The government’s flagship Green Deal could fail unless it is made attractive to the private sector companies that will make it work, says a CBI report.
The system is due to enter force in autumn 2012. It will enable loans for improving the energy efficiency of buildings to be paid back through savings on energy bills.
But it “risks becoming a lame duck”, according to CBI deputy director-general Dr Neil Bentley. The report, published on 15 February, says that the government must develop a “viable financing model, attractive to private sector investment”.
Potential investors are interested, it says, but uncertainty over which party will take the risk of default on repayments is making them wary. Another issue to resolve is how to ensure small companies can access the market for installing insulation and other measures.
The energy and climate department (DECC) could boost confidence by providing robust models of expected payback periods for different types of property, including non-domestic buildings. This would allow likely profitability to be gauged.
As a last resort, the Treasury may need to provide initial investment but this would be difficult to justify at a time of austerity.
A range of measures are likely to be needed to boost uptake and further improve investor confidence, argues the report. These could include reducing stamp duty on more energy-efficient domestic properties, or requiring commercial properties to have display energy certificates.
Furthermore, a mechanism for holding incompetent installers to account “will be vital” to ensure consumer confidence, and avoid the scheme becoming tarnished by association.
Lastly, the report says the Green Deal should be promoted by local and national government through targeted communications, such as when people buy a new boiler or register a birth.