The latest phase of ECO running from autumn this year until March 2022 has been refocused on 'affordable warmth' rather than carbon reduction
ECO, the UK's flagship £6bn domestic energy efficiency scheme, is being refocused on upgrading more than one million fuel poor homes over the next three and a half years, the government confirmed today.
The Energy Company Obligation (ECO) scheme requires larger energy companies to supply heating and energy efficiency measures to domestic properties.
BEIS today confirmed the scheme will be expanded to include more energy firms when the next phase kicks off this autumn and runs through until March 2022.
And the government also confirmed that as previously mooted the ECO requirement for energy suppliers to promote carbon saving measures has been axed in favour of a refocus on delivering "affordable warmth". As such energy efficiency improvements will have to be targeted at households that officially qualfy as fuel poor.
Full details for the next phase of the scheme have been set out today following a consultation over the future of ECO earlier this year. It came as the government also confirmed the passage of the Energy Price Cap bill into law, which will cap customer energy bills from the Big Six suppliers initially until 2020, after which regulator Ofgem will recommend if it should remain in place until 2023.
Energy and Clean Growth Minister, Claire Perry, said the government was committed to building an energy market that delivers "clean, affordable energy". "This cap coupled with our £6bn energy efficiency scheme will help build a market that puts consumers at its heart and ensures that those most at risk of fuel poverty are protected," said Perry. "Energy suppliers now need to get on board, ditch their old practices and improve their efforts to deliver value, choice and excellent customer service."
The government's consultation response published today confirms its intention to remove the Carbon Emissions Reduction Obligation (CERO) arm of the scheme and instead refocus on "affordable warmth". CERO had previously required suppliers to promote green "primary measures" for energy saving such as roof and wall insulation and connections to district heating systems.
However, while BEIS acknowledged removing the CERO will result in lower levels of CO2 emissions savings, it estimates the scheme will still achieve lifetime carbon savings of 2.1Mt of CO2 equivalent for each of year ECO is in operation. It also points to other policies that "address carbon savings in homes and across the economy more widely".
The government has also decided to increase the final obligation under ECO to £8.253bn lifetime bill savings, an increase from the £7.735bn consulted on.
Pedro Guertler, senior policy advisor at green thinktank E3G, welcomed the focus on fuel poverty, longer term outlook and reconfiguration of ECO's rules, but warned the amount of energy efficiency investment in the scheme remained "far short of what is needed to meet fuel poverty targets".
"At least twice as much support is needed for low income households who struggle with their energy bills," he said. "Energy efficiency is the only permanent solution to fuel poverty. The governments of Scotland and Wales grasp this, who, including ECO support, invest four times and twice as much per capita respectively in low income household energy efficiency as is invested in England.
He added: "The CCC recently reported that home insulation rates have crashed by 95 per cent since 2012. The new ECO will drive just one eighth of the insulation rate that the National Infrastructure Commission says is needed from 2020 to decarbonise our energy system at no extra cost to households. The government needs to prepare a comprehensive energy efficiency infrastructure action plan that delivers this and meets its Clean Growth Strategy ambitions."
Further details confirmed today include a requirement for at least 17,000 solid walled homes to be treated each year under the next phase of ECO, either through solid wall insulation or using a combination of other technologies.
The scheme will also allow the equivalent of 35,000 broken heating systems to be replaced, as well as the replacement of inefficient heating systems if they are installed alongside insulation.
Moreover, at least 15 per cent of energy efficiency measures must also be earmarked for rural homes under the scheme's rules, while suppliers will be able to meet up to 10 per cent of their obligation through "new, innovative products".
The supplier obligation threshold is also being reduced in a phased manner from 250,000 customer accounts to 150,000 by the end of the period in 2022, the government said.
First launched in January 2013, ECO has seen 2.3 energy efficiency measures installed on approximately 1.8 million homes, according to BEIS.
However, the government is continuing to face fierce criticism over its domestic energy efficiency policies that the latest policy reforms are unlikely to fully allay.
The Committee on Climate Change has repeatedly argued more rapid progress on improving energy efficiency is required if the UK is to meet its carbon targets, while opposition parties have argued that recent years have seen sharp falls in energy efficiency funding.
A recent report from the IPPR think tank calculated that based on the current rate of energy efficiency improvements it will take the goverment six decades to meet its fuel poverty targets.
The government may focused energy efficiency funding more clearly on those most in need, but calls for a comprehensive overhaul of domestic efficiency policy and dedicated infrastructure funding are unlikely to go away.
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