New Build Heat Standard (amended) 2024: business and regulatory impact assessment

3. Policy rationale: background and updated approach

6. The Climate Change (Emissions Reduction Targets) (Scotland) Act 2019 commenced in March 2020, setting annual and interim emissions reduction targets for Scotland on a trajectory to net zero emissions by 2045. Published in October 2021, the Scottish Government’s Heat in Buildings Strategy set out the policy landscape surrounding the decarbonisation of space and water heating in Scotland. The NBHS was one such policy outlined as part of that Strategy.

7. Direct emissions from buildings accounted for almost 20% (7.7 MtCO2e) of Scotland’s territorial greenhouse gas (GHG) emissions in 2022, the latest year for which statistics are available. Meeting our legally-binding targets will require action to be taken with regard to reducing emissions from the existing stock of buildings through fabric upgrades and conversion to zero direct emissions heat, or ‘clean’ heating, as well as ensuring new buildings do not exacerbate the challenge. The Building (Scotland) Amendment Regulations 2023, aim to address the latter.

8. Under the existing NBHS (introduced through Standard 6.11 of the Building (Scotland) Amendment Regulations 2023) from 1 April 2024), all heating defined as Direct Emissions Heating (DEH) was prohibited unless for use as emergency heating^[2]. This included bioenergy which also produces emissions at point of use – much like oil and gas systems. Following the NBHS coming into effect on 1 April 2024, a significant number of concerns were raised by various parties, particularly by rural and island communities, relating to their reliance on bioenergy (including wood burning stoves). It also became clear that the emergency provision did not reconcile with the nature of wood burning stoves which are often installed for more frequent use rather than solely as emergency systems. This is why Ministers committed to reviewing the NBHS, to consider the role of bioenergy and wood burning stoves in new builds in more detail.

9. The rationale for prohibiting heating systems that produce direct emissions at the point of use is that building owners have responsibility for these systems and their emissions and so can take action to change them. This is in contrast to energy delivered through heat networks or the electricity grid where emissions occurring upstream are the responsibility of the system operator, with building owners using these systems having little or no agency. Combustion of biomass does produce CO2 emissions at the point of use. This is why, under current New Build Heat Standard regulations, bioenergy has been categorised as a “polluting” or direct emissions heating system.

10. Within this context, it is important to acknowledge that how we consider the emissions and treatment of bioenergy has evolved. While combustion of biomass does physically produce CO2 emissions at the point of use, these emissions are balanced out against CO2 that was absorbed from the atmosphere when the biomass feedstock grew. As a result, for the purposes of reporting on emissions, and in line with international carbon accounting practice, the Scottish Government considers the combustion of biomass to produce net zero CO2 emissions at the point of use.

11. It is important to note that the combustion of biomass may yield small amounts of some other greenhouse gas emissions (methane and nitrous oxide) which do not cancel out in the manner described above for CO2. However, given these emissions do exist, it may be more accurate to categorise the use of bioenergy as “near net zero.”

12. We recognise that some communities may have limited choices in relation to clean heat solutions, particularly island areas which rely on a mini-grid with limited electrical capacity to connect new systems. In these areas, it may be most appropriate to use a bioenergy system or a small-scale communal system (heat network). In those circumstances, bioenergy is likely to replace the use of oil.

13. We also acknowledge that peat has a distinct cultural and historical significance, particularly in rural and island communities, where the practice of cutting peat can often be a social, community occasion. Crofters also have a longstanding tradition, and legal right, to cut peat which is often used for domestic burning. For this reason, the review also covered the use of peat for heat.