The Building (Scotland) Amendment Regulations 2022: Section 6 (Energy): ICIA

The Building (Scotland) Amendment Regulations 2022 – Section 6 (Energy) - Island Communities Impact Assessment

Introduction

1. Section 7 of the Islands (Scotland) Act 2018 (the 2018 Act), places a specific duty on relevant authorities, including the Scottish Ministers and other public bodies, to have regard to island communities in carrying out their functions.

2. This includes the need to consult with island communities and prepare an Island Communities Impact Assessment (ICIA) to determine and respond to any changes arising from legislation which, in their opinion, is likely to have an effect on an island community which is significantly different from its effect on other communities (including other island communities) in Scotland.

3. This assessment should:

• describe the likely significantly different effect of the legislation;
• assess the extent to which the Scottish Ministers consider that the legislation can be developed in such a manner as to improve or mitigate, for island communities, the outcomes resulting from the legislation; and
• set out the financial implications of steps taken under this subsection to mitigate, for island communities, the outcomes resulting from the legislation.

4. The Island Communities Impact Assessments: Guidance And Toolkit (2020) (the Guidance) sets out an approach for undertaking an ICIA. This includes an initial screening stage ('Section 7 assessment'), followed by an additional impact assessment stage ('Section 8 assessment') if required following screening. The final stage is the publication of relevant documents.

5. Section 11 of the 2018 Act requires that a relevant authority must have regard to the Guidance in fulfilling its section 7 duty. The Guidance emphasises the importance of effective and meaningful consultation and robust community engagement so that islanders are given a platform to voice their opinions, concerns and suggestions. It also addresses the need to consult island communities in order for a relevant authority to comply with the section 7 duty.

6. This document constitutes the ICIA undertaken, in accordance with the Guidance, in respect of The Building (Scotland) Amendment Regulations 2022 (the 2022 Amendment Regulations) as they relate to changes to improve the energy and environmental performance of new buildings and new building work. A companion ICIA was undertaken for changes within the same regulations which seek to improve fire safety.

Background

7. The building standards system in Scotland is established by the Building (Scotland) Act 2003 (the 2003 Act). The system regulates building work on new and existing buildings to provide buildings that meet reasonable standards which:

• secure the health, safety, welfare and convenience of persons in or about buildings and of others who may be affected by buildings or matters connected with buildings;
• further the conservation of fuel and power; and
• further the achievement of sustainable development.

8. Requirements applicable to building work are set through Building Regulations as a set of mandatory functional standards. These are simple statements on the outcomes which must be achieved when undertaking building work. These standards are supported by a body of guidance set out in Domestic and Non-domestic Technical Handbooks. This published guidance assists by defining the scope of action expected under each standard, providing one or more examples of how compliance with the standard can be achieved. Noting that the standards can also be met through use of solutions not included in published guidance. Standards are defined and applied at a national level.

9. Whilst the building standards system does enable flexibility in how compliance with standards is demonstrated, the current published Technical Handbooks do not provide alternative approaches based specifically upon the geographical location of construction work.

10. Under the 2003 Act, the Scottish Government's Building Standards Division, acting on behalf of the Scottish Ministers, prepares and updates building standards legislation and guidance documents, conducting any necessary research and consulting on changes.

11. Energy standards within section 6 of the Building Standards Technical Handbooks were reviewed and improved in 2007, 2010 and most recently in 2015. For new buildings, The Building (Scotland) Amendment Regulations 2007 saw the introduction of a single means of demonstrating compliance for new buildings on the basis of calculated carbon dioxide emissions targets, using a Standard Assessment Procedure (SAP) for dwellings and Simplified Building Energy Model (SBEM) (or equivalent) for non-domestic buildings. Each review introduced further staged improvement to standards and it is assessed that emissions arising from energy use in new buildings constructed to the 2015 standards are, on aggregate, around 75% lower for new homes and 80% lower for new non-domestic buildings, compared to the standards in force in 1990.

12. Recognising the improvement already delivered by previous energy standards reviews, options for further improvement have been developed, in 2020 and 2021, through research and with the support and input of a working group of key industry stakeholders.

