ECO and the Green Deal PROGRESS TO DATE; THE IMMEDIATE OUTLOOK; AND WHAT NEEDS TO HAPPEN

Progress to date And immediate outlook following proposed cuts to the Energy Company Obligation

Major measures delivered by Green Deal Finance, Cashback and ECO These slides focus predominantly on ‘major measures’; i.e. those that constitute most of the work carried out. These are: ◦Efficient boilers ◦Cavity wall insulation (CWI) ◦Loft insulation (LI) ◦Solid wall insulation (SWI) Most of the following slides show month by month delivery of the above measures, from January 2013 to March

Major measures delivered by Green Deal Finance, Cashback and ECO

Programme delivery in historical perspective – about which more later … Green Deal and ECO: much momentum lost, and set to worsen this financial year due to cuts

Green Deal Finance and Cashback Progress to date

Major measures delivered by Green Deal finance Worth noting that other measures have featured strongly in Green Deal Finance: Heating controls Solar photovoltaics However, from here, we stick to the original four major measures…

Major measures delivered by Green Deal finance It looks as if interest has been declining… End of January 2013: Government- backed marketing campaign launches End of June: “Green Deal mired in IT and legal problems”Green Deal mired in IT and legal problems

Major measures delivered by Green Deal Cashback Mid-February: SWI cashback increased from £650 to £4,000; back-dated to mid-December

Energy Company Obligation (ECO) Progress to date and immediate outlook

Progress to date under ECO Next slides examine ECO as a whole, and then its constituent parts: ◦Carbon Emissions Reduction Obligation (CERO) ◦Carbon Saving Communities Obligation (CSCO) ◦Home Heating Cost Reduction Obligation (HHCRO) Latest official data from DECC and Ofgem are used (to March 2014). Post March 2014, we look at the impact of changes proposed in the current ECO consultation, and compare this with what would have happened were the ECO left unchangedDECCOfgem

Major measures delivered by ECO – without changes

Major measures delivered by ECO – consultation changes

Major measures delivered by CERO – without changes CERO activity has ramped up to the level it would need, approximately, to sustain in order to meet its original March 2015 target

Major measures delivered by CERO – consultation changes The level of activity in the first quarter of 2014 increased dramatically to take advantage of the ‘levelisation uplifts’ proposed by the consultation. This compounds the reduction of CERO targets and means very little will occur until at least April

Major measures delivered by CSCO – without changes

Major measures delivered by CSCO – consultation changes CSCO is the only part of ECO that will see any significant level of activity between now and March

Major measures delivered by HHCRO HHCRO well ahead of schedule to meet targets. This is why it starts to wind down level of activity Mostly boiler replacements, averaging 1.2 measures per household helped

Relative contributions to date From Green Deal Finance, Cashback and Energy Company Obligation – placed into longer term context of previous programmes

Relative contributions: Green Deal Finance …

… plus Green Deal Cashback …

… plus ECO.

Delivery since 2000: loft insulation An 87% drop in loft insulations, even though 7.5 million lofts remain under- insulated

Delivery since 2000: cavity wall insulation A 46% drop in cavity wall insulations, even though over 5 million homes could still benefit

Delivery since 2000: boilers EEC-2 was an important facilitator in the transition to condensing boilers The incentive structure under HHCRO to date has meant that boilers have been the simplest way of achieving its target

Delivery since 2000: solid wall insulation Long project set-up time under CESP led to spike to reach target in its last year Momentum being lost; 8 million untreated solid wall homes remain

All major measures across the programmes Drifting further away from what is needed, and what is possible

What needs to happen Meeting Carbon Budgets and dealing with fuel poverty

On reducing CO 2 emissions To meet carbon budgets, the Committee on Climate Change requires all remaining cavities and lofts to be insulated by 2015, and 2.2 million solid walls to be insulated by 2022* * 2013 Progress Report to Parliament, Chapter 3, Section Progress Report to Parliament

