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DECC,Fuel Poverty

How should we measure fuel poverty?

Improving the Hills approach to measuring fuel poverty

In March 2011, Professor John Hills was appointed to lead a review of the Government’s fuel poverty definition and target. The final report, published in March 2012, found that there were significant flaws in the way fuel poverty was measured.Professor Hills proposed an alternative approach, which defined a fuel poor household as one with a low income and facing high costs.  ACE Research has engaged extensively with the Hills fuel poverty review in recognition of its profound implications for low income consumers, Government fuel poverty policy and wider energy and welfare policies.

DECC propose to adopt the Hills approach as the Government’s new definition of fuel poverty, and ran a consultation on this from September to November 2012.  ACE’s response to this consultation can be accessed here.

Consumer Focus also commissioned ACE Research to further investigate the Hills proposals and to put forward alternative suggestions. The result was a report entitled “Improving the Hills approach to measuring fuel poverty”.  In this research we follow the overall Hills framework but propose improvements that better reflect the ability or otherwise of low income households to afford their energy services.

The research concludes that Professor Hills has made a valuable contribution to our understanding of fuel poverty by:

  • Reasserting the importance of fuel poverty as a serious and urgent problem that is distinct from general poverty.
  • Recognising the serious impact of fuel poverty and cold homes on physical and mental health, well-being and premature mortality.
  • Confirming the central role of capital investment in energy efficiency as the long term sustainable solution to fuel poverty and the need to complement such investment with fuel price, tariff and income measures.
  • Re-defining ‘low income’ within the fuel poverty equation such that the definition is now consistent with other poverty definitions and recognises the logic of excluding fuel costs.
  • Recommending a new indicator (the ‘gap indicator’) that measures the severity of fuel poverty, as well as the number of households in fuel poverty. We have made use of a gap indicator, based on the current definition, in a number of our reports and submissions to Government in the past.

However, we have serious concerns about Hills’ proposed definition of high energy costs, both with respect to its failure to reflect fuel affordability and with respect to the fact that it makes ‘it almost impossible to literally eradicate fuel poverty’. Indeed the Government recognises this feature of the Hills definition itself and is considering changing legislation to reflect the proposed change.

In the report, we put forward practical proposals for addressing these flaws, focussing on technical improvements to the Hills approach, and showing how these improvements could improve targeting. We believe that these proposals develop the Hills approach considerably and provide us with an indicator far better suited to capturing the reality of fuel poverty.  The research also provides an extensive analysis of fuel poverty and its relationship to vulnerability, cold homes, household characteristics and many other consumer circumstances.

Download the full report here:

Improving the Hills approach to measuring fuel poverty

Download ACE’s response to the DECC consultation here:

Fuel Poverty Consultation Response

 

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Consumer Focus,Domestic Energy Consumption,Energy Bills,Energy Policy,Fuel Poverty

Who Pays? The impact of energy policy on consumer bills

Two reports for Consumer Focus on the impact of environmental and social policies on consumer bills

As part of Consumer Focus’s “Who Pays?” programme, ACE Research was commissioned to produce two reports about the impact of environmental and social policies on consumers’ bills.

With energy prices rising, fuel poverty becoming more widespread, and households struggling to afford their energy bills, some have sought to blame energy and climate change policies that often result in a direct or indirect levy upon energy bills. A lack of transparency over the magnitude and distributional impact of these costs has made it difficult for stakeholders to make considered judgements.

Government and the Committee on Climate Change have responded by publishing assessments of the impact policies currently have on energy bills, and the likely impacts by 2020.  Such assessments depend upon a range of assumptions. Using a combination of housing stock and household models, the report entitled “Impact of future energy policy on consumer bills” presents evidence on the potential range of energy bills under different assumptions, the structure of the costs that are passed through to consumers, and explores the distributional impacts of bills in 2020.

The principle of recovering the costs associated with UK environmental and social policies via consumer energy bills or taxes is not a new one.  The report entitled “Past and future trends in environmental and social levies seeks to quantify the historical costs and average cost per household associated with such policies from 1990 to 2010 (see Figure 1), and forecast future costs from 2010 to 2020.  In light of the controversy around the Government’s proposal to reduce the support for small scale renewable electricity (Feed-in Tariff rate for photovoltaics), this paper also explores the cost implications of two different tariff scenarios investigated by Government.

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Carbon Price Floor,Energy Bill Revolution,Fuel Poverty

The impact on the fuel poor of the reduction in fuel poverty budgets in England

Government slashes support for fuel poor

The Government has significantly reduced the financial support it gives the fuel poor, according to a new report released today.

The ACE report is the first time the Government’s fuel poverty budget has been analysed in depth by experts outside Government. It finds that the money received by the fuel poor in England has been cut by 26% between 2009 and 2013, taking into account all the Government’s new policies.

