Econation: Credit Where Credit's Due

Well done to the Government for allocating $NZ323.3 million for a home insulation and clean heating programme in the Budget. However I suspect that the Government did this somewhat grudgingly considering all the pressure that was necessary to get them to make this decision. Perhaps the credit should rightfully go to those who pressured the Government from all sides including the Green Party, the Parliamentary Commissioner for the Environment, EECA, the building industry, the health sector, NGOs and many others, like Econation.

The reason this investment is so popular is because it has so many benefits. It will help make houses warmer and drier and therefore healthier. It will stimulate the building industry and provide jobs. It will reduce the amount of energy required for home heating (and cooling) therefore reducing CO2 emissions and the need for new power generation. It will reduce the cost of energy for households and increase the value of their houses.

The current economic recession is seen by many as an opportunity to change to sustainability. It might be a bitter pill to swallow but the reduction of consumption during a recession is good for the environment. (The corollary of this is that poor people, by consuming less than rich people, are less culpable for the environmental degradation caused by humans.) The recession won't last forever though and consumption will start to grow again but in the meantime there is an opportunity to start revamping the economy.

Many Governments around the world are using stimulus packages and budgets to invest in a more sustainable future. A number of Governments have included 'green' investments as part of these broader packages. However in most cases the amount of green investment falls short of the 20% of the total stimulus package called for by economist Nicholas Stern and the 1% of GDP provided as a guideline by the United Nations. Even in the US where Obama's plan has been applauded by local environmental groups they are only spending about 13% of their total economic recovery package on green measures when they are spending much more money flogging dead horses like the auto industry. In the EU green measures account for about 14% of recovery packages. In contrast South Korea devoted two-thirds of its $US36 billion recovery package, or about 3% of its GDP, to green investment. China allocated about a third of its $US580 billion recovery plan to green measures, concentrating on energy efficiency.

The New Zealand Insulation Fund
The $NZ323.3 million for home insulation and clean heating is only about 0.25% of New Zealand’s GDP and in fact only $NZ243.7 million is new funding because there was already $NZ79.6 million budgeted for home interest subsidies and home grants programmes. The 2009 Budget is also providing $NZ50 million for cycleways which would take the total for 'green investments' to about 0.3% of GDP. This is certainly better than nothing.

The insulation and heating programme aims to retrofit more than 180,000 New Zealand homes over the next four years. The fund will be leveraged to get the maximum benefit by providing a third of the cost of improvements. Recent research shows that a majority of homeowners are willing to pay off the cost of upgrading the thermal performance of their homes but they can't afford a significant one-off, up-front cost. The report, released by The New Zealand Business Council for Sustainable Development, shows that given the right package 210,000 homeowners will take up the right mix of private loans and public grants to upgrade the thermal efficiency of their homes in the next 12 months.

Who can get a grant?
Initial details indicate that grants will be available to anyone no matter their income and larger grants are available for Community Services Card holders. The amount available is a third of the cost of insulation to a maximum of grant of $1,200 (more for Community Services Card holders). Some banks, councils, iwis, DHBs and electricity providers have indicated that they will offer loans to those who qualify for grants to cover the remaining amount.

EECA will be administering the fund and whilst full details have not been released yet there is more information about how the scheme will operate here: EECA – New insulation and heating programme (http://www.eeca.govt.nz/node/3107).

I hope as many of you as possible take advantage of these grants.

Michael Lockhart
Econation | Making sense of sustainability

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