Opinion: Where now for ECO?
Published by Max Salsbury for 24dash.com in Environment and also in Housing
Opinion: Where now for ECO?
By Simon Green, head of sustainability, Lakehouse
It’s been a summer of changes in the Department for Energy and Climate Change (DECC).
July saw publication of its response to the consultation on the Energy Companies Obligation (ECO), confirming insulation funding cuts which will leave some 100,000 fewer properties receiving vital energy efficiency works.
This was accompanied by a new fuel poverty strategy and an announcement of promising progress for the Green Deal Home Improvement Fund (GDHIF). Yet two days later, a rush on applications meant the whole £120 million pot had been exhausted after just six weeks.
This fund – a short-lived successor to the original Green Deal cashback scheme – has been added to a long line of schemes and targets that have come and gone in recent years, following the end of the Carbon Emissions Reduction Target (CERT) and the Community Energy Saving Programme (CESP).
It has become apparent with the most recent shifts in these policies that the government is in danger of losing credibility on residential energy efficiency. Its piecemeal, abrupt approach to policy change has had serious implications for the domestic energy efficiency market, the UK’s carbon targets and managing fuel poverty.
The cuts to ECO have made it increasingly difficult for contractors and housing providers to meet their sustainability obligations, leaving vulnerable residents and properties most in need of energy saving measures at risk. Housing retrofits in London will be particularly affected.
Moreover, the changes undermine ECO’s fundamental aim to accelerate market transformation. By allowing energy companies to lower carbon targets and focus on cheaper, easier-to-deliver solutions such as loft and cavity wall insulation, the new subsidy structure penalises immature markets and hard-to-treat stock.
While some limited changes to ECO are welcome – such as the reclassifying of district heating systems as a “primary” measure – the disregard for solid wall insulation will do little to create real change in the market. This has a direct impact on achieving economies of scale, training and developing an experienced supply chain.
Meanwhile, the sudden closure of the GDHIF also undermines confidence in the consumer side of the market, leaving planned projects in the lurch and vulnerable residents with little information on how their homes can be improved.
The surge in applications which brought about the GDHIF’s close demonstrates the demand for funding. But the GDHIF was never enough to plug the gap created by changes to ECO. It failed to be fully accessible, with problems for the ability of leaseholders to participate in bulk schemes undertaken by housing providers. Once again the industry suffered as a result, with housing providers unable to serve this tenure group and deliver comprehensive change.
Together, these changes also damage the UK’s chances of meeting its carbon reduction targets. The Committee on Climate Change has warned that the 2025 target is likely to be missed, with the 31 per cent reduction targeted more likely to be nearer 21-23 per cent. Given the scale and velocity of changes in recent years, this has come as little surprise.
Further down the line, the legally binding emissions reduction target of 80 per cent by 2050 will be even harder to achieve. The new fuel poverty strategy could, in theory, help us to reach this figure. It requires as many fuel poor homes “as reasonably practicable” to reach a band C energy efficiency rating by 2030, supplemented by mid-way targets of a band E standard by 2020, and band D by 2025.
However, we’ve seen these ill-defined objectives before. The previous target – within the Warm Homes and Energy Conservation Act – promised to eliminate fuel poverty entirely by 2016, if it too was “reasonably practicable”.
The worry is that this will again act as a loophole, giving governments the freedom to work around these loosely-defined targets if they deem them too expensive. Meanwhile, thousands of residents are at risk of remaining in fuel poverty well into the next decade as a result of the staggered approach.
At present, it seems that government policies are unravelling. Frequent changes are frustrating at a time when we should be supporting an emergent energy efficiency market. The new fuel poverty strategy has shifted the responsibility of raising standards to housing providers, without a clear answer on what funding will help them achieve this. The government must stop changing course and step up its game on energy efficiency, creating long-term, collaborative strategies to make a real impact.