Green Homes: Low-carbon houses given tax breaks

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Our homes, said the Chancellor, account for one-quarter of Britain's carbon dioxide emissions, and he provided a series of measures designed to encourage the development of low-carbon houses - "benefiting the climate through lower emissions, and benefiting consumers through lower bills".

He extended the grants for microgeneration - generating some of your own electricity instead of relying entirely on the National Grid, which wastes much of the energy it creates in transmitting it long distances - and he started the process by which people who do that could sell their surpluses back to the Grid and receive proper income.

He scrapped stamp duty until 2012 on all new zero-carbon homes up to half a million pounds in value. He also announced that Britain was proposing in the EU that the rate of VAT on energy-saving and environmentally friendly products in the home should be reduced from 17.5 per cent to 5 per cent.

But for some campaigners, he simply did not go far enough. The measure which excited most comment was his 50 per cent increase in the amount of grant aid available for microgeneration, from £12m to £18m. On the face of it, this is substantial - but many observers felt it was inadequate to keep up with demand. Over the past year or so, the public has discovered that if you want to put a wind turbine on your roof, like David Cameron, or a set of solar panels, there are extremely generous government grants available. You might receive, for example, as much as £3,000 towards the £9,000 solar panel installation cost.

The trouble is, there are not enough of them. The grants, part of the Government's low carbon buildings programme, have become so much in demand that they have recently been given out in tranches each month - and are snapped up within hours. The last set went in 75 minutes.

The extra £6m, many observers felt, was nowhere near enough to satisfy the burgeoning demand. And it would soon run out. "We think the amount is absolutely pitiful, considering that the UK is lagging behind the other industrialised countries in developing and rolling out small-scale renewable energy technologies," said Dave Timms, economics campaigner with Friends of the Earth.

However, Mr Timms applauded Mr Brown's decision to ask Ofgem, the energy regulator, to find out how green homes could benefit more by selling their electricity surpluses back to the Grid - a situation which at the moment is entirely haphazard compared with, say, Germany, where there are regulated high prices available to household generators.

"That would help a lot with the long payback time, which, with the high initial cost, is one of the main barriers to people investing in home renewable energy," he said.

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