Reports that Boris Johnson wants to siphon funding from existing energy efficiency schemes to boost spending on home insulation could leave the NHS more than £500 million out of pocket as a result, a think tank has warned.
‘The Times’ reported on Thursday morning (16 June) that the prime minister plans to boost energy efficiency by topping up the existing, industry funded Energy Company Obligation (ECO) scheme with government money.
Under this scheme, which appears to be modelled on an ‘ECO Plus’ scheme touted by the industry to government, eligibility for assistance would be widened out from fuel poor households to those on middle incomes if they are prepared to contribute to works.
The Times reported that Johnson wants to divert cash from existing energy efficiency programmes, such as the Public Sector Decarbonisation Scheme, to fund the insulation of hundreds of thousands more UK homes.
However, the environmental think tank E3G has calculated that the NHS could lose out on £519 million of energy efficiency cash if the latest £871.7 million phase of the scheme, which is designed to improve public buildings like schools and hospitals, does not go ahead in September as planned.
E3G’s estimate is based on figures showing that nearly 60% of money awarded through the scheme’s latest round was distributed to the NHS, which the think tank said is due to see its energy bills more than double this year to £1.2 billion.
While E3G welcomed moves to increase the number of homes being insulated, it said this work should not be funded at expense of public buildings, given that £1.4 billion promised for energy efficiency in the Conservative’s last general election manifesto has yet to be allocated.
Colm Britchfield, researcher at E3G, said: “There is no need for the government to choose between investing in hospitals or homes. It can and should do both, by keeping the public sector fund and expanding support to help households upgrade the energy efficiency of their homes and save money on their energy bills.”
He was backed up by Joanne Wade, chief strategic advisor to the Association for Decentralised Energy, who said: “Cutting the public sector decarbonisation scheme at such short notice would be a grave mistake – not only would it lead to issues for the supply chain and derail future action on tackling climate change, it also undermines industry confidence in such schemes.”
Jess Ralston, senior analyst at the Energy and Climate Intelligence Unit, said “Number 10 is now alert to the need to stop wasting heat, but pinching from other efficiency scheme’s pots, like those for public sector buildings, isn’t going to make the country any better off as Brits, either through tax or bills, will still be paying to burn more expensive gas.”
However, industry figures welcomed the government’s move to expand the scope of the ECO scheme.
Eon UK chief executive, Michael Lewis, said: “Energy efficiency is the fabled ‘silver bullet’ for a future energy system: it cuts bills and carbon emissions today, it creates jobs and it reduces our reliance on foreign gas. I welcome any extra commitment from government that helps people to improve their homes ahead of winter and what we expect will be another significant rise in the energy price cap.
“The best thing government can do to help those people living in cold and draughty homes, people who are wasting energy and paying more than they need to for their heating, is to invest more in an expanded Energy Company Obligation that delivers for the long term.”
Philippe Commaret, managing director for customers at EDF, said: “With energy prices likely to remain high for some time, we must find enduring solutions to help customers. The value of insulation rises with higher energy costs so each efficiency measure can reduce household bills by twice as much this coming winter compared to last.
“The Energy Company Obligation scheme successfully delivers energy efficiency measures to the fuel poor and EDF has brought forward an additional £20 million of spend this year. But there is a significant policy gap for others, particularly low-middle income owner-occupiers who are struggling with rising bills. A voluntary supplier-led and government-funded scheme for those outside of fuel poverty would permanently reduce bills for many more households.”
The Times report follows a call by CBI director-general Tony Danker earlier this month for greater investment in energy efficiency, which is one of the key recommendations of Utility Week’s Energy Reset campaign.