Chris Huhne, the Energy and Climate Change Secretary, set out his vision for Britain's transition to a sustainable economy earlier this week in a speech at the London School of Economics. 

Offshore wind and carbon capture and storage would be key players in Britain's future energy generation, Huhne said, but he reserved the starring role of his speech to the Green Deal, which he described as "a radical programme to bring our houses out of the dark ages" by upgrading  the energy efficiency of the country's homes.

Under the proposed plan, energy companies would pay the upfront costs of insulation for U.K. households, who would then pay back the costs gradually in their utility bills. The government intends that the extra cost of paying for the insulation would be offset by reductions in household energy bills.

"At a time of increasing gas prices energy efficiency is a no-brainer," Huhne said. "It is also a massive economic and job opportunity which could help Britain's economy turn the corner. With up to 100,000 green jobs up for grabs over the next five years, and even more in the long-term, this is about growing our economy in a way that's good for jobs, the environment and energy security."

He added "Over the next two years we expect to insulate 3.5 million homes, with a renewed focus on those in fuel poverty and those who need it most, We will look at how we can apply the Green Deal model to businesses, too, enabling them to cut carbon, and cut costs. The potential benefits are vast."

Green Deal Specifics

The Green Deal proposition, set to be introduced in Parliament next month, is a new financing structure, which will allow the owners of domestic and non-domestic buildings to install certain energy efficiency measures through a 'pay as you save' framework.

Owners can install energy efficiency technologies, such as loft or cavity wall insulation, through 'green loans' provided through companies accredited by the Government. They will then pay through the savings made in their energy bills over 20 years, with the savings being greater than the repayments.

The obligation to repay the costs of energy efficiency measures will be attached to the energy bill at a property, rather than to an individual. So if a property is sold, repayments will continue through energy bills paid by the new owner, who will in turn benefit from the reduced bills associated with the scheme.

The Government also announced Tuesday measures to improve the energy efficiency of the private rented housing sector. The bill will create powers allowing any tenant asking for reasonable energy efficiency improvements to receive them from 2015 onwards. It will also allow local authorities to insist that landlords improve the homes that are performing poorly.

John Alker, director of Policy and Communication at the UK Green Building Council said "This deal has the potential to be applicable to every building in the UK, and it will help property owners install badly needed energy saving measures."

From a business perspective, Alstair Harper, Senior Campaigns advisor for CBI said "We look forward to seeing the detail of the Green Deal but feel it does have a lot of potential. Mainly, we need to know who carries the risk of these loans. I was at Chris Huhne’s talk at the LSE and, again, while I await the detail in the Energy Bill, I was pleased to hear him discuss how it can be made to work for tenants and landlords. This was of concern to a lot of SMEs."