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
Spencer Thompson on small firms, jobs and sick pay (7min)
BBC Radio Essex - 22 Apr 2014Graeme Cooke on alternatives to payday lenders (45min)
BBC Radio 4 Today - 22 Apr 20141% increase in NI rates could bring in £4bn each year for NHS
The Independent - 22 Apr 2014One-off payday-loan levy would help fund affordable lending
The Guardian - 21 Apr 2014
Church of Scotland welcomes IPPR plan for affordable lenders
The Herald - 21 Apr 2014Call for clampdown on payday lenders
The Times - 21 Apr 2014We must do everything we can to help SMEs carry on the good work
The Independent - 21 Apr 2014Most of these elderly people have a simple need – not to be on their own
The Observer - 20 Apr 2014
One in four small firms plans to hire this year
The Telegraph - 19 Apr 2014Wales says no to Scottish independence
WalesOnline - 19 Apr 2014Ministers are 'not trusted'
Daily Mirror - 14 Apr 2014A real alternative to loan sharks
Sunday People - 14 Apr 2014
Politicians of all stripes suffer sharp fall in trust
Telegraph - 14 Apr 201436% have faith in the parliamentary system
Metro - 14 Apr 2014Labour pledges to introduce Regional Ministers
ITV News - 09 Apr 2014Putting the voice of English regions at the heart of decision-making
The Independent - 09 Apr 2014
Labour's plan to 'bust open' civil service
Guardian - 09 Apr 2014Young electorate showing disenchantment with today’s politics
Financial Times - 08 Apr 2014Labour's plans to boost Whitehall diversity
Evening Standard - 07 Apr 2014Dugher plan to 'bust open' Whitehall to 'working class'
BBC News Website - 07 Apr 2014