Check against delivery
I’m delighted to be here at the Ecobuild conference. We have come a long way since I spoke about the Green Deal at this conference last year. We are now entering the final stretch up to the launch of the Green Deal this autumn.
When the Coalition was formed one of our first pledges was for this to be the Greenest Government ever. At the heart of this pledge - particularly given the tough economy we inherited - is energy efficiency.
In a world of increasing energy prices, market volatility and rising energy imports, energy efficiency has never been more important.
That is why we are creating something brand new - the Green Deal. It is truly revolutionary. It will help homeowners, landlords and tenants get a whole range of home improvements beyond insulation, including a whole range of front of house, eye catching measures.
The Green Deal will act as a catalyst to stimulate innovation so that more and more energy savings products come to the market
Today, I wanted to draw out three key points to unpack that simple description of the Green Deal:
- firstly, this is a brand new way of approaching energy efficiency - not a continuation of CERT, CESP, not a son of this or daughter of that
- secondly, it will create a brand new market and opportunities for industry - a market for the aspirational, not just for the worthy or energy sensible
- thirdly, don’t underestimate the power of communities in their many shapes and forms - these will be key to delivering this agenda
But first, to give more context.
In the UK, we have some of the worst performing buildings in Europe. More than half of our homes don’t have sufficient insulation. They leak heat like a sieve.
The UK building stock was responsible for 43% of total UK emissions in 2009.
And despite the relatively mild winter we are coming through, increasing numbers of families are struggling to pay their energy bills and have been hit by rising energy prices. We estimate that this year up to 4.1m households will be in fuel poverty in England alone.
Energy efficiency can help tackle each of these challenges. It is a win-win-win scenario: reducing emissions, saving money and creating opportunities for business.
The Green Deal places consumers at the centre of energy efficiency policy. It isn’t about stop start Government driven and owned programme of works. It is about consumers driving demand, and a competitive market responding.
Backed with strong consumer protection, we are providing people with opportunities for investing in their home - and let’s face it, people are always looking to improve their homes, even in times of austerity. It is part of the British DNA.
Perhaps the tangible benefits energy efficiency improvements can bring, is best illustrated by some pictures. Taking a leaf from the many home improvement shows and magazines - here are some before and after pictures:
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These improvements are a result of a partnership between East Riding of Yorkshire Council, Saint-Gobain Weber and Lloyd Clough.
An area of 55 streets was identified and all properties were of solid wall construction, with the majority around 100 years old. Measures applied were External Wall Insulation, loft insulation and some heating improvements as well as some street improvements.
As you can see the solid wall insulation has drastically improved the appearance of the properties and improved the energy efficiency. Feedback from the project has demonstrated an increased sense of community and a renewed pride in the area.
To give a second example, I had the pleasure of visiting Salford last year, including a tour of homes installed with external solid wall insulation.
Homes on the Regent Park estate were built in the 1970s, timber framed with no wall insulation.
As they had a traditional brick appearance, residents were keen to keep the look. This was something they achieved with a brick effect render on top of the insulation. Here is a resident, talking me through the finished effect.
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Energy efficiency aside, this has clear kerb appeal too.
So I think it important to recognise that energy efficiency is not just about saving carbon, important though that is. It is also about providing people with homes they are happy to live in. It is about tapping into a sense of home improvement.
Of course, the Green Deal isn’t just good for the consumer. It is also good for economic growth. There is a considerable new market opportunity for businesses and industry.
Our analysis supporting consultation proposals suggest that employment in the sector could more than double by 2015. Personally I think these are conservative estimates. And we are talking about billions of pounds worth of investment. This needs to be seen as a 20 year programme which has long term confidence.
In this way, the Green Deal is as much a part of our growth agenda as it is a part of our climate change policy.
No longer will every discussion on energy efficiency focus solely on the insulation industry. The Green Deal has been designed to finance the installation of a broad range of measures across the energy efficiency market. Our goal is to enable the property to benefit from all the improvements that can create savings.
The heating, glazing, lighting and Microgeneration industries will all be able to use this innovative financing mechanism.
Less we-known measures which improve energy efficiency, such as flue gas heat recovery and waste water recovery systems will also be eligible for finance under the Green Deal.
Some new measures have been included in the Green Deal following the consultation with particular relevance to the non domestic buildings. Some of these are simple improvements, such as solar blinds and shading devices - but they can make a big difference to energy savings.
I also want to make clear that where measures which often can’t pay for themselves over their lifetime, they can still be part-financed, either on their own, or as part of a package. As a result, customers can benefit from a package of improvements, safe in the knowledge that the Green Deal charge will always be less than the savings the measures can generate.
