The government’s decision to delay ECO may bring short term relief to household budgets, but there are long-term social and environmental costs
The current political debate over energy policy appears to be almost entirely about affordability. This is clouding some of the most important environmental challenges associated with the UK’s existing housing stock.
In his Autumn Statement, George Osborne appears to have deprioritised energy efficiency so as to reduce costs per household. This has the overall effect of watering down the UK’s green housing policy. The promise to reduce average household energy bills by £50 a year is primarily based on reducing the current Energy Company Obligation (ECO) cost to big energy firms. This is achieved by lengthening the deadlines for home insulation programmes that the ECO is intended to cover.
As a result, the rate of energy efficiency improvements for UK’s existing residential stock will be reduced. As well as the obvious environmental consequences of this, there will be significant social ones. For example, lower income households who are struggling to sufficiently heat their homes will suffer from a lack of long term investment, and jobs in the home insulation sector could be put at risk.
At the end of the day, it is not robust to rely upon end users/consumers taking up energy efficiency incentives to counterbalance carbon emissions that should be reduced by the private energy companies
Cutting the ECO will mean adding 2.9 megatonnes of CO2 to our national emissions by 2017. The government is aiming to offset this to a carbon neutral position through the announcement of a £540m investment package into energy efficiency. Over 80% of this investment will target home buyers (offsetting up to half the cost of stamp duty into energy efficiency improvements) and private rented sector homes (to facilitate improving these to a minimum energy performance standard by 2018).
But it is not at all clear where the finance for such investments will come from, or whether households and the private sector will respond to them. Indeed, the scale of energy efficiency measures that have been installed under the ECO scheme have to date far outweighed those installed under the Green Deal. At the end of the day, it is not robust to rely upon end users/consumers taking up energy efficiency incentives to counterbalance carbon emissions that should be reduced by the private energy companies.
The fact is that the housing stock in the UK is amongst the least energy efficient in Europe, and our domestic energy prices (when taxes are included) are amongst the lowest in the EU. The highest standards of energy efficient housing in Europe are likely to be in Denmark, Sweden, and Germany, which interestingly also have the highest relative prices of domestic electricity (€ per kWh). This is hardly likely to be a coincidence, but rather a sign that these countries Governments are taking sustainability and long-term energy policy very seriously. Germany is a case in point, as we witness its determined phasing out of nuclear power and heavy investment into both energy efficiency and renewable energy in recent years.
So let us not forget the ultimate goals of housing and energy policy:
1. Improving energy efficiency (and simultaneously addressing the issue of heat affordability for lower income households)
2. Decarbonising energy supply
3. Boosting energy supply – ie addressing energy security
Julie Hirigoyen is UK head of sustainability at Jones Lang LaSalle