The Green Deal is a policy launched by the Department of for Energy and Climate Change in the United Kingdom that aims to take a large step towards greater energy efficiency. This measure was initially discussed in 2011 but officially launched in June of 2012. The United Kingdom has an energy consumption rate of nearly 3000 kgoe per annum, which is reasonably high (See Appendix 1). The deal ultimately provides consumers with energy efficient techniques that would cost less than standard equipment in the long term. The Green Deal encourages consumers to do this as it provides them with loans, which can be paid back through the energy bills (Richards). Using energy inefficiently is a negative externality as the activity of energy wastage imposes costs on society, as there is a shortage of nonrenewable energy. There is a high social cost, as the private cost is high as energy wastage is inefficient and external costs include the cost to society by making energy scarce. This also eventually is the path to sustainable development, which is one of the macroeconomic objectives of every economy (Pettinger). At the end of this analysis, this report will directly address the research question to make a concluding statement, “To what extent was the UK government successful in reducing the externality of energy consumption in the United Kingdom through the Green Deal?” The government of the United Kingdom believed this measure would be effective in reducing the externality of energy consumption.
In theory, the concept of the Green Deal seems perfect. The homes in Britain are considered ‘draughty’ and by implementing energy-saving techniques such as insulation, draught proofing, double-glazing these homes can become more energy efficient, which leads to less consumption of energy and a reduced negative externality. The Green Deal incentivizes the consumer as it provides you with a loan from which you can buy these improvements. This loan will be paid back as an additional charge on your energy bill. The energy bill would have anyway been reduced and once the additional charges are paid off, the bill would have saved the consumer a significant amount of money in the long term ("What Is the Green Deal?"). The concept is so simple and beneficial to society and individuals and the Green Deal can be considered successful in this aspect.
Another success for the Green Deal is that it does not require upfront costs so anyone with a long-term plan can save money for themselves without paying a lot of money at the beginning. Additionally, the loan can be paid back in monthly payments stretching out over a long period of time sometimes around 25 years. This is very helpful to those people who cannot liquidate a lot of money this easily. Hence, this part of the Green Deal was helpful to the lower classes in society and has another reason to be successful. The Golden Rule is sub-policy of the Green Deal that impacts to benefit society. The Golden Rule is an...