We will also streamline the process by which new measures are added to the Green Deal. We want to ensure that new and innovative measures can be included in the framework on a systematic basis once their performance is independently verified.
It was announced on 8th March that we will be funding a £10 million competition to be launched in early May to support incorporation of innovative technologies which can achieve significant energy savings in existing non-domestic buildings.
The market for energy efficiency is large. Around 6 million households do not have double glazing in all their windows. Approximately 70% of English homes do not have a full set of heating controls. And there are still 16.4 million non-condensing boilers
Sector specific updates
All sectors which manufacture, distribute and install Green Deal eligible measures can benefit from the new financing arrangements.
The insulation sector will see a large increase in investment as we start to tackle the 7 million solid wall properties that have yet to be treated. It is vital the growth of the sector is safe and sustainable.
I would like to confirm the position for the Microgeneration industry. The Green Deal and Renewable Heat Incentive are two key policies for DECC. There are a number of potential links between the Green Deal and the domestic element of the RHI, including similarity of customer base, and some technologies.
Some renewable heat technologies will be eligible under the Green Deal finance.
In addition, improving energy efficiency in a property can help to boost the effectiveness of many renewable heat technologies, such as air and ground source heat pumps.
We believe there is plenty of scope for greater integration in the marketing of the RHI and the Green Deal, allowing consumers to make more informed consumer choices.
The framework opens up the market, but we know that for industry it is essential the demand is there, so you can be confident in your investment.
Although the Green Deal is a market driven initiative, we recognise that we have an important role to play.
The Chancellor announced a £200m injection of Government funding to provide a time limited introductory offer. It demonstrates that we are serious about hitting the ground running. We will lay out the details of how this will be used as we get closer to the launch of the Green Deal.
Colleagues in the Department of Communities and Local Government are consulting on changes to Part L of the Building Regulations that could further drive take up of energy efficiency measures from October 2012.
Consumer Advice Line
It is of course vital that consumers have the information to feel confident in making decisions about installing energy efficiency measures and which Green Deal offer is best for them.
To address this, a new advice service goes live on 2nd April, and will initially provide impartial advice to consumers on existing energy efficiency offers and renewable energy incentives.
This service will come into its own in the run up to, and following the launch, of the Green Deal.
Opportunities for Industry
To help ensure the best deal for consumers, we wanted to encourage a wide variety of different businesses, local authorities, social housing providers and third sector organisations to play a role in this new market.
I’m pleased to say there are a number of organisations looking to enter the market with a variety of different business models. These models include - but are by no means restricted to - keeping all the functions in house, out sourcing the supply chain and working in partnership with SMEs.
Green Deal Providers
We want a thriving Green Deal Provider market. We want a range of providers to enter the market, each with their own unique selling points.
We have revisited our consultation position on Green Deal provider authorisation requirements to help promote a competitive market, and reduce costs which will ultimately be passed onto the consumer. Within this, we are of course ensuring that robust consumer standards are met, creating a market that balances consumer protection and burdens on businesses.
Consumer protection is at the heart of the Green Deal and we want to make sure the Green Deal is the best deal for everyone. As a result, it is essential to strike a balance between adequate consumer protection and not creating cost prohibitive barriers to market entry.
With this in mind, I am pleased to announce that we are proposing to remove the requirement for Green Deal Providers to have a surety bond in place prior to authorisation.
In addition, we are removing the need for Green Deal Providers to provide an Independent Conciliation Service. Instead, we are procuring a bespoke Green Deal Ombudsman to deal with any Green Deal complaints.
We have also changed the warranties proposal, removing the requirement to hold warranties for the length of the plan. We are still proposing to include robust minimum standards.
Use of existing schemes where appropriate will mean that consumers will receive as much protection as is available. Where schemes don’t exist, our proposal to include a 5 year product warranty plus ten years of consequential building damage cover go further than the current industry norm. The minimum requirements we are putting in place means the warranty will be of real value to the consumer.
Consumer protection is still of utmost importance and we really feel that the position we have reached is the most suitable for consumers and business.
Industry Gearing Up
But it’s not just companies themselves gearing up, it’s about ensuring industry understand their place in the Green Deal and are aware of the many opportunities that it brings about.
A Green Deal Provider guide to be issued by the Department shortly will contain a step by step guide on how to become a Green Deal Provider.
I am aware the Construction Products Association and Energy Efficiency Partnership for Homes have collaborated with a number of other industry partners to produce a “Green Deal Opportunities for Industry” document. This is aimed at helping the whole supply chain to gear up for the Green Deal and will be published in the coming weeks.
