Achieving net zero in social housing: Zero Emissions Social Housing Taskforce report

Appendix A: Existing and forthcoming Scottish Government policy and strategy

This appendix summaries some of the existing policies and strategies considered by ZEST.

Climate Change

Housing to 2040 affirms the Scottish Government’s commitment to take action to adapt and retrofit existing homes to improve their energy efficiency and decarbonise their heating, ending their contribution to climate change.

Rapid change is required by all sectors of Scottish society to meet Scotland’s response to the global climate emergency. Legislation sets a target date for net zero emissions of all greenhouse gases by 2045, and sets interim targets requiring emissions reduction of 75% by 2030 and 90% by 2040. Housing has an important contribution to make to this and social housing can act as a catalyst for wider change in other tenures. There are plans to introduce a regulatory framework across all tenures, and a general push to cross-tenure housing standards in Housing to 2040.

The Scottish Government estimates that around 50% of homes, or over one million households, will need to convert to a low carbon heating system by 2030 to ensure the interim statutory targets are met. There is a challenge to ensure that works to the fabric of the building and new zero emissions heating systems also serve to increase comfort and affordability for fuel poor households.

EESSH

The Energy Efficiency Standard for Social Housing (EESSH) is a non-statutory target set out in guidance developed by the Scottish Government through consultation with landlords.

The first EESSH milestone (EESSH1) set a target for social housing by house and fuel type (equivalent to high D or low C EPC band depending on property) by 31 December 2020. A second milestone (EESSH2) sets a target for all social housing to meet, or be treated as meeting, EPC Band B, or be as energy efficient as practically possible within the limits of cost, technology, and consent, by the end of December 2032.

As set out in the Housing to 2040 document, the Scottish Government will bring forward the review of EESSH2 to 2023. It is clear, though, that EESSH will need some fundamental changes to align with the wider net zero agenda. Key considerations are how this wider agenda impacts what social landlords are being asked to do.

Social Housing Net Zero Heat Fund

In August 2020 the Scottish Government launched the Social Housing Net Zero Heat Fund, to support social housing landlords across Scotland to take forward projects to deploy zero emissions heat, improve energy efficiency, and reduce fuel poverty. The Scottish Government has committed to extending the fund over the next five years with a £20 million annual budget. The fund has also received an enhanced budget of £10 million for financial year 2021/2022 for projects seeking to carry out energy efficiency only projects which demonstrate they are taking a Fabric First approach with the intention of installing zero emissions heating systems in the following years.

The Social Housing Net Zero Heat Fund is a capital grant fund that has been designed to accelerate the delivery of energy efficient, zero emissions heat provision to social housing projects across Scotland and to support projects that can effectively contribute towards the achievement of the Scottish Government’s ambitions for Scotland to achieve net zero emissions by 2045. The fund supports projects that can accelerate the deployment of zero emissions heat in existing social housing. In the first year of the fund, grant support has been offered to 10 social housing zero emissions heat projects across Scotland.

Low Carbon Infrastructure Transition Programme (LCITP)

Launched in 2015, the Low Carbon Infrastructure Transition Programme (LCITP) is a collaborative partnership led by the Scottish Government, working with Scottish Enterprise, Highlands and Islands Enterprise, Scottish Futures Trust and Zero Waste Scotland. The programme aims to stimulate commercial interest and investment and maximize Scotland’s vast potential in the low carbon sector while contributing to the positive progress of the Scottish Government in reducing Scotland’s greenhouse gas emissions. Since its launch, the Scottish Government has used the LCITP to make technical expertise and financial support available to innovative low carbon infrastructure projects which have potential for replication. This approach has led to the successful delivery of a number of renewable heat projects including the Queens Quay heat network in Clydebank, which utilises heat from the River Clyde and a new heat network in Stirling, harnesses energy from wastewater and supplies heat to nearby public buildings and businesses.

As the current LCITP programme draws to a close in 2021, there must now be consideration of how its successor can become the primary mechanism for deploying zero emissions heat at scale, co-ordinating support for the rollout of heat networks and heat decarbonisation infrastructure. To achieve this, the Scottish Government must make a financial commitment to the successor programme which matches the ambitions we need it to deliver. LCITP and its successor programme will invest £400 million over the next five years in large-scale heat decarbonisation infrastructure.

Targets in Other Sectors

The Scottish Government will require new buildings, starting with new homes consented from 2024, to use zero direct emissions heating, and also feature high levels of fabric energy efficiency to reduce overall heat demand so that they do not need to be retrofitted in the future. It will introduce a requirement through the 2024 New Build Heat Standard for new buildings being constructed to connect to existing heat networks, when they are located within a Heat Network Zone.

There will be regulations for minimum energy efficiency standards for all owner-occupied private housing, expected to be set at a level equivalent to EPC C where it is technically feasible and cost-effective to do so. All domestic owner-occupied buildings should meet this standard by 2035. There will also be regulations requiring private rented sector properties to meet a minimum standard equivalent to EPC C, where technically feasible and cost-effective, by 2028.

The Scottish Government will also consult on a regulatory approach for mixed-tenure buildings which would see them required to reach a good level of energy efficiency, equivalent to EPC C rating, where technically feasible and cost effective, and install a zero emissions heating supply by 2045.

Green Heat Finance Task Force

The Draft Heat in Buildings Strategy includes a commitment to establish a Green Heat Finance Task Force to provide recommendations to Scottish Government on potential new financing models and routes to market for low and zero carbon heat by May 2023.

Public sector funding from the Scottish Government, UK Government, local authorities, or investment from new institutions like the Scottish National Investment Bank, will be a part of the solution to deliver the scale of transformation needed by 2045. However, private investment will also play a role – whether that be from homeowners, landlords or business paying for their own properties or from the institutional investment community providing financing for large scale infrastructure.

The Scottish Government will establish a Green Heat Finance Taskforce to forge a new partnership approach between the Scottish public sector, heat decarbonisation experts and the financial sector, working with organisations including the Scottish Futures Trust and the Green Finance Institute, to explore potential new and value for money innovative financing mechanisms for both at-scale and individual level investment. The Green Heat Finance Taskforce will make recommendations on the range of approaches that the Scottish Government, in collaboration with the private sector, should bring forward to support the scaled growth in private capital needed and, where possible, pilot innovative solutions to attract investment.

Other relevant groups/recommendations

As part of the ZEST group discussions, the work of other related organisations was discussed, and additional stakeholder meetings were held with Skills Development Scotland, the Scottish Qualifications Authority, the Scottish Funding Council and the Scottish Government Low Carbon Support Unit. Other organisations including the Scottish National Investment Bank and the Royal Incorporation of Architects in Scotland (RIAS) were also invited to present at the ZEST meetings to stimulate further discussion.

It is clear that addressing the climate emergency is both an active and urgent topic, and this is also evidenced by the ongoing work and emerging recommendations of other key groups such as the Just Transition Commission, Scotland’s Climate Assembly, the Existing Homes Alliance and the Environmental Justice Commission. While the focus of this particular group has been achieving net zero heat in social housing, there is alignment with many of the recommendations already proposed by other organisations regarding the importance of a just transition and ensuring the costs of meeting wider climate change targets are not borne by those least able to afford it.