- The proposed energy price cap freeze can avert an immediate bill crisis, but home energy efficiency at scale is essential to thaw overall long-term public spending by permanently reducing household bills.
- To lower bills, fight inflation and tackle the UK’s dependence on high-cost gas, the government should invest an additional £5 billion to insulate UK homes, including launching a new energy efficiency scheme, ECO Plus.
- Without intervention, bills for people with average energy consumption living in inefficient homes (with an energy rating of ‘D’ or worse) will be over £1,000 higher a year than people in homes rated C or better under the new price cap.
- The decision to cut energy efficiency funding in 2013 means 9 million households are now facing bills £300 higher per year than they would have been.
E3G is calling on new Prime Minster Liz Truss to deliver £5 billion in additional investment over the rest of this parliament to insulate UK homes and permanently cut energy bills, as a necessary parallel measure to the proposed price cap freeze.
The vast majority of UK households have no access to any subsidised insulation schemes. E3G is therefore calling for an additional £3 billion investment to kickstart a new energy efficiency scheme, ECO Plus. This would be based on the existing and successful ECO insulation scheme, but expanded to support low to middle income households at risk of falling into fuel poverty this winter with low-cost loft and cavity wall insulation.
E3G is calling for existing insulation schemes to be ramped up by £2 billion, for the remainder of this Parliament, fulfilling pledges made in the Conservative manifesto. This investment should be channelled into the Home Upgrade Grant, Social Housing Decarbonisation Scheme and the Public Sector Decarbonisation Fund, helping to insulate more low-income homes, schools and hospitals.
UK homes are the worst insulated homes in western Europe, leaking three times as much heat as homes in Scandinavian countries. There is potential to cost-effectively cut energy bills by at least a quarter by installing energy efficiency measures.
Up to 9 million households have lost out on insulation measures as a result of government cutting the ECO energy efficiency programme in half in 2013. As a result, the annual energy bill for each of these households this winter will be £300 higher based on the new Energy Price Cap.
Read E3G’s emergency energy response briefing for recommendations on how the new Prime Minister Liz Truss can tackle the UK’s chronic dependency on gas.
Ed Matthew, Campaigns Director at E3G said:
“If Liz Truss is serious about delivering a long-term solution to high energy bills, then she must tackle the root cause of the problem and end the scandal of the UK having the least energy efficient housing stock in western Europe. We are wasting at least a quarter of the heat used in UK homes through leaky roofs, windows and walls.
Liz Truss can ensure a Conservative government lives up to its name and helps all households to conserve energy by investing in insulation support. This winter, it could be a matter of life and death.”
Available for comment
The following E3G spokespeople are available for commentary, please contact them directly:
Colm Britchfield, Policy Advisor, E3G
+44 (0) 7542 865 564, email@example.com
Ed Matthew, Campaigns Director, E3G
+44 7827 157 906, firstname.lastname@example.org
Notes to Editors
- E3G is an independent climate change think tank with a global outlook. We work on the frontier of the climate landscape, tackling the barriers and advancing the solutions to a safe climate. Our goal is to translate climate politics, economics and policies into action. About – E3G
- The new Energy Price Cap is set to increase to £3,549 in October. The cost of energy has trebled in a year and is set to rise again in 2023. If these rises go ahead as planned, over half of UK households will be plunged into fuel poverty. E3G is calling for emergency action to stop this rise but says this must be complemented by long-term action to reduce the UK’s dependence on expensive gas.
- Liz Truss has also pledged to suspend “the green levy.” This refers to several environmental and social policy levies, for which consumers pay around £160 per year – less than 5% of bills from October. 97% of levy costs are made up of four policies: The Renewables Obligation and Feed-in Tariff, which helped pay for renewable generation in the past, but have been closed since 2017 and 2019 respectively. The Warm Home Discount and Energy Company Obligation, which are fuel poverty policies. The Warm Home Discount gives a £140 rebate to 2.26m households in fuel poverty, generally pensioners or people in receipt of certain means-tested benefits. The Energy Company Obligation pays for energy saving measures like insulation, heating controls and new boilers for people in fuel poverty.
- It is not yet clear what suspending green levies entails. The legacy costs associated with the Renewables Obligation and Feed-in Tariff are contractual, but they could be paid for directly by government. The cost of the Warm Home Discount and ECO could also be paid for by government but suspending them entirely would be harmful for people in fuel poverty. More information is available here: https://www.e3g.org/publications/green-levies/
- Expanding UK fossil fuel supply is expected to do almost nothing to bring down prices as the UK price of gas is linked to the international market in gas, making the UK highly vulnerable to energy price blackmail by Putin. In addition to accelerating the deployment of renewables, the Government must also prioritise energy efficiency. It is estimated that in October it will cost on average over £1000 more to adequately heat a poorly insulated home than a home which is well insulated.
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