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Introduced in 2013, the Energy Company Obligation (ECO) is a British energy efficiency program. This is in fact, a revolutionary initiative taken by the UK government regarding home upgrades. Now, the country’s law requires larger energy suppliers across the UK to provide energy-saving solutions to residential properties under ECO.
Both Eco1 and Eco2 aid disadvantaged consumer groups to be energy-efficient and reduce fuel prices. These companies focus on heating and insulation measures. The goals of ECO are to lessen fuel poverty, preserve energy supply security, and cut carbon emissions.
What is the ECO?
Do you know before ECO, there was the Community Energy Saving Program (CESP) and the Carbon Emissions Reduction Target (CERT) programs in the United Kingdom? But when the government introduced the Eco program, it replaced both CESP and CERT.
ECO stands for Energy Company Obligation. It is a government scheme for the British public to save energy, environment and money on heating costs. The government through this scheme particularly targets those households that are struggling with fuel poverty. Moreover, they cannot pay sky-high energy bills. Now, ECO works alongside energy companies to provide support and funding for energy efficiency measures to low-income households. Moreover, the ECO aims to meet the country’s goals of reducing carbon footprint and net-zero policy.
Objectives of ECO Scheme
ECO has three major responsibilities:
Helping with Carbon Emissions
ECO helps make homes better for the environment. For this purpose, it provides insulation in walls and roofs. Next, it connects to special heating systems and adds extra insulation. Moreover, it replaces old boilers and offers other home upgrades like air source heat pumps and solar panels.
Making Communities Greener
ECO also works to make neighbourhoods more eco-friendly. They do this by adding insulation and connecting to special heating systems that are more energy-efficient and environment-friendly. It also supports areas where people might not have a lot of money to afford home heating or they live in rural places.
Reducing Heating Costs
ECO helps some people with their heating bills. They do this by adding insulation, fixing or changing boilers, and electric storage heaters. This is especially true for people who get certain benefits and live in regular homes.
How does ECO1 and ECO2 work?
All big energy companies are a part of the ECO initiative. They’re equal partners with the government. First, these companies are responsible for carrying forward the agenda of home heating. Secondly, they reduce carbon footprint and provide energy upgrades for homes. So it is their job to help people who find it hard to afford home heating.
Additionally, energy companies make sure that those who don’t have much money or are vulnerable can keep their homes warm. On top of that, these companies help households to use less energy. Further, they replace older boilers with more efficient modern models. Finally, the amount of work each company does depends on how much of the gas and electricity market they have. So, each company has a part in making homes use less energy and helping people who struggle to pay for heating.
Who is funding the ECO1 and ECO2?
Even though Eco1 and Eco2 are government schemes, energy firms fund them. This indicates that taxpayers are not footing the bill for the energy initiatives. Over time, the qualifying criteria has been changing in the eco-program.
Now, the law requires energy providers to fulfil specific criteria for the number of homes they assist in improving under the ECO plan. Should they fail to meet these standards, they will be subject to fines from the government. The country’s other energy-efficiency programs are then funded in part by these fines.
ECO1 Scheme
The period of ECO1 was January 2013–March 2015. The Energy Company Obligation scheme’s first phase, known as ECO1, focused on requirements in three key areas. The Home Heating Cost Reduction Obligation (HHCRO), the Carbon Saving Community Obligation (CSCO), and the Carbon Emissions Reduction Obligation (CERO).
Suppliers needed to attain CO2 savings of 12.4 metric tonnes for CERO, 6 metric tonnes for CSCO, and £3.7 billion for HHCRO.
Moreover, energy suppliers were able to surpass all of these requirements by the end of ECO1. As a result, they saved £5.16 billion under HHCRO, 9.87 metric tonnes under CSCO, and 18.33 metric tons of CO2 under CERO.
ECO2 Scheme
The ECO2 period was April 2015–March 2017. In the second phase, ECO2 made suppliers save more money on heating. They reduced 6 metric tonnes for communities and cut 19.7 metric tonnes of CO2 emissions.
The term “ECO2T” refers to the extension period for ECO2, which ran until September 2018. Under the terms of the new agreement, energy companies have to save £2.76 billion under HHCRO. Plus, they were able to save 7.3 metric tonnes of CO2 under CERO
How does ECO1 and ECO2 work?
All big energy companies are a part of the ECO initiative. They’re equal partners with the government. First, these companies are responsible for carrying forward the agenda of home heating. Secondly, they reduce carbon footprint and provide energy upgrades for homes. So it is their job to help people who find it hard to afford home heating.
Additionally, energy companies make sure that those who don’t have much money or are vulnerable can keep their homes warm. On top of that, these companies help households to use less energy. Further, they replace older boilers with more efficient modern models. Finally, the amount of work each company does depends on how much of the gas and electricity market they have. So, each company has a part in making homes use less energy and helping people who struggle to pay for heating.
What's the difference between ECO1 and ECO2?
Both ECO1 and ECO2 were iterations of the UK’s Energy Company Obligation (ECO) scheme, designed to improve energy efficiency and tackle fuel poverty. However, they had some key differences:
Timeline:
- ECO1: January 2013 – March 2015
- ECO2: April 2015 – March 2017
Obligations:
ECO1
- Carbon Emissions Reduction Obligation (CERO): Focused on reducing carbon emissions through measures like loft insulation and solid wall insulation.
- Carbon Saving Community Obligation (CSCO): Targeted energy-saving measures in specific communities, later replaced by the HHCRO.
- Home Heating Cost Reduction Obligation (HHCRO): Helped low-income households with measures like boiler upgrades and cavity wall insulation.
ECO2
- Simplified the scheme with just one main obligation, the Affordable Warmth Obligation (AWO), essentially combining the previous HHCRO with elements of CERO. AWO focused on installing energy-saving measures in low-income and vulnerable households.
Other differences:
- ECO2 initially had stricter energy-saving targets and a larger focus on fuel poverty compared to ECO1.
- ECO2 faced some implementation challenges and funding issues, leading to the introduction of ECO2t (a temporary extension).
Who is funding the ECO1 and ECO2?
Even though Eco1 and Eco2 are government schemes, energy firms fund them. This indicates that taxpayers are not footing the bill for the energy initiatives. Over time, the qualifying criteria have been changing in the eco-program.
Now, the law requires energy providers to fulfil specific criteria for the number of homes they assist in improving under the ECO plan. Should they fail to meet these standards, they will be subject to fines from the government. The country’s other energy-efficiency programs are then funded in part by these fines.
Conclusion
Eco1 and Eco2 were distinct versions of the mainstream Eco program, having both similarities and differences. Eco2 came after Eco1, and Eco3 followed Eco2.
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