Additional measures needed for green deal to be successful

John Sinfield, Managing Director of Knauf Insulation, believes additional measures are needed for the Green Deal to be successful. Knauf Insulation has undertaken detailed market analysis, which has forecast a significant fall in the uptake of insulation upgrades once subsidies from Carbon Emission Reduction Target (CERT) is removed, despite these measures being crucial to the reduction of carbon emissions…

Currently, Carbon Emission Reduction Target (CERT) is the main driver for improving the energy efficiency of buildings as it places a legal obligation on energy companies to deliver a reduction in CO2 emissions. To do this, they subsidise and promote a number of measures – everything from shower-flow restrictors to heat pumps, as well as loft and cavity insulation. If they don’t hit their targets, OFGEM has the power to fine them up to 10% of their turnover – a pretty strong incentive.

CERT finishes at the end of 2012, and will be replaced by the Energy Company Obligation (ECO) ECO and Green Deal. Undoubtedly, these have the potential to deliver the most comprehensive upgrade of the existing housing stock since WW2. However, more needs to be done to realise that potential otherwise the Government risks curtailing the steps required to hit the UK’s carbon-reduction targets.

We certainly need to see more detail about how homeowners will be incentivised to ‘green’ their properties. If the right combination of ‘carrots and sticks” are not put in place, the Green Deal may not deliver – for consumers, Government and industry.

Knauf Insulation has measured the potential impact on loft and cavity wall insulation, particularly in relation to the ‘able to pay’ sector. Under current proposals the Green Deal and ECO will provide no subsidies or incentives to these households to undertake insulation upgrades, even though figures show this potentially represents over 3M conventionally fill-able cavities and 9M lofts that can be topped up.

These represent easy wins in terms of carbon saving for Government and cost saving for homeowners, but what is of real concern is that the majority of fill-able cavities and lofts are in the ‘able to pay’ sector. If the Green Deal is to really deliver, it must drive take up by these consumers. Consumers, who thus far, have not grasped the benefits of living in an energy-efficient home.

The graph illustrates that, despite longer term forecast increases in demand for insulation in the general building market, the lack of focus on lofts and cavities in the funded residential refurbishment market will have a significant impact overall for glass mineral wool. This potential ‘cliff edge’ has massive implications, not just for manufacturers, but also for consumers, installers and the Government.

Upgrading the thermal efficiency of properties through loft or cavity wall insulation is one of the easiest and cheapest means of reducing energy use. Cavity wall insulation can save a home 550kg of CO2 a year, whilst installing up to 270mm of loft insulation can save between 110kg and 220kg CO2 a year1. Furthermore, to optimise the potential efficiencies of any other method – be it a new boiler or thermostats, new windows or utilising renewable energy sources – any building must first be properly insulated. The cheapest energy is saved energy.

With the Government out to consultation on both the Green Deal and ECO, we are calling for the Green Deal / ECO to go still further, to ensure the large numbers of easy to insulate loft and cavity walls that remain unfilled, are upgraded.

What is crucial is that there is a considered transition plan from CERT into Green Deal / ECO that allows these upgrades to take place. This increases certainty for both installers and manufacturers and will also allow continued investment in new solutions for hard to treat cavities and solid wall properties. Installers in particular need to re-skill their workforce to deal with the new internal and external wall insulation solutions that will be required.

In its recent report to Government, The Commission for Climate Change recommended that the Green Deal and ECO were aligned “with the ambition to insulate all lofts and cavity walls by 2015, as well as two million solid walls by 2020”. To achieve this, broader incentives must be put in place, such as stamp duty reductions, council tax benefits or changes in VAT – and which we call on the Government to action.

1} Figures from Energy Saving Trust – exact CO₂ saving depends upon the existing thickness of loft insulation