Leo Hickman 

Is Cameron’s green deal the real deal?

Leo Hickman: Questions about financing and internal dissent will dog the Conservatives' newly revived home energy efficiency scheme
  
  


Just when we were beginning to think that David Cameron had forgotten his former rallying call to "Vote blue, go green", up he pops during the business end of the Copenhagen climate negotiations to announce that the Conservatives, if elected to government next year, will "kickstart" £20bn of investment to help improve the energy efficiency of millions of homes across the UK.

"The green deal would give every household the right to have home energy efficiency improvements of up to £6,500 in value," says the Conservative website. "The cost of this work will be paid back through the household's energy bills, and through the much greater savings that arise from a more energy-efficient home."

The mayor of London and 14 local councils across the country, covering more than 3m homes, have signed up, say the Tories, to trial the scheme next year, should they be elected to power. The trial will involve a "street-by-street approach targeting first those people most in need of cutting their fuel bills and heating their homes".

Cameron has also announced that Tesco and Marks & Spencers have both been signed up as partners. (This triumvirate also got together last month to announce that, under a Tory government, consumers would be rewarded for recycling with vouchers for Tesco and Marks & Spencer.) But this "green deal" isn't exactly breaking news as Cameron had already announced during a speech at an event organised by Tesco in October that he was already in discussion with the retail giant about helping his party to implement the initiative:

We need to use the same imagination when it comes to making home improvements for energy efficiency. That's where our green deal comes in. It works like this. People will have an independent assessment of what improvements could be made to their homes to save energy and money. They would then get an entitlement worth up to £6,500 to have those improvements carried out at no upfront cost to themselves. Financed by banks, a number of retailers, energy providers, social enterprises and local authorities will carry out the work. And the banks will then get their money back by taking a slice of the savings made in the homeowner's electricity bills. The rest of the saving goes straight into the homeowner's pocket.
It's a triple win. It will create a new competitive market in energy efficiency worth at least £2.5bn a year. It will create over 70,000 skilled jobs. And it will save an estimated 9.4m tonnes of carbon. Already some of this country's leading retailers are keen to be involved – and I'm delighted to announce that includes Tesco too, building on their existing Home Insulation Service.

Even if this is the sort of politically timed "re-announcement" that Cameron likes to scold Gordon Brown for committing, the proposed scheme still makes sense. But quite why Tesco and Marks & Spencer need to be so heavily involved has yet to be made clear. Tesco, as Cameron alluded to in his speech, does already offer a nationwide Home Insulation Service. But Tesco simply acts as the middle man in this arrangement. Any customer applications are fielded and processed by a Cornwall-based energy consultancy called Enact Energy. Enact then sub-contracts any resulting insulation work to accredited local fitters. This begs the question: just how much is Tesco likely to profit from this proposed "green deal"? (I asked Enact to clarify how this deal might work and it said that it was due to have a conference call with Tesco representatives to ask it exactly the same thing itself. I will try to post any update in the comments below, once I hear back from Enact or Tesco.)

Perhaps the bigger question is how this deal will be financed. Again, details are patchy to say the least, other than that "banks" will be involved. The Tories are stressing it will be "self-financing", but Labour has responded by saying the deal is a "green con". It's one thing saying that the savings on fuel bills achieved by homeowners once they have installed the insulation will recoup the cost of the original loan, but quite another to say how that loan will be financed in these economically challenged times. In Germany, a similar scheme called the CO2 Building Rehabilitation Programme was launched in 2001 and is largely financed by EU-approved government subsidies which are processed by the federally owned KfW Bankengruppe. To date, €6.4bn has been allocated via the German scheme. Is Cameron really prepared to go this far?

One interesting footnote to Cameron's announcement is his insistence that the deal is part of a "localist green revolution". He is right to identify that there is a "danger of starting to lose people" with a top-down approach to tackling climate change.

"People do not like being lectured," he said. "You have to take people with you, and the way to do that is to connect individual behaviour and rewards, and help people see the advantages of going green. We have to have carrots as well as sticks." Personally, I think Cameron will have success pushing this line.

It is welcome, too, that Cameron has finally addressed the growing climate scepticism among his backbenches, as evidenced by the frankly laughable report entitled "100 Reasons Why Global Warming is Natural" published by the Eurosceptic European Foundation – and then absurdly trumpeted on the front page of the Daily Express. As Harriet Harman pointed out during PMQs, the European Foundation boasts 11 Tory MPs as members.

Cameron would be foolish to ignore this growing dissent, but he says he has it under control: "A very small number of people take a different view on the science, but the policy is driven by me, and that is the way it is going to be."

Do not adjust your sets – this particular soap opera could become compulsive viewing over the coming months.

 

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