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What Will ECO Cover

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What is ECO?

The Energy Company Obligation (ECO) took over from the existing CESP (Community Energy Saving Programme) and CERT (Carbon Emissions Reduction Target) initiatives in December 2012. Its prime objective is to assume responsibility for addressing the needs for the domestic sector energy efficiency measures.

The ECO remit includes two separate initiatives. Firstly, the Carbon Saving Obligation has been designed to assist those households who do not meet the government's Green Deal 'Golden Rule' criteria and are ineligible for funding through the scheme. To be eligible to secure finance through the CSO the energy saving measures to be undertaken must include solid wall insulation.

The second initiative is the Affordable Warmth Obligation. This is to be targeted at those households with low incomes or those who live in compromised properties for which it would be difficult to provide adequate heating. Funding will be targeted at those in receipt of certain benefits; tax credits and disability benefits, who have been previously identified through the CERT Super Priority Group criteria and are in danger of slipping into fuel poverty.

It is the hope of the coalition government and the DECC (Department of the Environment and Climate Change) that the new ECO initiative will stimulate a larger take-up of energy efficiency funding amongst all sectors of the UK public, leading to potential job creation within the associated industries and economic growth for the UK as a whole. They also aim to raise awareness among the social and private sectors of the importance in ensuring energy efficiency in the UK housing stock; helping the country to meet global commitments to CO2 reduction and the action on climate change.

What Energy Efficiency Measures will be Covered by ECO Funding?

The coalition government has allocated £1.3 billion annually to the ECO funding scheme which should be available from autumn 2012 or spring 2013. Initial indications are that full funding will be allowed for those households on low incomes who wish to install solid wall insulation (SWI) and that a combination of ECO, RHI (Renewable Heat Incentive) and FIT (Feed-in Tariff) should be accessible for the installation of Microgeneration fuel saving measures, priority being given to those homes not on a mains gas supply.

The Consumer Focus Organisation had expressed doubts in early 2012 that the government had not made enough provision for those households who currently qualify as part of the CERT PG (priority group) and felt that they may not receive parity with other applicants for ECO funding. The organisation highlighted the plight of the 11.2 million households in the UK (43% of the total) who were, at present, afforded PG status. They also questioned the benefits of the initiative for those 6 million households currently living with fuel poverty.

In April 2012, Deputy Prime Minister, Nick Clegg addressed these concerns by announcing that of the £1.3 billion allotted to the ECO measures (raised through a levy on consumer energy bills), £540 million would now be targeted specifically to redress fuel poverty. Previously, only 25% (£325 million) had been available through the Affordable Warmth Fund and this would have been inaccessible to the landlords of social housing stock.

Mr Clegg further clarified that there would consequently be a reduction to £760 million of the available funding for the provision of solid wall insulation which would be accessible to householders through a 'properties hard to treat' fund. An additional £190 million would be provided to assist low income households to install cavity wall and loft insulation. This funding would also be available to social housing landlords.

Will ECO Provide a Level Playing Field for All?

The Future of London is comprised of a community of regeneration practitioners who monitor and provide comment on many environmental issues which will directly affect the capital. They have voiced concern that London may miss out on the benefits of ECO funding due to the specific nature of its housing stock and the geographical limitations which the city provides.

They highlight the fact that due to the nature of the funding criteria, ECO suppliers will be encouraged to provide funding to those properties cheapest to improve. A spokesman for one of these leading suppliers stated that

"...the necessary supply chain for home refurbishment doesn't exist on a large scale within the M25".
The costs that suppliers, distributors and installers will face to transport materials to the capital could be prohibitive. There would also be congestion charges and the general inaccessibility to delivery vehicles to be considered.

Future of London went on to say that within London there are in excess of 600,000 homes within conservation areas. As a large proportion of the ECO funding is to be targeted to solid wall insulation, which will generally be treated with external cladding, these type of measures would not easily receive planning permission for such properties.

It was also highlighted that 13% of the capital's households lived in fuel poverty and, as was reported in the 2010 Marmot Review, this had a highly corrosive effect on all those living in these conditions. There was an impact on general health and mental well being, a significant loss in missed work and school days due to ill health, in addition to extra strains put on the NHS and Social Services.

Future of London encouraged all of the city's boroughs to address the issues as soon as possible to ensure that the more vulnerable of London's householders would not lose out when the ECO funding became available for allocation."