Why ECO should become ECO

By way of a cheery goodbye to 2013, Damian Carrington reported in the Guardian on December 30th  that (according to a compilation of Parliamentary answers and latest DECC official statistics) loft insulation retrofits plummeted by 93% between 2012 and 2013 (1.61 million to just 110,000) and cavity wall insulation measures dropped 76% over the same period (640,000 to 125,000 in 2013). What he could also have reported using the same statistics was that solid wall insulation – that category of ‘hard to treat’ properties regarded by the Climate Change Committee as essential to treat at a rate of over 3.5m solid walls by 2030 – also fell from 82,000 in 2012 to 16,461 in 2013. Which also means a drop of almost 80%.

These figures, of course, mark the passing of the CERT, CEST and Warm Front programmes and their replacement by Green Deal and the three strands of ECO. And it is ECO which has, Carrington notes , done all the heavy lifting to arrive at the pitiful total that was reached, accounting for no less that 98% of all installed measures in 2013. This latter point, I think, puts the lid on the suggestion that the poor figures can be explained away by saying that this is just a hiatus whilst the new schemes unfold. The almost invisible performance of Green Deal and the pulling apart of ECO will most likely mean that ECO lifts some of the Green Deal dead-weight, but at the expense of other harder to achieve measures such as solid wall insulation. So we can therefore expect the modest solid wall insulation figures to be as bad next year or indeed even worse. In short, it is not a hiatus. It is a collapse, with no relief in sight.

And it is serious, very serious indeed, because we know that energy efficiency in homes is the only really effective way to combat fuel poverty in the long term. And we know that for any serious climate change emission targets to bite we need many more UK homes, commercial and industrial buildings being made more energy efficient (as the CCC provides for in its carbon budgets). Each of these goals will only be achieved by the methodical implementation of measures in a reliable, extensive, year in and year out fashion until we get there. The grandmother’s footsteps-style repositioning that DECC has undertaken in the wake of the ‘green levies’ fiasco of two months ago will perhaps turn a collapse into a mere rout, but that is all.

So I think it is time for a fundamental rethink of how we get ourselves anywhere near back on track, because we know we will have to do so sooner or later.

I don’t think we need to look very far to see what might be done, and it isn’t just all about money, although the presence of funds to make it happen is very important. Even if the plans of the admirable Energy Bill Revolution people were to be adopted, with their proposed root and branch energy efficiency programme which uses the proceeds of future green taxes to vault English and Welsh homes up through the energy rating bands, we would still need to look at how such a programme might be delivered. And here I think is where much of the effort, even when it was better and publicly funded, has come unstuck.

A common thread through CESP and ECO ( that is until the December ECO announcement stopped many fledgling collaborations in their tracks) has been that where programmes have worked or started to do so, they were through area partnerships between energy companies and local authorities. Along with social landlords it is because of these unsung heroes that much of the progress to date has been made. The final Ofgem CESP report records for example:

‘Almost all CESP measures were delivered through partnerships with social housing providers (SHPs) or by direct promotion to private households (e.g. privately owned homes within social housing developments). Activity carried out in partnership with SHPs was the most popular delivery route but many schemes covered both delivery routes, often including the private householders that were located within predominantly social housing areas.’

And what would have happened, in all probability, if the ECO target had remained fixed to 2015, was that obligated energy companies would have sought to offset known and reliable chunks of their obligations onto local authority partnerships as a priority. For instance, like the one that was about to be signed between three partners MITIE, SSE and Southampton City Council for the cladding and uprating of thousands of homes across the city until clumsy Dave tore the rules up.

And we know, looking back somewhat, that local authorities were highly successful in delivering uprating programmes including insulation in the General Improvement Areas and Housing Action areas of the 70s and 80s.

It always has looked a little strange, in the light of all this evidence, that a complex layer of measures has been in place, obligating energy companies to seek partners. Or in the case of CERT and now for ECO actually to seek out ‘vulnerable’ households and get their properties treated, when it would all have been far simpler, more straightforward and effective to do it at local authority level.

I appreciate that placing obligations into the hands of those that had them was a way of avoiding the cost of all of it falling upon the public accounts (although quite why we can’t just follow the rules adopted by pretty much the rest of Europe for public expenditure purposes is a mystery). I also understand that Green Deal, in particular, has been informed by an imaginative but ultimately far too byzantine experiment in capturing the forward value of energy savings into a market led programme. But let’s face it: both approaches look like they’ve failed.

Even so, we could adapt elements of the logic of both approaches into something that may work over the next period.  I think that the relationship between partners should simply be turned around: Energy Company Obligation should become Every Community Obligation.  Local authorities should have the obligation for reaching targets for treated properties in their areas, and once programmes have been put into place, energy companies should be obliged to compete to secure the right to fund an agreed part of them. Rewards similar to some of the principles of the New Homes Bonus should come the way of local authorities reaching their targets. This could be done through area schemes such as ‘Efficiency Improvement Areas’ similar to GIAs. Energy companies would have to chase the musical chairs of schemes to fund in order to be signed off for their allocated funding obligation and to ‘buy out’ a higher fine if they fail.

Probably, most of the funds local authorities would need to carry out their obligation could be obtained in this way and fines for energy companies could be recycled. It would be far simpler and I think far more efficient that the present system. And you never know we might just cladding by cladding, cavity wall by cavity wall, get back onto the road we know we will have to travel down.

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