Green Deal and ECO

Hilary Tanner, LGA

Insert date www.local.gov.uk

Headlines from LGA survey of local authorities

• 132 councils responded to survey on Green Deal & FITs

• 87% of respondees had started to develop plans, 47% of those just started

• 59% decided on a delivery partner, most likely to be green deal partner with 8% deciding to be providers

• Lead department most likely to be housing with responsibility shared with environment & regulatory services and planning

Survey feedback on benefits of the Green Deal and common concerns

Benefits:• Reduction in carbon emissions• Reducing fuel poverty• Potential to increase employmentConcerns:• Lack of take-up• 3rd parties mis-representing the Green Deal• Not suitable for low income residents

The Energy Company ObligationCarbon Reduction:

Hard-to-treat properties only (solid wall insulation)

£760 million available until 2015

All householders eligible

58% of the ECO

Carbon Saving Communities:

Area- based schemes

Aimed at social housing

All measures

£190 million available until 2015

Areas of high deprivation (lowest 15%) and rural with benefits

15% of the ECO

Affordable Warmth:

Reducing overall heating bills

Householders on multiple benefits – social housing not eligible

‘Fuel Poor’

£350 million available until 2015

27% of the ECO

Where ECO meets the Green Deal

Unsuitable for finance e.g.•Fuel poor or low income; •Low energy user;•Hard to treat housing

CONSUMERS Suitable for full finance e.g.•On higher incomes;•High energy user;•Low cost measures

Green Deal Finance

Energy Company Obligation

Funded primarily by GD Finance e.g.

basic insulation

Funded primarily by ECO e.g.

central heating

ME

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Opportunities for rural authorities

• Rural authorities more expensive under previous schemes because of transport cost and low density of buildings – will this change under the Green Deal?

• Carbon Saving Communities (CSCo) with rural target– 15% of the target (to reduce carbon) must be met

in rural areas– Recipients must be in receipt of one or more

benefits

Considerations for councils

• Brokerage– There are plans for the ECO to be siphoned through a

brokerage system. This is to help organisations that are not energy suppliers to have access to this supporting finance.

– Rumours that councils and social housing providers will not be able to directly trade within the brokerage, but will have to procure a green deal provider to do so – unless they become one themselves

• Council reputation– Financial package that we will be selling to our

householders – trusted by our householders

Considerations for councils

• Protection of vulnerable householders– No guarantee over savings, or that cost of works

will be less than savings – don’t want low income groups having to spend more

– No solution for pre-payment meters (proportion taken off for charge)

– Debt considered as Energy debt and householders can be disconnected for not paying the Green Deal charge

Considerations for councils in funding the Green Deal• Availability of Finance

– Not clear how the Green Deal will be financed– Some councils prudentially borrowing to generate local

schemes– Green Deal Finance Company seeking to pool funding

(including that from local authorities) to bring the interest rates down.

• Will people want to take this out? Should councils be encouraging them to do so?

• Complicated product• Can sell other products in the home

Context

• Climate local – support for council action on carbon reduction and climate resilience

• Green deal as part of a range of options for households – to be aligned with RHI and FITs

• Links with health and housing

• Revised statutory duty under HECA

Next steps

• Consultation on ECO Brokerage in Autumn• LGA supporting documents for councils – including

help to navigate the ECO and partnerships with energy suppliers

• LGA Green Deal Conference 16 November in London

• Transition from existing schemes to ECO end of 2012 calendar year

• Enforcement role for councils within the private-rented sector when minimum standards come into force in 2018 (EPC E)