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Green Deal: a waste of precious resources

I've always had my suspicions about the way that energy efficiency is presented as an easy way of reducing carbon emissions. For a start there's the Jevons paradox: the observation that efficiency gains tend to lead consumers towards enhanced performance. In other words, as houses become more efficient we tend to keep them much warmer. Being someone who lives in a cool (or even cold house) and wears jumpers all the time, I find modern houses stiflingly hot, but most people are much happier to wear shorts and t-shirts indoors.

But even leaving this kind of thing aside, whenever I have done the sums on my own house I've always come to the conclusion that investment in energy efficiency is not going to provide a good return. It's therefore interesting to see that my back-of-a-fag-packet calculations seem valid across the board. A new, and by the looks of it carefully controlled study of homes in the USA has found that the much touted gains from energy efficiency measures are actually relatively small and certainly less than the cost of installation.

The researchers found that the upfront cost of efficiency upgrades in the Michigan program came to about $5,000 per house, on average. But their central estimate of the benefits only amounted to about $2,400 per household, on average, over the lifetime of the upgrades.

The program did help households save energy: after the upgrades, homes used 10 to 20 percent less energy for electricity and heating. But, notably, that was less than half of the savings that had been predicted beforehand.

In the UK, enormous sums of money have been ploughed into energy efficiency, most notably through the LibDems "Green Deal". Indeed most people's phones have been ringing off the hook with people touting subsidised home insulation schemes. But assuming that the results of the US study apply here too then one would have to conclude that the Green Deal has been a complete waste of precious resources. It's another epic fail by big government.

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Reader Comments (49)

I've just had new double glazing and the saleman was nonplussed that the only reason I wasn't replacing the windows and doors was for energy efficiency. He had a whole talk ready but I waved it away. Fortunately we quickly came to the agreed position that all I was interested in was a good price and we didn't waste any more time on chit chat. The other companies were more dogged in their green presentations and wanted to charge more for it. Needless to say they didn't get anywhere but out my rotten front door.

Jun 24, 2015 at 10:03 AM | Unregistered CommenterTinyCO2

Price trend in fuel might offer some explanation.
- It is possible that at the time of grants they projected fuel prices to have an upward increasing trend..and of course fuel prices have dropped.
- I hate to point it out but some clever green will realise that if one way to make the "energy efficiency" measures NOT look so wasteful is to now FORCE FUEL PRICES up drastically... that way the perceived savings go up.

Jun 24, 2015 at 10:12 AM | Registered Commenterstewgreen

Also interesting that they don't look at the Carbon balance as well - does the energy to manufacture, transport and install that insulation actually save anything there ?

Jun 24, 2015 at 10:20 AM | Unregistered CommenterMorph

I recall when Wedgie-Benn was Wilson's Technology (White heat of) Minister and he wanted to insulate every home in Britain. I read (in the Times, I think - it was then my daily paper) that someone had calculated that the energy saved by the insulation would be a lot less than the energy required to make the insulation in the first place.

What goes around....and those who cannot remember their history are condemned.....

Jun 24, 2015 at 10:26 AM | Unregistered CommenterHarry Passfield

From personal experience the best return on investment is heavy velvet curtains or similar; especially in modern houses with large windows. Not sure of the cost these days but on winter evenings once the curtains are closed and incandescent lights and TV are on there was a measurable increase in room temperature perhaps 3 or 4'C on an average winters day. With other energy saving measures (LED lights etc.) not sure this would be as much these days.

We're now in an old stone built house which has been renovated, the work included insulation, draught-proofing and so on. This certainly made a difference, cost effective - for someone who suffers from cold feet - definitely yes for an accountant probably not.

Jun 24, 2015 at 10:29 AM | Unregistered CommenterSandyS

The green exponent still don't live in the world of the economically possible. That's why the BBC is having an orgasm right now that a Dutch court has ordered the government to cut GHG by "at least 25% by 2020".

If upheld, it seems that this might be good thing (except for the Dutch of course) because the general population has still not had the full demonstration of the suffering wished upon them in the name of greenery. Then they will ken.

Jun 24, 2015 at 10:33 AM | Unregistered Commentermichael hart

In the UK, enormous sums of money have been ploughed into energy efficiency,

In terms of electricity usage it has had little to no effect.

