Fuel poverty and energy efficiency obligations – A critical assessment of the supplier obligation in the UK

Abstract

Energy efficiency obligations (or white certificates) are increasingly used to reduce carbon emissions. While the energy efficiency obligations were originally intended as carbon reduction and not fuel poverty policies, due to recognition of the potential for regressive outcomes they often include provisions for vulnerable and low-income customers. Intuitively, reducing carbon emissions and alleviating fuel poverty seem to be two sides of the same coin. There are, however, considerable tensions between the two when addressed through energy efficiency obligations, particularly arising from the potentially regressive impacts of rising energy prices resulting from such obligations, but also the complexity of targeting fuel poor households and the implications for deliverability. Despite those tensions, the UK government decided to use energy efficiency obligations, the supplier obligation, as the main policy for reducing fuel poverty. In light of the proposals, this paper provides an analysis of the main tensions between carbon reduction and fuel poverty alleviation within energy efficiency obligations, outlines the fuel poverty provisions of the British Supplier Obligation, assesses its rules for identifying the fuel poor, and provides a critical analysis of the planned policy changes. Based on this analysis, alternative approaches to targeting fuel poverty within future supplier obligations are proposed.