House of Commons - The Green Deal: watching brief

The Green Deal: watching brief - Energy and Climate Change Contents

2 Objectives, outcomes and monitoring methodology

5. In this section we investigate why the Green Deal is needed, what the Government is hoping to achieve and how it will evaluate its progress against its aims. Chapter three provides a more detailed examination of the kinds of indicators that would be useful in monitoring the performance of the Green Deal programme as it is rolled out.

Objectives: why introduce the Green Deal and ECO?

6. Buildings in Britain are among the least energy efficient in the world.[6] The Government has launched the Green Deal in order to introduce a new way for households and businesses to pay for energy efficiency improvements to their properties. The Energy Companies Obligation (ECO) is an obligation on energy companies to provide energy efficiency measures to help vulnerable and fuel poor consumers and people living in harder-to-treat properties. It is paid for by all consumers through their energy bills. It should be noted that ECO is replacing two other schemes—the Carbon Emission Reduction Target (CERT) and Community Energy Saving Programme (CESP)—which also aimed to provide energy efficiency improvements through an obligation on energy companies.

7. DECC told us that the principal objective of the Green Deal and ECO was reducing carbon. Other aims of the scheme include:

boosting the low carbon economy;
empowering consumers to make energy efficient home improvements;
empowering businesses to compete for energy efficiency opportunities in new ways;
levering in new private investment; and
ensuring that robust consumer standards are met.[7]

8. ECO is intended to:

provide insulation measures to households in specified areas of low income;
provide support to low-income consumers that are vulnerable to the impact of living in cold homes, including the elderly, disabled and families; and
deliver 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.[8]

Outcomes: what does success look like?

9. There is no doubt that the Green Deal is a high profile policy with a lot riding on its success: it will contribute towards all three of DECC's core aims of reducing carbon emissions, ensuring energy security and delivering affordability. Given the prominence of the Green Deal, we believe it is appropriate to ask what a successful outcome would look like. Only when clear outcomes have been specified will it be possible to assess whether the policy is delivering effectively or not.[9] As British Gas explained to us:

Consideration should be given to establishing a forecast for each measure so that progress can be tracked against expectations, and mitigating actions instigated where necessary.[10]

10. We were therefore surprised that DECC was not able to provide us with a well defined set of expected outcomes. The Department's written submission identified only two concrete outcomes for the Green Deal and ECO:

potential carbon savings of 4.5 million tonnes of CO₂ per year by 2020; and
benefitting an extra 100,000 households in low income areas each year (making a total of around 230,000 households).[11]

11. The Minister was either reluctant or unable to answer our questions about exactly what he hoped the Green Deal would achieve. For example, when we asked the Minister how many homes he expected to have improved over the next five years, what the net benefit per home would be, and what the carbon reduction would be, he was not able to give us a definitive answer. His official, Mr Thomas (Deputy Director, Green Deal Consumer Demand), told us that the Department expected 1 million Green Deals by March 2015 but then qualified this by adding that this figure included "installations involving ECO, installations not involving ECO, people paying for things through Green Deal finance and people not paying through that".[12]

12. The Department provided some clarification in written supplementary evidence; reiterating the anticipated carbon savings of 4.5 million tonnes of CO₂ per year by 2020 and estimating that the Green Deal and ECO would support between 39,000 and 60,000 jobs in the insulation sector by 2015.[13]

13. Several witnesses told us that many of DECC's projections for Green Deal outcomes had been revised downwards. For example, Mr Sinfield (Insulation Industry Forum) told us that DECC had previously forecast that 250,000 jobs would be created through the Green Deal.[14] The Association for the Conservation of Energy said DECC had revised its projection for marketplace worth and carbon savings downwards too.[15]

14. In order to remain on track with carbon budgets, the Committee on Climate Change has suggested that 6-7 million cavity walls will need to be insulated by 2020, as well as 7 million lofts and in excess of 1 million solid walls.[16]

15. Our role as a select committee is to hold the Government to account. It is impossible to do this if the Government itself cannot explain more precisely what it is hoping to achieve through its policies. It is unacceptable that, three years into the life of this Parliament, Ministers are incapable of defining the actual goals of one of the Coalition's flagship policies. This is not a question of "micromanaging" but rather trying to gain an unambiguous view of what the Department expects to happen as a result of its policy intervention. This would allow us to assess in future whether the policy is on track, underachieving or indeed exceeding expectations.

16. We hope that, in the spirit of open scrutiny, the Department will set out in its response to this report what the most recent projected outcomes of the Green Deal and ECO are. In addition to expected carbon savings, it would be useful to identify outcomes for DECC's other objectives of the scheme (namely: boosting the low carbon economy, empowering consumers, empowering businesses, levering in new private investment, and ensuring consumer standards are met).

