If the US Had a Dept. of Energy and Climate Change
August 27, 2012

The United Kingdom's Department of Energy and Climate Change (DECC - why doesn't the U.S. have one of these?) has enacted a financial mechanism for energy efficiency upgrades called Green Deal, in accordance with a provision included in the country’s Energy Act 2011.

This arrangement works like many of the on-bill financing methods featured in New Energy Cities' report Powering the New Energy Future from the Ground Up: Profiles in City-led Clean Energy Innovation. The difference is that those offers were issued by individual utilities, banks, and/or local governments, whereas Green Deal is an avenue through which an entire nation can receive energy assessments and carry out cost-effective retrofits with zero up-front expense. Are you paying attention, American legislators?

America’s best-performing community efficiency finance programs do find success in the same place as the UK’s Green Deal: collaboration, but the Green Deal's end-to-end process, mapped out here, leaves no stone unturned, connecting different players in the energy efficiency supply chain to each other within a consistent framework. As with the Clean Energy Accelerator's Best Offer Ever in Austin, TX and Portland, OR's Clean Energy Works Oregon (CEWO), the Green Deal offers a comprehensive package of services and benefits for all customers.

Close involvement with contractors and lenders as part of a large program of identically structured efficiency projects has proven conducive to more and deeper upgrades. Clear, accessible information and advice exists on the DECC's website for the disparate pieces of the financing, assessment, advising, and installation puzzle.

Although the Green Deal ensures ease of replicability by integrating the design to remain generally the same for all customers, its approach varies in a few areas to reflect differences between domestic (residential) and non-domestic (commercial and industrial) costumers. For example, non-residential buildings typically require more complex assessments of how buildings use energy than homes require.

In the Private Rented Sector, two additional factors address the split incentive issue that often impedes retrofits (where landlords pay the cost of the retrofits, but tenants receive the benefits of the efficiency work through lower-cost utility bills).  First, the program reduces or altogether negates the upfront cost to landlords of energy efficiency upgrades. Second, tenants save more than they pay on their bills.

The Green Deal Provider, another ingenious component of the DECC's plan, acts as a counter-signatory to the Green Deal plan, taking responsibility for arranging both financing and the energy efficiency work. The Provider can assess, install, and offer loans in-house, or it can outsource any, and even all, aspects of service, but one way or another the Provider is managing the process, which allows the customer’s experience to be “one-stop shop,” even when assessment, installation, financing, and costumer service all come from different entities. Complex collaboration is achieved without complicating the process for all involved.

Although current U.S. congressional gridlock renders improbable the passage of a proposal similar to the Green Deal anytime soon in America, communities in the U.S. can take it upon themselves to incentivize improvements of the built environment's energy efficiency.

Individual communities may not be capable of producing the standardization that a national policy would bring about, but they have the advantage of familiarity with local elements. Instead of simply imitating the Green Deal, communities can look to it as a guide for creating unique and appropriate programs with features that make use of resources and conditions specific to that area's economy.

Partnership and simplicity for all participants is vital to a successful upgrade program, and the UK's Green Deal serves as a promising model for governments attempting to encourage entrance into the energy efficiency market.


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