ACE Researcheceee @ Presqu’île de Giens, June 7, 2013ACE Researcheceee @ Presqu’île de Giens, June 7, 2013 Somewhere between a ‘Comedy of Errors’ and ‘As.

ACE Research eceee @ Presqu’île de Giens, June 7, 2013


Somewhere between a ‘Comedy of Errors’ and ‘As You Like It’?

A brief history of Britain’s ‘Green Deal’ so far

Paper by Pedro Guertler, Sarah Royston and Dave Robson

presented by Pedro GuertlerHead of Research, Association for the

Conservation of Energy


Overview

ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future

• The Green Deal: What is it?(In theory)

• A history of its development(And early implementation)

• Conclusions• Discussion



The Green Deal

What is it, in principle?



What is the Green Deal?


• Home energy efficiency finance mechanism• Designed to address barriers of:

– Up-front capital cost– Long pay-back periods of costly improvements

• Does this by:– Offering a commercial rate, long term fixed-interest

loan for improvements– Being attached to the property, paid back via, and

whoever is responsible for paying, the electricity bill– Ensuring repayments needed to pay back loan are

less than the value of the energy savings created


Origins and ‘ideology’


• Inspired by ‘PACE’ programmes in the USA• Aim to ‘rebalance’ funding: away from

socially-funded towards ‘individually paid for’ energy efficiency

• All major political parties were proposing a variation of it

• Socially-funded energy efficiency support is now only for technologies which don’t pay for themselves


Customer and supply chain ‘journey’



Previously…




A history of the Green Deal’s development…

…and early implementation.



(Some of) the cast



Market-driven


• “This is a market mechanism, funded by private capital, which we believe will deliver far more to consumers than any sort of top-down Government programme” (DECC, 2010)

• “…a more market-focussed approach […], where competition amongst Green Deal providers is likely to drive take-up beyond the levels expected under CERT or the option of no policies” (DECC 2012)


Market-driven. Really?


0

500

1,000

1,500

2,000

2,500

3,000

ECO (to March 2015)Cashback (to March 2014)Municipalities (to March 2013)TrainingMarketing

€ m

illio

ns


The industry gets ready


• “…there is a real opportunity to stimulate the market […] Whether it’s the real deal or not, the industry is ready” (Kingspan Insulation 2011)

• Financial Times reported positive outlook for investors in Kingfisher shares

• Industry players set up ‘The Green Deal Finance Company’


Aggressive ambition


• “[It] will be a revolution. […] The most ambitious energy-saving plan ever put forward. A once-and-for-all retrofit that will make every home in Britain ready for a low-carbon future.” (Huhne 2010)

• “The biggest home improvement programme since World War II” (Huhne 2010)

• “Europe’s most innovative and transformational energy efficiency programme” (Barker 2010)


Aggressive ambition


• All homes to benefit by 2030…• …supporting 250,000 jobs in 2030…• …in an energy efficiency market worth

€8.25 billion per year…• …whilst saving 34% of direct CO2

emissions from housing by 2020 (compared to 2008)


Ambitious. Really?



Shifting ambitions – projections


“…a more market-focussed approach […], where competition amongst Green Deal providers is likely to drive take-up beyond the levels expected under CERT or the option of no policies” (DECC 2012)

2008 Q2

2009 Q1

2009 Q4

2010 Q3

2011 Q2

2012 Q1

2012 Q4

2013 Q3

2014 Q2

2015 Q1

2015 Q4

2016 Q3

2017 Q2

2018 Q1

2018 Q4

2019 Q3

2020 Q2

2021 Q1

2021 Q4

2022 Q3

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000 Additional impact of ECO

Green Deal only, above BAU

BAU': No Green Deal or ECO

CWI needed to help meet IO

CWI delivered

Carbon Plan ambition

Del

iver

y of

CW

I per

qua

rter


Shifting ambitions – rhetoric


Rhetoric Tracker™ © 2013 C.O.D. Science Inc.

2010 = 100

2010 2011 20120

20

40

60

80

100

120

Size of market (turnover)Number of homes retro-fittedNumber of jobs supportedCO2 emissions


Stakeholder reactions


• “We think there is a significant risk in leaving it to the market, as that has never worked anywhere in the world and is unlikely to happen in the UK” (David Kennedy, Committee on Climate Change, 2011)

• “[Predictions were] produced by DECC economists, a notoriously hidebound lot in a department traditionally more interested in promoting big projects – from nuclear reactors to windfarms – than in persuading people to save energy.” (The Daily Telegraph 2012)

• “The Green Deal Impact Assessment is already out of date” (Barker 2012)


Reframing the ambition (Nov 2012)


…and over-deliver in terms of the

measures that are installed in

people’s houses.

Wherever possible, we want to see that we under-

promise…


Some hope: ‘consequential improvements’


Right? Wrong.


Some hope: early launch date


• October 2012, with “Excellent customer experience from day one” (Davey, 2012)

• “We want to launch steadily” (DECC, 2012)• “It will be a soft launch.” (Barker, September

2012)• “Most aspects […] will start on 1 October […]

finance plans only from January 2013.” (Davey, September 2012)

• “…was not, in fact, a launch.” (Barker, October 2012)


Initial results 1



Initial results 2



Initial results 3




Conclusions



Risk of failure heightened by…


• Reliance on vast number of components of the Green Deal to fall into place at the right time – or to fall into place at all.

• Huge mismatch between rhetoric and the programme’s development

• A very clear case of how not to manage expectations.


Why?


• Politics: The Green Deal is a Government ‘flagship’ policy

• Institutional capacity: The Government was not in denial about problems with Green Deal development, but simply did not perceive them

• ‘Year Zero’ syndrome: The old policy framework is associated with the previous government


So…


• Is it a ‘Comedy of Errors’ or ‘As You Like It?’



Discussion



Discussion


• Questions? Comments?• What are your views on moving in the direction of more

market-based mechanisms?• How to address underlying problems?• Parallel experiences or insights?

[email protected] Twitter: @uk_ace

Thank you.

ACE Researcheceee @ Presqu’île de Giens, June 7, 2013ACE Researcheceee @ Presqu’île de Giens, June 7, 2013 Somewhere between a ‘Comedy of Errors’ and ‘As.

Documents

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overall energy demand

energy savings

ideology ace

overview ace

cast ace

conservation of energy

marketdriven ace