Government might extend ECO

30th October, 2013

The government is considering increasing and extending a flagship £1.3 billion-a-year retrofitting scheme so it can work alongside its beleaguered sister project - the green deal.

It has been reported that the coalition is considering extending the energy company obligation by 18 months, as a ‘reprieve’ for energy companies and because of concerns over the impact on people’s fuel bills.

However, it is understood that Department of Energy and Climate Change officials believe that if energy companies have longer to meet their carbon reduction targets, these targets should also be proportionally increased.

Under ECO, energy companies pool money from consumers’ energy bills to buy carbon savings from energy efficiency works through deals with landlords.

Energy companies claim meeting their ECO targets will cost them double government estimates and are struggling to agree retrofit deals with landlords quickly enough to meet their March 2015 deadline.

They argue the low take-up of the government’s green deal programme, for which ECO is supposed to subsidise hard-to-treat works, has meant that it has been harder than anticipated to spend ECO cash.

If energy companies miss their targets they can be fined up to 10 per cent of their global turnover by watchdog Ofgem.

The coalition has come under pressure to end a cycle of ‘boom and bust’ caused by successive new obligation targets leading to carbon prices soaring as energy companies have raced to meet deadlines.

As a result, sources say the coalition is expected to suggest in a consultation to be published in January that, instead of unveiling a new round of ECO - ‘ECO2’ as expected - it will propose ‘ECO 1.2’.

This will extend the current programme and scale up the targets on a ‘pro-rata basis’, while also allowing uptake of the green deal to increase, covering more homes and thus reducing the cost of delivering ECO for energy companies.

A source close to the discussions said: ‘There is a firm sense that this is the preferred option among DECC officials.’

A DECC spokesperson said: ‘We will be consulting in early 2014 about what we shall do beyond March 2015. There are no current plans to extend targets.’

Source: Inside Housing

A Policy Debate titled "What future for ECO" will be a key feature of the Opening Plenary at the Retrofit Summit, held at the Business Design Centre, London on 05 December.  Invited speakers to the debate include; David Strong, EEPB, Jonathon Reynolds MP, Shadow Minister for Climate Change (invited), DECC, Ofgem, Claire Harrold, Head of Business Development at Npower and David Adams, Technical Director at Willmott Dixon.

To view the full programme or to book tickets to the Retrofit Summit, CLICK HERE.

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