With wholesale gas prices set to continue to rise in 2022 – having already increased by 400% in 2021, tackling the soaring price of energy bills is already becoming a key political debate. A recent report by National Energy Action found that roughly six million households may be unable to pay their energy bills after the price cap increases in April.
Talk of reducing so-called “green levies” to counter fuel poverty, however, risks adversely affecting those for whom the levies provide the most targeted support. While we clearly need to find a solution that takes us away from our dependence on foreign gas, we must be careful not to turn a cost of living debate into one which in turn actually continues raise long term living costs.
Just as we need to maintain our investment in the “Green Industrial Revolution” if we are to truly deliver levelling up for post-industrial communities, with investment in new small nuclear reactors establishing new manufacturing supply chains in Sheffield, or offshore wind farms driving new investments in towns such as Grimsby and Cleethorpes, so too we need to maintain our commitment to deliver better energy efficiency and insulation for the poorest in society. Speculation that these may be under threat risks also undermining progress we have made delivering for those in fuel poverty and on the lowest incomes.
The Energy Company Obligation, or ECO as it is commonly referred, is a programme that delivers energy efficiency measures to low income and vulnerable households across the UK. Since its inception in 2013, it has categorically been a qualified success – delivering 3.1m insulation, heating and other measures to over 2.3m households. Critically, those who occupy less energy-efficient homes tend to be those on the lowest incomes. So, any fluctuations in energy prices disproportionately impact those least able to afford it. Regional disparities in fuel poverty rates mean that removing ECO will disproportionately impact the North of England, particularly the North-East, where 12% of households are classed as ‘fuel poor’.
The reality is ECO adds less than 52p a week to households’ energy bills but delivers an average annual saving of £290 to the poorest households in our society that have received measures. Government’s own published data shows that the £1.57bn invested in energy efficiency and renewables through ECO has delivered £6.6bn in energy bill savings for low-income households. And it is expected that the total cost savings delivered by ECO3, the current iteration of the scheme, will be worth over £8.25bn.
Energy efficiency schemes are also a powerful tool in reducing household emissions. Only recently the Committee on Climate Change reaffirmed its view that low-carbon retrofits and making buildings fit for the future should serve as the cornerstone of the Government’s approach to meeting our NDCs and net zero ambitions. ECO does exactly that – enabling households with the lowest incomes who are unable to invest in the technologies needed for a net zero future transition towards a greener future. Under ECO2, a former iteration of the scheme, the estimated lifetime carbon savings amounted to 27m tonnes – the equivalent of planting 182m trees.
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At the same time, ECO is a key driver of green jobs and growth. It helps to future proof the UK jobs market by increasing employment in key industries, such as the deployment of heat pumps.
Ensuring that the UK takes maximum advantage of the economic growth opportunities presented by the shift to net zero is, quite rightly, a priority for this Government. According to Frontier Economics, energy efficiency projects deliver comparable benefits to other major infrastructure projects. For every £1 million invested in retrofitting homes, 23 person-years of employment are created. Meanwhile, IPPR North has estimated that investment in green jobs, created through establishing new manufacturing supply chains, will add an extra 46,000 new jobs in the north alone by 2030.
I stood on the 2019 Conservative Party Manifesto, which pledged records sums of money to fund energy efficiency programmes in the UK to tackle fuel poverty and lead the global fight back against climate change. With the next iteration of this scheme set to be announced later this year, now is not the time to row back on these successes if we want to support those who need help the most.
Chris Skidmore MP is a former Energy Minister who signed Net Zero into law in 2019 and is the Chair of the Net Zero Support Group of Conservative MPs.