UK Scraps ECO4: What the End of the Energy Company Obligation Means for Households, Installers and the Race to Net Zero
UK Scraps ECO4
The UK Government has officially scrapped ECO4 (Energy Company Obligation Phase 4). This is a major policy shift that will reshape public support for home energy efficiency. For years, ECO4 funded insulation, heating upgrades and other energy-saving improvements for low-income households. Its removal marks a significant turning point for homeowners, installers and the nation’s progress toward Net Zero 2050.
Below, we break down how the UK scraps ECO4 impacts different people, why it matters and what could replace it.
What Was ECO4 and Why Was It Important?
ECO4 was a government-mandated scheme requiring large energy suppliers to fund energy-efficiency improvements for vulnerable and fuel-poor homes.
The scheme primarily supported:
- Loft and cavity wall insulation
- Solid wall insulation
- Air source heat pumps
- Heat-loss reduction measures
- Upgrades for inefficient or broken heating systems
ECO4 played a major role in reducing carbon emissions and lowering household bills, particularly during the UK’s ongoing cost-of-living and energy-price crises.
Why the UK Has Scrapped ECO4
The UK Government’s decision to scrap ECO4 marks a major turning point in national energy-efficiency policy. ECO4, the fourth phase of the Energy Company Obligation, had been one of the country’s primary tools for upgrading the homes of low-income and fuel-poor households. However, ministers have concluded that the scheme no longer fits the direction of the UK’s long-term strategy for decarbonisation, affordability and modernisation. Several interconnected factors contributed to this decision, each revealing why ECO4 was considered no longer sustainable or suitable for the next stage of the nation’s Net Zero journey.
One of the biggest reasons behind the end of ECO4 was the steadily rising cost of delivering the scheme. Energy suppliers were responsible for funding the improvements, but the administrative burden, compliance processes, verification requirements and installation complexities had grown significantly. These increased costs were passed on to consumers through their energy bills, meaning that continuing with ECO4 risked placing even more pressure on households at a time when the country was already facing a cost-of-living and high-energy-price crisis. The government argued that ending the scheme was necessary to prevent further upward pressure on bills and to protect vulnerable households from additional financial strain.
Another important factor was the government’s desire to shift away from isolated, single-measure energy upgrades toward a more comprehensive and modern approach to home decarbonisation. ECO4 was heavily focused on traditional upgrades such as insulation, boiler replacements and heating system improvements. While effective, this model did not fully support integrated low-carbon technologies like heat pumps, solar panels, smart thermostats or whole-home energy management systems. The government has made clear that the UK’s path to Net Zero requires homes to be treated as complete, interconnected energy systems. Scrapping ECO4 allows policymakers to design a new scheme that encourages deeper retrofits, embraces new technologies and relies on modern data-driven performance standards rather than outdated modelling.
Administrative complexity was another challenge that contributed to ECO4’s downfall. Installers frequently reported that the scheme involved excessive paperwork, confusing eligibility rules and slow, bureaucratic approval processes. These issues made it increasingly difficult to deliver installations quickly and efficiently. Many companies struggled to operate profitably within the constraints of the scheme. The government believes that ending ECO4 will ultimately allow for a replacement that is more streamlined, more accessible and easier for installers and households to navigate.
The limited reach of ECO4 also played a major role. Although the scheme was highly effective in supporting low-income and vulnerable people, it offered very little help for the majority of households across the UK. Millions of homeowners and private renters, particularly those on middle incomes, were left without access to meaningful support for improving the energy efficiency of their properties. Scrapping ECO4 clears the way for a more inclusive approach, one that can serve a broader range of households and help address the UK’s widespread problem of poorly insulated homes.
There was also a growing sense that ECO4 no longer delivered the kind of measurable carbon savings required for the UK’s Net Zero commitments. The scheme relied on theoretical models rather than real-world performance data, which made it difficult to determine whether the expected reductions in carbon emissions were truly being achieved. With the government increasingly focused on verifiable results and transparent carbon accounting, ECO4’s methodology appeared outdated. Future schemes are expected to rely on smart meter data, digital monitoring, advanced modelling and post-installation verification to deliver clear, auditable improvements in energy efficiency.
Finally, the government’s long-term strategy involves moving toward new funding models that blend public and private investment, encourage innovation and support large-scale decarbonisation. ECO4’s structure, which depended heavily on obligations placed on energy suppliers, could not easily evolve to accommodate these modern financial and technological demands. Ending the scheme allows policymakers to design something more flexible and better aligned with the future of home energy upgrades.
In summary, ECO4 was scrapped because it had become too costly, too narrow in its scope, too administratively burdensome and too outdated for the UK’s evolving decarbonisation landscape. Although it delivered significant benefits during its lifetime, the government believes that a newer, more modern replacement can deliver deeper carbon reductions, reach more households and accelerate the nation’s progress toward Net Zero. The next challenge lies in ensuring that whatever replaces ECO4 is introduced quickly and effectively, to avoid leaving households and installers without the support they urgently need.
What the End of ECO4 Means for UK Households
The end of ECO4 creates a significant shift in the support available to households across the UK, particularly for those struggling with high energy bills and inefficient homes. For more than a decade, the Energy Company Obligation provided a reliable route for qualifying families to receive fully funded or heavily subsidised upgrades such as insulation, heating improvements and essential home efficiency measures. With ECO4 now discontinued, the landscape for homeowners has changed almost overnight, and many households will experience the impact directly and immediately.
