Discrepancies between fuel poverty and clean growth agenda “continue to hit vulnerable rural households”

As a new report shows, the number of fuel poor households in England has risen to over 2.5 million. OFTEC says recent revisions to the Energy Company Obligation (ECO) scheme don’t go far enough in ensuring that low income homes do not suffer at the expense of the government’s clean growth agenda.

The committee on fuel poverty’s (CFP) third annual report has found that despite government introducing the fuel poverty strategy 2015, the number of households unable to afford to adequately heat their homes has risen by 210,000 to 2.55 million.

In June 2018, OFTEC welcomed the announcement from the Department of Business, Energy and Industrial Strategy (BEIS) that oil boilers will not, as initially proposed, be excluded from the next phase of ECO (ECO3), which has now come into effect.

This means that under the scheme, fuel poor households who currently rely on oil heating can have a broken oil appliance repaired or replaced and so continue to benefit from using the cheapest fuel for the off-grid sector.

Between 2014 and 2018, the four year average price of heating oil in Great Britain was 68% cheaper than LPG and 85% cheaper than electric (Economy 7), the two other main options available to rural homes.

However, in an attempt to unite fuel poverty strategy with carbon reduction efforts, the inclusion of oil in ECO3 does not extend to first time central heating (FTCH). Therefore, fuel poor households will have no other option than to heat their homes with far more costly LPG (also a high carbon fossil fuel) or electricity. Until the national grid is decarbonised, electricity will also continue to contribute to carbon emissions.

OFTEC CEO Paul Rose comments: “Whilst the limited inclusion of oil in ECO3 was an important win for many low income and vulnerable off-grid households, it doesn’t go far enough.

“We fully support government’s clean growth strategy and understand aligning the fuel poverty agenda with carbon reduction goals is a tricky balancing act, but carbon reduction policy cannot be introduced to the detriment of the vulnerable and fuel poor. The key objective of ECO must remain providing affordable warmth to address fuel poverty otherwise the number of households who can’t pay their heating bills will continue to rise.

“This will in turn take an even greater toll on the NHS and the already unacceptably high number of excess winter deaths in this country as more vulnerable people suffer the health consequences of living in cold homes.

“We are currently discussing with BEIS the most practical and cost-effective low carbon solution for oil heated homes going forward. We believe this to be a liquid biofuel. With a biofuel replacement for kerosene currently being actively developed, we hope very soon to be able to allay any concerns over whether oil boilers should be installed as part of fuel poverty initiatives such as ECO.

“Once a suitable biofuel solution becomes available, we propose a government supported scheme to replace the estimated 400,000 ‘zombie’ oil boilers still in use with modern, high efficiency boilers – a move which would immediately reduce fuel bills and carbon emissions by up to 20%. The upgrade would be free for those eligible for ECO with priority and higher subsidies being made available to struggling households.”

OFTEC endorses the emphasis the revised ECO3 scheme has placed on insulation as an important overall step towards improving energy efficiency and therefore reducing fuel bills and carbon emissions. But in practice, this may again be of limited benefit for the rural fuel poor.

Due to the general poor quality of off-grid housing stock, which also tends to be older, an estimated 88% of off-grid homes currently fall into EPC band D or below. This makes these properties far more difficult and expensive to insulate and it may not even be possible to bring many up to the required band C which government aspires to by 2035 under the Clean Growth Strategy.

Paul Rose continues: “We have to be realistic here and look at the cost effectiveness of relying on insulation, particularly wall insulation, as a key driver to improving energy efficiency in off-grid homes, where fuel poverty is more common. Insulation is an easy win for newer properties but could prove an extremely expensive retrofit measure, as well as being simply impractical for many rural properties.

“We must focus on solutions that will address the unique issues associated with hard to treat rural properties. Our proposed low carbon liquid fuel would provide an easy to implement alternative to kerosene which wouldn’t rely on improved insulation to deliver substantial carbon savings. Crucially for the fuel poor, economies of scale as liquid biofuel supplies improve and the fact that a blended fuel would initially be introduced, would also mean our solution remains cheaper than LPG, electric storage heaters or heat pumps into the future.”