OFGEM calculates three figures for typical household energy usage: low, medium and high. Here are the figures from 2003 (the earliest I could find) and 2015 (kWh)

2003: Low = 1,650, Medium = 3,300, High = 4,600
2015: Low = 2,000, Medium = 3,100, High = 4,600

Not exactly a runaway success.

2003 figures..
2015 figures

Jun 24, 2015 at 10:34 AM | Unregistered CommenterTerryS


a Dutch court has ordered the government to cut GHG by "at least 25% by 2020".
And instigated, so the report says, because of the say-so of 900 activists. How very democratic - not.

Jun 24, 2015 at 10:36 AM | Registered CommenterHarry Passfield

michael hart:

So that means the Dutch will close their (coal fired) Maasvlakte power stations that feed the Brit-Ned connector, knocking another 1 GW of Britain's reliable power supply.

Jun 24, 2015 at 10:42 AM | Unregistered CommenterIt doesn't add up...

I have a W*******r Boiler that has lasted almost 6 yrs. (should I say this?). Cost to me is approx £100 pa and thats because I purchased/installed it myself. I was lucky because where I live various boilers are a constant problem, evidenced by the continual B. Gas vans etc parking in the street. Folk likely cough up £15 odd pm for annual maint.

Vat is in all of this.

Insulation did make a difference to my 70's brick sh8t in W. Mids, but was largely cancelled out by energy price hikes/green BS. Never forget the little old meter charge per day!

Double Glazing..I note too often that DG fits are often of the type with the glazed units removable from the outside. Expensive job lots everywhere.

So for those who cannot DIY its very costly...but thats the aim isn't it?

Jun 24, 2015 at 10:50 AM | Unregistered CommenterEx-expat Colin

A consequence of sealing up your house for energy efficiency is the decline in air quality because of noxious emissions from all sorts of manufactured products.

In the US the problem of radon gas seepage is also well documented. But nobody needs to be concerned about granite countertops. It's the soil that is the problem.

"Cellars and basements sunk into soils over granite can become a trap for radon gas, which is formed by the decay of uranium. Radon gas poses significant health concerns, and is the number two cause of lung cancer in the US behind smoking"

Jun 24, 2015 at 10:53 AM | Unregistered CommenterFrederick Colbourne

@HP logical fallacy mate
eg. One cancer patient might be completely right to bring a case against an entire government if it fails to give him a proven economic safe drug.

Jun 24, 2015 at 10:54 AM | Registered Commenterstewgreen

As with most government policy, it succeeds by separating the benefits from the costs. If benefits and costs never meet, it is easy to brag about the former and bury the latter.

Jun 24, 2015 at 10:56 AM | Unregistered CommenterGeckko


OFGEM's Supply Market Indicator has seen assumed gas consumption fall from 15.3 MWh/a in March 2014 to 15 MWh/a in April 2014, then 14.8MWh in August 2014. The forward forecast assumes just 14.6 MWh/a. Your bill is falling because of energy savings you can't afford it we simply assume it.

Jun 24, 2015 at 11:04 AM | Unregistered CommenterIt doesn't add up...

noun [boon-dog-uh l, -daw-guh l]
a project funded by government out of political favoritism that is of no real value to the community or the nation.

The "renewables" and "energy efficiency" games fit the definition. There are two metrics which are ignored by the spenders and receivers of other people's money.

Did the work actually result in savings?

Was the work delivered at a price commensurate with component cost and fair margin / payment for the work?

Measuring success is something that bureaucracies swerve around at any opportunity except when the definition is arbitrarily (most times - ludicrously...) in their favour . The dwelling energy certification scheme being a nice little box ticker meaningless make-work.

Transparency of price for the componentry is resisted and anti competitive trading practices predominate under the guise of approved contractor schemes which are tantamount to bid rigging. The UK home heating market is riddled with overpriced stuff - compare the actual prices for (identical) gas boilers in say Ireland and the UK mainland. ("Renewable" equipment - esp. assd. heat pumps likewise)

I've no problem with paying an hourly rate and a competitive price for components. What I observe though is state mandated restrictive practices inflating prices dramatically without honest cost / benefit evidence being offered.

The flocks of bloated, flightless carbon quangos noisily congratulating each other simply rub salt into the gashes in your wallets.

