House of Commons Library

The Green Deal

Published Thursday, February 6, 2014

This paper describes the Government's Green Deal energy efficiency policy. The Government has since decided to stop funding the Green Deal Finance Company (GDFC) which was set up to lend money to Green Deal providers.

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On 23 July 2015 the Government announced it would stop funding for the Green Deal Finance Company.

The decision was taken "in light of low take-up and concerns around industry standards".

An FAQ has been made available to advise customers on the implications of this.

The Green Deal was the Government’s “flagship piece of legislation, which will deliver energy efficiency to homes and buildings across the land”.

The Green Deal went ‘fully live’ on 28 January 2013 in England and Wales and on 25 February 2013 in Scotland. In March 2013 the first in a series of monthly uptake statistics was released.

Through the Green Deal, energy customers in England, Wales and Scotland received loans to make energy efficiency improvements. The repayments will attach to the electricity bill at a property, rather than to an individual, passing to any new occupier or bill payer.

The “golden rule” is that the instalment payments should not exceed the savings on an average bill, but because this is on an average bill, there is the chance that in some cases, a household’s energy savings may not cover the cost of the Green Deal package. This, together with concerns about Green Deal being basically a loan with interest, rather than a grant scheme, has led to concern about Green Deal take up.

A new energy company obligation (ECO) underpinned the Green Deal for ‘those most in need’ and for hard to treat homes where measures do not fit the golden rule. In the Autumn Statement in December 2013, the Government announced that it would extend the time scale for ECO by 2 years to March 2017 in order to reduce the annual costs in consumer energy bills, estimated to be by £50 including the cost of other measures.

Commons Briefing papers SN05763

Authors: Christopher Watson; Edward White; David Hough

Topics: Climate change, Electricity, Energy, Energy conservation, Fuel poverty

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