Finding the sweet spot: effectively aligning household energy policies

19 June 2018

The Committee on Fuel Poverty have published our report examining the policy tensions and synergies between tackling fuel poverty, reducing carbon emissions and keeping energy bills down.

The report examined how different household energy policies interact and proposed adjustments to use the funding streams for each of these more effectively and efficiently. You can download the full report here.

The report identified three key tensions between the different policy measures.

  • Tackling fuel poverty vs reducing carbon emissions. If people are under-heating their homes, they are probably emitting less carbon. Therefore if people are given financial support, and use this to heat their homes more, there will probably be higher carbon emissions as a consequence.
  • Inefficient targeting. Targeting fuel poor households adequately is complicated. Currently, some benefits ‘stack’ on some types of households whilst some in need receive less support.
  • Short term vs. long term measures. Is it better to focus on helping people by giving them immediate financial support to keep warm, or take a longer view and use funds to insulate more houses so they are less likely to need that help in future?

The report modelled the distributional effects of these policies and the suggested adjustments using the National Household Model. This showed how different adjustments affected different  types of fuel poor household, and also how funding and income streams could be changed to produce different priorities and outcomes.

Toby Bridgeman, who managed the project said "What the study demonstrates that it's possible to adapt existing policies to make more progress towards the government’s goals and aims, while at the same time not removing existing benefits from the majority of vulnerable people and not increasing the total combined costs of these policies."

The study identified a number of high level principles to apply when developing policy that addresses these combined goals

  • Choose the sweet spot: prioritise policies that both reduce fuel poverty and carbon emissions and avoid policies that impede one of these.
  • Prepare the ground for future action: ensure plans to meet near-term targets also make it easier to meet long-term targets.
  • Be clear who foots the bill, who gains the benefits and why these choices have been made.
  • Look across the whole suite of relevant policies to reveal impacts and options: regularly review how household energy policies interact.

“Thinking about a suite of policies together like this was very effective at identifying a series of policy adjustments that could result in progress on tackling prescient issues in the household sector. Hopefully this is something that government can take on board for future policy design.” said Toby.

“However, what was also clear is that significantly more policy and investment will be needed for the housing sector to reach the 2030 fuel poverty targets, aspirations set out in the Clean Growth Strategy, and legal obligations to reduce carbon emissions. Even with the adjustments we have considered, the current set of household energy policies will not go far enough to meet these objectives.”

The report, executive summary and the Committee on Fuel Poverty's response are all available to download here.

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