13. The scope of this review covers improvements to the standards which limit both energy demand and greenhouse gas emissions arising from new buildings and new building work. Changes to be implemented also include consequential amendment of ventilation provisions sought in new homes as a result of improved energy performance and the introduction of a need to assess and mitigate overheating risk in new homes and new residential buildings.

14. The 2022 Amendment Regulations, introducing updated fire and energy standards, are expected to be laid in the Scottish Parliament in April with a proposed coming into force date of 1 June 2022 (for the fire standards) and 1 October 2022 (for the energy standards). Supporting guidance is expected to be published in May 2022. As noted above, a separate ICIA was undertaken in regards to the fire standards.

Objectives

15. The Climate Change (Scotland) Act 2009 (the 2009 Act) and The Climate Change (Emissions Reduction Targets) (Scotland) Act 2019 (the 2019 Act), which amends the 2009 Act, sets targets to reduce Scotland's emissions of all greenhouse gases to net-zero by 2045 at the latest, with interim targets for reductions of at least 75% by 2030 and 90% by 2040.

16. In December 2020, the Scottish Government published its Update to the Climate Change Plan, reflecting the increased ambition of the 2019 Act. This update maintains the commitment to investigate the potential for further, significant improvement on 2015 energy standards and also how building regulations can support the achievement of these targets and other emissions and energy policy outcomes, including our decarbonisation of heat agenda.

17. Within the Programme for Government 2019-2020, the Scottish Ministers made a commitment to ensure that from 2024, all new homes are required to use renewable or low carbon heat. The Heat in Buildings Strategy (2021) (the Strategy) seeks to deliver on this commitment, building on the policies and actions set out in the 2020 Update to the Climate Change Plan and setting out a pathway to zero emissions buildings by 2045. The Strategy details a series of near-term actions to put us on a clear path towards this, as well as a range of further, longer-term commitments to accelerate and further scale the transformation of the nation's building stock, including the introduction of a New Build Heat Standard from 2024. A New Build Heat Standard: scoping consultation was undertaken from December 2020 to March 2021, which set out the high-level vision for the new standard. This focused upon regulation to require, from 2024, new buildings to use heating systems which produce zero direct emissions at the point of use. The Scottish Government is currently developing more detailed proposals for further consultation on this issue.

18. It is recognised that, within their scope of application, Building Regulations already deliver a significant contribution to emissions reductions. The 2022 Amendment Regulations seek to deliver further improvements to building performance through energy standards with a view to supporting other policy work, subject to the robust assessment of both benefits and costs and the implications for the construction industry in Scotland. As these changes will generally affect all parties involved in the undertaking of new construction work, proposals are subject to public consultation and significant engagement.

19. The key objectives of the 2022 Amendment Regulations in respect of this agenda are summarised as follows:

• To further reduce energy demand and emissions from new buildings and new building work.
• To focus design choices for new work on solutions which are effective in reducing delivered energy (that which is supplied to the building from external sources).
• To help 'prepare the way' for 2024 proposals to decarbonise heat in buildings, which would remove 'at-building combustion solutions' from new development.
• To reflect assumptions of improved building fabric, in new homes in particular, by clarification and moderate revision of domestic ventilation provisions.
• To introduce a more formal approach to assessing summer overheating risk in new dwellings and similar residential buildings.
• To use these changes as an opportunity to define a cleared expectation around the processes needed to demonstrate compliance with building regulations (a related Building regulations - compliance and enforcements: consultation was also recently undertaken).

20. To fulfil these objectives, the 2022 Amendment Regulations and supporting guidance would include (or support) the following changes to building standards:

• Introduction of a new energy target for the construction of new buildings;
• Revision of minimum energy performance standards set for both building fabric and fixed building services, applicable to new buildings and work to existing buildings;
• Consequential changes to standards for building ventilation in response to fabric improvements, including an increase in the level of building testing prior to completion; and
• Introduction of the need for overheating risk assessment and mitigation measures for new homes and other similar types of new residential buildings.

21. Provisions within the 2022 Amendment Regulations are also framed in the context of the anticipated use of 'zero direct emissions' heat solutions in the very near future, including the need to 'futureproof' the construction of new buildings, by delivering high levels of heat demand reduction and setting out information on simple, low cost adaptation where such heat solutions are not initially included on construction.

