First of all – Climate Change!
It is widely reported that the average temperature of the Earth’s surface is not only rising, but rising at an increasing rate. The average temperature has risen by almost one degree centigrade since 1900, with the majority of that rise taking place since the 1970’s.
Apparently, due to the burning of fossil fuels more than thirty billion tonnes of carbon dioxide are emitted into the atmosphere every year and this is contributing to global warming. The threats of global warming, rising sea levels and potentially catastrophic disruption to normal life are causing Governments all over the world to take action.
Most Western Governments are taking steps to reduce the emission of so-called ‘greenhouse gases’ by reducing the use of fossil fuels in the generation of energy and by improving energy efficiency. The reduction in the use of fossil fuels has resulted in the promotion of ‘green energy’ sources such as wind, wave and solar power and that is evident by the subsidies which these energy sources attract.
In attempting to improve energy efficiency the Government is encouraging the use of ‘A’ Rated energy efficient products such as refrigerators and central heating boilers as well as promoting the insulation of buildings. There are over 26 million homes in the UK and it is claimed that over half of them have inefficient energy systems, poor insulation levels, or both.
Also, the Department for Energy and Climate Change (DECC), which was responsible for managing the Green Deal estimated that almost a quarter of all UK carbon dioxide emissions and a third of all carbon monoxide emissions are generated from domestic properties.
Green Deal Legislation
With 1990 as the base year, commitments given by successive British Governments require a 34% reduction in carbon dioxide emissions by 2020 and an 80% reduction by 2050.
The Climate Change Act (2008) legislated for a reduction in carbon emissions by setting legally binding ‘carbon budgets’ in the domestic, commercial and industrial sectors of UK life and in 2011 the Energy Act took this further by introducing the Green Deal.
Running alongside the Green Deal was the Energy Companies Obligation (ECO) and the Electricity and Gas (Energy Companies Obligation) Order 2012 was approved by Parliament on 4th December 2012.
It placed responsibility on the big six energy companies to provide funds to pay for the installation of certain home improvements intended to make private homes more energy efficient.
It was estimated that around £1.3 billion per year would be made available to cover the cost of these energy-saving home improvements. The ECO Scheme was scheduled to run initially until March 2015, was extended to March 2017 and is now extended further.
Green Deal in Practice
The ‘Golden Rule’, on which the Green Deal Initiative was based, was designed to ensure that the initial amount borrowed to fund a particular energy efficient home improvement, was limited by the value of future savings on energy bills as a result of that installation.
So if installing a more energy efficient central heating boiler or double glazing is going to save, say £30 per month on your energy bill, the initial loan is restricted so that the £30 per month saving is sufficient to repay it. But it was difficult to ensure that the savings will be sufficient to repay the loans because it was affected by changes in future energy use (possibly due to changes in occupancy levels), increases in the cost of energy and not least….the cost of the loan.
What all this means, is that someone is going to have to assess which type of home improvement will save money on energy bills for a particular home, how much they will save and whether the saving can pay the upfront cost of the installation.
This was the job of a Green Deal Assessor and the Green Deal process was broken down into four main stages.