Energy Company Obligation,Supplier Commitment
For the benefit of consumers and the supply chain, and unlike the Energy Company Obligation (ECO), longevity, simplicity and flexibility must be at the heart of the next supplier commitment’s design (read full position paper). Its objective must be to serve as an important and stable plank to meeting carbon budgets within a wider framework of policies and measures that support a nationwide transformation of the housing stock through staged deep retrofits. It should be capable of delivering a wide range of measures to a large number of households, and drive the best possible outcome for consumers by lowering their bills and improving their health and comfort, both in the medium and long-term. A separate and new fuel poverty programme should be established alongside it, delivered in every locality by working with the devolution agenda and preferably funded through public expenditure. This must be fit for the purpose of meeting England’s new fuel poverty targets and flexible enough to mesh with existing fuel poverty programmes in Scotland and Wales. The next supplier commitment (SC) needs to:
- Inter-operate with a long-term policy framework for low carbon housing (which is currently lacking with respect to finance, structural tax incentives (e.g. Stamp Duty, Council Tax) and regulation) – which must also be characterised by longevity, simplicity and flexibility
- Be set in lifetime carbon terms over a five-year time horizon, to 2022, with the five-year time horizon extended every 2.5 years and transparent penalties for non-compliance
- Be required to satisfy customers, not respond to tick boxes in over-long and costly paper trails
- Include the able-to-pay and have a robust but broad distributional safeguard for fairness
- Use deemed carbon scores to enable consistent and stable offers to be made to consumers while reducing administrative cost
- Deliver and employ individual home retrofit roadmaps to make staged deep retrofit a reality
- Not constrain any part of the SC to only particular measure classes (such as the Carbon Emissions Reduction Obligation and insulation) and be allowed to install any Green Deal approved measure across insulation, heating and controls, lighting and renewables
- Deliver an ambitious solid wall insulation programme with a minimum of 500,000 installations for the first five-year period, concentrating on houses and guided by quality of installation
- Include mandatory minimum delivery through brokerage, the level of which should be kept under review
Energy Efficient Buildings,Zero Carbon Homes
One of the great triumphs of genuine private/public co-operation has been the work of the non-profit Zero Carbon Hub. Ever since its formation in 2008, it has proved to be the acknowledged entity to which everyone turns – companies and Ministers alike – to consider how best to progress towards ensuring that only the most energy and carbon-efficient new buildings are constructed.
But the vast majority of the buildings we shall be living and working in forty years from now have already been built. Precious few of these are even vaguely zero carbon; most waste bucketfuls of energy every day. By common consent we have one of the oldest, and certainly one of the least energy efficient, building stocks in the entire western world.
It is clear that one of the main challenges over the ensuing decades will continue to be to dramatically improve the energy performance of these buildings. This will need to happen at a rate long aspired to. But – as has been shown in the case of the flagship Green Deal Finance policy – right now falling woefully short of even its cost-effective (let alone technical) potential.
Energy Efficiency,Energy Efficiency Commitment,Energy Efficient Buildings,Energy Performance Certificates,Stamp Duty
The Prime Minister was unequivocal. This summer his Government will introduce a new incentive scheme to encourage home movers to invest in energy saving measures.
At his most recent monthly cross-examination by House of Commons Committee chairs, he quite specifically described it as a “stamp duty discount for people who take action to improve the energy performance and energy efficiency of their homes” (Q49).
I only wish that this description had been accurate. Sadly it is not. Because formally the new scheme is not directly related to the stamp duty transaction. And, due to that, it can be argued there is no requirement whatsoever for the key professional groups involved in the buying and selling of homes – specifically, solicitors and licensed conveyancers, and estate agents – to inform anybody about the new scheme.
Edward Davey,Energy Company Obligation,Green Deal
Purpose of this paper
The genesis of this paper was the speech made by the Secretary of State for Energy & Climate Change, the Rt Hon Edward Davey MP, at a reception on the Terrace of the House of Commons on September 3 hosted by this Association.
In his speech, he challenged the Association, on behalf of our industry, to put forward recommendations as to how the effectiveness of the Green Deal/ECO programmes might be improved immediately. This paper sets out a series of practical proposals regarding ways in which a series of operational issues should be addressed.
European Commission,European Union,Tax
ACE has submitted a written response to the European Commission, DG Taxation Consultation on “Review of existing legislation on VAT reduced rates”.
The EC’s stated aim is to create a “simpler, more efficient and more robust” VAT system in the EU, partly by removing certain reduced rates which are believed to “constitute an obstacle to the proper functioning of the internal market”.
The EC has already conducted some evaluation of the existing VAT structure, and this consultation focuses on key areas that require further consideration, including the reduced VAT rate for certain energy products.
Download ACE’s consultation response here: Consultation Response: VAT reduced rates
DECC,Heating,Renewable Heat Incentive
European Commission,European Union,VAT
Should energy-saving products be subject to the full 20 per cent rate of VAT? The UK and the European Commission are set to do battle in the courts
Next spring a case will be heard in the European Courts. The result could seriously damage the prospects for the government’s flagship Green Deal programme. This would increase the costs of installing many key energy-saving measures and by doing so, render many potential packages simply too expensive to undertake.
Under the Golden Rule, the costs of installing any package of improvements funded by Green Deal Finance must be capable of being repaid during the lifetime of the loan. To qualify, calculations are made, valuing potential consequent reductions in energy consumption at its present price against the costs of measures installed (plus interest). Monthly loan repayments must be more than matched by putative energy savings. If on paper this cannot be shown to be profitable to the householder, no loans will be able to be made.
If the European Court of Justice rules against the UK government, then the cost of installing a whole range of familiar energy-saving items – thermostatic radiator valves, microgeneration, and every kind of insulation installed by contractors – will increase overnight by a whopping 15 per cent. That includes the costs of installation, as well as the costs of materials.