Building sector needs mix of policies to deliver energy savings

Energy Efficiency Obligation Schemes should be part of a mix of policies rather than used as a single instrument to deliver energy savings in the building sector, according to a new paper [1] by researchers at the University of Sussex, University of Oxford and the Joint Research Centre at the European Commission.

The article, which reviews energy efficiency obligation schemes [2] across the European Union, finds that they can be most effective used alongside other energy efficiency policies so that the synergies between the different policies can be exploited.

Dr Jan Rosenow, researcher at the Centre on Innovation and Energy Demand (CIED) [3] and one of the authors of the article, said:

‘Policies like the Energy Company Obligation [4] are not a ‘silver bullet’ solution to the problem of encouraging energy efficiency but have a proven track record to deliver substantial energy savings. They need to be part of a consistent mix of policy instruments to support different types of measures, different tenures and different property types’.

Energy efficiency obligation schemes require obligated parties, generally energy utilities, to meet energy saving targets by delivering or procuring energy savings for customers. The costs of the scheme are then paid through customers’ energy bills. In the UK, the current scheme – called Energy Company Obligation (ECO) – is specifically targeted at reducing the energy bills of people living in fuel poverty.

The article evaluates energy efficiency obligation schemes and their future role in delivering energy savings by looking at the case of the UK and Denmark, two countries that have the longest history of running such schemes in the European Union. It concludes that energy efficiency obligation schemes have a strong track record in delivering savings from low cost measures but their scope may need to widen to deliver greater levels of savings, in line with more stringent targets. To be able to make a contribution to more significant energy savings, incentives need to be established for deeper – and more costly –  improvements, recommend the researchers.

‘The high take-up of the Green Deal Home Improvement Fund [5] demonstrated that there is a clear demand for more comprehensive refurbishment programmes, if the financial offer is sufficiently attractive. The government’s Clean Growth Strategy [6] set out a high level of ambition, but the proof will be in the policies that are developed to deliver on the government’s goals. ‘ – commented Dr Rosenow.

The UK government is currently looking into how it should support improving energy efficiency in the building sector. The Clean Growth Strategy featured a number of policies aimed at achieving this, including the extension of the ECO in some form until 2028. Alongside the Clean Growth Strategy, the Department of Business, Energy and Industrial Strategy (BEIS) also published a Call for Evidence on ‘Building a market for energy efficiency‘ [7] in which they are also looking into changing the ECO so it supports the development of innovative energy products and services.

Notes to editors:

[1] The journal article is available here: https://link.springer.com/article/10.1007/s12053-018-9657-1

[2] CIED, the Centre on Innovation and Energy Demand at the Universities of Sussex, Oxford and Manchester is one of six End Use Energy Demand Centres funded by the Research Councils UK Energy Programme. It sits at the forefront of research on the transition to a low carbon economy. It investigates new technologies and new ways of doing things that have the potential to transform the way energy is used and achieve substantial reductions in energy demand.

[3] Energy efficiency obligation schemes require energy companies to deliver energy savings by carrying out measures which help consumers improve energy efficiency. Under the European Union Energy Efficiency Directive, countries are required to set up an energy efficiency obligation scheme or implement alternative policy measures in order to reduce final energy consumption

[4] The Energy Company Obligation (ECO) is a government energy efficiency scheme in Great Britain to help reduce carbon emissions and tackle fuel poverty.

[5] The Green Deal Home Improvement Fund, added to the Green Deal in 2014, was an incentive scheme open to all householders in England and Wales wanting to improve the energy efficiency of their homes. Up to £5,600 per household was available under the scheme as cashback, depending on the measure. The scheme ended in 2015.

[6] The Clean Growth Strategy sets out proposals for decarbonising the UK economy through the 2020s. On current trends, the UK is set to miss its emissions reduction targets. A significant part of the gap to meeting the targets stems from insufficiently ambitious plans to reduce emissions from buildings, in particular from homes, through improved energy efficiency and low carbon heating.

[7] The Department of Business, Energy and Industrial Strategy ran a consultation on ‘Building a market for energy efficiency’ between October 2017 and January 20118. It outlined a range of barriers to investment in energy efficiency and invited views about the role of government in overcoming them and stimulating the market through more direct interventions. Read CIED’s response to the inquiry.

[8] There are a variety of projects at CIED investigating energy efficiency in buildings. Take a look at our ‘Housing and Buildings‘ theme to find out more.