I should think that, by the time you read this, we will be about to hear or will have heard the Chancellor’s Autumn Statement (now effectively a second budget). I have no idea what will be in it, except that it will almost certainly contain the outcome of one of the fastest “reviews” in history: the recent “green levies” review suddenly announced by the Prime Minister literally half way through Prime Ministers question time a few weeks ago. The problem with this review (which is explicitly linked to the presumption that the green levies contribute £112 to an average energy bill) is that the various amounts that appear on our bills as levies perform a variety of different tasks. Only some of them would truly fit this “green levy” description. The charges that can properly be called “green levies” are basically those that go to underwriting wind farms and solar energy and most of them are pretty fully committed to already. They were ruled out of the “review” pretty soon after it had been announced.
Ironically this leaves the Carbon Floor Price (a levy that doesn’t actually save any carbon emissions and goes straight to the Treasury) and those levies that help the elderly and fuel poor to manage their energy bills better, or those that contribute towards making our homes more energy efficient and so far less expensive to power in the long term. These are the elements of our energy bills that the Chancellor will almost certainly pronounce upon in in his statement. The question is, will he absorb them into general taxation (and give himself a fundraising headache in the process) or will they be modified or even abandoned entirely?
The word in advance of the statement was that the likely recipient of the review would be the Energy Company Obligation (ECO). This £1.3 billion-a-year obligation was placed on the energy companies to force them to tackle some of our most energy incompetent homes – such as solid wall houses – and in part to do so in favour of people who are in fuel poverty and live in such properties. It may be that ECO as a whole will be funded from general taxation but I think it is more probable that it will be cut or extended over a longer period (but with the same amount of obligation level). The present cut off point is 2015.
It is perhaps a bit of a metaphor for the whole febrile debate on energy that we should have come to this. Because without a doubt, if you want to save the most, permanently, on energy bills, ECO (or something like it) is the programme you should be investing in. The comparative figures across Europe should not surprise anyone but they still come as a bit of a shock. In the UK we have some of the continent’s cheapest energy prices but we also have significantly larger energy bills than most. And this is quite simply because, as a rule, we live in more poorly insulated, leakier homes than in the rest of Europe. These energy inefficient houses are twice as high an incidence as in Scandinavia, for example. And therefore we sit at the bottom of the European league for homes spending considerable amounts of household income on energy – we spend almost three times the level of homes in Belgium or Holland.
The effects of ECO-type schemes on bills can be startling. Many solid wall homes across the country can halve their bills through effective insulation measures. This would be a far higher and more permanent saving than other measures being canvassed. For example, reforming tariffs probably saves a few pounds and an energy price freeze would save perhaps £72 – definitely worth having but paling in weight beside the long-term effects of wholesale energy efficiency action.
Now of course energy efficiency measures affect the country asymmetrically whereas less dramatic measures spread the gain. But overall we all lose in the long term if we do not take the energy efficiency of our homes seriously and invest in their improvement. And this is why I for one will grieve if the apparently little loved and under-defended ECO scheme is sacrificed at the altar of short term energy bill expediency.
This article was first published in The Environmentalist.