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Market News

 February 12, 2009
Every UK home to get green makeover

 Government proposes "green version of Changing Rooms" for housing stock and hints small businesses could also access new financing mechanisms.

Every home and small business in the UK could gain access to free or low-cost measures to enhance their energy efficiency as part of a nationwide programme proposed by the government today, which promises to deliver a huge boost to providers of energy-efficient and microgeneration technologies.

Likening the proposed "Great British Refurb" to the 1960s rollout of an entirely new gas network, energy and climate change secretary Ed Miliband said the government would aim to provide whole-house energy makeovers to seven million homes by 2020 and cut carbon emissions by a third on 2006 levels by the same date.

He added that in addition to the medium-term targets, the government would seek to ensure every home has access to whole-home refurbishment services by 2030 and cut emissions from the entire UK housing stock to almost zero by 2050.

"We are proposing a universal street-by-street, house-by-house scheme with everyone offered free or low-cost advice," he said. "This cannot just be about a few million homes -- we need to think bigger than that."

Central to the new plan are proposals for a new financing scheme designed to help householders overcome the high up-front costs typically associated with the installation of energy-efficient and microgeneration technologies.

Under the scheme, householders would be offered loans to cover the cost of green refurbishments with repayments being made through part of the savings on energy bills that would result.

Miliband said that importantly, repayment of the loan would effectively be linked to the property rather than the resident. "People only live in their homes for an average of nine years, [and] when we talk about up-front costs of £4,000 or £5,000 [for green refurbishments] they would not recoup the cost in saved energy bills [before moving]," he said, adding that under the scheme the next resident would be able to continue to make the repayments from the continued savings on their energy bills.

The loans are expected to be provided by a range of different entities, including energy companies, local authorities and potentially loan providers such as banks and supermarkets.

Miliband admitted that the government had not yet looked at the regulatory regime that will govern the loans, but he said that several local authorities had already expressed interest in offering green home financing schemes and predicted that private sector companies would be interested in a lending model that guarantees them a reliable revenue stream.

The proposals are now open to public consultation and Miliband said the government would also look at extending the financing scheme to small businesses to help the commercial sector deliver similar improvements to the building stock.

Speaking at the launch of the scheme, housing minister Margaret Beckett said that the refurbishment programme would be truly universal, with the social housing sector set to benefit from government subsidies that will make it a " giant demonstration project" for other sectors of the housing stock. She added that the government would also offer the same financing and incentives to landlords, and investigate the measures that may be needed to be taken to ensure costs are fairly split between tenants and landlords.

In addition to the new financing schemes, the strategy confirms plans to roll out a feed-in tariff for installations of microgeneration technologies in April 2010 and introduce a new incentive scheme for deployments of renewable heat technologies by July 2011.

It also sets out many new measures designed to underpin the rollout, including plans to provide free or low-cost energy audits to every home, set up a central body to co-ordinate how companies and local councils undertake refurbishments, and set up accreditation schemes for installers.

The proposals were broadly welcomed by green and business groups, which praised the scale of the measures and the move to overcome the high up-front costs that have hampered all previous attempts to promote energy-efficiency measures.

Colin Butfield, head of campaigns at WWF UK, praised the government's " laudable targets", adding that a focus on enhancing the energy efficiency of the building stock represented the most cost-effective way of cutting emissions. However, he warned that the government needed to provide more details on precisely how the various schemes will be funded as "a matter of urgency".

His sentiments were echoed by Paul King, chief executive of the UK Green Building Council, who said that the strategy could help to create 40,000 new jobs and showed that the government "understands the scale of the challenge and has set suitably ambitious targets".

But he also called on the Treasury "to raise its game in the upcoming Budget " and provide more immediate funding to help promote green refurbishments. " Financial incentives are needed to encourage major green refurbishments -- the precedent has already been set with stamp duty rebates for zero-carbon homes," he said, adding that the government should also promise to underwrite its proposed loan scheme to encourage take-up and step up efforts to promote green refurbishment of commercial buildings.

Miliband admitted that the proposals had not yet been fully costed as the final bill would depend on the rate of take-up of the new services and financing schemes, the final level of the feed-in tariff and renewable heat incentive that is still being worked on, and the extent to which economies of scale enjoyed by expanding developers of microgeneration technologies such as heat pumps and solar panels results in cost savings.