Energy Company Obligation (ECO)

ECO1, ECO2, ECO2t and ECO3

The first phase of the Energy Company Obligation (ECO), known as ECO1, ran from January 2013 to March 2015. This placed obligations on larger energy suppliers to deliver energy efficiency measures to domestic premises in Great Britain.

There were three main obligations under ECO1 which energy companies were required to meet. The obligations were the Carbon Emissions Reduction Obligation (CERO), the Carbon Saving Community Obligation (CSCO) and the Home Heating Cost Reduction Obligation (HHCRO). CSCO also had a sub-obligation focused on rural areas (the CSCO rural sub-obligation). Under ECO1 suppliers were required to achieve an overall target of 12.4 Mt CO2 for CERO, 6 Mt CO2 for CSCO and £3.7billion for HHCRO. Suppliers achieved 18.33 Mt CO2 under CERO, 9.87 Mt CO2 under CSCO, including 1.79 Mt CO2 under the rural sub-obligation, and £5.16billion under HHCRO. 

The next obligation period, known as ECO2, launched on 1 April 2015 and ended on 31 March 2017. Suppliers were required to achieve the following cost and carbon savings - 19.7 Mt CO2 under CERO, 6 Mt CO2 under CSCO and £6.46 billion under HHCRO.

The government extended this policy until 30 September 2018 with a new period termed ECO2t. You can view a summary of the changes made on the government website. Energy suppliers were required to achieve 7.3 Mt CO2 for CERO and £2.76 billion for HHCRO. The CSCO target had to be achieved by 1 April 2017, while the CERO and HHCRO targets had to be achieved before 1 October 2018.

ECO3 policy was entirely formed from one obligation, the Home Heating Cost Reduction Obligation (HHCRO). Under HHCRO, obligated suppliers would have mainly promote measures which improve the ability of low income, fuel poor and vulnerable households to heat their homes. This included actions that result in heating savings, such as the replacement of a broken heating system or the upgrade of an inefficient heating system. The ECO3 Order commenced on 3 December 2018 and ran until 31 March 2022. The ECO (Amendment) Order 2019 came into force on 1 January 2020. The ECO3 Order overall target for the HHCRO obligation was £8.253 billion in cost savings.

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