Michael O’Doherty, who was until recently “Head of Climate Change, Buildings & Energy” for Manchester City Council, but is now “Assistant Director, Greater Manchester Environment Team” gets the sock-of-wet-sand treatment from MCFly editor Marc Hudson. Green Deal or no Deal? Fuel Poverty? Irresponsible Journalism? It’s all in here, and more. And, gentle readers, Mr O’Doherty will probably be helping to present Manchester City Council’s fourth carbon budget to a committee of councillors next week. It’s on Tuesday 16th July, at 2pm, and you’re all very welcome…
Could you lay out some of the threats and opportunities the retrofits agenda/Green Deal for Greater Manchester.
The threats are we don’t manage to retrofit our homes to the standard we need to in the time frames we’ve got, so we don’t get the carbon emissions [reductions], that’s the first threat. Beyond Green Deal, beyond EC, that’s the task at hand. We need to invest £12 billion into the GM housing stock by 2030, 2035. We need to have shifted the average Energy Performance Certificate (EPC) levels up from a low E to a high B. And anyone who knows anything about EPC knows that is a really challenging target. We need a complete market shift. We need to create a new market. And Green Deal and ECO is the framework that’s been put in place to do that.
As far as I am concerned, the basics of that framework – pay as you save with the Energy Companies Obligation subsidy supporting it, with other public sector incentives around it… that principle is supported by all three main political parties. However, it will need tweaking as it’s introduced. The principle of pay as you save to unlock that investment is an important one. And in Greater Manchester we see the opportunity to stimulate the market early, to get the supply chain to really mobilise, to get our organisations, our companies to get the right skills and accreditations in place and to link our procurement of main Green Deal and ECO partnership with the local supply chain, to hit the targets we need to stimulate the market in the first three or four years.
The risks are of course if you go too fast, or you don’t have control over who is entering the market, or who is representing which organisations, you could have work that’s done to a poorer quality, that you could have work that’s done without the proper engagement with the residents to ensure that the savings are made; so the principles of “pay as you save” are lost. And all of these issues hitting the press in the wrong way could really knock the opportunity. So if we expect too much in the first few years, we risk undermining the principles that need to be supported by the three parties over the next twenty to thirty years. We need some policy stability, and if we get too hung up with the fact that there will be a bit of argument about the level of ECO funding, or the level of cash-back funding, then we actually lose sight of the long term opportunity. What’s important is getting local authorities and particularly cities to take the lead with the private sector to drive this market to ensure that it’s got strong foundations for the next twenty to thirty years.
One of the observations that I think that people who’ve been following climate change and the responses to it would make is that there always seems to be a bit, or a lot, of slippage. Are we significantly further behind than you expected us to be say two or three years ago, or are things generally proceeding at the pace you thought they would?
Two or three years ago we expected to have a Green Deal in place as an offer in October 2012. And we would have hoped to have had a GM Green Deal ECO offer in and around the same time as that. The reality is that the Green Deal is not really going to kick in with any serious momentum until probably August/September this year. Companies are just now being registered with the Green Deal facility, so the numbers for Green Deals have been very small. We will have in Greater Manchester a Green Deal ECO partnership in place by January 2014, so the time frames work reasonably well. Yes, it would have been great if the whole thing could have been a year earlier, but the reality is that it’s taken a little bit longer. And for a major policy issue that’s not surprising. We’ll be in place with our Green Deal offer from January next year. We’ve already brought in place our ECO partners, so [we] will be developing the market for that period. As I said earlier, Green Deal/pay-as-you-save is the long-term opportunity. It will need a lot of stimulation in the first few yeas. So actually ECO and the other [government initiatives] and incentives such as Go Early will be crucially important. We’re actually bang on target, we’re in place with an ECO offer. We’ve just delivered a really successful Go Early scheme with government. We completed on 90% of the £3m funding that came to GM against the coldest winter on record, performing better than any other City. I think that tells us not only have we got the right programmes in place being procured right now, but we’ve got the right governance structures in place, the right relationships between the public sector, the ten authorities, between businesses, social housing providers , who will be crucial in delivering this as well.
What are the known known threats as Donald Rumsfeld might say– what are the things coming up in the next year that have the potential to derail progress with the Green Deal and ECO?
