Updated: CBI joins chorus of concern over Green Deal plans

The CBI has added its voice to growing concerns over the effectiveness of the government's flagship Green Deal energy-efficiency scheme, warning that changes to the proposed plans will be required if the initiative is to deliver promised carbon savings and commercial opportunities.

The employers issued a statement yesterday to coincide with the end of the government's consultation period on its Green Deal proposals, confirming that it shares concerns held by Green NGOs and opposition MPs that the scheme will lead to a fall in the level of cavity wall insulations.

The CBI's submission to the consultation notes that currently the government's promised Energy Company Obligation (ECO) mechanism for funding hard-to-treat homes and those affected by fuel poverty could result in a fall in the number of homes receiving insulation upgrades.

As such it recommends that loft and cavity wall insulation should be supported by the ECO for a limited period, in order to ensure the level of insulation improvements does not fall.

The group also recommended that the government use the £200m that has been promised to promote the Green Deal to fund a simple voucher scheme similar to that used under the last government's boiler scrappage scheme.

"Without demand we haven't got a Green Deal," said Rhian Kelly, CBI director for business environment. "Businesses are ready to work with the government to excite and incentivise consumers, by emphasising the cost-saving as well as the carbon-saving benefits."

The CBI's intervention follows a series of reports from green groups that praise the basic principle of using the Green Deal financing mechanism to cover the upfront cost of energy-efficiency improvements, but warn that the government's current proposals will not deliver the national upgrade of properties that ministers have promised.

Most notably, the Green Alliance think-tank yesterday released a major new report analysing how the Green Deal and ECO scheme is likely to be applied in three geographically and economically distinct constituencies.

It concluded that, while there is considerable community-level support for the scheme and its goals, numerous barriers to the deployment of energy-efficiency upgrades look set to hamper the scheme's roll-out.

In particular, the report argued that with schemes offering free insulation still struggling to drive adoption, significant incentives will be needed to ensure take up of a scheme based on loans, even if the government promises to ensure repayments are lower than the energy bill savings that result from energy-efficiency upgrades.

It also warned that adoption could be further undermined by low levels of public trust in the energy companies that are likely to be involved in the development of many Green Deal services.

The report recommends that the government link the Green Deal scheme to the Green Investment Bank in order to offer interest rates on Green Deal loans of around two per cent.

It also argues that ministers should pave the way for the launch of the scheme with a national marketing strategy, and increase support for the fuel poor by scaling up funding available through the Energy Company Obligation.

"It is clear that the potential of the Green Deal to help reduce carbon emissions in homes must be linked to the wider social issues people are facing," said Rebecca Willis, Green Alliance associate and an adviser on the report. "We can't expect people to embrace this because it's a nice thing to do. If the Green Deal is going to be taken up by businesses and individuals, then it must also answer the problems they face."

It also emerged that shadow climate change minister Luciana Berger has written to climate change minister Greg Barker urging him to respond to criticism of the Green Deal proposals and approve fundamental reforms to the scheme.

Citing government figures predicting that the launch of the Green Deal will result in the number of cavity wall and loft insulations falling by 70 per cent and 90 per cent respectively, Berger argued that "far from providing the certainty that businesses need and the protections which consumers deserve, the consultation proposals create more problems than solutions".

She also recommended that the government reform the ECO proposals to provide more support for fuel-poor households and link the Green Deal scheme to the Green Investment Bank in order to ensure the availability of low interest loans.

Ministers have consistently maintained that they are committed to using the Green Deal to deliver a nationwide energy-efficiency upgrade programme and, as such, will take steps to drive adoption of the scheme before it launches in the autumn.

Writing on BusinessGreen earlier this week, climate change minister Greg Barker said that the government had already received around 400 responses to its consultation and would take on board the recommendations that have been put forward.

"[The Green Deal] will be the biggest home energy improvement programme of modern times, addressing the urgent need for a step-change in our approach to energy efficiency in existing domestic and commercial buildings," he said. "The vision for the Green Deal and the new Energy Company Obligation (ECO) is an ambitious and far-reaching one. It's a world where the UK leads with a dynamic new energy-efficiency market where the consumer is in charge, with nationwide brands, local businesses and community organisations competing to deliver the best proposition for the consumer."