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Is the Energy Company Obligation (ECO) fulfilling its obligations?

•  Changes imminent for flagship efficiency scheme
•  Eligibility and priority measures altered
•  Funding cuts limit ambition – EST expert

The Energy Company Obligation (ECO), the government scheme that gets larger energy suppliers to install energy efficiency measures in homes, is in the midst of changes – with new recommendations set to come in to force very soon.

Joseph Cosier from Energy Saving TrustThey are to cover an 18-month transition period before ECO formally re-launches for the period 2018-2022. Energy Saving Trust had its say during the decision-making process, and we spoke to Policy Officer Joseph Cosier (pictured) to find out whether the changes are what was expected – and what they mean for energy efficiency in the UK.

Positive tweaks but a much smaller budget

The headline change looming over the new approach is that the ECO's budget has been cut by 40 per cent, to £640million – far from good news. Joseph points to statistics from the Association of the Conservation for Energy, which show a distinct downward trend over recent years in government energy efficiency investment, as well as the amount of households helped. Joseph added:

“The changes that are being implemented are broadly good, and we’re pleased that a lot of the things we called for are being included. But ultimately, ECO is being cut in size and will deliver fewer measures and help fewer people. Considering the important benefits that energy efficiency offers, this is the wrong direction. We need to be ramping up activity, not reducing it.” Joseph Cosier, Policy Officer, Energy Saving Trust

But while naturally disappointed with that, Joseph believes there have been some positive tweaks made to how the scheme is run. Joseph said, “One of the biggest things for us is the inclusion of an obligation to install measures in rural areas as part of the Carbon Emissions Reduction Obligation, or CERO. We had called for more focus on these parts of the country, which tend to have the most cold, leaky properties.

Another interesting addition is that local authorities will be given a chance to do more, even if only on a small scale to start with: “A more flexible approach is needed – and so the news that 10 per cent of Affordable Warmth funding can be used to target the vulnerable, even if not technically in fuel poverty, is good news, even though we argued for a higher percentage. Overall, it's definitely looking more open, and simpler to find out who is eligible.”

Mixed news on boilers

Technician adjusting boiler controlsAnother notable change was that the scheme has limited the amount of boiler replacements it will carry out to 25,000 a year, in order to direct more of the funds towards insulation. Joseph commented:

“There's good and bad elements to this. We supported the cap, and a refocus on insulation, but we wanted to see some money put aside for replacing broken boilers in the most vulnerable households. People in these homes can often have no-one to turn to, and be forced to make tough choices, so it's not great news.”

Fuel poverty focus

ECO is moving more towards being a policy to tackle fuel poverty, with the latest changes upping the Affordable Warmth aspect of the scheme up from 36 to 70 per cent. Joseph thinks that this is a trend that's set to continue when the final format is finalised for the four years from 2018. 

He said: “It looks like they're going to make it all fuel poverty focused – maybe 100 per cent Affordable Warmth, while improving the targeting of those most in need.”

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Has ECO succeeded?

It seems like an apt time for a progress report – so how has ECO done overall as a means of tackling cold homes and helping reduce people's energy overheads since its launch in 2013?

Joseph commented: “ECO has delivered energy efficiency measures—particularly a large amount of low-cost improvements. But I think where our view differs from the government is that we don't necessarily think that an energy company obligation is the best way to tackle fuel poverty. 

“It's funded by all energy consumers, but only a comparatively small number of people actually benefit. Funding help for these households through taxation would probably be the best approach, but that's unlikely to happen, so we have to make sure ECO is as good as it can be.”

Limited support 

ECO is now the only show in town when it comes to government intervention in the energy efficiency market. Joseph thinks upcoming prospects for getting more measures installed are uncertain. 

He said: “Private rented sector energy efficiency standards are coming in April 2018 for F and G-rated homes, so that's a positive, but it is a shame that we've only got a smaller ECO in terms of energy efficiency policy with money behind it. Green Deal is now in private hands, so it's not known what kind of take-up of measures that might achieve.

 “The government's Emissions Reduction Plan is due in March as part of the fifth carbon budget. There will of course be lots in there, but it's unlikely to offer any more funding to make homes warmer and cheaper to run.”

Share your thoughts with us in the comments below, or tweet us at @EnergySvgTrust.

Gary Hartley is Energy Saving Trust's expert blogger. He has extensive experience researching and writing on a number of topics, with particular expertise in sustainable energy, policy, literature and sport. As well as providing regular blog content, Gary has also been published in numerous magazines and journals.

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