Some might say it's a joke - I'd use other words.

Jun 24, 2015 at 11:06 AM | Registered Commentertomo

I'd also say that the quotes from companies that mentioned the green deal and ditto for the new boiler I had last year, were significantly higher than deals without it. So the government and the consumer are needlessly being charged for the same ineffective green con.

Jun 24, 2015 at 11:10 AM | Unregistered CommenterTinyCO2

Stewgreen: The key phrase you used was: "a proven economic safe drug." One could argue that reducing carbon (sic) emissions in the Netherlands will not ameliorate the climate for that country alone - and it certainly hasn't been proven.

In any case, the judge has now ruled that the Dutch Gov has got to do what the activists asked.

Jun 24, 2015 at 11:15 AM | Registered CommenterHarry Passfield

The absurd thing is that when I last visited the Energy Savings Trust website it was seriously proposing "investments" with such long payback periods that they would never pay for themselves as soon as you take a cost of financing into account.

I just re-ran the numbers, and it suggests

More loft insulation 15 years payback
Solid floor insulation 27 years
New boiler/additional thermostats 31 years

I think that by law they should not recommend anything beyond a 7 year payback before financing costs.

Jun 24, 2015 at 11:36 AM | Unregistered CommenterIt doesn't add up...

michael hart, if a Dutch court has ordered the Dutch Government to cut Green House Gas Emissions so drastically, surely a good place to start would be the Greenhouses used for their flourishing tulip bulb industry (and other flowers)

The Dutch tulip bulb business is often quoted as an example of greed distorting market forces, leading to financial ruination. Some historical lessons need repeating, so that those Government officials with learning difficulties, don't get left behind in their search for reality.

Jun 24, 2015 at 11:52 AM | Unregistered Commentergolf charlie

We got cavity wall insulation and an extra layer of roofs pace insulation in a 5 bedroom detached house for £200.

A no-brainer, considering I was going to do the roof space myself and it alone would have cost more than this (and it's a horrible job).

We're all paying for it so why not take advantage?

Jun 24, 2015 at 12:14 PM | Unregistered CommenterNial

In 2009 the Australian Labor government launched a home insulation scheme to save us from the Global Financial Crisis and global warming. They rushed into it and every con man in the country was in on the act. The result was 224 house fires and 4 deaths from electrocution from foil insulation. It was an expensive diaster. .

Jun 24, 2015 at 12:15 PM | Unregistered CommenterClive08

There have been a lot of failures in trying to insulate older buildings - particularly those without cavity walls. Turning a cool dry building into a warm wet one is the usual failure. Beware of promises made by the subsidised.

Jun 24, 2015 at 12:18 PM | Unregistered CommenterAlan William Mindoes

According to the Building Research Establishment the payback time for installing double glazing, on average, amounts to roughly eighty years. Whenever DG salesmen are told this you can see the horror and disbelief in their eyes. They always tell me it's around five years, which is funny.

Jun 24, 2015 at 12:56 PM | Unregistered CommenterPaul

What about "condensing" boilers, now mandated by law? I replaced a 20-year old gas boiler with a modern condensing unit of notionally greater output. We bl**dy froze! Turns out that the condensing boilers are only efficient at very low output water temperatures. We had an old Victorian pile with small radiators, and even turned up to max it didn't heat properly. And, of course, turned up to max the gas savings were undetectable.
Sold the house (in the summer), passed the problem on...

Jun 24, 2015 at 1:31 PM | Unregistered CommenterJohn Davis

In South Australia there are underground houses in Coober Pedy that remain at a comfortable temperature despite a temperature range of -10 to 50℃. It is very dry there, so no danger of flooding.
Now you know why the Greens want everybody to go back to living in a cave.

Jun 24, 2015 at 1:32 PM | Unregistered CommenterGraeme No.3

@Nial's fallacy of "We're all paying for it so why not take advantage?"
True we ALL pay for it in our energy bills, however it''s not fair cos not ALL can take advantage equally eg. Mansion man gets a big subsidy, whilst poor renting family can get nothing, cos those grants go to the landlord.
That's why UKIP's Roger Helmer shouldn't have taken the solar panel subsidy's stealing from the poor.

