Low carbon zones: an energy efficiency proposal that might work

11th November, 2013

The UK is struggling to improve its energy efficiency performance, especially in the residential sector. A proposal to focus energy efficiency improvements on target geographical areas aims to harness the age-old desire to keep up with the neighbours to make Britain's homes warmer. Could it work?

UK homes are so poorly insulated that the country has the highest rate of fuel poverty and among the highest rate of winter deaths from cold in Europe.

But government programmes to encourage more efficient use of energy have come in for a good deal of criticism recently for being expensive and ineffective - particularly a measure known as the Energy Company Obligation (ECO). Following David Cameron's announcement last week that he plans to "roll back" some green policies, ECO could be about to be cut. 

Fuel poverty charities wrote to the government last week asking it to step up efforts to improve energy efficiency But what might a successful energy efficiency programme look like? Some commentators and academics suggest the answer could be to focus energy efficiency improvements on specific geographical areas.

A specific geographical focus

Oxford academic and fuel poverty expert, Dr. Brenda Boardman advocates an area-based approach - where specific geographical areas are identified as 'low carbon zones'. Within the zone, every household would be offered financial support to encourage them to install insulation.

The approach could overcome a big problem with ECO. The programme currently requires energy providers to seek out low-income households and consumers on benefits, and subsidise home insulation for them. Energy companies argue it costs " millions" to find out which of their customers are eligible for the scheme - making it very expensive.

Under an area-based approach, that wouldn't be a problem, Boardman argues, because everyone in the zone would be approached. She adds that more people would be likely to sign up because they can see their neighbours are doing it.

Local partners - not just the energy companies

Energy companies also find it difficult to persuade householders to have insulation measures installed, because people don't trust them. 

In a recent poll by the Energy Savings Trust, 64 per cent of respondents said they "would be more energy efficient in the home if someone told them how". But 60 per cent said they didn't want energy efficiency advice from their energy supplier. The majority of respondents said this was because they believed energy companies are only interested in making money.

If other local partners are involved, consumers might be more willing to listen. In a report released last year, left-leaning thinktank IPPR argued that an area-based approach should be delivered in collaboration with the local council. It said the council would also be best placed to identify target areas and to integrate the programme with other regeneration and development efforts.

A previous government energy efficiency programme - known as the Community Energy Saving Programme - was focused on specific geographical areas, and undertaken in collaboration with local authorities.

Grants and loans that convince

Governments who want to persuade people to make energy efficiency improvements to their home usually do so by offering grants or loans.

The government's Green Deal programme offers loans to homeowners who want to install energy efficiency measures. The loan is paid off through a surcharge on the householder's energy bill. But in theory, the bill doesn't go up - as more insulation should mean they consume less energy overall.

There's a catch, however. Commentators have criticised the programme because the loans are offered at an interest rate of 7%.  So far, take up has been low. A committee of MPs described the financial incentives available as " unattractive and uncompetitive".

In contrast, Ed Matthew from the campaign group Energy Bill Revolution says the government could take lessons from other countries to make its loan scheme more attractive. For example, German households are offered loans with an interest rate of one per cent - with grants available for the less well off, he says.

Dr Boardman says an advantage of the area-based approach is that within the low carbon zone, an individual discussion can take place with every householder. Ultimately, this would mean the strongest financial support being focused on the poorest households.

Big funding

There's no doubt that these kind of programme require a lot of money. Energy Bill Revolution, supported by an alliance of groups, is calling for the government to use revenues from the Emissions Trading Scheme and Carbon Price Floor to fund a nationwide energy efficiency programme.

That's quite an ask, as it would involve a big sacrifice for the Treasury. The campaign suggests it would free up 4 billion a year for energy efficiency programmes. That might be a hard sell for the government at present. But so far it has not suggested any new ways of tackling energy efficiency, if it delays or cuts ECO. As energy bills continue to rise, it could be under pressure to think of something.

Source: Carbon Brief

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