UK Government Going Green

30 April 2013

The UK Government continues to move forward with its latest energy efficiency scheme. It is hoped that the Green Deal will aid much of Britain improve old, leaky homes, cutting carbon emissions in the process.

Going Green

Five years ago, the UK Government passed the Climate Change Act 2008, confirming its commitment to reducing carbon emissions by 80% before 2050.

The long-term proposal came after the UK’s carbon footprint peaked at 852 million tonnes in 2004.

Between 2008 and 2009, a 19% decrease in carbon emissions was recorded, but the following year saw a 10% increase, sparking the Government to refocus its attempts at reducing its carbon footprint.

The Green Deal

After a series of delays, the Green Deal was officially launched on January 28th 2013.

Orchestrated by the Department of Energy and Climate Change (DECC) and administered by Ofgem, the scheme has been devised to aid homeowners, tenants, landlords, and commercial businesses to make their properties more energy efficient.

The Government hopes to reduce the number of people facing fuel poverty, which is expected to be in the region on nine million by 2016.

The scheme offers upfront capital to pay for more than 40 energy efficient home improvement measures. Those signing up to the Green Deal can retrofit their property with Solid Wall Insulation, Cavity Wall Insulation, Loft Insulation, Solar PV, improved heating systems, double/triple glazing, and much more.

An initial assessment is carried out on a property to determine which improvement measures are best suited. Following this detailed evaluation, a Green Deal plan can be drawn up providing the necessary funding to make the changes.

The Golden Rule

Under the scheme, the sum borrowed for renovations is repaid via the property’s energy bill. Annual interest is charged at 6.96%, while a £63 set-up fee and £20 annual administration fee are also required.

However, under the scheme’s ‘Golden Rule’, the cost of repaying the loan, with interest and admin charges, must not exceed the sum saved by making the changes in the first place.

For example, Cavity Wall Insulation is expected to save the average property £135 per year. Therefore, the cost of repayment must not exceed £135 per year. Likewise, Solid Wall Insulation is expected to save £475 per annum, which means bill payers can expect to pay no more than £475 in repayments.

Although householders will not see the initial savings, when the total sum is repaid, bills will be reduced. DECC is adamant that no bill payer will be out of pocket because of the Green Deal.

Initial Response

After a fairly slow start to the campaign, which was marred by an assortment of technical and financial issues, the Green Deal saw a boost in its second month.

More than 7,000 Green Deal assessments – which evaluated the worth of improvements such as Loft Insulation and Cavity Wall Insulation – were lodged during March, the second full month of the scheme.

The Government heralded the early days of the scheme as a success with the potential to grow and was also pleased by the number of jobs being created.

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