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A future obligation on energy companies

Second paper in a series identifying options for the future of fuel poverty and energy efficiency policy

This paper, written with the support of Carillion Energy Services, is the second in a series identifying options for the future of fuel poverty programmes and household energy efficiency policy. It examines the options for the design of, and priorities for, the new Energy Company Obligation (ECO) in the context of the Green Deal policy framework.

Download full report  here

The paper explores the objectives for the new ECO as set out in the Energy Bill 2011 and their influence on the way in which the new programme might be designed. The ambition for the programme is considered along with its ability to deliver simultaneously on the multiple objectives – delivery on carbon and fuel poverty targets, promotion of solid wall insulation and underpinning the Green Deal.

The paper resolves that in order to deliver in a significant way to all of the objectives set out for it, the ECO budget would need to be enormous. Within the limits of a reasonable and acceptable budget the contribution the ECO can make to each of the objectives risks being disappointing, if not imperceptible. It recognises therefore that without proper management the objectives within the ECO – in particular the fuel poverty objective and the need to underpin the Green Deal – will compete.

The paper was intended as a discussion piece to open debate and enquiry in the period preceding the public consultation on the new ECO, along with other elements of the Green Deal, expected in the autumn. We welcomed comments on the ideas in the paper along with other thoughts on the ECO design in response to the prompt ‘consultation’ questions below. The summary of these responses can be found here.

Guiding questions:

  • At what level to you think the overall size and ambition of the ECO should be set?
  • How and in what proportions do you think the ECO should be split between the objectives of fuel poverty elimination and the subsidy of ‘more expensive measures’?
  • Do you have any opinions or evidence on the most suitable measurement currency for the new thermal efficiency target and any desirable minimum level of achievement?
  • What are your thoughts on the integration of the ECO with Green Deal Finance and other existing or proposed schemes?

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