ECO (Energy Company Obligation)
All large energy suppliers are obliged to meet government targets for the reduction of CO2 emissions in the houses that they supply with energy. There are a number of things that they can do, but in practice this means that they will provide and administer grants to households to fund energy saving home improvements.
The Energy Company Obligation (ECO) replaces the old CERT (Carbon Emission Reduction Target) and the CESP (Community Energy Saving Programme) which ended in December 2012 and the Warm Front scheme that ended in March 2013. The funding available is similar, with £1.3 billion available every year. The ECO is targeted at making domestic homes more energy efficient and is designed to work alongside the Green Deal, with customers being able to sign up for both schemes.
There are three main areas that the ECO targets alongside the Green Deal:
- The poorest and most vulnerable – HHCRO scheme (formerly the Affordable Warmth)
- Hard to treat homes that would otherwise go untreated – CERO scheme (formerly the Carbon Saving Obligation)
- Low income communities – Carbon Savings Communities Obligation (CSCO)
As the Green Deal is a market mechanism, rather than a simple grant or subsidy, the ECO is used to assist homes in one of the 3 categories to make the Green Deal work for them, particularly in respect to the Golden Rule. The Golden Rule states that energy saving measures must pay for themselves in energy bill savings to qualify for a Green Deal loan. There are some circumstances in which this is not the case, particularly households that can’t afford to heat their homes adequately (and so the measure may not mean that they spend less on heating) and old houses that need solid wall insulation, which is typically quite expensive. This means that measures in these homes are likely to be part ECO funded and part Green Deal funded. As such the two schemes are fully integrated with each other, although in the majority of cases it is expected that the Green Deal will be provided without the need for the ECO.
When you have your house assessed for the Green Deal you will be advised as to whether you qualify for funding under ECO. The HHCRO scheme is the only part of the ECO that is currently open for applications – you can check whether you match the criteria and apply here. The other parts of the scheme are expected to open for applications shortly.
- What is CERT?
- The 'Carbon Emissions Reduction Target' obliges energy companies to take steps to ensure that the amount of CO2 emissions from homes is reduced. It is all about reducing CO2 emissions, one of the main causes of climate change. CERT came into effect in April 2008, and is in the third phase of a programme that has been running since 2002. The previous phase was known as the Energy Efficiency Commitment.
- Why do we need CERT?
- The UK has committed itself to a number of targets to reduce harmful emissions and CERT has been designed to make a significant contribution to achieving these targets:
- cutting greenhouse gas emissions by 22 per cent from 1990 levels by 2008-2012, as part of the Kyoto Protocol
- cutting emissions of CO2 by 34 per cent and 80 per cent from 1990 levels by 2020 and 2050 respectively, as part of Government policy
- How does CERT work?
- Electricity and gas suppliers will be obliged to promote things that:
- improve energy efficiency, for example, loft and wall insulation
- increase the amount of energy generated from renewable technologies such as wind turbines, solar panels and ground source heat pumps
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