USE OF TARGETS

17. Establishing a forecast is not the same thing as setting a target. Many witnesses argued that setting take-up targets for the Green Deal would be a bad idea.17] This was partly because it is simply too early to know what might be realistic. [18]However, we also heard that setting targets for uptake of the Green Deal—which uses a market-based approach— could lead to overselling, which could be detrimental to consumers and the overall reputation of the scheme. [19]Of course, ECO operates in a different way to the Green Deal; it is a regulatory approach and uses targets to drive action from the companies who are subject to the obligation. Dr Eyre (Environmental Change Institute, University of Oxford) noted that there are existing targets under article 7 of the new European Energy Efficiency Directive for energy efficiency improvement.[20]

18. While it would be useful for the Department to set out projections for uptake of the Green Deal, we do not believe that it is appropriate to set targets. The Green Deal uses a market-based approach and so setting fixed targets could lead to hard-selling or even mis-selling in order to meet goals. This would be detrimental to consumers.

Monitoring and evaluation: methodology

19. As we have already noted, the Green Deal is a flagship policy with a great deal riding on a successful implementation. Ongoing monitoring and evaluation will be very important in ensuring effective delivery; it should allow any problems to be identified so that they can be rectified and should also distinguish aspects that are working well so that they can be replicated.

20. We are aware that DECC does have plans to track and evaluate the progress of the Green Deal. However, much of the detail of exactly how the evaluation will be conducted and what it will look at remains opaque. At the time of writing (May 2013), DECC had not published any kind of evaluation plan for the Green Deal and ECO.

21. DECC told us that it will "gather an extensive set of data from delivery partners as the Green Deal is rolled out".[21] There are also plans for "a specific evaluation study that will track awareness of Green Deal and appetite for installing energy efficient measures amongst consumers over a period of time".[22] The Department later told us that "we have also started to put in place our plans for longer term evaluation and have already undertaken one survey of the domestic consumer experience".[23]

22. We encourage DECC to finalise its evaluation strategy for the Green Deal as soon as possible. This is particularly important for areas where baseline measurements will be required to assess changes over time (such as energy usage before and after measures are installed).

23. Witnesses suggested a number of methods that could be used as part of the monitoring and evaluation of the Green Deal and ECO. These included:

conducting a sample survey of Green Deal participants to gather data on the characteristics of who is engaging with the scheme;
conducting a sample survey of Green Deal participants and combining this with qualitative research to assess consumer experience and satisfaction;
conducting a sample survey with a subgroup of Green Deal participants to assess the experiences of fuel poor, low income and vulnerable consumers;
conducting a "mystery shopping" exercise to assess the quality of advice given to consumers;
conducting expert monitoring of Green Deal installations to assess the quality of work and to measure actual energy usage and expenditure on energy bills; and
conducting longitudinal studies to gain an understanding of consumers' journey through the Green Deal process, from initial enquiry through to post-installation.[24]

24. We believe that all of the methods outlined in paragraph 23 could form a useful part of a monitoring and evaluation programme for the Green Deal. Two in particular strike us as being particularly important: research that seeks to understand consumer experiences on a longitudinal basis (following the Green Deal process from start to finish) and expert assessment of actual energy usage and expenditure on bills before and after measures are installed. We recognise that these types of study can be expensive to carry out. We therefore recommend that DECC should attempt to co-ordinate its own evaluation studies with research being carried out by other institutions in this area, in order to maximise the utility of any data being collected. For example, the five End Use Energy Demand research centres that were announced in late 2012 could potentially contribute towards the evaluation process. Energy companies will also conduct their own monitoring.[25] DECC should use the Low Carbon Innovation Coordination Group to ensure that research is properly joined-up and provides the maximum use to policy makers. Chapter 3 sets out some of the specific questions that a collaborative research and evaluation approach like this should seek to address.

25. DECC told us that there may be a delay in accessing some of the data needed for evaluation:

In collecting and analysing information against indicators, it is important to recognise some of the time lags involved. In some cases, this is because data only becomes available over longer timescales - such as the National Energy Efficiency Database, which reports on changes in actual energy use. In other cases, such as when building evaluation evidence, this can only be considered to be representative and robust when collected over a longer period of time.[26]

26. While we recognise that there will be a time lag involved in collecting some data—such as measuring energy usage, which needs to take place over a number of years—it is nevertheless essential to carry out monitoring of impacts in the short-term too, so that any teething problems can be identified and ironed out at an early stage.[27]

Monitoring and evaluation: areas for scrutiny

27. We have identified 7 key areas where we believe scrutiny would be beneficial: