The FIT is is still regressive, even after Supreme Court victory

At last the Supreme Court has brought an end to the feed-in tariff (FIT) fiasco. The government hasn’t covered itself in glory regarding this issue and has left its “greenest government ever” claim looking somewhat tarnished and covered in verdigris.

The whole episode should be a lesson in the dangers associated with any government trying to intervene in the market-place.

Many of us felt that the FIT, as introduced by the previous administration, was flawed from the start. In particular, the absence of any conditionality requirements - when I had my 4kW PV system installed in 2010, I wasn’t asked a single question regarding the thickness of insulation in my loft, or if I had cavity wall insulation, or basic controls on my boiler.

It was extraordinary that you could receive a very generous incentive to install renewable generation technologies, without any requirement to ensure that the building incorporated even the most basic energy efficiency measures. This was a huge missed opportunity and a great example of non-joined-up thinking within government. The part of DECC responsible for delivering the UK’s 2020 renewable energy generation target seemed incapable (or unwilling) to talk to their colleagues responsible for delivering the CO₂ reduction targets.  

Now the pendulum has swung in the opposite direction – only D rated homes or better, will be eligible for the FIT. Again, this seems wrong. Surely, all home owners should be encouraged to adopt cost effective energy efficiency improvements, irrespective of the buildings actual energy rating.

The greatest Co₂ reduction opportunities (in terms of pounds invested per tonne of carbon saved), will be associated with homes in the E,F and G bands –in most cases installing all cost effective measures in F and G rated buildings, will not raise the rating to a D – effectively excluding millions of householders living in older homes from access to the FIT incentive scheme.

However, householders in E to G rated homes will still be paying for the FIT incentive, which will enable those living in more efficient homes to benefit from it. This is an extraordinarily unfair form of indirect regressive taxation - it’s little wonder that green taxation gets such bad press.  Setting the limit for FIT eligibility at D strikes me as more about limiting and rationing access to the FIT scheme, than about delivering cost-effective CO₂ reductions.

It’s potentially another huge missed opportunity. In my view the FIT conditionality requirement should not be linked to the energy rating of the home, but be based on the installation of all measures which meet the Green Deal’s Golden Rule.

David Strong is director of David Strong Consulting