Isramart : Soft loans planned for low carbon homes

Isramart news:
The government aims to spur private lending to households for energy efficiency and low carbon upgrades, under a proposed law to fight climate change and cut fuel poverty, the government said on Tuesday.

The aim is to overcome the high upfront cost of home refurbishments, for example to insulate lofts or install draught-proof windows and solar panels, by allowing people to take out long-term loans at subsidised interest rates.

Customers would repay the loans from energy savings or the money earned from renewable power incentives announced last month.

The cash-strapped British government hopes high demand will entice private sector lenders including banks, energy companies and low-carbon technology installers to supply cheap debt.

Energy and Climate Secretary Ed Miliband could not confirm, however, how much he expected lenders to make available.

"It will be for the private sector to come forward and offer the financing, and I think there will be a large market in this," he told Reuters.

The government hopes it can spur demand by passing a law in the next parliament which ties the debt to a house rather than its owner, allowing longer repayment terms.

"The key thing that we're doing is to put the proposed legislation forward to ensure that the re-payments are attached to the house not the person," said Miliband.
"By spreading the repayments over a much longer period, more like 25 years than the eight years that someone might want to live in a house, that's what makes it financially affordable."

Local government would make sure lenders charged interest rates which households could repay from energy savings and renewable power earnings, said Marian Spain, director of strategy at the Energy Saving Trust, which advises government.

"Some of the schemes will be subsidised by the local authority," she added.

EMISSIONS

The plan depended on new legislation in the next parliament, following a general election expected in the next two months. The opposition Conservatives have similar plans.

"The Government's new energy efficiency strategy could enable billions of pounds to be invested in improving the energy efficiency of Britain's homes," said Ben Caldecott at low carbon investors Climate Change Capital.

The "Warm homes, greener homes" initiative aimed to cut carbon emissions from homes by 29 percent by 2020. Around a quarter of British emissions come from the energy used in homes. A lack of clarity over finance disappointed campaigners.

"It's not good enough to depend on the market to deliver low-cost finance. You need a green bank to allow whole-house retrofits, rather than just incremental improvements," said Ed Matthew, who leads energy efficiency at climate think-tank E3G.

The government announced two other changes - allowing local government to force energy companies to pay for efficiency improvements, previously centralised, and new rental property standards forcing owners to invest in upgrades.
The present Carbon Emissions Reduction Target will continue, now in its third, three-year phase from 2008-2011 expected to drive private energy company investment of around 2.8 billion pounds in home efficiency improvements.

The government has said it plans to install smart meters, which allow people to view energy use in real time, across all homes by 2020, and all new homes to be "zero carbon" from 2016.