Friday, July 17, 2009

Brilliant environmental concept the Liberal Party should adopt

Just when things seem gloomy, along comes a very bright, very practical idea to reduce the 27% of greenhouse gases created by warming our homes worldwide.
How does it work? By the creation of a new industry which retrofits existing houses without the homeowner having to go into debt, spend money or pay more than he or she is now paying.

This is how it works:

""It is called "Pay As You Save". It's based on a simple premise: that the cost of installing energy efficiency measures be funded through the future savings made on that household's energy bills.

So how does it work? The majority of home energy efficiency measures pay for themselves over a period of time.

Some are quite cheap, such as loft and cavity wall insulation or low-energy lighting.

But others are more expensive, such as suspended wooden floor insulation, new A-rated boilers and particularly solid wall insulation.

Most of us put off installing these measures, particularly the more expensive ones, because we do not think we will get the benefit. It just costs too much upfront; and given we move house, on average, every seven years, why bother?

Pay As You Save is designed to address this problem. Firstly, the upfront cost of measures, for example £10,000, is put up by a third party (such as a bank, retailer or local authority), not the consumer.

Next, your home gets its makeover, carried out by trained and accredited builders, and as a result energy usage is slashed by around half.

Then, from the savings on energy bills, a "standing charge" is repaid, every month, until the original lump sum (plus some interest) has been paid off.

The trick is to structure the scheme so the householder, or tenant for that matter, starts saving money from day one, and always saves more each month than they pay back.

The other key part of the package that enables this to work is that the monthly charge is attached not to the person, but to the property itself and would be paid off over a period of 25 years.

So when the householder moves on, the home's new occupant continues to repay the charge - and recoups more than that in savings."

Perhaps the Liberals should adopt this, and table legislation in the next session of Parliament (which the other two opposition parties will surely support) providing for this to happen asap in Canada?


  1. Mark McLaughlinJuly 17, 2009 2:39 pm

    It's not a horrible idea in principle, but it sounds as if it would be pretty confusing to explain to people, and cumbersome to administer which makes it a stinker in the 'good politics' rating scale.

    Like most schemes, the devil is in the details. How much would the lender's interest be on a program like this, who would be a 'trained and accredited builder' to install such improvements and how could you ensure the transfer of debt ownership when the house gets sold?

    Sounds like a beauocratic nightmare.

    Humm, maybe it is a perfect Liberal program after all.

  2. Mark McLaughlinJuly 17, 2009 2:41 pm

    Urg. Some bad spelling in there.

  3. If we stuck to simple concepts only, we would be yelling More taxes! to Harper's stupid No more taxes!

    Let's get some meaty policies out there in front of the voters, before Harper succeeds in making the next election a duel between him and Ignatieff with no mention of the Tory record or lack of reasonable policies ...

  4. I don't think it's really that complicated at all, especially the bottomline of it not costing you more to make improvements.

    CC, that's a brilliant idea.

  5. I also like this idea.. very good find 'cat.

  6. One other point, that acts in concert. If you signed up for this plan, would you not, almost subconsciously become more aware for your energy consumption? You'd save because of the upgrade, but you would also be closely monitoring your usage, which would probably result in even lower bills. If you knew that the faster you paid back the savings, the faster it went into your pocket, that would have a supplemental impact.

  7. 'attached not to the person, but to the property itself and would be paid off over a period of 25 years.'

    Like a mandatory assumable mortgage?
    What is the taxpayer/government role in this scheme? Guaranteeing the loans?

  8. I guess the government's role would be that, plus making sure that the mortgage is linked to the home, not the person getting the mortgage.

    Sounds like a good policy. I have one problem though. This requires predicting how much the savings will generate for the client so that the bank can charge an interest by which they make a profit, and the client makes some savings. However, these predictions could deviate from real life if energy prices fluctuate.

    Isn't it possible then that one could pay for a mortgage charging more than one saves? I'm not exactly sure, but I think it does.


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