Energy Company Obligation (ECO) — key features of ECO1 and ECO2

Energy Company Obligation (ECO)

Energy Company Obligation (ECO) is the UK government’s agenda of energy efficiency reforms. It started in 2013 with a clear goal of making British homes more energy-efficient. Both ECO1 and ECO2 projects are in sequence. Now, all the big energy suppliers all over the UK provide energy-saving solutions to homes through eco1 interim and eco2 schemes. Both of them help families with low-income resources to opt for heating system upgrades.  The projects mainly focus on improving heating and insulation. Generally, ECO as a whole aims to reduce fuel poverty and cut carbon emissions. It makes sure there’s enough energy for everyone.

What’s the Energy Company Obligation?

The ECO, or Energy Company Obligation, is a program introduced by the UK government. It’s designed to help the British public save energy, protect the environment, and reduce heating costs. The main target of the program is households facing fuel poverty, where people struggle to pay high energy bills.

Before ECO, there were two other programs called the Community Energy Saving Program (CESP) and the Carbon Emissions Reduction Target (CERT). However, when the government brought in the ECO program, it replaced both CESP and CERT.

ECO partners with energy companies to fund energy-saving efforts for low-income homes. The goal is to help struggling families upgrade their homes. It meets the country’s targets for reducing carbon emissions and achieving net zero.

ECO1

In the fight against climate change, energy efficiency plays a crucial role. The UK’s Energy Company Obligation (ECO1) scheme runs from 2013 to 2015. It is also referred to as ECO interim. The program aims to tackle these issues simultaneously. It places legal obligations on large energy companies to improve the energy efficiency of homes across Great Britain. But what are it’s objectives and main features, and how does it impact the UK?

Objectives of ECO1

ECO1 had three distinct yet interconnected objectives:

  • Reduce Carbon Emissions: By improving energy efficiency, the scheme aims to cut carbon emissions from homes. It contributes to the UK’s climate change targets.
  • Reduce Fuel Poverty: It improves households’ overall energy measures. Next, it lowers energy bills for vulnerable households. As a result, it alleviates fuel poverty and its associated health and social problems.
  • Drive Innovation: The scheme encourages the development and adoption of new energy-efficient technologies. So it boosts the UK’s green economy and creates jobs.

Key Features of ECO1 Scheme

ECO1 Key Features

ECO1 employs a multi-pronged approach. Below are some of the most important features of this program:

Three Separate Obligations: the scheme comprised three distinct obligations:

  • Carbon Emissions Reduction Obligation (CERO): Focuses on installing measures and reducing carbon emissions. For example, loft insulation and boiler upgrades.
  • Carbon Saving Community Obligation (CSCO): Targets specific communities facing fuel poverty. In this way, it provides insulation and renewable energy measures.
  • Home Heating Cost Reduction Obligation (HHCRO): Assists low-income households with energy efficiency improvements. It does so regardless of their location.
  • Focus on Vulnerable Groups: Prioritizes assistance for low-income households, fuel-poor families, and those living in hard-to-treat properties.
  • Variety of Measures: Supports a wide range of energy-saving measures. For instance, insulation and heating upgrades to renewable energy installations.
  • Obligations for Energy Companies: Large energy suppliers deliver specific energy efficiency measures. This is regarding targets based on their market share.

Impact of ECO1

While the initiative faces challenges and critiques, it has delivered significant achievements:

  • Reduced Carbon Emissions: Over 1.3 million tonnes of carbon dioxide have been saved.
  • Helped Fuel-Poor Households: Around 334,000 low-income households have received energy efficiency support.
  • Boosted Innovation: The scheme spurred the development and adoption of new technologies. It contributes to the UK’s green economy.

Impact of ECO1

The Energy Company Obligation (ECO2) scheme, was launched in 2015. Like ECO1, this too aims to improve energy efficiency in homes across Great Britain. It provides energy upgrades like boiler replacement and insulation to low-income households. Moreover, it helps the environment by reducing carbon footprint. It also helps people save on energy costs.

