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Can different approaches to funding household energy efficiency deliver on economic and social policy objectives? ECO and alternatives in the UK

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  • Katris, Antonios
  • Turner, Karen
Abstract
Residential energy efficiency is a core element of the decarbonisation policy in many nations. In the UK, the established approach to enabling efficiency gains through centralised retrofitting programmes involves socialising costs via consumer energy bills through the Energy Company Obligation (ECO). One UK policy concern is whether less affluent households should receive greater access to ECO funding. However, there is a broader concern that the use of constrained public resources should be justified through wider and sustained economic returns emerging. Here, we consider the (centralised) ECO approach to cost recovery alongside alternative (decentralised) approaches to delivering energy efficiency programmes that either pass costs to beneficiary households or fully socialise costs via income tax. We find the key drivers of both household and wider economy outcomes are the absolute levels of resources actually devoted to enabling efficiency gains and household disposable income freed up to power expansionary processes. The latter in particular brings challenges and trade-offs in terms of meeting both economic performance and social policy objectives, given that resources targeted at higher income households can ultimately free up more real spending ability and sustain greater gains in GDP, employment and household incomes.

Suggested Citation

  • Katris, Antonios & Turner, Karen, 2021. "Can different approaches to funding household energy efficiency deliver on economic and social policy objectives? ECO and alternatives in the UK," Energy Policy, Elsevier, vol. 155(C).
    • Handle: RePEc:eee:enepol:v:155:y:2021:i:c:s0301421521002457
    DOI: 10.1016/j.enpol.2021.112375
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    Cited by:

    1. Karen Turner & Julia Race & Oluwafisayo Alabi & Antonios Katris & Kim Swales, 2023. "The relationship between a ‘polluter pays’ approach to carbon capture, regional policy and ‘just transition’ employment agendas," Climate Policy, Taylor & Francis Journals, vol. 23(3), pages 366-378, March.

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    More about this item

    Keywords

    Energy efficiency; Energy policy; Economic sustainability; Socialising costs; Computable general equilibrium;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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