22. The changes proposed are to an existing regulatory framework designed to define and deliver minimum standards applicable to new buildings and to new building work. They are, predominantly, measures which vary current provisions already sought under regulation and familiar to those involved in the delivery of the built environment. The exception to this is the introduction of the requirement to assess and mitigate overheating risk in new residential buildings which is a new mandatory requirement.

Gathering Data and Identifying Stakeholders

23. In developing the 2022 Amendment Regulations, a public consultation was undertaken via the Scottish Government's consultation hub, Citizen Space. The consultation, Scottish Building Regulations: Proposed changes to Energy Standards and associated topics, ran from 26 July to 26 November 2021. A total of 177 responses were received. An independent analysis of the consultation responses, undertaken by Harlow Consulting, is published on the consultation webpage.

24. Responses to the consultation were received from all six islands local authorities and two organisations identifiable as located, or with an interest, in island communities. A total of 25 responses included comments relevant to remote, rural or island communities.

25. Throughout the energy review process, we have sought to provide stakeholders, including those with island and remote communities' interests, with the opportunity to share their views with us. The views gathered have informed this assessment and our decision making process.

26. During the consultation, between 14 September and 5 October 2021, seven stakeholder engagement Q&A webinars were also conducted, covering the key changes proposed, with questions asked on the impact of change on development in remote, rural and island communities. The final webinar in this series focussing specifically on potential impacts to these communities.

27. The Building Standards Division also engaged with the Federation of Master Builders to facilitate a discussion session with their members regarding the potential implications of the energy standards changes for the delivery of affordable housing in rural and island communities. This session took place on 11 November 2021.

28. Two further post-consultation engagement sessions were undertaken with island communities stakeholders through promotion of sessions via the six islands local authorities. These took place on Monday 14^th March 2022.

Context – new development in island communities

29. To provide an illustration of the level of new development taking place in island communities, analysis was undertaken by identifying Scottish Islands postcode areas. For this purpose, only postcode sectors specific to island communities were reported. Those which are shared with mainland areas were not.

• HS1-9: Lewis & Harris, Scalpay, North & South Uist, Benbecula, Barra
• IV41-49, 55-63: Skye, Raasay
• KA 27: Arran
• KW15-17: Orkney Islands
• PA20: Bute
• PA41-78: Gigha, Islay, Jura, Colonsay, Mull, Iona, Tiree, Coll
• PH42-44: Eigg, Rhum, Muck, Canna
• ZE1-3: Shetland Islands

Main heating fuels were reported to inform discussions around 2022 review elements which relate to fuel choices, noting the absence of mains gas as an option in the islands, and to support the pending move away from 'direct emissions heating systems' from 2024.

30. Summary points from analysis are noted below:

• New dwellings – 1.9% of new development (450 units) took place on island communities.

These were fuelled 91.5% by electricity, 4.5% by oil, 2% mains gas (Bute) and less than 2% each other fuels. No units completed using district heating as a fuel but we are aware there is a network in Lerwick and connections are proposed. This compares to 80% by mains gas, 12% electricity, 6% district heating and 1% each LPG and oil in non-island communities. (Source - Scottish EPC data 2017-21)

• New non-domestic buildings - 2.2% of new development (by area) took place on island communities. This accounted for 4.2% of the number of new developments.

These were fuelled 75% by electricity, 12% by oil and 5% each by LPG or district heat; 3% other fuels. This compares to 51% by electricity, 37% mains gas, 4% biofuels, 3% by LPG, 2% district heating and 3% other fuels in non-island communities. (Source - Scottish EPC data 2021)

Context – factors affecting development on island communities.

31. Discussion on the impact of the proposed changes was undertaken with an awareness (and verification during engagement) of pre-existing factors which already affect development in island communities:

• Higher construction costs (higher cost of living generally)
• Standard construction cost indices do not give the full picture – too generalised and not up-to date enough.
• Fuel poverty higher in island communities
• Reduced supply chain options; operatives, transport, sourcing of solutions
• Mains gas for heating is not an option
• Some islands have no grid connection
• Weather & climate more extreme; relevance of 'national standards' to more remote areas. Need for local solutions to local circumstances.
• An abundance of renewable energy but often a lack of mechanisms to utilise that for benefit at a building level?