Jun 24, 2015 at 1:54 PM | Registered Commenterstewgreen

David Mackay in his tour for the DECC 2050 program was keen to have everyone reduce their average temperatures to around 19C. Due to the price of gas, we've had our heating thermostat set to 19C as a max, so only reach his preferred averages on sunny summer days. In winter we use jumpers and blankets. Despite that, our bills have continued to climb. I looked at our historic usage a while back, and found that we'd reduced our energy consumption quite a bit, (to the point that we are uncomfortable) but the costs have risen dramatically. If I remember correctly the effective price per kWh was around three times what it was 10 years ago.

That includes having taken advantage of a 'free' offer of cavity wall insulation that actually cost £60 due to the size of the house. (Well worth it, as the payback on that was be less than a year).

There is no doubt that price rationing of energy is well under way, and the poor are suffering. The Green Deals are indeed a way of subsidising the companies that sign up, and create higher prices for consumers even after the 'rebates'.

Jun 24, 2015 at 2:10 PM | Unregistered CommenterJoe Ronan (aka Cumbrian Lad)

Regarding the Dutch court ruling, the following quote from Wiki maybe sets the context for the stupidity of BBC reporting:

The Netherlands' name literally means "Low Countries", influenced by its low land and flat geography, with only about 50% of its land exceeding one metre above sea level.[16] Most of the areas below sea level are man-made. Since the late 16th century, large areas (polders) have been reclaimed from the sea and lakes, amounting to nearly 17% of the country's current land mass.

So for a period of over 300 years, during which sea level has been steadily rising following recovery from the LIA, and using relatively low tech technology, the Dutch have increased their land area by 17%, adding somewhere in the region of 7,000 km^2 of land. But apparently they are at risk from rising sea levels.

Clearly not.

Jun 24, 2015 at 2:33 PM | Registered Commenterthinkingscientist

In Cleveland, OH, the Anthony J Celebreeze Federal Building is being sheathed in glass panels to improve efficiency. The price tag of the project is $121 million and the expected return is a savings on the order of $500,000/year. Do the math: Yep, somewhere around 200 years to break even on investment!

Jun 24, 2015 at 2:45 PM | Unregistered CommenterDean_1230


Can they borrow at less than 0.4% for 200 years to make it pay?

Jun 24, 2015 at 3:40 PM | Unregistered CommenterIt doesn't add up...

Instead of retrofitting old homes, it would be better to rebuild them. You simply can't get the efficiency of a new house with 6" fibreglass in the walls, more in the ceiling and an airtight shell. Canada has required that since about 1980.

Jun 24, 2015 at 3:50 PM | Unregistered CommenterEric Gisin

Careful Eric, you'll be suggesting next that the government are as successful at energy policy as they are at managing the housing stock :)

Jun 24, 2015 at 3:57 PM | Unregistered CommenterJoe Ronan

It is almost a truism now that promised savings never materialise, but it is especially so when public funds are involved.

There is (or should be) a Parkinson's law of government projects, namely that expenditure always exceeds the projected cost, and the overspend is proportional to the potential embarrassment of ministers if revealed.

Jun 24, 2015 at 4:00 PM | Registered Commenterjamesp


"the Anthony J Celebreeze Federal Building"

Somehow, I would expect that to be draughty...

Jun 24, 2015 at 4:01 PM | Registered Commenterjamesp

You have to be hard-nosed to decide what is best for you. I live in a large apartment building and we are considering switching communal areas to LED lights - at a pretty considerable cost. However, these are lights which are on all the time (corridors and parking areas) so the electricity saving is also considerable. Pay-back time is around 18 to 24 months, but we are getting another quote for the lights which may be even cheaper. Life-time for the bulbs is an issue, but so far reports suggest there is little to worry about here.

One thing we have squashed is reducing the level of lighting and/or putting timers and movement sensors on lighting in the parking areas. I refuse to let "saving the planet' compromise safety.

Jun 24, 2015 at 4:11 PM | Unregistered CommenterRob

Eric Gisin:

Do you have an payback estimate on rebuilding? My guess would be measured in centuries.

Jun 24, 2015 at 4:18 PM | Unregistered CommenterIt doesn't add up...

Some years ago in north Africa I carried out a study on stand alone a/c units. This showed that in summer, when it was very hot, the a/cs were set at a temperature 5 deg LOWER than the temperature in winter when they were switched on.