Objectives of ECO2 Scheme

  • Reduce carbon emissions: By installing energy-saving measures, ECO2 aims to cut carbon dioxide emissions. This contributes to the UK’s national climate change targets.
  • Combat fuel poverty: The scheme focuses on helping low-income households. Moreover, it focuses on those in vulnerable groups by making their homes more energy efficient. This reduces their energy bills and improves their living conditions.
  • Boost the economy: ECO2 has created jobs in the energy efficiency sector. It stimulated the economy through increased investment in insulation, boilers, and other measures.

Main Features of the ECO2 Scheme

  • Three obligations: Like ECO1, this scheme too has three main obligations for energy companies:
  • Carbon Emissions Reduction Obligation (CERO): This focuses on installing energy-saving measures like loft insulation, cavity wall insulation, and boiler upgrades.
  • Carbon Saving Community Obligation (CSCO): This targets fuel-poor communities and aims to deliver energy efficiency measures in a coordinated way.
  • Home Heating Cost Reduction Obligation (HHCRO): This focuses on helping low-income households reduce their energy bills, primarily through boiler upgrades.
  • Targeting specific groups: The scheme prioritizes vulnerable groups like low-income households, older people, and those with disabilities.
  • Free or subsidized measures: Households could receive energy efficiency measures for free or at a subsidized cost, depending on their income and eligibility.
  • Market-based approach: Energy companies were given flexibility in how they met their obligations, allowing them to choose the most cost-effective measures.

Achievements of ECO2

Enhanced Savings Focus:

ECO2 aims to further increase savings on heating costs. It requires energy suppliers to achieve reductions of 6 metric tonnes for communities. Plus, 19.7 metric tonnes of CO2 emissions.

Extension Period - ECO2T:

The term “ECO2T” refers to the extension period for ECO2. It lasts until September 2018.

Extended Obligations:

During ECO2T, new obligations were introduced. This includes a requirement for energy companies to save £2.76 billion under Home Heating Cost Reduction (HHCRO). Plus 7.3 metric tonnes of CO2 under the Carbon Emissions Reduction Obligation (CERO).

Referral and Support Mechanisms:

Eligible individuals could be referred to the ECO scheme by their energy providers. Especially if they were struggling with ongoing fuel debt or managing prepayment meters.

Local Authority Involvement:

Local authorities play a role in referring individuals to energy providers participating in the ECO scheme. This is based on their assessment of the need for support.

Eligibility Criteria for ECO1 and ECO2

The eligibility criteria include checking the energy rating of properties, requiring specific ratings like D, E, F, or G for owned homes, and E, F, or G for rental properties.

Landlord Permission Requirement:

Individuals are advised to ensure they have the landlord’s permission to carry out any work on the property. This emphasizes collaboration between tenants and property owners.

Changes in Disability Benefit Inclusion:

ECO2 introduced changes in disability benefits. It incorporates Housing Benefit, Pension Credit, and Savings Credit. However, it also imposes stricter rules. For instance, it lowers the capacity to 5,000 households eligible for boiler grants.

Qualifying benefits for ECO

To be able to get a government grant, you should be receiving one of these benefits:

  • Universal Credit
  • Child Tax Credit
  • Income Support
  • Working Tax Credit
  • Child Benefit
  • Pension Savings Credit
  • Income-based Jobseeker’s Allowance (JSA)
  • Income-related Employment and Support Allowance (ESA)
  • Housing Benefit
  • Pension Guarantee Credit

Energy Performance Certificate

No matter where you live, you should also check your property’s energy rating. Here’s what it needs to be for you to be eligible:

  • If you own your home, the energy efficiency rating should be D, E, F, or G.
  • If you rent from a private landlord, the property should have an energy rating of E, F, or G. Further, check with your landlord for the exact score.
  • If you live in social housing, the energy efficiency rating needs to be E, F, or G.
  • Make sure to get permission from your landlord if you want to do any work on the property.

Conclusion

Energy Company Obligation (ECO) is the umbrella program. Both ECO1 and ECO2 are part of this umbrella. The main goal of the scheme is to alleviate the financial sufferings of low-income families. It helps them save energy, reduce carbon footprint and minimize fuel costs. Eligibility criteria are somewhat similar with a little bit of difference. Moreover, the UK government has set its net-zero target and ECO is the main player in this regard.

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