Energy efficiency: Who pays and who benefits?
Published date: 17 Dec 2012
Download full publication
ECO is a new programme that aims to improve the energy efficiency of homes in Great Britain. Only a limited number of people will be able to benefit from ECO but the cost of the policy will be borne by all energy bill-payers. This report assesses what those costs might be and how the benefits and costs will be distributed.
Coming into force on 1 January 2013, ECO is a programme that will cost suppliers an estimated £1.3 billion a year. In what marks a radical change from previous supplier obligations, ECO will oblige suppliers to deliver high-cost energy efficiency improvements and improve households that are fuel-poor. Households that are not eligible for support through ECO will have the option of installing measures at no up-front cost through the Green Deal. Unlike the policies it replaces, it explicitly aims to address both carbon emissions and fuel poverty.
If government estimates are accurate then the cost of ECO will replace, roughly pound-for-pound, the costs created by the current policies, worth about £50 a year in the average annual household energy bill. However, analysis of previous policies suggests that the government's estimates could be much too low or too high, which means the cost to consumers could dip to £20 or soar to £116 a year.
There are also concerns that lack of capacity and resources at the local authority level could undermine the scheme's ability to reduce carbon emissions at the lowest cost possible, and that suppliers may find it difficult to identify and engage efficiently and accurately suitable fuel-poor households.
The report's recommendations include:
- An early review to consider which measures are eligible under ECO, including the possibility of extending the policy to include loft and cavity wall insulations.
- Government support for local authority involvement in the form of a £40 million investment in local authority staff and resources.
- Close monitoring of suppliers’ progress towards achieving the fuel poverty target in ECO to identify whether this target is deliverable and cost-effective.
- A pilot of the 'Low-Cost, Low-Efficiency Area' (LILEA) approach to targeting resources at fuel-poor homes, which could be significantly more efficient and cost-effective than current methods.
- Suppliers should be required to submit detailed information on the costs of delivering their ECO obligations, which should be independently verified.
Reg Platt, Senior Research Fellow
Author(s) : Will Straw - 13 Sep 2013
You may be interested in...
IPPR in the news
Transport infrastructure spend just £245 in the North
The Independent on Sunday - 09 Dec 2013Decentralise housing and transport powers
New Statesman - 09 Dec 2013North South infrastructure plan divide
The Independent - 06 Dec 2013Tax relief for childcare won't make it cheaper
The Telegraph - 06 Dec 2013
We need a green economy
BBC News - 06 Dec 2013Retrain people in their 50s and 60s
The Financial Times (£) - 05 Dec 2013Transport infrastructure spending far higher in London
The Spectator - 05 Dec 2013Universities should pay a living wage
Times Higher Education - 05 Dec 2013
Tax free childcare will not cut childcare costs
Nursery World - 05 Dec 2013Parents thousands of pounds worse of with Govt's tax relief plan
The Telegraph - 04 Dec 2013New competitors in the energy market
The Independent - 04 Dec 2013Areas like London must prep for Romanian and Bulgarian migrants
BBC News - 04 Dec 2013
Cuts to ECO are a panicky response
The Guardian - 03 Dec 2013Green deal loan take up pitiful
The Guardian - 03 Dec 2013Scottish independence a long shot
The Week in Parliament - 03 Dec 2013Increasing income tax allowance won't help the poor
The Guardian - 03 Dec 2013
An unanswerable case for NHS reform
The Guardian - 02 Dec 2013Pay care providers on outcome not activity
The Guardian - 02 Dec 2013Shore up community relations to help with migrants
The Observer - 02 Dec 2013Not intelligent to clamp down on foreign students
The Independent - 02 Dec 2013