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Archive for the ‘PAYS’ Category

To have any hope of hitting our legally binding carbon targets and to keep people out of fuel poverty, we have to radically transform the energy performance of housing stock.

But the bill for refurbishing our stock to the required standard is very high: something like £7bn to £15bn per year until 2050. A hell of a pill for treasury to swallow as part of general spending.

Enter Green Deal. Under this arrangement, Government don’t have to fork out the money. Instead, Green Deal captures the estimated value of future energy savings that result from a low-energy refurb, converts these annual savings into one lump sum and then uses this lump to carry out the refurb in the first place. Get it all just right, and the capitalised savings are worth more than it costs  to carry out the refurb. Brilliant! Refurb bill sorted. (more…)

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The proper way to slash carbon emissions is to tax carbon at the point of fuel extraction and let the market sort the problem out.

But because there’s no political appetite for carbon tax, we end up tinkering at the margins trying to address the emissions problem in tortuous and esoteric ways. Here’s a list I jotted down on the train on my way into the office:

  • CERT
  • SHESP
  • CESP
  • PAYS
  • Decent Homes
  • Allowable Solutions
  • Part L
  • RHI
  • FiT
  • CCL
  • CRC
  • ROCs
  • Retrofit for the Future
  • JESSICA, JASPERS, ELENA
  • Expanded Suppliers Obligation

All of this cost and bureaucracy becomes redundant the moment the real price of carbon is reflected in the cost of energy. Is political expediency the biggest obstacle to carbon abatement?

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In Whitehall, advocates of PAYS and an expanded suppliers obligation are clashing over which mechanism should be used to refurb existing housing. This is the second post of two. If you missed it, read the first part here.

Here’s a quick summary of the two mechanisms:

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Hitting the 80% carbon reduction by 2050 has huge implications (and costs) for the residential sector. Two strategies are emerging for dealing with these costs, each with its own potentially severe side effects.

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Although PAYS has been conceived to address retrofit, developers and RSLs are hoping it might also reduce the financial burden of meeting more stringent upcoming regs for new build.

In theory it works like this: by capitalising future energy savings, developers could afford to put in the low carbon measures they need to in order to hit strict limits on emissions. The occupants then use a portion of the savings to pay off this capital lump.

Developers hit their targets and occupants get savings. Everyone’s a winner. But in the case of new build, what are the savings measured against? The UKGBC final PAYS report suggests that:

(more…)

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