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Sweetening the Green Deal Scheme

The Green Deal is the coalition Government’s flagship environmental project. It is aimed at making up to 14 million homes more efficient by 2020, through insulation, draught proofing, double glazing and other measures designed to reduce energy usage. The improvements are paid for by home owners through special loans which attach to the property rather than the individual but the attraction is the “golden rule”, whereby for a measure to be considered under a Green Deal plan the anticipated savings on the fuel bill must be greater than the cost of the repayments.

This will seem to some like a no brainer, however a recent report commissioned by the Department of Energy and Climate Change entitled “Behaviour Change and Energy Use” suggests that it may be more difficult to encourage the kind of widespread take up that will be necessary if the scheme is to be successful and it proposes offering various additional incentives, which will be implemented in field trials prior to commencement of the Green Deal in autumn 2012.

One Month’s Free Council Tax

One of the conclusions of the report is that we have a tendency to “discount the future”, meaning that we ignore long term gains in favour of smaller short term benefits and that we tend only to think in the short term. This causes a problem for the Green Deal since the loan will be paid off over a number of years.

One option being trialled to induce more people to sign up for the Green Deal therefore is to provide financial incentives. The options being offered under the trial are one month off from paying council tax when you sign up and also vouchers for Homebase and Argos. The hope is that this will appeal to our desire to get “something for nothing”. The council tax incentive will be funded by the council (which may be controversial in the present climate if rolled out on a large scale) and the vouchers will be provided by the businesses which facilitate the scheme, so that no additional funding will be required by central Government.

Collective Purchasing Discounts

Research shows that social influence – the tendency for people to adopt the opinions, judgements and behaviour of their peers, is a major factor in dictating our decisions. Furthermore, we are more likely to be influenced by friends, family and neighbours than members of the wider society. It seems therefore that the more people take up the Green Deal, the more people will follow. To facilitate this, discounts are being offered for collective purchases.

The discounts will be funded by commercial partners and will for example be 5% off if there are two purchasers, 10% for 3, 15% for four etc. The idea is that one “leader” will do the work of the DECC and commercial partners by rounding up friends and family to join in the scheme. Others will then see what these groups are doing and follow suit.

Community Rewards

All the detail has not been fleshed out, another option is to offer community rewards. This fits in well with the “Big Society” and will allow community leaders to get larger numbers of people involved. Rewards might include free solar panels for a community centre or something of that type.

More information on the Green Deal can be found here

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