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Green light for Green Deal

This week, the Government set out secondary legislation that will give industry the green light to bring the Green Deal energy efficiency market into operation, alongside measures to strengthen consumer protection, reduce industry burdens, and implement the Energy Company Obligation (ECO).

Energy Secretary and Climate Change Secretary Edward Davey

According to DECC, more and more families are being hit by the rising cost of gas and electricity, but inefficient homes are using a lot more than they need to. Millions of homes do not have full double-glazing. More than half do not have enough insulation or an efficient condensing boiler. Most do not even have proper heating controls. Overall, our leaky buildings account for 43% of the UK’s total greenhouse gas emissions.

The Government-backed Green Deal programme will help bill payers make energy-saving improvements to keep their homes warm and cosy. With the Green Deal, people will be able to pay for some or all of the work done with the savings expected to be made on energy bills. ECO, a subsidy from energy suppliers, will provide extra help for those most in need and for properties that are harder to treat.

These policies will boost the burgeoning low carbon economy by supporting up to 60,000 jobs in the insulation sector alone by 2015, up from around 26,000 today. They will empower consumers by giving them new ways of funding home improvements and empower businesses by enabling them to compete for energy efficiency opportunities in new ways.

In addition to setting out the parts of the framework that are already in place, the announcements give clarity to the market by detailing the next steps to getting Green Deal and ECO rules set by October, including, in legislation to be laid later this week, ensuring support worth around £1.3bn a year to deliver energy efficiency and heating measures across Britain to help tackle fuel poverty and climate change. An increased focus on poorer areas should see an extra 100,000 households in low income areas benefiting each year, compared to our proposals, bringing the total number of low income households and those in low income areas assisted to around 230,000 a year.

Energy Secretary and Climate Change Secretary Edward Davey (pictured) said: “I have published the Government’s detailed plans along with legislation that will allow the industry to bring the Green Deal into existence. The Green Deal will play a huge role in improving the energy efficiency of our homes and businesses, with ECO making sure that the most vulnerable homes benefit too. We have listened very carefully to what industry, consumer groups, and other organisations have told us. Broad support for a managed, tested and careful introduction of the Green Deal fits exactly with our objective to provide an excellent customer experience from day one and a market where a range of new players can readily participate.

“I am determined to make sure that, in addition to creating huge opportunities for Green Deal providers and businesses along with thousands of new jobs, this new market in energy efficiency will deliver the very best deal for consumers.”

Following consideration of more than 600 responses to the Government’s November consultation on the Green Deal and ECO, full details of the final policy are set out in the response document published this week.

This includes ensuring that robust consumer standards are met, creating a market that balances consumer protection and burdens on businesses. Changes include improved consumer protections such as restrictions on ‘cold calling’, and new rules requiring Green Deal Assessors to declare any commission they might be receiving for carrying out an assessment and any ties to Green Deal Providers. A change to the warranties proposal eases requirements on businesses to hold warranties for the length of a Green Deal Plan while maintaining robust minimum standards of protection for consumers, including 25 year warranties in the case of wall insulation.

Improvements for behind the scenes operations make it easier for energy companies administering the Green Deal charging to deliver a smoother customer experience.

Changes have also been made to the ECO to allow more hard-to-treat cavity walls to qualify for support, and to provide specific support for low income and rural areas. These changes will help the insulation industry – which has been supported by current schemes – transition successfully to take advantage of the new market opportunities created by Green Deal and ECO. An estimated technical potential of around 2.8million hard to treat cavity wall properties will now be eligible under the ECO.

The Government has also confirmed it will introduce the Green Deal through supporting a responsible and controlled approach with full national systems testing. This is to ensure the market has the opportunity to build over the next 18 months, meeting Government ambitions for a national energy efficiency retrofit across the next decade and beyond.

The Green Deal framework will be built on sound foundations, starting with assessors, installers and Green Deal Providers to ensure they are ready to start work in October. From August this year, accredited certification bodies can submit applications to register with the Green Deal Registration and Oversight Body, and will then be able to register assessors and installers as ‘Green Deal Approved’. Similarly, potential Green Deal Providers will be able to apply for approval. At the same time, new systems introduced by energy suppliers for the collection of the Green Deal charge will be robustly tested. This will ensure that preparations can be made ready for the next step; the signing of the first Green Deal plans in January 2013, from where the market for the Green Deal will continue to grow.

