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The Energy Company Obligation (ECO) is a British Government programme. It is designed to offset emissions created by energy company power stations. The first obligation period ran from January 2013 to 31 March 2015. The second obligation period, known as ECO2, ran from 1 April 2015 to 31 March 2017. The third obligation period, known as ECO3, ran from 3 December 2018 until 31 March 2022. The fourth iteration, ECO4, commenced on 1 April 2022 and will run until 31 March 2026.
The Government obligates the larger energy suppliers to help lower-income households improve their energy efficiency. [1] [2]
ECO is the replacement of two previous schemes, the Carbon Emission Reduction Target (CERT) and the Community Energy Saving Programme (CESP). [3] It has been announced that the programme will be replaced in 2017 by a less extensive version. [1]
The programme focused on heating, in particular improving insulation. [2]
Ofgem has been appointed the scheme administrator on behalf of the Department for Energy Security & Net Zero.
The ECO scheme works by placing an obligation on large and medium energy suppliers in England, Scotland and Wales to provide energy-saving measures for households deemed to live in fuel poverty. Suppliers are allocated based on their overall share of the domestic gas and electricity market.
The range of measures available through the scheme include heating upgrades, solar panels, wall and roof insulation. The provision of these measures is supposedly designed to help vulnerable families reduce their energy bills. The scheme is also seen as a way of helping the government reach its net zero target by 2050.
Ofgem's ECO3 final determination report provides details on the overall performance of the scheme and conclusions regarding of energy suppliers’ achievement against their obligations. The overall target for all participant suppliers was an estimated lifetime bill savings of £8.253 billion. The ECO3 final report confirms that this target was exceeded, with a total estimated lifetime bill savings of £8.457 billion achieved.
The other highlights of the findings were as follows:
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The latest iteration of the Energy Company Obligation (ECO4) began on 27 July 2022 and will run until 31st March 2026. ECO4 focusses on improving the least energy efficient properties and targets homes with an energy rating between D and G. It also aims to provide a more complete retrofit of properties to ensure maximum carbon emission savings. A minimum project scoring methodology is in place to ensure a multi-measure, whole house approach to each property. This is designed to encourage the installation of a variety of measures per household, including insulation, solar panels and renewable heating systems.
For homeowners looking to take advantage of the ECO4 scheme, organisations like UK Energy Management (UKEM) [5] can assist in securing funding and arranging the installation of energy-efficient measures. These improvements are government backed, but supplied by energy companies, and may include loft insulation, solar panel installations, and energy-efficient boilers, aimed at reducing energy consumption and carbon emissions.
The eligibility criteria for ECO4 has seen the removal of disability benefits which qualified under the ECO3 component of the scheme. The ECO4 focuses solely on households that receive income based benefits, some tax credits and pension credits. This change was introduced to ensure that the scheme targets those households most in need of energy efficiency support, particularly those at risk of fuel poverty. However, there have been concerns that the removal of disability benefits from the eligibility criteria may leave some vulnerable households unsupported.
ECO4 qualifying benefits:
Local authorities can sign declarations for eligible households that apply through Flexible Energy under the programme, but the works are carried out by private companies, with funding from energy suppliers. Householders are recommended to check that installers are registered on the TrustMark website. [6]
According to Ofgem's statistics as of 7 May 2024 there have been a total of 100,708 Energy Company Obligation 4 projects submitted. [7] This highlights the scale of the programme in improving energy efficiency in homes across the UK. The scheme aims to provide long-term energy savings while contributing to the UK’s carbon reduction targets.
The statistics on energy supplier performance at 7 May 2024 can be viewed on the Energy Saving Genie website. [8]
Energy conservation is the effort to reduce wasteful energy consumption by using fewer energy services. This can be done by using energy more effectively or changing one's behavior to use less and better source of service. Energy conservation can be achieved through efficient energy use, which has some advantages, including a reduction in greenhouse gas emissions and a smaller carbon footprint, as well as cost, water, and energy savings.
The United Kingdom's Climate Change Programme was launched in November 2000 by the British government in response to its commitment agreed at the 1992 United Nations Conference on Environment and Development (UNCED). The 2000 programme was updated in March 2006 following a review launched in September 2004.
Renewable heat is an application of renewable energy referring to the generation of heat from renewable sources; for example, feeding radiators with water warmed by focused solar radiation rather than by a fossil fuel boiler. Renewable heat technologies include renewable biofuels, solar heating, geothermal heating, heat pumps and heat exchangers. Insulation is almost always an important factor in how renewable heating is implemented.
In environmental policy, white certificates are documents certifying that a certain reduction of energy consumption has been attained. In most applications, the white certificates are tradable and combined with an obligation to achieve a certain target of energy savings. Under such a system, producers, suppliers or distributors of electricity, gas and oil are required to undertake energy efficiency measures for the final user that are consistent with a pre-defined percentage of their annual energy deliverance. If energy producers do not meet the mandated target for energy consumption they are required to pay a penalty. The white certificates are given to the producers whenever an amount of energy is saved whereupon the producer can use the certificate for their own target compliance or can be sold to (other) parties who cannot meet their targets. Quite analogous to the closely related concept of emissions trading, the tradability in theory guarantees that the overall energy saving is achieved at least cost, while the certificates guarantee that the overall energy saving target is achieved.