Consultation / Engagement

32. Engagement on review topics was primarily with people who are directly involved in the delivery of new buildings or new building work in island communities, as clients, developers, designers, contractors or public bodies.

33. During engagement, the key themes of the review were summarised to support effective discussion on the potential impacts that may be experienced in island communities:

• To further reduce energy demand and emissions from new buildings and new building work.
• To focus design choices for new work on solutions which are effective in reducing delivered energy – that which is supplied to the building from external sources.
• To help 'prepare the way' for 2024 heat proposals which would remove 'at-building combustion solutions' from new development.
• Streaming the approach for new development to two targets – mains gas and heat pump notional buildings – removal of oil, LPG and biomass fuel packages from domestic and use of actual building fuel in ND notional building.
• Improved fabric backstops, reflecting the 'best 50%' of current construction. Both newbuild & extension/alteration.
• 'Better' use of on-site generation – no longer count the export component when defining and meeting targets. Limits potential overprovision which does not contribute to reducing energy needed from external sources.
• Moving to split compliance for supplied heat solutions to the energy efficiency of the building (building regs) and the characteristics of the network supplying heat (noting future separate Heat Network regulations and this may only currently be relevant, at scale, in Lerwick).
• To reflect assumptions around improved building fabric & infiltration, in new homes in particular, clarification and moderate revision of domestic ventilation provisions. Choosing right approach for intended infiltration level.
• To introduce a more formal approach to assessing summer overheating risk in new dwellings and similar residential buildings.
• To use these changes as an opportunity to define a clear expectation around the processes needed to demonstrate compliance with building regulations (related compliance plan consultation). Some specific provisions already embedded above – increase airtightness testing, reinforcing need for commissioning and reporting.
• At this stage review remains focussed on energy and emissions in use. Work is underway to look at embodied and whole life reporting, but is at a very early stage.

34. Key themes arising from consultation responses and onward engagement with people and organisations from island communities are summarised below:

• Cost of development is higher. This can be significantly under-assessed if relying on standard sources of cost information (e.g. Building Cost Information Service, (BCIS)). The local context and nature of a project can significantly increase project costs, particularly on the smaller or more remote isles.

Whilst land prices are less, development work on the islands costs more and delivers a product that, as a marketable asset, often has a lower value than in more populous or central areas. Examples of projects running at 145% above central belt costs were offered (BCIS stops at 130%).

For publicly funded work, assessments should include consideration of previous local project data. Affordable housing was often raised as an example of where funding often does not approach what is actually needed to deliver a given project.

Views on new housing in particular, with Shetland offered as an example. No big house builders, land prices are affordable but development is getting to the stage where it is cost-prohibitive, a comment also made for other communities. Pushing standards may make new homes unaffordable as some developments are 'at the limit' now. Concern that further change, whilst positive for subsequent running costs, may impact on local economy, particularly private/ commercial development where funding assistance is not available.

• Limits of 'one-size fits all' regulation. Application of national building regulations may deliver intended outcomes but may sometimes not be the 'best fit' for local conditions. Whilst significant issues have not been raised in the past, this is a known discussion topic. Often stemming from reference to, or application of, British or EU standards for construction work. Examples are not specific to island communities but to areas with less access to solutions or with more extreme climate.

National standards apply national factors (e.g. for emissions) which do not always 'fit' local situation – e.g. applying factors for grid electricity where an island is not connected to the National Grid. As with national building regulations, a 'one-size fits all' approach to supporting data has useful limits.

Airtightness testing changes. Proposals would increase the amount of pre-completion testing undertaken on new buildings. For example, in Orkney, testing commonly returns (good) values between 1.5 m³ to 5 m³ but still a lack of testers exists. Ventilation strategy does not always correspond to test result. General concerns on capability on islands – adverse weather conditions limit testing windows, increased testing equals more challenge overall.

Concern over move from sample to full testing - if asking for testing, can developers still apply random sampling. Topic to explore with verifiers?

Lack of key contractors. No easy access to testers/contractors compared to more central areas. Useful to survey capacity and establish opportunities with testing organisations and verifiers?

Noting experience of registered social landlords – sample testing has worked with known contractors. Offer mechanism to enable 'declaration without test' formally, with follow up within a defined period? Is there scope for revised guidance on testing in 'wilder' conditions and on – alternative means of managing risk through broader assurance of process?

