Posted by: Nick Duxbury17/05/2012
Today climate change minister Greg Barker tweeted: ‘Terrific meeting with PM & DPM on #GreenDeal at No10. Strong support but lots more to do before launch in autumn, so full steam ahead!’
For me, this prompted the question: is the green deal in crisis? It hardly lacks problems, but do they present a collective crisis to the extent that the policy is really on the ropes? Against all the weight of headline-based evidence, and charged by blind optimism, I am going discard my usual journalistic scepticism, roll the dice and say no.
Looking at the media coverage, it is clear that the problem that has received the most attention in the past week is one that I have not covered in enormous depth in the pages of Inside Housing: the potential collapse of the loft and cavity wall insulation industry during the transition from CERT and CESP subsidies to the £1.3 billion ECO fund in January. Much of the headlines around green deal crisis have stemmed from the insulation lobby. This is absolutely understandable as, from their perspective, the green deal spells crisis – DECC’s own impact assessment predicts a 93 per cent fall in installation of loft insulation and a 70 per cent fall for cavity wall insulation. However, it does not constitute a life and death problem for the green deal.
A report today in Building magazine suggests that the government is considering extending CERT and CESP to smooth over the interim period. Although this would make an enormous amount of sense for a lot of people, it would also be problematic. Right now some energy companies are on track to meet their CERT and CESP targets while others are looking like they will miss them. It would clearly be unfair to let some firms off – especially when they had been threatened with fines of up to 10 per cent of their global turnover. Indeed, you can bet the family silver that were CERT and CESP targets to be extended, some of the big six giants would be on the blower to their lawyers pretty sharpish and the government would, in turn find itself in some very hot water.
The option Building reports is being mooted is an interim measure that could ‘smooth over’ the transition from CERT and CESP to the £1.3billion ECO in January. In short, this would be a CERT and CESP mark two – an extension or a bridging subsidy that would carry the sector over.
This would be equally unpopular with the big six. Energy companies are still lobbying for the current targets to be relaxed or dropped and ECO to be reduced in size – the chances are they would balk at the prospect of having to pay for a second target. In any case, they would simply pass on the costs to consumers through bills – a move that the government would oppose. As one source told me, ‘it is being discussed, but I haven’t seen any documents to suggest it is going to happen, though.’
It is true that interim measures are being considered. But it is far from certain that this is the route the government will go down. The problem facing the DECC is that for every action, there is a reaction. The more that energy company obligation costs people’s energy bills, the worse the regressive impact on fuel poverty. This might not be such a priority for the insulation sector, but it will be at the top of the list of concerns for the government which right now is realising that ‘green taxes’ on energy bills are not vote winners (see the ridiculous saga around ‘conservatory tax’ for evidence of how fickle it can be on this front). Indeed, the BBC’s green deal crisis story is much more closely bound to the fact that green deal will fail to tackle fuel poverty than it is to its failure continue subsidising the insulation sector sufficiently. The fundamental problem is that retrofitting homes to cut carbon does not necessarily mean reducing fuel poverty. This has long been flagged up by the Hills Report which was commissioned by the government. It strikes me the only change is that number 10 is now engaging with the sector with these concerns ahead of publishing secondary legislation next month.
There are plenty of other concerns that have barely received any page space that are all potential deal breakers: the absence of any State Aid sign off from the European Commission (which was only presented to the EC a month back and can take up to 18 months) for either the Green Investment Bank, the Green Deal Finance Company, or even some of the huge council tenders for green deal programmes, for instance.
All this said, I think that casting the scheme as being in a state of crisis is something of an exaggeration – perhaps an element of spin from industry bodies with vested interests is creeping in here. At the end of the day, the green deal is the government’s flagship energy efficiency scheme. While concerns will be taken seriously ahead of the introduction of secondary legislation, the idea that the PM is on the verge of binning the scheme lacks credibility. If anything, the sector should be pleased that number 10 is listening to industry fears rather than interpreting this as a green deal Armageddon. There are some massive hurdles still to overcome, but I am marginally enthused that the government appears to be making an effort to do something to overcome them.
What is still most disconcerting is the persistent grumbling from senior Tory ministers about some of the most fundamental aspects of the policy. It undermines a lot of the work DECC are putting into creating some sense of momentum for the policy.
So, it’s great to hear that the PM and his deputy have nothing but ‘strong support’ for their flagship retrofit programme – now let’s hear some similar sentiments from the PM himself who so far has been too quiet by far on the subject of green deal. Although, if he were to lend his voice it would doubtless be considered proof that the green deal really is in crisis.
From Green paper
Examining the latest developments from the world of sustainable housing.