
the expected financial savings must be equal to or greater
than the costs attached to the energy bill. In practice,
this means that repayments should be no more than what a
typical household should save in energy costs.
How it works
There are five stages to the Green Deal process:
1. Assessment – a registered Green Deal Assessor visits
the property and surveys energy usage and options for energy
efficiency improvements.
2. The Assessor recommends appropriate improvements and
indicates whether they would be expected to pay for themselves
through reduced energy bills.
3. Green Deal Providers give quotes for a Green Deal Plan,
which include the work to be done and the repayment plan.
4. The Provider arranges for improvements to be made by
a Green Deal Installer.
5. Green Deal repayments are automatically added to the
electricity bill for the home.
Energy Companies Obligation (ECO)
The ECO is a subsidy from energy suppliers that works alongside
the Green Deal to provide energy-saving improvements for
those people who are most in need and for properties that
are harder to treat.
How it works
Energy companies have three obligations under the ECO:
1. an Affordable Warmth Obligation, to
deliver a total of £4.2 bn savings on energy bills
for consumers living in private tenure properties that receive
particular means-tested benefits;
2. a Carbon Saving Obligation, to deliver
total carbon savings of 20.9 MtCO2 through the installation
of measures like solid wall and hard-to-treat cavity wall
insulation, which ordinarily can’t be financed solely
through the Green Deal; and
3. a Carbon Saving Community Obligation,
to deliver total carbon savings of 6.9MtCO2 through the
installation of insulation measures in households in specified
areas of low income, including hard-to-reach low-income
households in rural areas.
The costs of ECO will be passed on to all energy consumers
on their energy bills.
Green Deal and ECO interaction
It is intended that the two schemes will overlap as follows:
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1 HM Government, The Coalition: our
programme for government, May 2010;
See for example, David Cameron Green Economy speech, available
at: http://www.businessgreen.com/bg/news/2241323/camerons-green-economy-speech-in-full;
Nick Clegg's speech on the green economy, 23 May 2011, available
at: http://www.libdems.org.uk/speeches_detail.aspx?title=Nick_Clegg%E2%80%99s_speech_on_the_green_economy&pPK=0e1da756-bb98-489e-9e72-d97c95a0715b
See, for example, DECC press release, Policies are putting a
cushion between energy prices and household bills - Davey, 27
March 2013 Back
2 House of Commons Liaison Committee,
Oral evidence from the Prime Minister, Tuesday 11 December 2012,
HC 484-ii and -iii, Q 135 Back
3 For example, see House of Commons
Energy and Climate Change Committee, Eighth Report of Session 2010-12,
UK Energy Supply: Security or Independence?, HC 1065; House of Commons
Energy and Climate Change Committee, First Report of Session 2012-13,
Draft Energy Bill: Pre-legislative Scrutiny, HC 275-I Back
4 House of Commons Energy and
Climate Change Committee, Fifth Report of Session 2012-13, Consumer
Engagement with Energy Markets, HC 554-I, para 100 Back
5 Page number 29 Back
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