Jun 24, 2015 at 5:03 PM | Unregistered CommenterSpen

In fairness to double glazing, it does have more merits than just saving money.
My house is a lot quieter since I had it installed. I used to be woken up by every motorbike or drunkard at 2 in the morning.
That's a luxury worth buying, in my opinion.

Jun 24, 2015 at 5:51 PM | Registered CommenterM Courtney

Fit the Best! ;)
Guess who works for them! :)

Jun 24, 2015 at 6:16 PM | Unregistered CommenterAdam Gallon

Nok me dahn wiv a feaver!
Whodav fort it?

The green "deal" is anovver nice little earner, for rich geezers.

Jun 24, 2015 at 6:48 PM | Unregistered CommenterBitter&Twisted

Some years ago I heard about a program to offer subsidized insulation to owners of old, poorly insulated homes in a town in Oregon. Most of the houses had electric heaters, and the aim was to reduce wintertime power consumption.

The actual effect was to increase power consumption.

They investigated and found that the homeowners had previously been cutting firewood and using their wood-burning stoves, since it was too expensive to use the electric heaters very much in their drafty, thin-walled houses. After the added insulation, they could afford to axe the effort of woodcutting (so to speak) and just flick on the heater.

Jun 24, 2015 at 7:05 PM | Unregistered CommenterDave Bob

I have a 16 year old gas boiler ( ideal classic) with cast iron heat exchanger, these boilers are bullet proof and will last for years, unlike the modern boilers where your lucky to get 7 years use out of them at over £2000 a throw, the efficiency of these modern boilers is overstated so the savings in gas are small, the outcome is that you will not recoup the costs of a new boiler. I have another (classic) waiting in the garage, (cost £25 from Gumtree) and more spares in the shed.

That`s my green deal.

Jun 24, 2015 at 9:21 PM | Unregistered CommenterRob

One of the advantages of a woodburning stove is that you can get warm burning junk mail, especially mailshots from companies promising to make a profit out of cutting your fuel bills, at no cost to themselves.

Green greed does go up in smoke very nicely. And it's free.

Jun 24, 2015 at 10:31 PM | Unregistered Commentergolf charlie

Re Jun 24, 2015 at 4:00 PM | jamesp

There is Jerry Pournelle's Law of Budgets and Deadlines - "Everything takes longer and costs more"

Jun 24, 2015 at 11:50 PM | Unregistered CommenterAnother Ian

If you aren't getting the promised savings from energy efficiency it's obvious that you aren't homogenising and adjusting your data in the approved climate-science manner.

Jun 25, 2015 at 12:35 AM | Registered Commenterdavidchappell

Assuming there is an energy shortage (even an artificially created one), then telling people to conserve energy is rather like telling a starving man that the solution to his hunger is to eat less.

Jun 25, 2015 at 1:33 AM | Unregistered CommenterRobert of Ottawa

The US result means that there are too many installations, not that it is a waste of time. Many old homes, particularly in New England, are just leaking air, and the energy bills go to many hundreds of dollars in wintertime. Saving $100-$200 a month would be easy. Yet in places like Boston it is not worth it because they are rentals.

Jun 25, 2015 at 2:57 PM | Unregistered CommenterMikeN

@ ex-pat Colin

...I have a W*******r Boiler that has lasted almost 6 yrs. (should I say this?). Cost to me is approx £100 pa and thats because I purchased/installed it myself....<./i>

I have a Potterton Netaheat gas boiler, which I installed myself in 1984. The control board went around 2000 - I replaced it and it's still going strong. It has had no maintenance. If only all household goods ran for 30+ years like this...

Jun 26, 2015 at 10:59 AM | Unregistered CommenterDodgy Geezer

Jevons paradox maybe, but surely just basic economics, when cost goes down consumption goes up.

And perception is reality. Once brainwashed into believing that energy efficient this and that will reduce bills, people will use more believing the cost is either less or no more, even if in fact they end up using more and paying more.

Despite so many well taxpayer funded 'experts' and advisors, politicians and their bedfellows have a poor grasp of Human nature and the basics of life.

Jun 26, 2015 at 12:15 PM | Unregistered CommenterJohn B

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