Various ‘green subsidies’ have existed for the past decade which have helped to part fund housing refurbishment projects aimed at improving energy efficiency, and help reduce the amount of carbon emitted from the UK’s existing built assets. Although the UK Government places an obligation on the energy companies to fund these initiatives, the subsidy is actually collected via the consumer’s energy bill. It is fair to say that these schemes have been a success, as household bills in 2016 were below 2008 levels as higher prices resulting from low-carbon policies and network costs were more than offset by reductions in energy use. The green investment has traditionally been focused on lower costs measures such as boiler upgrades, cavity wall and loft insulation but the most recent scheme was designed to improve the fabric of homes built using a solid wall construction through the installation of external wall insulation. The Energy Company Obligation (ECO) was originally expected to create over £1 billion of investment into energy efficiency over 3 years, both in private and social housing. This level of investment would have helped to upgrade our existing housing stock, help lift many more thousands of households out of fuel poverty, reduce carbon emissions and also create a substantial amount of skilled jobs. However over the last three years the ECO scheme has been subject to various consultations and reviews which have resulted in little support for the more expensive measures such as solid wall insulation. This is extremely disappointing as in order to achieve the Government’s goal of improving fuel poor homes to efficiency band C by 2030, this would require roughly doubling the funding currently provided under the Energy Company Obligation (Committee on Climate Change Energy: Prices and Bills – impacts of meeting carbon budgets – 2017 p.8).
Further to the recent ECOt2 consultation response the Energiesprong Market Development Team has agreed a decision not to pursue ECO funding for the demonstrator projects, yet may still be considered an appropriate source of grant to be used as part of a volume deal. The previous structure and mechanism of ECO have been altered to place more emphasis on private sector housing and individuals classified as living in fuel poverty. Although the greater focus on the fuel poor is welcomed, we feel that the limitations on social housing are counterproductive. There are now two strands to the funding instead of three - Affordable Warmth (HHCRO) and the Carbon Emissions Reduction Obligation (CERO). The original Carbon Savings Communities Obligation (CSCO) which formed part of ECO and focused on properties located in rural areas has been removed, although there is a ‘sub-pot’ of funding within HHCRO aimed at rural households. The main strands to ECOt2 are summarised as follows.