Green Deal and ECO

Ann McKenzie & Angus Macleod

Green Deal and ECO• Energy Act 2011 sets framework for GB-

wide Green Deal & ECO policies led by UK Government: operational Autumn 2012

• SG working closely to ensure Scottish circumstances taken into account

• Consultation open till 18 Jan 2012: Green Deal and ECO and secondary legislation

How will Green Deal work in Scotland?

• Consumers offered energy efficiency improvements to their homes, community spaces and businesses at no upfront capital cost

• Payments recouped through a charge in instalments on the electricity bill over the long term (eg 25 years)

• The Green Deal will include owner-occupiers, the private and social rented sectors and the commercial sector.

How will Green Deal work in Scotland?

• A market mechanism, funded by private capital (though some LAs have shown interest)

• Repayments no greater than estimated energy savings – “golden rule”

• Moving property: the financial obligation is on the energy bill-payer - ie move out and obligation moves to the next bill payer

• It is not a conventional loan since the bill payer is not liable for the full capital cost of measures

How will Green Deal work in Scotland?

• Must have a fabric assessment (revised rdSAP based for domestic properties) – used for golden rule cap - and an occupation and use assessment

• Generally measures have to be “fixed”. Consultation seeks views on eligible non-domestic measures.

• EPCs will aid obligation to disclose Green Deal finance on a property to potential occupants

How will Green Deal work?Assessors and Installers will have to be:• Certified by an accredited certification body against the

relevant Green Deal standard set out in the Code of Practice

• A “member” of the certification body which certified them.

• Comply with the Code of Practice; • Agree to keep clear records of work done and allow

monitoring of work when requested.Green Deal Providers will have to agree to the code of

practiceGreen Deal Oversight body will be charged with ensuring

organisations comply with the Code and accreditation and certification requirements.

Progress / work in progress• Flexibility in the Energy Act• Remote Advice service for Scotland• Accreditation • Installers & assessors• Finance: We are exploring innovative finance proposals to ensure

that Green Deal can be offered to all areas in Scotland. • EPBD Regulations Consultation. Sets out Revised EPC• Development of EPC database (covering non-dom and GD

requirements) Domestic• Solid wall insulation pilot scheme in Orkney and Fife this year will

offer interest free loans for SWI• Assessment metric - climate• Hard to Treat homes in Scotland

ECO: Energy Company Obligation

• UK Govt sets outcome & obliges energy suppliers to deliver• 2 targets:

– Carbon Saving (reduce domestic carbon emissions) – Affordable Warmth (reduce heating costs for target households)

• It is not a pool of money that Govt uses to deliver measures. • DECC expect overall spend by suppliers on meeting the

both targets to be approx £1.3bn a year.• If suppliers spend all of this and if they spend 9% in

Scotland this would equate to around £120m in Scotland per year

• Carbon Saving target expected to be greater share of spend by suppliers.

ECO …ECO to focus on:• ECO Affordable Warmth – vulnerable and poor

households• ECO Carbon Saving – any household (potentially with

distributional safeguard). DECC envisage many take up GD finance.

Eligible measures• GD - relatively broad• ECO Affordable Warmth - relatively broad• ECO Carbon Saving - a Green Deal assessment must

identifying it as appropriate AND restricted in DECC proposals to “solid wall insulation” with DECC accepting evidence on other hard to treat wall types

EPCs in Scotland• Currently consulting on EPBD recast• Addendum: EPC and recommendations report (domestic) draft design

Currently consulting on EPBD• Aim to make the requirement to disclose

as simple as possible.. (info is illustrative)

Wider policy context• Sustainable Housing Strategy Group • Review of Fuel Poverty led by Fuel Poverty

ForumWhy we need Green Deal and ECO to deliver :• Fuel poverty – 2016• SHQS - 2015 (and future standard)• Climate Change (Scotland) Act – Milestones set

out in Report on Proposals and Policies • Energy Efficiency Action Plan – reduce energy

consumption by 12% by 2020

Maximising investment

• £55m SG investment in fuel poverty and insulation programmes this year

-including £12.5m for UHIS• £65m investment in 2012-13• ECO alone worth c. £120m per annum in

Scotland• Leverage of investment through SG

programmes

Issues highlighted by SG to DECC

• Flexibility to continue with UHIS-style approach• Affordable Warmth – lack of fit with SG

programmes• Carbon reduction subject to “distributional

safeguard”– implications for social landlords• Individual consent – barrier to large scale social

sector programme delivery• Barriers to work in flats• “Additionality” rules – regulation options

Consultation• Stakeholder Concerns raised during

events (Not SG views)– The fuel bill savings offered under the Golden Rule will not be

sufficient to incentivise large scale take-up of Green Deal along the scale envisaged by UK Government. People are used to getting very low cost or totally free measures.”

– GD is not appropriate for low income, vulnerable households. They should not be required to incur debt through their fuel bills to pay for energy efficiency measures.

– Low income households should not support costs for others through obligations which put up their fuel bills. Should be more support for Affordable Warmth

– Many potential buyers will be put off buying houses with Green Deal loans attached.”

– Concern that small, local businesses will find it hard to compete for Green Deal business

Consultation• Stakeholder Concerns raised during

events (Not SG views)– Concerns that the assessment process will be too

complex/expensive and/or not impartial enough and that qualifications will not be available in time.

– Concern that a market driven approach will disadvantage remote areas with higher costs

– Community groups, local councils and RSLs will be needed to help marketing to encourage take-up and avoid mis-selling

– Rapid shift from loft and cavity to solid wall insulation will impact on jobs

– Need support for enabling measures – Concern that Affordable Warmth ECO will not be open to social

landlords

Consultation• Stakeholder Concerns raised during

events (Not SG views) – Social tenants should not have to pay for energy

efficiency measures through their energy bills – and it may be more cost effective to do this via rents

– Concern that UK and Scottish Government programmes will work in competition

– Concern that Section 63 regulations will not have intended impact as proposals include exemption if green deal finance is taken up, however no minimum improvement via this route is stipulated in Section 63 or Green Deal proposals.

ConsultationLinks• Green Deal: DECC website with associated documents

(18 Jan) www.decc.gov.uk/en/content/cms/consultations/green_deal/green_deal.aspxhttp://www.decc.gov.uk/en/content/cms/consultations/green_deal/green_deal.aspx

• Scottish Government email address (in case you would like SG to be aware of your GD consultation response):eem@scotland.gsi.gov.uk

• Implementation of the Energy Performance of Buildings (EPBD Recast) (20 Jan) www.scotland.gov.uk/Publications/2011/10/con1427

Addendum: http://www.scotland.gov.uk/Resource/Doc/217736/0122664.pdfwww.scotland.gov.uk/Resource/Doc/217736/0123060.pdf