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ECO stays, but implementation will slow

The Government looks to have bowed to pressure from the industry to maintain the the Energy Companies Obligation (ECO) scheme but will extend it by two years in order to reduce its cost to households.
The BBC announced this morning that that the scheme, which gives free home insulation to low income households will be implemented over four years instead of two. This would cut the annual cost by half.

There had been very strong rumours that the scheme would be cut altogether in the Autumn Statement on 5th December.

Ministers hope this move will help to cut annual household energy bills by £50.

A further levy is likely to be funded via the taxation system rather than energy bills.

The industry has been lobbying the Government on all fronts ever since the rumours began about the danger to ECO.

A number of insulation manufacturers, including Knauf Insulation, have written to the Prime Minister himself, as have the UKGBC.

Last night (November 28) Climate Change Minister Greg Barker told BBC Newsnight he wanted to “marry up” ECO and the Green Deal which has thus far had a very poor take up.

The ECO scheme began this year (although it has existed in a different format previously) and obliges energy firms to pay for low income households to make their homes more energy efficient. The cost of this is transferred directly to energy bills.

Knauf Insulation managing director John Sinfield said was interviewed on BBC Radio 4’s You and Yours yesterday about the industry’s lobbying of the Government on this issue. He said of today’s news: “So, yet again we have the Government making policy announcements via the media… Theoretically (running ECO over two years) will halve the cost of ECO. However, it will also cost up to 10,000 jobs in the supply chain, a supply chain that has heeded the DECC and geared up to deliver the obligation within the original timeframe. It also rewards those energy companies who are nowhere near their targets, and penalises those that have started to get the work done.”

He continued: “We face a situation that could go two ways. A two year extension with no increase in targets, leading to more needless deaths, a decimation of the energy efficiency industry and higher fuel bills over the long term, or do the following:

  • Pro rata increase in targets based on the two year extension

  • Include a sensible solid wall minima along with the addition of low cost loft and cavity to ECO

  • Use differential stamp duty as an incentive to drive Green Deal uptake

    “If the Government stands up to the energy companies and delivers these changes, we will have a better scheme, a lower cost scheme but, crucially, a serious program to deal with our poor housing stock. Wouldn’t it be great if this time next year we were looking at a reduction in needless winter deaths, instead of the 30% increase announced on Tuesday?”

  • About Fiona Russell-Horne

    Fiona Russell-Horne
    Group Managing Editor across the BMJ portfolio.

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