The publications also include a final impact assessment and associated research, and confirm the appointment of Ofgem to be the ECO Administrator. Also today, guidance for industry sets out which measures will qualify for Green Deal finance and the ECO – 45 in all – providing clarity on which sectors fall within scope and underlining the opportunities for innovation enabled by the Green Deal.

The complete ministerial statement from Edward Davey, Secretary of State for Energy and Climate Change, is below:
Today my Department is publishing the government response to the Green Deal and ECO consultation ahead of the introduction of the Green Deal this Autumn. Having considered over 600 written responses from a variety of organisations and individuals, I would like to thank all those who submitted a formal response or participated through the various activities held during the consultation. Feedback from the consultation directed our focus towards four key policy areas; strengthening consumer protection, reducing industry burdens, improving behind-the-scenes operations and revising ECO. I have acted on these areas, and full details of the final policy are set out in the government response.

Following consultation, this week I am laying before Parliament the key statutory instruments that establish the market framework of the Green Deal and ECO, subject to the affirmative procedure. I am laying these instruments alongside the final impact assessment, which evaluates the net present value of the policies. My Department has simultaneously published associated research that informed our final conclusions. Later in June I will lay before Parliament a second tranche of more minor Green Deal statutory instruments subject to the negative procedure. I will also be bringing forward the Green Deal Code of Practice and modifications to energy licences and codes.

Having taken over this programme four months ago, I have spent this time talking to stakeholders and understanding how to ensure successful delivery. Mindful that we are creating the foundations for a market that will run through to 2030, and in light of representations I have received, the regulations I am laying today provide for a carefully managed introduction of the Green Deal starting this Autumn.

Subject to parliamentary approval of the Green Deal legislation, accredited certification bodies will be able to submit applications to register with the Green Deal Registration and Oversight Body from August. The certification bodies will then be able to register those assessors and installers they have certified. Similarly, potential Green Deal Providers will be able to apply for their approval. This will allow participants time to seek formal authorisation ahead of the introduction of the Green Deal framework in the autumn. It is important that the market will be able to test systems properly during the first weeks following the introduction of the Green Deal framework and ahead of the first fully completed Green Deal plans in early 2013. In the meantime, the Energy Company Obligation (ECO) legislation I have put before Parliament today will ensure that a new ECO is established from October this year. This will mean that an estimated £1.3 billion worth per year of energy efficiency and heating measures can be delivered across Great Britain. This will be directed to vulnerable and lower-income households and carbon saving measures. The government remains absolutely committed to tackling fuel poverty.

An important aspect of preparations is training the workforce, and I took an obligation in the Energy Act 2011 to report to Parliament on what steps I have taken to encourage Green Deal installation apprenticeships. On 8 March 2012, in co-operation with Asset Skills and Construction Skills, I announced £3.5m to train up to 1,000 Green Deal insulation installers, and 1,000 Green Deal assessors to our new National Occupational Standard for Green Deal assessment. This training will also include the validation of existing installer training courses to meet the new Green Deal PAS 2030 requirements and the training of trainers to ensure that quality training courses are available. I welcome the wide support from industry for this initiative and the huge level of interest reported by the sector skills councils. We believe the Green Deal has the potential to support up to 60,000 jobs in the insulation sector alone, more than doubling the number of jobs in the sector, and making a real contribution to green growth.

We will work with the insulation sector to explore the value of a second tranche of funding for training later in the year to help those moving from CERT and CESP and into related Green Deal installations. In addition to this, my Department will continue to work with employers and the sector skills councils to ensure that the Government's wider Apprenticeship Frameworks support not only the Green Deal, but also green and sustainable construction more generally.

We have created a robust legal framework that enables a market in energy efficiency to flourish. We are committed to ensuring the interests of Green Deal providers and financiers remain protected to maintain the security of Green Deal asset and thus secure the lowest possible cost finance for consumers.

It is only sensible to keep regulations under review and, for the sake of transparency, I will commit now to review these regulations, in consultation with appropriate stakeholders, before 31 January 2018 and to publish the conclusions in a report. The report will set out the objectives of these regulations and assess the extent to which they were achieved, whether they remain appropriate and, if so, the extent to which they could be achieved with a system that imposes fewer regulations.

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