Domestic housing in the United Kingdom presents a possible opportunity for achieving the 20% overall cut in UK greenhouse gas emissions targeted by the Government for 2010. However, the process of achieving that drop is proving problematic given the very wide range of age and condition of the UK housing stock.
Various energy conservation measures are taken in the United Kingdom.
The energy policy of the United Kingdom refers to the United Kingdom's efforts towards reducing energy intensity, reducing energy poverty, and maintaining energy supply reliability. The United Kingdom has had success in this, though energy intensity remains high. There is an ambitious goal to reduce carbon dioxide emissions in future years, but it is unclear whether the programmes in place are sufficient to achieve this objective. Regarding energy self-sufficiency, UK policy does not address this issue, other than to concede historic energy security is currently ceasing to exist.
Energy Saving Trust is a British organization devoted to promoting energy efficiency, energy conservation, and the sustainable use of energy, thereby reducing carbon dioxide emissions and helping to prevent man-made climate change. It was founded in the United Kingdom as a government-sponsored initiative in 1992, following the global Earth Summit.
The Carbon Emission Reduction Target (CERT) in the United Kingdom is a target imposed on the gas and electricity transporters and suppliers under Section 33BC of the Gas Act 1986 and Section 41A of the Electricity Act 1989, as modified by the Climate Change and Sustainable Energy Act 2006
The availability and uptake of green electricity in the United Kingdom has increased in the 21st century. There are a number of suppliers offering green electricity in the United Kingdom. In theory these types of tariffs help to lower carbon dioxide emissions by increasing consumer demand for green electricity and encouraging more renewable energy plant to be built. Since Ofgem's 2014 regulations there are now set criteria defining what can be classified as a green source product. As well as holding sufficient guarantee of origin certificates to cover the electricity sold to consumers, suppliers are also required to show additionality by contributing to wider environmental and low carbon funds.
The National Energy Foundation (NEF) is an independent British charity, established to improve the use of energy in buildings.
The UK boiler scrappage scheme was a scrappage scheme to subsidise up to 125,000 English households to install newer, fuel-efficient heating systems and stay warm without wasting energy. Each qualifying household would receive a £400 grant. Households that took part were expected to save between £200 and £235 a year on fuel bills, cut their carbon emissions and sustain work for the heating industry.
A feed-in tariff (FIT) is paid by energy suppliers in the United Kingdom if a property or organisation generates their own electricity using technology such as solar panels or wind turbines and feeds any surplus back to the grid. The FIT scheme was imposed on suppliers by the UK government, and applied to installations completed between July 2009 and March 2019.
Zero-carbon housing is housing that does not emit greenhouse gasses (GHGs) into the atmosphere, either directly, or indirectly due to consumption electricity produced using fossil fuels. Most commonly zero-carbon housing is taken to mean zero emissions of carbon dioxide, which is the main climate pollutant from homes, although fugitive methane may also be emitted from natural gas pipes and appliances.
The Green Deal was a UK government policy initiative that gave homeowners, landlords and tenants the opportunity to pay for energy efficient home improvements through the savings on their energy bills from 2012 to 2015. At the heart of the Green Deal was the rule that savings on bills would exceed the cost of the work. By meeting this 'Golden Rule', consumers were able to receive energy savings without direct cost. Consumers then paid back the cost of such improvements through the expected savings in their energy bills. However, there is no guarantee that the eventual savings made by consumers will match the cost of the loans they take out to make the improvements and industry bodies recognised there was a risk consumers could end up out of pocket.
Sustainable refurbishment describes working on existing buildings to improve their environmental performance using sustainable methods and materials. A refurbishment or retrofit is defined as: "any work to a building over and above maintenance to change its capacity, function or performance' in other words, any intervention to adjust, reuse, or upgrade a building to suit new conditions or requirements". Refurbishment can be done to a part of a building, an entire building, or a campus. Sustainable refurbishment takes this a step further to modify the existing building to perform better in terms of its environmental impact and its occupants' environment.
The Community Energy Saving Programme was an obligation on large UK energy companies to deliver energy saving measures to low income households. The obligation came into force on 1 September 2009 and ran until 31 December 2012. CESP was designed as a pilot for an area based obligation, and the subsequent Energy Company Obligation includes a more flexible area-based component, the Carbon Saving Communities Obligation.
Public plans for energy efficient refurbishment are put in place by states to encourage building owners to renovate their properties in a way that increases their energy performance. As financing represents the most important obstacle to this type of renovation, the plans favour financial incentives in the form of loans or grants. Various institutions can be involved in the process, such as ministries, banks, firms, or energy services companies (ESCOs).
The Energy Act 2011 is a UK Act of Parliament relating to UK enterprise law and energy in the UK.
The Great British Insulation Scheme (GBIS) is an initiative launched by the UK government to enhance efficient energy use in residential properties. The scheme initially consulted on by the Department for Energy Security and Net Zero labelled as ECO+, reflects the UK's efforts towards environmental sustainability and the reduction of household energy costs.