Sunday, November 28, 2010

The Green Deal

Juliette Jowit in the Guardian on Wednesday made some very good points about the loans that home-owners will be able to take out for energy saving makeovers.

She points out that on the Decc's own figures, if the loan is taken out for solid-wall insulation, the annual payments for the loan will be more than the amount saved on fuel.

Jowit does not take into account the effect on the home's value of making the improvement.  At the moment insulation may not increase the home's value very much, but as fuel bills rise, buyers are going to become more aware of the value of insulation and at the very least, insulation will make a home easier to sell. So, home-owners may choose to take out one of the loans on the basis that even if they end up paying a little more than they are saving on fuel, they will increase the amount of equity in their home.

It also seems likely that solid-wall insulation will become cheaper as the market for it grows.

Nevertheless, Jowitt has highlighted a major problem with the scheme.  I'm fairly certain that most of the UK's housing stock is still pre-1930's and built with solid-wall construction.

Jowit also points out that a number of policies on climate change, for example the EU emissions trading, are driving up underlying energy bills, effectively amounting to a form of regressive taxation.  Surely this is true of all green taxes?  Even where the taxation is a tax on industry, as with the carbon trading scheme, the cost will ultimately be borne by the consumer.  I don't see that this is a bad thing.  Consumers need to be encouraged to reduce their use of fossil fuels and the easiest way to do this is to raise the price.  The regressive effect can be ameliorated by using some or all of the revenue from green taxes for progressive tax allowances.

2 comments:

energyzone said...

I think your observations are valid. At the moment the Government's commitment to the scheme seems to be wavering a little, particularly by "pushing back" the green investment bank which should be financing the plan.

Refer to UK Green Deal www.greenadvisersuk.com for more information about energy efficiency measures for insulation and renewables.

energyzone said...

I think your observations are valid. At the moment the Government's commitment to the scheme seems to be wavering a little, particularly by "pushing back" the green investment bank which should be financing the plan.

Refer to UK Green Deal www.greenadvisersuk.com for more information about energy efficiency measures for insulation and renewables.