Big banks jump on green bandwagon

Some banks are now offering discounted mortgages to people buying eco-friendly homes and Energy Star certified homes. The trend toward green living has finally caught the attention of the banking industry.

Banks have watched as consumers have made greener choices in everything from washing detergent and light bulbs to high-efficiency furnaces and solar energy panels. With consumers interested in greening their lives, most of Canada's major banks have seen the opportunity to offer "green mortgages," which offer homebuyers a discounted interest rate and other incentives to buy more environmentally sensitive houses or perform upgrades aimed at lowering their environmental footprint.

Consumers, especially first time buyers, are increasingly looking to green home upgrades to help the environment and lower the carrying costs of owning a new home.

According to surveys conducted by Leger Marketing, while Canadians are interested in lessening their impact on the environment, the decision to buy a "green home" is really being driven by saving cash, and more than 59 per cent of respondents cite financial savings as the main reason for making eco friendly upgrades and purchases. The results are not surprising, considering more than 51 per cent of survey respondents say utility costs are the biggest surprise financially when it comes to owning a home.

Having new windows, doors and a high-efficiency furnace can go a long way to help make those carrying costs more palatable, according to Leger, which found 92 per cent of Canadian respondents recognize the cost advantages of energy-efficient home upgrades.

It also found nearly half of all homebuyers plan to make investments in energy-efficient upgrades in the next year, especially with the anticipated extension of the federal government's ecoENERGY Retrofit program. The program allows Canadians to write off a portion of their green home renovations on their taxes.

The green trend isn't just infecting resale homebuyers. According to an EnerQuality Green Building survey released in November 2009, more than 40 per cent of Ontario homebuyers are willing to pay up to $10,000 more for a new green home, or a home that is Energy Star certified. It's almost double the 22 per cent of homebuyers who were willing to spend that amount of money in 2008.

While almost all of Canada's big banks are offering green mortgages, the loans aren't open to just anyone. Buyers must qualify for the green loan by proving that the house they are buying meets certain green energy standards, or that they will be completing certain green upgrades to the home shortly after moving in.

Incentives offered by the banks vary. Some will provide rebates equal to the cost of a home energy audit, which is around $300, and then a cash back incentive that can be used for green upgrades. Others offer discounts to posted mortgage rates.

Though wading through all these new options proves to be a daunting task, homeowners and those who are looking to make the move to a greener lifestyle have been diligent in getting all their goals in order with help from the banks and the useful information they provide.

Companies who are participating in this new wave of going green aim to make a considerable mark in lessening the disconcerting carbon footprint.

Incentives 'can help home-owners go green'

Incentives, such as garden makeovers and fruit and veg vouchers, could help home-owners invest in energy efficiency measures, a pilot scheme has shown.

But the study found that more had to be done to convince people of the merits of flood protection devices, even if they lived in high flood risk areas. The trial by the University of Salford set out to discover if non-cash incentives could change attitudes. Studies have estimated that 70% of homes in 2050 have already been built.

Experts warn that unless existing homes are "retro-fitted" with energy saving devices, then the UK will not meet its target of cutting CO2 emissions by 80% in the middle of this century from 1990 levels.

Tempting technology

In the small-scale trial, 50 households in Timperley, near Manchester, were offered surveys to assess the houses' energy efficiency and vulnerability to flooding.

They were then offered a selection of non-cash rewards, including public transport season tickets and access to further education courses, if they decided to go ahead and invest in devices to reduce energy use or protect their homes from flooding.

Out of the 50 homes, 25 agreed to have a survey carried out. Five households then went on to have their homes improved, while a further seven were undecided at the time the team produced its interim report.

The trial was funded by the Environment Agency and Trafford Borough Council.

A spokesman for the Environment Agency said that one-in-six homes in England and Wales were at risk from flooding.

"The Environment Agency has completed 225 new defences in the past four years, increasing protection to over 198,000 properties, but flooding cannot be entirely prevented," he told BBC News.

"We urge people to check whether their property is at risk by signing up to the Agency's free flood warning service to get free alerts.

"Individuals and businesses can also help make their properties more resistant to flooding using specialised flood products."

Erik Bichard, who led the research team, explained why incentives could have a role to play as a policy tool to improve the take-up of green technology. "Psychologists have been trying to tell us about how people make decisions for some time, it just has not filtered through to this area," he said.

Professor Bichard said there were five main areas that affected people's decision-making processes:

- Understanding the issue
- Caring about the issue
- Knowing what to do
- Will doing something solve the problem?
- What will people think?

He went on to explain how the offer of rewards could influence how people made up their minds.

"Some of these areas are cognitive, intellectual, fact-based reasons, such as: Is there a problem? What can I do about it? Will it work?

"Incentives by-pass a lot of that thinking and take people straight to the question: 'If I do this then will I be better off than before'?"

One of the participants, Barbara Tarbuck, decided to pay for a new boiler to be installed in return for a garden makeover and fruit-and-veg vouchers.

Despite living in a relatively modern home, she explained that she agreed to a survey because she wanted to know what measures were already present in the house.

"I also wanted to see what I could do to reduce energy bills, so I was quite intrigued to see what ideas they came up with," she said.

Mrs Tarbuck also welcomed the idea of offering non-cash rewards: "It is alright to have a little grant to have a little bit to put towards the cost, but I am seeing benefits in two sorts of ways.

"I probably would never spend money on a garden makeover, I would have kept it for what you might call more practical things."

Tough choices

In the trial, all five households that decided to improve their properties all went for energy saving measures, with none choosing to reduce their homes' vulnerability to flooding.

Professor Bichard and his team asked people why they had decided against spending money on flood protection measures.

"About half of the people were put off by the price of flood protection," he said, adding that two door guards and some air brick covers would cost almost £2,000.

"Although we were proposing to reward back the full amount, the economic situation [meant that] people just did not have that sort of cash in the bank to make that sort of investment."

Mrs Tarbuck was among this group. She explained: "I went for the larger outlay of getting a boiler fitted. I am not saying I will not do it in the future, as I still have the report and what was recommended."

Professor Bichard said that the other half of participants were sceptical as to whether it was necessary to spend the money in the first place.

"They simply did not believe that flooding was ever going to affect their house, even though the Environment Agency's statistics show that they lived in a flood threatened area and they really needed to take responsibility to protect their house.

"That is interesting because even with the amount of incentives that we were offering, it just was not enough to overcome the fourth 'will it work' reservation."

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