By John Sinfield; Managing Director (Knauf Insulation Northern Europe)
So, yet again we have the Government making policy announcements via the media. Today, the BBC are running a story about the plans to modify the Energy Company Obligation (ECO). This seems to have been singled out by No. 10 as the target in the hastily announced review of the so called ‘green levies’.
ECO is designed to channel £1.3bn into improving the energy efficiency of the UK housing stock – housing stock which is amongst the leakiest in Europe. It costs each bill payer about £47 per year, although some energy companies would have you believe the figure is much higher. If it is higher, it’s more about their efficiency in delivery rather than real costs.
So, back to the BBC story. Seems that we can expect some changes to ECO to be announced next week, all based around the Government’s need to regain the political ground they lost following the Labour announcement of a price freeze. Whether you believe such a price freeze is possible is a moot point – it has resonated with the electorate, and in today’s political reality, that is all that matters. Therefore, the Government wants to tinker with ECO to allow the energy companies to announce price reductions. Let’s look at the various elements of the story:
- An extra two years to deliver ECO. Theoretically this will halve the cost of ECO. However, it will also cost up to 10,000 jobs in the supply chain, a supply chain that has heeded the Department of Energy and Climate Change (DECC) and geared up to deliver the obligation within the original timeframe. It also rewards those energy companies who are nowhere near their targets, and penalises those that have started to get the work done
- Inclusion of easy measures (lofts and cavities). This makes sense, but only if it is linked to a solid wall minima. In that way, the overall costs of delivery are reduced, and the solid wall industry gets some certainty to allow it to invest for the future
- Incentivise Green Deal. A must. The Chancellor could use Stamp duty to allow a reduced payment for those houses that have had energy efficiency improvements. This will give a real boost to the Green Deal, and boosting the Green Deal is also crucial if the costs of delivery of ECO are to be brought down
So, we face a situation that could go two ways. A two year extension with no increase in targets, leading to more needless deaths, a decimation of the energy efficiency industry and higher fuel bills over the long term, or do the following:
- Pro rata increase in targets based on the two year extension
- Include a sensible solid wall minima along with the addition of low cost loft and cavity to ECO
- Use differential stamp duty as an incentive to drive Green Deal uptake
If the Government stands up to the energy companies and delivers these changes, we will have a better scheme, a lower cost scheme but, crucially, a serious program to deal with our poor housing stock. Wouldn’t it be great if this time next year we were looking at a reduction in needless winter deaths, instead of the 30% increase announced on Tuesday?