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Financing the Green Deal

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Financing the Green Deal

The UK’s new “Green Deal” energy efficiency policy framework aims to address a legacy of poorly insulated housing stock and rising fuel poverty as well as climate and energy security concerns. Estimated to create 100, 000 jobs over the next 5 years, the programme is described by the UK’s Secretary of State for Energy and Climate Change as a “once-and-for-all refit that will make every home in Britain ready for a low-carbon future”.

In the future Green Deal loans could become very attractive investments funded at scale and by the private sector, and could drive a retrofit market worth £7bn−£11bn per year over the next 15 years, a major ramp up from existing investment of £1−2bn per year. However, currently there is a significant gap between the political ambition and what the policy as it currently stands can deliver. This paper explores the issues in more detail and discusses the enhancements that need to be made with the quite separate needs of both householders and the capital markets in mind. It focuses particularly on the role the Green Investment Bank could play both in driving demand and in ensuring sufficient upfront capital is available to take the Green Deal forward.

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