Investing to Save - the German Approach

by Andrew Warren, ACE. 20th Jan 06

The new German Chancellor, Angela Merkel, is heralding in a new era in energy efficiency in homes that could put the UK's stumbling efforts to shame.

The UK has not been alone in putting energy issues under the policy microscope. In Europe's largest and richest nation, there has also been heavy consideration of these issues. And the conclusions reached should give considerable encouragement to those worried about the potential consequences of the UK energy review.

In many ways, the energy problems that faced the German government were very similar to those which the UK are facing. Higher oil and gas prices, growing energy imports, leaky elderly housing, a need to reduce greenhouse gas emissions.

But it is on energy efficiency that Chancellor Merkel is taking a giant step forward.

The new Chancellor has set up a new programme, designed to bring all pre-1978 homes up to contemporary energy standards. Each year, some 5 per cent of such housing will be refurbished, so that by 2025, the entire German building stock will be an exemplar for energy performance.

To achieve this, Merkel has set out a new financial policy, probably best translated as 'investing to save'. She has decided to quadruple the finances, to 1.5bn Euros a year (£1bn). She has also switched from financing loans to funding direct subsidies, in the belief that such direct financial inducements are much more likely to achieve success.

As we know, for the past 18 years the UK Treasury has not made available any direct fund to encourage householders to install energy-saving measures. It certainly does provide funds to improve the homes of those in fuel poverty - but as a social welfare matter, not to reduce energy consumption.

Instead it has preferred sticks to carrots: mandating that only more energy-efficient boilers or glazing replace those in existence, but providing no financial assistance. Consequently, there has been every incentive to 'patch and mend', rather than install new equipment. Since the requirement for only A- or B-rated domestic boilers was introduced last April, overall boiler sales are down by a staggering 100,000.

Rather than 'patch and mend', 'investing to save' is the way forward, to deliver an end result which will provide the step change in energy efficiency which the 2003 Energy White Paper predicted.

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Responses

Gavin Hodgson, BRE - 6th Feb 06

I enjoyed reading this article, but have a specific comment in relation to the statement "Since the requirement for only A- or B-rated domestic boilers was introduced last April, overall boiler sales are down by a staggering 100,000."

The overall number of units sold in 2002 was some 1.35 Million, so compared to 2002 a reduction of 100,000 is only a 7% change in sales which could be attributed to factors other than the amendments to regulations.

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