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Taking the Green Deal to the people

Oct 16, 2011 by | No Comments

At a fringe meeting of the Conservative party con­fer­ence in Manchester, Greg Barker (the min­ister for cli­mate change) described what will be one of the most ambi­tious energy-efficiency pro­grammes ever attempted: the Green Deal.

The flag­ship UK policy offers loans – linked to prop­er­ties not house­holders, and repaid through energy bills – to cover the upfront costs of a range of energy effi­ciency meas­ures, including loft insu­la­tion and boiler upgrades.

The scale of the ambi­tion is impressive – the Green Deal aims to reach mil­lions of homes, and is expected to play a major role in meeting national carbon-reduction tar­gets. It has been designed with input from the Behavioural Insight Team in the Cabinet Office – a group of beha­vi­oural eco­nom­ists who have become widely known as the ‘nudge’ unit because of their heavy depend­ence on the book of the same name. The ‘nudge‘ approach says that instead of trying to per­suade people to act one way or another, it is better to ‘nudge’ them into making cer­tain choices and decisions.

It is hoped that people will be ‘nudged’ into taking up the Green Deal by offering them a range of incent­ives, but the gov­ern­ment is at pains to emphasise that this is not a centrally-controlled strategy. Instead, the private sector will access gov­ern­ment funds and deliver the Green Deal ser­vices them­selves, from the loans to the lag­ging. This means that the Green Deal also rep­res­ents a unique exper­i­ment in cli­mate change policy: a three-way play between the state, the private sector and the public.

Will the exper­i­ment work? The basic logic of the Green Deal is bullet-proof: people seeking to increase the energy effi­ciency of their homes should not be held back by the upfront cost of installing effi­ciency meas­ures. Over time, the changes pay for them­selves through sav­ings in heating bills – or at least, that’s the theory. In reality, when people save money on their heating bills, they may crank up the heat and simply pay the same amount as they were before.

Known as the ‘rebound’ effect, the same problem can arise if people spend the money they save on heating their home on other high-carbon activ­ities, under­mining the impact of the ini­tial energy effi­ciency meas­ures. One ‘nudge’ cur­rently being dis­cussed is the use of vouchers for house­hold stores like Homebase as a means of making the Green Deal more attractive to people. But the risk of rebound here is sig­ni­ficant – if people come home with a car-load full of power tools, the energy effi­ciency sav­ings will be undermined.

These prob­lems are by no means insur­mount­able – but the fact that the gov­ern­ment wants to avoid too much con­trol over the policy may con­flict with the need for a coherent strategy for enga­ging the public. To avoid rebound effects, the Green Deal will have to make the links between dif­ferent types of energy-saving beha­viours clear. Yet the delivery of the policy is going to fall to the private sector, who will present it to the public in whatever way sells the most energy-efficiency ser­vices – regard­less of how it impacts on people’s beha­viour more broadly.

This conun­drum high­lights the paradox at the heart of the nudge approach, and by exten­sion the Green Deal: some­times the best way of achieving a spe­cific beha­vi­oural change is not the best way of enga­ging the public in the longer term. This would not be a problem if the Green Deal was the only policy needed to tackle cli­mate change, but in reality, it is just the start. Over the coming dec­ades, major changes will take place across a range of sec­tors, from food and farming, to domestic and inter­na­tional travel.

The nudge approach doesn’t have very much to say about how dif­ferent beha­viours relate to each other. People tend to act con­sist­ently across dif­ferent situ­ations – e.g. saving energy at work, as well as at home – when they start to think in terms of a self-identity that includes con­cern about the envir­on­ment. But if the Green Deal has only light-touch co-ordination from the gov­ern­ment, there will be no mech­anism for enga­ging the public at this level.

The Green Deal is an ambi­tious and impressive policy in prin­ciple. But when the cash incent­ives dry up, and no attempt has been made to engage with people beyond ‘nudging’, their enthu­siasm for carbon-saving may dis­ap­pear. The chal­lenge for the gov­ern­ment – and its private sector part­ners – is to find a way to deliver the policy that doesn’t unin­ten­tion­ally nudge people in the wrong dir­ec­tion in the longer term.

First pub­lished on 10−10−11 on the Guardian Professional Network.

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