It also finds that the budget for energy efficiency measures for the fuel poor in England has been cut by 44%. This has raised particular concern because energy efficiency improvements are considered the best long term solution to end fuel poverty. ACE estimates that the number of energy efficiency measures being installed in the homes of the fuel poor in England will fall from 150,000 in 2009 to 100,000 in 2013.

The report was commissioned by the Energy Bill Revolution campaign, the biggest fuel poverty alliance ever formed in the UK. It is made up of over 100 leading charities, consumer groups, businesses and unions calling for carbon tax revenue to be used to make the homes of the fuel poor super energy efficient.

The campaign calculates that there is enough carbon revenue to end fuel poverty and in time help make every UK home highly energy efficient. The Government will raise over £2 billion in carbon tax revenue in 2013 with consumers each paying an average of £25 on their electricity bill. By 2020 the Government will raise £4 billion in carbon tax with consumers paying an average of £54.

Ed Matthew, Director of the Energy Bill Revolution alliance campaign said:

“The fuel poor face a triple whammy. The fuel poverty budget has been slashed, the entire cost of new low carbon power has been put on household energy bills whilst Chancellor Osborne has pocketed every penny of carbon tax. This is despite the fact there is enough carbon tax revenue to end fuel poverty forever. That is a toxic combination which will bring untold misery to millions of households across the UK.”

Jenny Holland, Head of Parliamentary Team at ACE said:

“Instead of tackling the blight of fuel poverty, the Government has spent far too long twiddling its thumbs: two and a half years reviewing how fuel poverty is defined while at the same time drastically eroding budgets to tackle the problem. The Government must now urgently recycle carbon tax to make the homes of the fuel poor highly energy efficient. No household should have to choose between heating and eating. It’s time to end this national scandal.”

ACE and EBR (2012 11) Reduced fuel poverty budgets in England briefing 

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Carbon Emissions Reduction Target,Energy Company Obligation,Green Deal

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Dead CERT

Framing a sustainable transition to the Green Deal and the Energy Company Obligation

The ACE Research Team is today publishing its report on the implications of the transition from CERT to Green Deal and the new Energy Company Obligation after 2012 – to coincide with the deadline to the Government’s Green Deal consultation.

The ‘Dead CERT’ project’s focus is on the main contributors to the Carbon Emissions Reduction Target: cavity wall and loft insulation. Its aim is to understand the implications of the move from CERT to Green Deal and ECO for the markets for these measures, and to make recommendations to support a well-managed transition which ensures carbon budgets, fuel poverty targets, and the wider ambitions for the Green Deal can be met.

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eaga CT,Energy Company Obligation,Fuel Poverty

Costs of the ECO: the impact on fuel poverty

A report for eaga CT assessing the way that the costs of ECO could be met by households in order to minimise the impact on fuel poverty

The forthcoming Energy Company Obligation aims to underpin the Green Deal, support the improvement of hard-to-treat homes, and assist in the eradication of fuel poverty. As with previous supplier obligations, the costs will be met through consumer bills. How to ensure that these costs do not exacerbate the problems the policy will attempt to address?

This report puts forward the options available to policy makers to ensure that the Energy Company Obligation (ECO) is funded as equitably as possible. It considers a range of factors but focuses on the impact of the policy upon low income households as a whole, and those low income households with above-average energy consumption.

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Consumer Focus,Energy Company Obligation,Green Deal,Solid Wall Insulation

Scaling the solid wall

A report for Consumer Focus investigating the issues and barriers around the delivery of solid wall insulation

The Government anticipates that ECO, working alongside the Green Deal Finance mechanism, will play an important role in transforming the emerging solid wall insulation industry – the next major challenge for improving our housing stock. It also anticipates that social housing will be at the vanguard of such a transformation. However, large scale installation of solid wall insulation carries many challenges. It is expensive, disruptive to consumers and entails major logistical effort. But it also has the potential to dramatically reduce the fuel costs of low-income consumers, many of whom live in solid wall housing, as well as improve health and well-being.

Consumer Focus therefore commissioned the Association for the Conservation of Energy to investigate the issues and barriers that will need addressing if the solid wall insulation industry is to take off. Is social housing able to carry out the role the Government expects of the sector? What support does it require? Can social housing stimulate wider delivery of solid wall insulation in surrounding private tenure areas?

This report presents the findings of research into the experience of delivering SWI to date, based on interviews with stakeholders and a review of SWI schemes and trials. It highlights a range of issues that will need addressing if SWI installation is to take off.