The biggest threat is that we expect too much too soon from Green Deal. One of the problems is that we’re confusing terms; the term Green Deal is used to describe both the whole policy framework and the finance model. Separate out Green Deal and ECO first. Green Deal finance is getting all the headlines, but in my view, the whole package, finance, subsidy – i.e ECO – and the accreditation framework, are all required and the last two need to be fully established before we get large numbers of Green Deal loans.
That’s just one of the tools, but it’s an important one, because it allows you to offer these energy saving measures at no up-front costs. So psychologically I think that’s really important. And a lot of people will look at that and then maybe look at other finance routes. There’s an issue there for the Green Deal finance companies about sustainability but in terms of driving the programme, let’s not get caught up too much in the number of Green Deal loans. Let’s look at the number of housing retrofits that happen over that period. There’s something about getting the wrong message and looking for negatives. And certain organisations out there do look at the negatives in all this and I think we just have to understand the importance of getting some momentum.
Of course there are risks in terms of poor quality work being done, people mis-selling things, people being over-promised things, people not being properly educated and hand-held through the process so that they aren’t making the savings in energy that they were planning to, so that the Golden Rule then doesn’t work. Ideally this needs to be seen as a positive step for households, particularly in the first few years. So [we have] to make sure that households are happy with the quality of the work, the quality of the customer service and do make the expected savings in their bills. Other risks relate to the businesses involved – will they be able in the first few years to recoup their investment? A lot of organisations have invested significantly in this market, and it’s quite a complex market. It’s got many sub-sectors; the replacement boiler market has been there always for example, but now it’s more linked to other renewables and insulation schemes, which are less mature. We need our businesses to be growing, and they need the flow of work. So, ECO in particular, and other incentive schemes and the relationship between the local supply chain and public-private schemes are really important.
I’m sure some of our readers will be thinking “what about fuel poverty”? And I see that in a report to the Environmental Strategy Programme Board in May you mentioned that “a detailed report on fuel poverty is currently being drafted for the wider GM leadership team.” When will that report be finalised, and when will it be in the public domain? And what does it say?
It’s a draft report and workstream which is bringing together various different elements of fuel poverty work, both good and bad, recognising that as an issue it’s never really quite got to the top of the strategic agenda, or at least it hasn’t stayed at the top. It’s bringing together three GM commissions – the housing and planning commission, the Low Carbon Hub and the health and well-being commission and looking at where we can work differently. Certainly, from my perspective with Green Deal and ECO [it’s looking at] how we maximise the value of the Affordable Warmth element of Eco, to fuel poor households in GM and how we align different funding streams and work practices. It recognises and builds on a lot of work that is already in place – the GM Poverty Commission , the work in Oldham around community budget for fuel poverty for example. It’s simply a next step of the way as health services become more integrated back into local government, it’s recognising that this is an area of public sector reform that we can do something about right now. A draft is already in the public domain. [Found it!!]
Great, thank you. Is there anything else you’d like to say. Any questions you were afraid I’d ask, that I didn’t ask could you just answer them please.
What I’d say is that the role of public sector, private sector, voluntary sector, activists, in Greater Manchester is going to be really important in the next few years in engaging the different stakeholders, particularly households and communities. We’ve got what you might call a top-down programme. We think that’s right. We’ve got to drive the market in Greater Manchester. We’re [also] really looking to encourage bottom-up approaches that sit within that. So this is not about doing it in a one standard-size-fits-all way. This is about establishing a market, establishing the skills, the education and training, the quality assurance elements of that, but then over that period look at how we can be innovative in terms of making retrofit work, how we get community engagement to drive retrofit in neighbourhoods. And most importantly, learning from that in an iterative way. Learning from that locally – at a GM level – and sharing that learning nationally. Because I do think cities, particularly GM and the links we’ve got with our academic colleagues, with the third sector mean that we are in a really strong position to share that knowledge and learn from the development. We’re in a learning development phase right now, so I think that people need to accept that mistakes may be made in the short term, but the test will be how we learn from them so that we’ve got a sustainable programme over the next thirty years.
And can we come back in a year’s time and find out what progress has been made?
Of course you can!