The National Insulation Association recently released a Green Deal bulletin service aimed at providing information and support to their Members.
We have been having conversations with organisations from the outset, but the tone is changing. It is time to move from theory to practice.
I would encourage you to consider your role in the Green Deal.
I was pleased that DECC announced on 8th March £3.5m to train assessors and installers. We are working closely with the Green Deal Skills Alliance to ensure that support goes to where it is most needed. £2.5m of this will be to train solid wall insulation installers with the help of Construction Skills. £1m will be used to train Green Deal Advisors, operating at the front line of the Green Deal.
We hope to set out more detail on this in May.
I am also pleased to announce that DECC, working with supply chain experts will host a series of up to ten regional events as we get nearer to the launch of the Green Deal. These events will be designed to ensure that companies up and down the country - small or large - understand what they need to do to be in the Green Deal.
Having the right professionals to provide quality impartial advice to households and businesses is necessary for the success of the Green Deal.
We have been doing a significant amount of work with stakeholders to design the right assessment framework to support the Green Deal. National Occupational Standards setting out the high level expectations of all Green Deal Advisors are already available on the DECC website.
We have also responded to your feedback to the consultation. We are strengthening the protections for consumers - providing them with more transparent information on the role of the advisor before a visit even take place. These changes will bolster the already robust framework whilst allowing advisors to operate as part of a dynamic and flexible market. These improvements will be set out in the syllabus for all Green Deal Advisors that will be ready by the end of March.
Preparations are well underway to develop material to help training of Green Deal Advisors get off to a flying start. In the coming months we look forward to the first batch of Green Deal Advisors being trained.
Our framework has been designed to create robust standards for the installation of measures to increase consumer confidence, whilst ensuring we are realistic about what industry can deliver and building on existing best practice.
The British Standards Institution recently published the new standard for Green Deal installers. This represents a huge achievement and I am grateful to those industry representatives who worked with us to create this standard in record time.
Those wishing to install measures under the Green Deal must be certified to the new standard. We are working closely with the UK Accreditation Service to ensure certification bodies are ready and authorised in time.
We are continuing to work with the sector skills councils to update and develop new National Occupational Standards and identify where further support is likely to be required to build up the skilled workforce we will need.
For manufacturers the Green Deal will drive innovation and ensure quality standards are maintained. We will also develop a process to recognise the ‘better than average’ performance of products in the financing arrangements.
Energy Company Obligation
Of course, it’s not all about the Green Deal. We’re also ensuring through the new Energy Company Obligation that support is provided to tackle fuel poverty and for those who need the most expensive measures such as solid wall insulation.
We are working with industry to design a market-based brokerage system which will give Green Deal Providers a fair and transparent means of accessing ECO subsidy. This will mean they can make a competitive offer to consumers who are looking for a Green Deal that includes expensive solid wall measures.
Power of communities
Finally, and perhaps most importantly, strong local participation will also be key to rolling out the Green Deal. We don’t want pepper-potting. We want a coherent role out from a range of partners.
This Government is passionate about giving more power and responsibility to local people, neighbourhoods and communities to create better local services and outcomes. It is the Big Society.
And the Green Deal offers opportunities for Big Society style collaborations working with and through a range of partnerships according to local needs.
Landlords - both private and social - could all have an important role to play here, alongside Local Authorities and Community Organisations.
These organisations will know the needs and wants in their local areas. They will also be able to foster local economic development including supporting the maintenance and generation of local jobs and skills.
There is already evidence that communities are responding. Our £10 million Local Energy Assessment Fund is helping local communities come forward with their plans and preparation for the Green Deal.
From the London Borough of Merton’s local champions producing a list of households ready for a Green Deal advisor visit to Warwickshire’s ‘carbon dating’ matching interested consumers with an open home demonstrating the results.
And from Brighton’s ‘go early’ Green Deal pilots to Church Stretton in Shropshire installing solid wall insulation in their Town Council offices.
This is just a sample. There are over 200 more inspirational examples of how local communities are gearing up for increased energy efficiency and renewable energy generation through the LEAF fund.
In terms of next steps, the Green Deal framework is now receiving its final touches.
The primary legislation to make the Green Deal a reality is already on the statute books, we passed that last year. And we are currently finalising the secondary legislation following the close of our public consultation. Thank you to anyone who took the time to respond. We are carefully going through the responses.
This has been a collaborative partnership. Throughout this process stakeholders have been advising us on how to shape the framework to work with the grain of business whilst offering robust consumer protection.
And I hope it doesn’t stop there. As we enter the lead up to launch, I look forward to further collaboration with you to help make this market a success that continues to grow right through to the end of the decade.