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Domestic Emissions,Evaluation,Global Action Plan,Hackney,Housing

Evaluation of Hackney CO2 Reduction Pilot

Independent evaluation of the Hackney carbon emissions reduction pilot

Over fourteen months in 2010 and 2011 the ACE Research Team, in partnership with Blooming Green and Dr Joanne Wade, carried out an rolling evaluation of a pilot project aiming to promote energy use and carbon reductions in the housing stock in one Hackney ward. The project was commissioned by the Sustainable Environment Group of Hackney’s Local Strategic Partnership.

team hackney  smallThe evaluation team worked alongside Global Action Plan, the organisation that delivered the project, to provide input into the ongoing development of the approach and to produce a final evaluation of the project against its objectives. The evaluation report brings together the lessons from all stages of the project evaluation and sets this learning in the context of the future landscape that Hackney partners will face when continuing with work to reduce energy use in the future.

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ECEEE,Energy Efficiency,Fuel Poverty

Research Team present five papers at ECEEE Summer Study

Research Team present five papers at ECEEE Summer Study

The ACE Research Team presented five papers this year at the bi-annual energy efficiency conference organised by the European Council for an Energy Efficiency Economy, the 2011 Summer Study.

The team’s papers presented original thought collated for the purpose of the conference covering the topics of energy efficiency and renewable energy policy, finance for energy efficiency, the potential for a stamp duty differential to drive energy efficiency improvements, fuel poverty policy and the potential for a revival of the least cost energy planning approach.

The papers can be downloaded below:

Levelling the playing field through least-cost energy planning: in limbo, too late or just right?

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Energy Company Obligation,Energy Efficiency,Fuel Poverty,Green Deal

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.

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ECEEE,European Union,Targets

National energy efficiency and energy saving targets

Are some targets more equal than others? The evidence

The European Council for an Energy Efficient Economy today published a study on national target setting. The study provides a snapshot of the current use of energy saving targets and opinions about these across the EU, and is based on a broad survey and stakeholder consultation. eceee also opened a page on EU efficiency policy issues and targets.

Prepared by ACE and Dr Joanne Wade, the new eceee report is based on a survey completed by eceee members and other contacts in most Member States together with an online stakeholder consultation. The report is designed to help decision-makers and relevant stakeholders appreciate how targets are currently used and how effective they can be. It is hoped that this report will provide evidence to be used in upcoming policy development discussions – particularly surrounding the upcoming draft energy efficiency directive and the European Commission’s review of whether targets need to be made mandatory for the EU to meet its objective of a 20% primary energy saving by 2020.

ACE’s Director Andrew Warren has written an article on energy efficiency targets inspired by this report, and more of ACE’s take on it is summarised below:

In our own view as co-authors we think that:

The Energy End-use Efficiency and Energy Services directive (ESD) – which set an indicative energy efficiency target of 9% energy saving by 2016 compared to the average 2001-2005 consumption – has led to a degree of consistency across Member States in terms of reporting the energy savings of programmes, though it by and large has not resulted in new or expanded energy saving effort. In new Member States, it has raised the profile of energy efficiency policy. In older and larger Member States, it has been little more than a box-ticking exercise.

  • No legally binding public sector energy saving targets have been reported. Given the exemplary role the public sector is required by the ESD to play, this is serious cause for concern.
  • There is lively debate, and diverging views (both within and across Member States), about the harmonised methodology for reporting energy savings. It’s currently a stumbling block. Achieving consensus on the matter is a prerequisite to any credible EU targets, binding or not. Consensus would be best achieved by a harmonised method which is based on the lowest common denominator of Member States’ capability of measuring energy saving progress. The method can improve over time as Member States do.
  • There are a huge variety of economy-wide and sectoral energy saving targets which are not related to the ESD, nor to the 2020 20% objective. Any EU targets, especially if there is to be burden-sharing between Member States, need to be informed by what is already in place at national level.
  • Very little has been reported about how energy saving programmes contribute to the 2020 target. Also very little has been said about National Reform Programmes (the latest round of which will outline how the 2020 objective is to be met). At best, this suggests that the ESD target is taken more seriously. At worst, having more than one EU target (ESD and 2020) is counter-productive.
  • The use of energy saving obligations on energy utilities and white certificates programmes across Europe is growing. This is both in terms of the number of Member States using them and their increasing ambition (in terms of the size of obligations set). They use a variety of pragmatic methods to measure energy savings, (mostly) bottom-up. Valuable and increasingly positive experience is being accumulated. They are mostly successful and in some respects represent an ‘outsourcing’ of binding and credible energy saving targets to the private sector. The debate about binding EU targets must be mindful of this trend.
  • The EU has binding carbon and renewables targets, but they are simply not filling the ‘energy efficiency gap’. They might begin to do so as they become more stringent in later years, but that is too late. Energy efficiency has to be granted the same binding status if the EU is serious about its 2020 objective, and serious about meeting its climate obligations at least cost.

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