ECO - Seeing Red over "Green Crap"

2010 - David Cameron announces the "Greenest Government Ever"


It's difficult to know where to begin with the complete shambles that is the Government's policy changes on domestic energy efficiency and the Energy Company Obligation in particular. Where I will start is on the subject of  'policy stability'. Last year I was part of Government delegation to Germany. The mission was to get German companies to invest in the UK energy efficiency and renewables sector. One of the messages that came back to us from German business was about the uncertain policy landscape in the UK for renewables and energy efficiency support generally and that this was seriously discouraging inward investment. It was a fair point and difficult to answer because it was true

The energy efficiency sector is a very changeable business to work in. The first stage of the £1.3 Billion/year Energy Company Obligation has barely begun. Companies delivering schemes are still ironing out issues with the rules and regulations which govern it and trying to develop, design and deliver workable projects which save carbon and energy for domestic householders. Some companies which were delivering energy efficiency schemes and measures have shut up shop unable to make a go of it, others have found ways to make ECO fly despite the bureaucratic nature of complying with its regulations. Now huge funding cuts to ECO have created another hurdle to overcome.

The large price rises from the utilities had very little to do with the Energy Company Obligation. Some estimates put only 1/6th of the increase as being attributable to green levies yet the energy companies, 'The Sun' and other right wing media were successful at getting the focus of debate on energy bills to be focussed on it. There was strong speculation that Ed Miliband's call for an 18 month energy price freeze might actually have sparked this round of big bill increases with utilities banking our money earlier for the 'rainy day' which might be the first year and a half of an incoming Labour Government. A  Government at ease with its own policies would have recognised the misdirection and misinformation from the press and its own right wing for what it was and addressed it. The cut to funding itself was bad enough but the message it sent out to the energy efficiency industry on its lack of resolve was worse. Imagine you were a company that was considering investing significant sums of money in new plant and equipment to insulate homes. Within the space of a few weeks the whole policy landscape supporting your industry has changed. Companies don't invest, homes don't get insulated and it is the fuel poor who lose out.

As is common when introducing new policies particularly bad ones they are now badged as 'reforms', I guess this is 'reformed' as in "I dropped a jelly on the floor and my 5 year old tried to 're-form' it". It never turns out looking too good. One element of the reform is the new £500million financial incentive for new homeowners to insulate their homes. Several issues with this. People who are purchasing new homes are far less likely to be fuel poor as they have found enough money for a deposit and have means to pay a mortgage. So this is not a scheme targeted at the people who need it most. How long will it take to spend the £500million on energy efficiency measures in a housing market which is hardly very buoyant. You almost think that this is part of the plan. To give a headline big price tag on a measure which is going to take forever to spend and therefore not be that big a burden for the Treasury. All the illusion of action required for a goverment statement with none of the inconvenience and expense of actual activity.

The Energy Company Obligation changes are focused on the Carbon Emission Reduction Obligation (CERO) element of ECO. This was originally supposed to subsidise the Green Deal to make it work but seeing as the Green Deal is a bit of a flop there was a lot of brass sloshing round that needed using so Energy Companies could hit their targets. This funding went on a variety of different projects but as social housing was not eligible for the Fuel Poverty focussed part of ECO many social housing funded projects could well be funded through CERO. Now CERO is being cut as is the funding for solid wall insulation this is more likely to disproportionately impact on projects to improve the homes of social housing tenants on lower incomes.

What is really frustrating about all this is that the Energy Company Obligation as it stood before the cuts was difficult enough and it lacked the ambition and vision we need for improving the energy performance of the nations housing stock. Ultimately saving households millions of pounds a year, avoiding unnecessary excess winter deaths and rapidly reducing our carbon emissions is not a priority for the 'greenest government ever'. Perhaps the clue to trying to make sense of all this is in the word 'obligation'. Obligations are things which people, and in this case energy companies, are morally or legally bound to do. Obligation does not require enthusiasm, belief or passion, that should be the role of government, but instead they have been obliged to set that nonsense aside in the name of expediency, bluster and populism.