A government funded scheme designed to help UK homes become more energy efficient has failed to deliver, the National Audit Office has found.
The scheme, which cost the UK tax payers £240m, offered house-owners government-funded loans to equip their homes with technologies that reduce the consumption of energy. The costs of installing the systems, which included more efficient boilers and insulation, were first met by the providers, with the users paying regular instalments afterwards while already benefiting from the cost-savings.
The National Audit Office said that as only 14,000 households joined the scheme, its cost has climbed up to £17,000 per loan to be covered by tax payers. The National Audit Office stated that the scheme did not deliver any additional carbon savings that wouldn’t be achievable by other existing schemes.
"The Department of Energy and Climate Change's ambitious aim to encourage households to pay for measures looked good on paper, as it would have reduced the financial burden of improvements on all energy consumers,” said Amyas Morse, head of the National Audit Office.
"But in practice, its green deal design not only failed to deliver any meaningful benefit, it increased suppliers' costs - and therefore energy bills - in meeting their obligations through the ECO scheme.”
The ECO (energy company obligation) scheme, worth £3bn, required suppliers to install energy saving measures in homes to cut carbon emissions, to support the green deal. According to the National Audit Office, the cost of the scheme was passed on to consumer bills, saving only around 30 per cent of the carbon emissions of previous programmes.
Taken together, the government's various energy efficiency schemes in the past few years cost £94 for each tonne of carbon they saved, significantly more than the £34 per tonne of carbon dioxide of the schemes they replaced. The National Audit Office said the initial focus on ‘harder to treat’ homes was partly responsible for this failure.
"The department now needs to be more realistic about consumers' and suppliers' motivations when designing schemes in future to ensure it achieves its aims," Morse said.
An investigation into the Green Deal Finance Company, set up to provide finance for the scheme, also found a £25m loan from the government was unlikely to be paid back by the company, which paid 13 members of staff £1.3m in 2014.
The UK’s 27 million homes are responsible for more than 25 per cent of the country’s energy demand and resulting greenhouse gas emissions. Reducing the energy consumption of homes is therefore seen as one of the key strategies to achieve overall emission reductions needed to slow down the climate change.
Previously, 1.4 million homes had benefited from earlier government schemes designed to tackle energy efficiency.