• Ventilation and commissioning. Move to greater emphasis on commissioning welcomed provided that this can be done by local installers. Recognise importance for end users to be informed on how systems work. Recognise the need to make ventilation appropriate. For supply & extract (balanced ventilation approach), commissioning is standard. Concern if commissioning requires further 'experts' to be called in. Officials noted that provisions are as in current guidance, but now more 'up front'.
• Building Solutions - Heat pumps. View expressed both that heat pumps are not the ideal solution due to high capital cost and that heat pumps are well understood and already a common solution in the islands. Noted that heat pumps have higher ongoing costs (operation and maintenance). Concern that changes in regulation may push development toward heat pump solutions. Officials noted that is not the intent but also that designers may view otherwise as options are considered in the context of changes proposed for 2024.
• Building solutions - building fabric and insulation. Islands are generally 'ahead of the game' for fabric, for many years adopting and adapting good practice with timber kits. Issue is sometimes with supplier solutions keeping up with island expectations. Recent example cited – product manufacturers removing certified information for higher performance wall constructions due to concern over fire performance? Officials noted fabric push in standards in England as well should drive provision of solutions. Also Construction Scotland Innovation Centre facilitation of work on knowledge gaps is starting - to identify these and support action to fill them.
• Retrofit & energy efficiency improvement. Retrofit is an issue – lack of ventilation pre-assessment or oversight was raised as a theme. Retrofit insulation quality often poor - building warrants are needed for external wall insulation (current requirement) but not most small scale work. To avoid risks of overtight, moisture build up, retrofit work needs to be supervised and small scale improvement needs proper QA. Airtightness performance (discussed above) in newbuild is not the issue in the islands – ventilation for retrofit is. Whilst out of scope of this review, officials noted this was under discussion within government and the former as part of a pending wider review of ventilation in building regulations.
• Broader issues - whole life / embodied emissions. It was noted that action on embodied or whole life emissions from development was out of scope of the current review. There was some interest in knowing how this would cover unavoidable elements such as additional 'cost' of delivery of solutions to the islands. Officials noted work on the topic still at an early scoping stage but that they were also interested in this question around scope of assessment and how this may include/exclude aspects of process which designers can influence and those they cannot.

Assessment and analysis

35. It is recognised that changes of the type proposed by this review will have an impact on the cost of new buildings and new building work across Scotland. The threshold at which proposed developments becomes viable varies with the type and location of a development. Feedback from stakeholders does flag this as a risk of concern for development in island communities, as well as remote and rural communities. However, it is noted that similar risk exists in many other parts of Scotland, albeit to as differing profile – e.g. viability relating to land rather than construction costs.

36. The nature of building regulations and their application as national standards does mean that requirements are applied equally across all Scottish local authority areas. And there is a degree of flexibility in the system inherent in this structure and through the appointment of local authorities with local understanding as the verifying and enforcing authority for their own area.

37. As building regulations exist to serve the public interest by delivering new development which meet provisions set out under the Act (see paragraph 7 health, safety, welfare and convenience of persons; conservation of fuel and power; support sustainable development), it is difficult for regulation to set lesser provisions on a geographical basis, as this may simply result in a poorer outcome from new development. However, as some areas of regulations, such as those addressing climate change, continue to set increasingly challenging minimum standards, the need for flexibility in how standards are met becomes more important to deliver change equitably.

38. We consider it is reasonable to assert that the proposed changes to building regulations to improve energy and environmental performance will not have a disproportionate adverse effect on island communities. However, this would be an assertion in principle based upon the evidence provided by review research and subsequent discussions on the consultation proposals and it does have to be suitably qualified.

39. As noted in paragraph 31, there are established levels of additional challenge associated with development of the built environment in remote, rural and island communities. There are also a number of key themes identified from this assessment process which merit ongoing investigation and action if further disadvantage is to be avoided.

