ECO replacement will not come into effect until 2018

An energy efficiency scheme to replace the Energy Company Obligation after it ends next year will not come into effect until 2018, energy minister Lord Bourne has confirmed.

Speaking to MPs on the Energy and Climate Change Committee last week, Bourne admitted there would be a year of “transition” before a new scheme was implemented, with the revised scheme focusing on tackling fuel poverty rather than reducing carbon emissions.

However, Bourne said there will be a transitional Energy Company Obligation (ECO) scheme - similar to the current scheme - between 2017 and 2018, which will be a halfway house between the current focus on reducing carbon emissions and the new emphasis on fuel poverty.

Speaking at the select committee, Bourne said: “In this parliament, we are hoping to link ECO much more specifically to fuel poverty, so that we ultimately have just one measure on ECO, which is a fuel poverty measure, in 2018.

He added: “The present system is there until 2017; we then have a transitional year, and we are issuing details of how it will operate. Then we [will] have [details of] how the system continues from 2018 onwards.”

Richard Twinn, policy adviser at the UK Green Building Council, said the 2018 scheme will involve changing the ECO sub-obligations, with suppliers receiving lower targets under the Carbon Emissions Reduction Obligation (CERO) and higher targets under the Home Heating Cost Reduction Obligation (HHCRO).

Under CERO, suppliers have to install energy efficiency measures such as roof and wall insulation, while under HHCRO suppliers have to promote measures to allow low income and vulnerable households - known as the “affordable warmth group” - to heat their homes.

Currently under ECO, suppliers have higher targets for CERO than HHCRO.

Twinn said: “The transition year is very sensible. When a new policy is introduced, delivery rates usually drop like a stone for the first few months as you have different reporting mechanisms, etc, and that has a knock-on effect to the supply chain. It will be a gradual decline in delivery compared to the boom and bust in previous years.”