Whats new about the governments energy efficiency announcements?
The government formally announced today that it’s going to weaken one of its key energy efficiency programmes as part of its package of measures to reduce consumer bills. But it’s sweetened the pill – by also announcing a raft of measures to strengthen its energy efficiency policies elsewhere. How does it all balance out?
There will be £540 million of new funding for energy efficiency measures, according to the announcement. But that needs to be balanced against the loss of funding elsewhere – and many of the new measures appear to already exist in one form or another.
1. ECO weakened…
As expected, the government has confirmed plans to weaken the Energy Company Obligation ( ECO). ECO requires energy suppliers to seek out and subsidise home insulation for low-income households. The government has agreed to give suppliers four years rather than two to achieve their targets under the scheme.
The cut means that the number of homes insulated under government energy efficiency programmes will fall from 80,000 last year to 25,000 next year, according to the Association for the Conservation of Energy (ACE).
2. â?¦ but efficiency targets “for the worst off homes” remain the same.
The government has sweetened the pill, however. It’s responded to fears that cutting ECO would mean fuel poor households are left without help to insulate their homes. The government will leave ECO’s programme targeted at the poorest households intact, according to today’s announcement.
This probably means that targets under two branches of ECO – known as the Affordable Warmth Obligation and the Carbon Saving Community Obligation – will be left unchanged. The Department for Energy and Climate Change hasn’t confirmed this yet, however.
Campaigners have also criticised ECO for failing to help those in the greatest need. ECO targets households that receive particular benefits or live in deprived areas. But those measures are poor proxies for people living in fuel poverty. Only 20 per cent of ECO’s funds go to people in fuel poverty, according to thinktank IPPR.
3. A £1,000 gift to new homebuyers to install energy efficiency measures
The government has also promised homebuyers £1000 to spend on energy saving measures.
It sounds attractive – but this isn’t a new incentive. The payment already exists under the Green Deal Cashback scheme, where consumers can currently claim government cashback on energy saving improvements up to a value of £1000. And at the moment, householders can claim the money at any point, not just when buying a new home.
The scheme is due to end in April 2014 – so today’s announcement just extends it for a bit longer.
5. Help for landlords to make rented properties more energy efficient
The government also promises landlords help to increase the energy efficiency of rental properties. But this won’t do much to reduce carbon emissions overall, according to Andrew Warren from ACE. That’s because a law already exists that will make it illegal for landlords to let out properties with the lowest energy efficiency ratings from 2018.
The government says the new funding will help improve about 45,000 of the least energy efficient households over three years. That’s about a tenth of the total that need upgrading as a result of the law, according to Warren.
6. More money for energy efficiency improvements for schools, hospitals and other public sector buildings
The government also says it will provide £90 million of interest free loans for energy efficiency improvements of schools, hospitals and other public sector buildings. The money will be provided under a programme called Salix, which is already running.
Warren says this is “unequivocally a good thing” as the programme is very effective – although measures to improve the efficiency of public sector buildings won’t impact on household energy bills.
7. Making the Green Deal simpler and more straightforward
The rather complicated and much-maligned Green Deal also gets a bit of a makeover. The programme, launched in January, allows householders to take out a loan from the government to fund measures to improve the energy efficiency of their home. But so far takeup has been low – in fact only 813 households have taken out a loan of the scheme so far – 0.6 per cent of the government’s target for the end of the year.
The government has announced a variety of mechanisms intended to make the Deal simpler and less bureaucratic – for example by providing a new online tool for householders, and increasing the number of measures that can be funded under the scheme.
It’s not clear whether the changes could address more fundamental criticisms of the Green Deal scheme – for example high interest rates attached to the loans.
In summary – some changes, still a long way to go
What do the measures add up to? At this stage, it’s hard to assess the government’s claim that the changes won’t mean a lessening of its commitment to energy efficiency – or that the changes are ‘carbon neutral’ in total.
ECO hasn’t been hit as hard as expected, and some money will still be spent on tackling fuel poverty. But few profound changes appear to have been introduced. Many of the ‘new’ announcements look like pre-existing programmes that have been recycled, extended or incentivised.