Positive observations

• Informed development on the islands already embraces a fabric first and construction quality approach due to environmental conditions and extremes of weather. This encourages a 'right first time' attitude.
• Island communities do push building specification on energy matters – familiarity with higher specification solutions is better, often use of closed panel timber frame, frequent application of heat pump solutions. Proposals offer a good mirror on the level of current challenge in that respect.
• For low infiltration buildings, common view that mechanical ventilation with heat recovery should be used - it works and is effective in more extreme environments. But cost is higher which means works often default to continuous mechanical extract.
• Little oil/gas heating in new developments - still some oil in very rural locations. Familiarity with electric solutions and use of heat pumps.

Neutral observations (not yet benefit or risk)

• Informed installers not generally a big issue, though accessible workforce is smaller, getting access to products can also be more of a challenge. Availability, delivery, increased cost are still challenges. Subsequent maintenance can often be more challenging in smaller communities due to remoteness.
• So far, able to train/upskill local workforce but supply and cost issues do arise. Some previous experience of drops in performance of systems due to unfamiliarity with products or solutions but awareness is now generally OK. Further change can, however, affect this.

Negative observations

• General concern – change that drives up cost does act as a disincentive to build. Not always clear where this is most keenly felt. Officials queried impact on delivery of numbers and variety of new work – some agreement so far on this as a risk. Positive observations on any additional action to embed evidence of further costs in any funding initiatives. When looking at project costs, to stay on budget, energy efficiency measures can often be the first 'saving'. Which is often the case everywhere? If mandated, how does this affect projects or small works on the islands?
• Extending airtightness testing may raise issues around programming and completion of newbuild as local testers are rare. Climate makes testing more challenging (more constant and higher wind speeds).

Officials noted that current national regime of sample testing still results in approximately 1 in 3 new dwellings being tested, with testing more likely in remote, rural and island areas due to a greater proportion of small or single building developments. This may both mitigate further risk and provide evidence of viable alternative solutions.

ICIA Outcomes and adjustment of proposals

40. The nature of building regulations is to impose change on existing practice and process. This is applied at a national level to address issues of national relevance affecting new development. Review is an opportunity to reinforce the challenges of delivering change but also note the flexibility that is intended to be inherent in the building standards system. And develop an onward focus on where change does need to better recognise context or local conditions.

41. The latter will be important for other ongoing work, in supply chain topics in particular, to recognise the challenges in island communities. This would include 2024 NBHS work where the islands may already be 'ahead of the curve' due to the absence of mains gas.

42. It is important to recognise that development on island communities is subject to a different set of risks and constraints compared to many other parts of Scotland. These relate mainly to the challenges arising from remoteness of location which lead to higher costs, more limited options/solutions and risks of disruption to projects.

43. Following assessment, there is no proposal to fundamentally alter the nature of proposals as the outcomes they seek to deliver are equally as important in island communities and in other communities. However the following actions are identified to moderate risks identified through the above process:

• Cost of development. On confirmation of proposals, contribute to a robust assessment of the cost of change arising from proposed changes to inform any review of funding regimes for public sector development in island communities.
• Access to specialist services. Recognise the continued challenge in accessing some specialist construction services and consider flexibility in approach in the application of standards to accommodate this. Initial example – airtightness testing of new buildings. Engage in dialogue with registering organisations to understand opportunities to build capacity in island communities.

Consider options for effective risk management when testing and commissioning buildings. For the former, consider how the risks from lack of registered testers and challenges of adverse climate can be managed whilst still supporting assurance of building performance

Use this further review to amend supporting guidance on building testing which is not yet amended and did not form part of consultation proposals.

• Onward engagement. Recognise the need for a more effective forum within which to raise issues arising from the local application of national standards. Identify options to enable effective representation from island communities and from remote and rural communities in any forums which discuss the onward implementation and further review of these standards.

Engage with islands local authorities on the challenges of verification and enforcement of building regulations as part of ongoing work to develop the verifier workforce and supporting frameworks.

Implementation and publication

44. Subject to the adjustments noted above, it is considered that the proposed changes can be progressed effectively without a disproportionate effect on island communities.

45. Engagement has identified that there is a need to support aspects of the development process for island communities. This will be developed as a theme in ongoing work with the construction sector on the implementation of the 2022 regulations and in development of any further proposal for change for 2024 and beyond.

ICIA completed by:

Vikki Bell

Steven Scott

Building Standards Division

8 April 2022

ICIA approved by

Stephen Garvin

Deputy Director

Building Standards Division

31 April 2022