For low-income and vulnerable families, the removal of ECO4 represents the loss of one of the few schemes that offered free or near-free energy-saving improvements. These households often relied on ECO funding to access loft insulation, cavity wall insulation or heating upgrades that would otherwise be unaffordable. Without the scheme, many people are now left with limited or no access to financial support for basic improvements that could significantly lower their energy use. This gap is particularly concerning at a time when energy prices remain high and many households are still coping with the effects of the cost-of-living crisis.
The end of ECO4 could also result in higher energy bills for households that were expecting upgrades or had already begun enquiries. Homes that lack insulation or rely on outdated heating systems typically consume far more energy, which directly increases costs. For families living in properties with poor EPC ratings, the absence of ECO-backed improvements means that energy inefficiency will likely remain a long-term challenge. This leaves many households facing the dual burden of rising energy bills and the inability to access support that could reduce their consumption.
Another consequence of ECO4’s closure is a period of uncertainty and reduced clarity about what support, if any, is available during the transition to whatever scheme replaces it. Homeowners who were preparing to apply for ECO4 or who had recently begun the process may now find their applications paused, cancelled or redirected. This creates frustration and confusion, particularly for households that urgently need improvements ahead of winter. Until the government announces and launches a new framework, many households will be left in limbo, unsure where to turn for assistance.
The end of ECO4 also impacts private renters and owner-occupiers who may not qualify for other schemes. ECO4 was one of the few initiatives that worked across multiple tenure types, making it accessible for people who might otherwise be excluded from support programmes. In the absence of ECO4, private tenants may struggle to convince landlords to invest in energy efficiency improvements, especially when the cost burden is high and the incentives for property owners remain limited.
Finally, the removal of ECO4 has broader implications for the quality of the UK’s housing stock. British homes are among the least energy efficient in Europe, and large-scale schemes like ECO played a vital role in addressing this decades-old issue. With the programme gone, the pace of improving the nation’s homes may slow, which could undermine national progress toward Net Zero and leave millions of households living in cold, inefficient properties for longer than necessary.
In essence, the end of ECO4 leaves many UK households without a clear or accessible pathway to making essential energy efficiency upgrades. It raises the risk of higher bills, colder homes and prolonged vulnerability for those already struggling, while also affecting the broader national goal of reducing carbon emissions. Until a new, effective replacement is introduced, homeowners and renters alike will face a period of uncertainty with fewer support options available.
What Could Replace ECO4?
With ECO4 now scrapped, attention has quickly turned to what the UK Government will introduce in its place. Although details are still emerging, it is becoming increasingly clear that the next generation of energy-efficiency support will look very different from the long-standing ECO model. The government has indicated that it wants to move away from schemes that focus on single, isolated measures and instead shift toward a more modern, flexible and data-driven approach to home decarbonisation. This means any replacement for ECO4 is likely to place a much stronger emphasis on whole-home upgrades, low-carbon heating and measurable performance outcomes.
One of the strongest possibilities is that ECO4 will be replaced by a more comprehensive retrofit programme that treats homes as complete energy systems rather than simply targets for insulation or heating improvements. A future scheme may encourage deeper and more meaningful upgrades by combining insulation, electrification, ventilation, smart controls and renewable technologies such as solar panels and heat pumps. The government wants new schemes to help households reduce both their energy consumption and carbon emissions in a way that is aligned with the UK’s 2050 Net Zero requirements. This suggests a model that integrates technologies, measures actual performance and rewards genuine improvements rather than theoretical calculations.
Another likely feature of the ECO4 replacement is the use of digital tools and data to verify carbon savings and energy improvements. The government has increasingly highlighted the need for measurable results instead of relying on forecasted energy savings, which means smart meter data, energy monitoring platforms and advanced modelling could play a central role. Future schemes may require proof of actual reductions in energy use before funding is released or finalised, creating a more transparent and accountable system for both households and installers.
There is also an expectation that the replacement for ECO4 will be more inclusive and accessible. ECO4 primarily served low-income households, but the government has signalled a desire to support a wider range of homeowners, including middle-income families and private renters. A new scheme could allow more people to access grants or incentives, helping to accelerate upgrades across the entire housing market rather than focusing solely on the most vulnerable groups. This shift would help the UK tackle its broader challenge of inefficient housing stock, which remains a major barrier to reducing national energy demand.
Financially, the new scheme may be supported by a blend of government funding, private investment and innovative finance models. The government has been exploring mechanisms that encourage market participation, reward performance and reduce the long-term dependency on suppliers funding upgrades through consumer bills. This opens the door to a modern funding structure that could be more stable, scalable and aligned with long-term climate goals.
While households wait for clearer guidance, other existing schemes such as the Boiler Upgrade Scheme, the Great British Insulation Scheme and various local authority programmes will continue to operate. However, none of these fully replace the breadth or scale of ECO4. This is why industry experts are anticipating the launch of a new nationwide initiative that mirrors ECO4’s reach but is redesigned to fit the needs of a rapidly changing energy landscape. Installers, homeowners and local authorities are now preparing for a more streamlined and modernised system that reduces administrative barriers, supports advanced technologies and delivers upgrades more efficiently.
In the absence of an official announcement, the exact shape of the post-ECO4 landscape remains uncertain. What is clear, however, is that the government intends to replace the scheme with a more dynamic, forward-thinking programme that encourages whole-home transformation, leverages new technology and expands access to a greater number of households. Whether this new approach will match or surpass the impact of ECO4 will depend on the speed of implementation, the level of investment and the government’s ability to create a scheme that balances affordability, simplicity and measurable carbon reductions.
How Homeowners and Installers Can Prepare Now
Explore Current Funding Options
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Final Thoughts
