Green Deal and ECO

1. Green Deal and ECO Ann McKenzie & Angus Macleod

2. 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

3. 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.

4. 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

5. 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

6. 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 practice Green Deal Oversight body will be charged with ensuring organisations comply with the Code and accreditation and certification requirements.

7. 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

8. 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.

9. 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

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

11. Currently consulting on EPBD • Aim to make the requirement to disclose as simple as possible.. (info is illustrative)

12. Wider policy context Sustainable Housing Strategy Group Review of Fuel Poverty led by Fuel Poverty Forum Why 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

13. 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

14. 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

15. 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 businesseswill find it hard to compete for Green Deal business

16. 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

17. 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.

18. Consultation Links 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.pdf www.scotland.gov.uk/Resource/Doc/217736/0123060.pdf