Monthly install rates to meet carbon budgets Monthly rates needed to meet carbon budgets (to end 2015 for LI and CWI, and to end 2022 for SWI) Without ECO cuts and without GD Home Improvement Fund, these monthly rates would have been expected to March 2015 Installation rates seen under ECO and Green Deal so far Installation rates likely as a result of the cuts proposed; new GD Home Improvement Fund could drive an additional 2,000 SWIs per month. But this would only make up 15% of the carbon savings lost to the ECO cuts Installation rates seen under CERT, CESP and Warm Front

On tackling fuel poverty The Energy Bill Revolution is calling for all low-income homes to be upgraded to an Energy Performance Certificate rating of Band C by 2025 – that means 5.9 million homes from now

On tackling fuel poverty Achieving Band C by 2025 means: ◦Deep retrofits ◦Wide range of energy efficiency improvements ◦Doing so at an ambitious, but achievable rate

Depth of retrofit in low income households

Depth of retrofit in low income households ECO is very much a single measure programme, with low income households supported receiving on average 1.2 measures each Deeper retrofits are needed, averaging 3.1 measures per low income household supported, if Band C is to be met Also, the range of measures ECO delivers is too narrow…

Composition of retrofit in low income households

Composition of retrofit in low income households As could be seen, low income households not only need deeper retrofits, but also require a much wider mix of measures to meet Band C See our ‘Ending Cold Homes’ report* for Consumer Futures (now Citizens Advice) *Click cover to open the report on the ACE website

Reaching low income households We estimate 460,000 low income households helped in Britain in first 15 months of ECO, of which 98,000 in fuel poverty ECO set to continue at a similar rate to March Lower number of low income households that will be helped by HHCRO and CERO likely to be offset by catch-up necessary for CSCO Without cuts, CERO would have helped considerably more low income households in the next 12 months. Were the ECO to continue until 2022, 640,000 fuel poor households would receive help. Helping all low income households to reach an EPC rating of C by 2025 doesn’t require that many more low income homes to be reached. But it would help many more fuel poor households (3.1m to 2025), and provide more lasting support through deeper retrofits

Reaching low income households So, the ECO supply chain is almost going into enough low income homes, compared to the number that need to be reached to reach Band C by 2025; this is encouraging, however: It is currently an opportunity missed, because low income households are not receiving the depth or the range of support necessary to fuel poverty proof their homes

Conclusions Green Deal Finance and Cashback have contributed little to retrofits, compared to ECO. ECO is delivering much less than previous programmes To cut carbon emissions at scale and speed required and to end fuel poverty more capital investment is needed to achieve deep retrofits. The Energy Bill Revolution is calling for: ◦Home energy efficiency to be made a UK infrastructure priority ◦2 million low income homes given free measures to bring them up to EPC Band C by 2020 and all low income homes brought up to EPC C by 2025 ◦Low interest loans for the able to pay ◦Use carbon revenue to provide long term funding

About the Energy Bill Revolution The Energy Bill Revolution is an alliance of 180 charities and businesses campaigning to end fuel poverty by making home energy efficiency the UK’s priority infrastructure investment. They are calling for all low income homes to be made highly energy efficient and for carbon tax revenue to be used to provide long term funding.Energy Bill Revolution For queries, contact Ed Matthew, Director at

About the Association for the Conservation of Energy The Association for the Conservation of Energy was formed in 1981 by a number of major companies active within the energy conservation industry. Our aim is to encourage a positive national awareness of the need for and benefits of energy conservation, to help establish a sensible and consistent national policy and programme, and to increase investment in all appropriate energy saving measures.Association for the Conservation of Energy ACE Research is an independently funded and internationally respected research unit which has consistently delivered ground- breaking policy research. Its work ensures that ACE’s campaigns and advocacy are always founded on, and guided by, the best available evidence and insight.ACE Research For queries, contact Pedro Guertler, Head of Research at