By Marcus Leach

There are a number of challenges the Government must tackle if the Green Deal and Energy Company Obligation (ECO) are to deliver cost-effective emissions reductions and drive private sector growth, the Confederation of British Industry (CBI) said.

In its response to the Government’s consultation on The Green Deal and Energy Company Obligation, the UK’s leading business group said making the Green Deal as consumer-friendly as possible will be critical to its success, especially at a time when household budgets are tight.

The CBI welcomes the Government’s allocation of £200m to incentivise early adoption of the Green Deal, and believes a simple voucher for early adopters, similar to the successful boiler scrappage scheme, could help to kick-start it.

“Without demand we haven’t got a Green Deal. 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," Rhian Kelly, CBI Director for Business Environment, said.

“The Green Deal has the potential to play a key part in the UK’s transition to a low-carbon economy. If successful, the Green Deal will be a win-win policy, delivering cost-effective emissions reductions and driving private-sector growth.”

The CBI is calling on the Government to make cost-effectiveness a priority when implementing the Green Deal and ECO. This will help enable the Green Deal to meet the “Golden Rule” - that anticipated cost savings for consumers will be greater than or equal to annual Green Deal charges.

Striking the right balance between consumer protection and business regulation is key to keeping costs down.

“While the CBI supports a rigorous accreditation system for assessors, providers and installers, the Government must not allow the pendulum to swing too far towards costly regulation," Ms Kelly said.

“This could lead to higher costs for the consumer, and we don’t want costs to start outweighing savings, as this would undermine the whole scheme.”

Under current ECO proposals, the majority of consumers will only be able to obtain subsidies for solid wall insulation, while subsidies for loft and cavity wall insulation will come to an end for many.

The Government’s own predictions suggest an annual drop in the number of cavity wall installations when the current subsidy regime comes to an end. So, to maintain demand and support a smooth transition to the Green Deal, the CBI wants loft and cavity wall insulation to be included within the carbon-saving element of ECO for a limited period of time.

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