Statement | Karen Turner | Nov 2025

The Centre for Energy Policy welcomes the Chancellor’s decision to ease the decarbonisation burden on electricity bills – a significant move away from placing green and system costs directly on households and businesses.

However, scrapping Energy Company Obligation (ECO) – which will only reduce household energy bills – removes a vital, if arguably very inefficient, route for insulation and efficiency upgrades, particularly for low-income households. No new measures were announced today on energy efficiency or heat pumps, and the loss of ECO risks slowing progress where support is most needed.

The forthcoming Warm Homes Plan is expected to fill this gap through taxpayer funding, but details on scale, scope, and delivery remain unclear. Until these are confirmed, it is uncertain whether households will be better protected or whether investment in efficiency will fall behind.

CEP research shows that recovering green costs through electricity bills is the least fair option and harms the wider economy by driving up electricity prices for households, transport, heating, and industry.

Funding net-zero costs through general taxation can be more progressive and limit negative impacts – though success depends on policy design and how real incomes are supported during transition.

Director of the Centre for Energy Policy, Professor Karen Turner, said:

Today’s shift to what is presumably going to be tax-based funding is a positive move, but removing ECO without having a clear replacement in place risks a serious gap in the UK’s transition plans. To maintain public consensus and deliver a fair, affordable transition, the government should set out a credible plan for long-term investment in energy saving solutions. This needs to include sustained electrification and insulation programmes to support low-income households in particular. Hopefully, the forthcoming Warm Homes Plan will deliver a more efficient and fairer solution

Photo credit: HM Treasury on Flickr