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Bold German energy-saving plans set to shame UK’s lack of ambition

ImageContrast the UK with its timid flagship schemes to improve existing UK homes with the ambitious plans in Germany where a bold loans and subsidy scheme aims for a massive 3 per cent a year improvement

Next month the new flagship scheme to improve the energy performance of existing UK homes, the Carbon Emission Reduction Target (CERT), is launched. The scheme places the entire onus for delivering-improvements on the six big energy companies.

For the average householder, there will be no government grants available. No low interest loans. No options to increase or decrease local council tax, depending upon the relative efficiency of the building. No stamp duty incentives for those who implement the efficiency recommendations received when changing home.

Beyond generalised exhortations to us all to be good citizens, the UK government offers effectively no support to the private sector to achieve its obligations.

The UK is not the only country seeking to improve its existing building stock. The German government is set to make a “quantum leap in energy efficiency”, improving it by 3 per cent a year – rather than the 1 per cent required under European law. Environment minister, Sigmar Gabriel, emphasises that cutting out waste is far more cost-efficient than building new power stations, whether coal-fired or nuclear. No new nuclear plants have been built in Germany for 25 years. Nobody plans to build any.

Upgrade entire building stock

Instead the government has introduced a “carbon dioxide refurbishment programme” as an integral part of Germany’s climate change and growth and employment programmes. The plan is designed systematically to upgrade the entire building stock to “contemporary standards” over 20 years.

Borrowers are able to take out low-interest loans for measures that help older properties reach new-build standard through refurbishment. Only pre-1984 dwellings are eligible for loans: as in the UK, that was the date when building codes first mandated energy-saving standards.

Upon achieving such standards, the government will repay 5 per cent of the loan to the householder. If carbon emissions after refurbishment are 30 per cent lower than minimum new-build standard, 12.5 per cent is repaid. If carbon emissions are halved compared to new-build, 20 per cent is repaid.

The loan scheme alters, depending upon demand. Currently it consists of:

  • a fixed (and heavily subsidised) interest rate for ten years – the rate varies depending on the loan amount and duration;
  • repayment time is flexible, from as little as four years, right up to 30 years;
  • up to €50,000 for refurbishment per dwelling, regardless of which of four different package options is chosen. The options are:
  • flexible repayment (increasing repayments incurs no additional cost);
  • loans can cover 100 per cent not just of the energy-saving materials, but also labour;
  • a recent addition: up to €1,000 (or 50 percent, whichever is lower) per dwelling for project management costs;
  • these options can be used in combination with other refurbishment loans.

Only half way to improvement

The CERT scheme in the UK effectively discourages our energy companies from installing anything other than the very cheapest energy-saving measures, frequently leaving a home only half-improved. In contrast, the German programme deliberately takes a ‘whole house’ view.

To be eligible for finance, refurbishments must achieve a reduction in CO2 emissions of 40kg/m2/year. This can be via one of five different packages of measures on offer. Packages 1 to 4 are different combinations of the standard measures: loft insulation, wall insulation etc.

Package 5 is designed for unusual cases or buildings which already have had some measures installed, and is deliberately more tailor-made. Under package 5, a qualified expert helps determine the measures necessary-to achieve-the energy savings.

Additionally, there is a subsidy scheme which runs in parallel to the loans on offer (although the two cannot be combined):

  • 10 per cent of refurbishment costs (up to €5,000) are granted per dwelling achieving new-build standard emissions;
  • 17.5 per cent of costs (up to €8,750) if building regulations are improved by 30 per cent;
  • 5 per cent (up to €2,500) for undertaking any of the refurbishment packages – even if new-build standards aren’t quite met.

Last autumn, Chancellor Angela Merkel increased the funds available for this package to €2.6bn every year. Her belief is that this will help ensure that greenhouse gas emissions drop by 40 per cent between 1990 and 2020.

This is a far more ambitious carbon reduction target than the UK aspires to. But then, the simple folk who run our Treasury have still to appreciate one fact. That in order to save energy, first you have to invest.

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