What is ECO?
Energy Company Obligations, or ECO, is a government-run programme delivering energy efficiency measures to British homes. It began in 2013 and aims to reduce carbon emissions and tackle fuel poverty, by ensuring that energy suppliers carry out retrofits on customers’ homes. The current phase is due to end in September of this year, and a consultation is presently being conducted over the form that it will take when it returns from 2018 to 2022.
What impact has it achieved so far?
ECO applies to all energy suppliers with over 250,000 customer accounts. There are 15 obligated suppliers in the UK, who collectively make up 93% of the total market share.
Over the first two phases of the scheme, more than 2 million measures were installed. These measures were primarily cavity wall insulation (35% of the total), boiler upgrades (23%) and loft insulation (24%). There were also 140,000 solid wall insulation installations.
What changes are being made?
Proposed changes to ECO include:
- Switching focus entirely towards fuel poor, low income, vulnerable households
- Increasing the flexibility of the scheme, to capture more vulnerable households that are not on means-tested benefits
- Dedicating 15% of the obligation to rural homes
- Removing funding for oil fuelled heating systems and focusing instead on first time central heating (FTCH) installations
Focusing on vulnerable households
Under the current scheme, around 70% of the obligation (‘Affordable Warmth’) is targeted at low income and vulnerable households, while 30% (the ‘Carbon Emissions Reduction Obligation’) is open to all households. This present scheme is intended as a transition stage towards the incoming scheme, with would be 100% focused on those who are fuel poor, on low incomes or vulnerable to cold, and can’t afford cost of energy efficiency measures themselves .While means-tested benefits would remain the primary way of identifying eligible households, the new proposal would increase the number of low income households without benefits that could receive measures. These would include certain households claiming Child Benefit and disability benefits. Local Authorities would also have greater scope to identify vulnerable households.
Sustainable Homes Analysis
Sustainable Homes welcomes the proposed increase in focus on vulnerable households. Residents with disabilities and young children can be particularly susceptible to fuel poverty and the health implications that can accompany it, so these proposed changes could have far-reaching implications for individuals’ wellbeing as well as their carbon footprints.
It is also encouraging to see the proposed elimination of support for oil fueled heating. However there is still an emphasis on improving gas based heating systems as a means of reducing fuel poverty. In the context of climate change and carbon reduction targets this feels like a short sighted approach. Gas boilers need to be replaced sooner rather than later with alternative heat sources, to avoid major refurbishment costs further down the line, and this could be a missed opportunity for taking more ambitious and innovative action now.
In addition it is disappointing to see a lack of ambition in the targets proposed. If the target number of solid wall insulation installations is dropped from the current 21,000/year to the proposed figure of 17,000/year, it would take over 400 years for all 7 million of the UK’s solid walled homes to be insulated. A more ambitious approach, supported by adequate funding, is therefore urgently needed. In the meantime we recommend that housing providers take a proactive approach to retrofitting stock beyond that signalled accounted for by ECO, in order to combat fuel poverty and meet carbon reduction targets.
Recommendations for housing providers
In order to maximise the effectiveness of ECO, housing providers should:
- Be prepared to install alternative measures. There are energy solutions besides gas, including heat pumps, micro-CHP and mixed solutions, that could be used
- Where possible investigate opportunities for whole-house retrofit, to maximise funding and most importantly outcomes for long-term asset management and residents
- Proactively identify vulnerable residents and take the opportunity ECO presents to focus on fuel-poor residents if you have not done so already
- Local Authorities in particular should make the most of their entitlement to put forward eligible homes
- Specify the measures that would be most suitable the homes concerned, to ensure all retrofits are appropriate and effective
- Work cooperatively with local networks of charities, health organisations and community groups to identify and refer households
 House of Commons Briefing Paper, ECO, the Energy Company Obligation, David Hough (2017)