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Energy companies will need to undertake up to 35% more energy efficiency work in order to meet targets set under the Energy Company Obligation scheme, under proposals set out by the government this week.

The Energy companies may need to undertake up to 35% more energy efficiency work to meet their Energy Company Obligation targets as a result of proposals set out by the government this week.

The Department of Energy and Climate Change (DECC) has said it plans to downgrade the energy savings attributed to energy saving products, such as cavity wall insulations and loft insulations, when calculating the overall carbon savings from building projects under the Energy Company Obligation (ECO) scheme, which comes into effect in January 2013.

Under the ECO energy companies will be required to undertake a set amount of energy efficiency work each year. Work they undertake is given a credit based on its calculated carbon savings, which adds towards their overall target.

If firms do not meet their ECO obligations they can be fined by the regulator Ofgem.

Under the proposals, each energy efficiency installation will earn energy companies less credit towards their total obligation than the officially stated rating for each building product 鈥搘hich is usually assessed by the product manufacturers.

Under the proposals the ratings of products would be downgraded by up to 35%, meaning  energy firms will have to do up to a third more retrofit work to meet their obligations.

The move to downgrade the ratings is aimed at accounting for the drop in performance of energy saving measures in actual homes when compared with test labs - referred to as the 鈥減erformance gap鈥�. These downgraded ratings are already used under current energy saving programmes the Carbon Emission Reduction Target and Community Energy Savings Programme.

John Tebbit, deputy chief executive of the Construction Products Association, said the move was a sensible solution while data on actual performance was gathered.