Heat in Buildings Bill consultation: island communities impact assessment

4. The ICIA (Section 8 Assessment)

4.1 The Islands (Scotland) Act 2018 requires an ICIA to:

• 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.

4.2 The following sets out the key issues in this impact assessment and the mitigations in place.

4.2.1 Issue - Potential for higher installation and operational costs for low and heating systems, recognising impact of accommodation constraints, weather and travel disruption) and availability of appropriate funding and finance which takes account of these challenges

4.2.2 Key mitigation -Many of our existing Scottish Government Heat in Buildings Delivery Programmes such as Warmer Homes Scotland, Area Based Schemes, Home Energy Scotland Loans, and CARES provide advice and support to island households and communities.

4.2.3 We also recognise that the costs of delivering energy efficiency measures are higher in rural and island areas. A rural uplift included in the HES grant of £1,500 applies to both the heat pump and energy efficiency grants. This is on top of funding for heat pumps up to £7,500 and for energy efficiency improvements – up to 75% of the combined cost of the improvements and up to the maximum grant amount of £7,500. This uplift increases the heat pump grant flat rate and the maximum limit of the energy efficiency grant to £9,000. An additional £7,500 of funding is available as an optional interest free loan for both heat pumps and energy efficiency measures.

4.2.4 We will recognise the additional time taken to develop projects in islands settings and ensure that this is given consideration in project and financial planning

4.2.5 Issue - Higher heating costs and high levels of fuel poverty

4.2.6 Key mitigation - The Scottish Government continues to believe that better energy efficiency standards in homes can save energy and reduce bills while making homes warmer and more comfortable. Improving the energy efficiency of our housing stock remains a huge priority for Scottish ministers, which is why our national fuel poverty programmes will continue to support better insulation and other improvements to homes in, or at risk of, fuel poverty.

4.2.7 As part of this consultation, we will engage with organisations representing consumers in or at risk of fuel poverty and feed these findings into the design process for the bill. This will be guided by the 8 principles outlined within the Heat in Buildings Strategy.

4.2.8 We have established a statutory Scottish Fuel Poverty Advisory Panel to undertake the statutory duties to monitor, advise on and challenge our progress on ending fuel poverty, and to advise on the impacts of actions by others on fuel poverty and extreme fuel poverty across Scotland.

4.2.9 We will ensure ongoing regard for The National Islands Plan (Objective 5 - to reduce levels of fuel poverty; and Objective 9 - work towards creating net zero emission islands and providing global climate change leadership).

4.2.10 As set out in the Strategy we will work with Consumer Scotland and a range of Scottish consumer representative organisations to ensure that issues of consumer detriment are identified and addressed, focussing on consumer understanding, accessibility, costs, redress, and support for vulnerable consumers.

4.2.11 Issue - Whole house retrofit and the suitability of standard energy efficiency measures and requirements for traditionally constructed buildings

4.2.12 Key mitigation - We know that these properties will face specific challenges in meeting the new Standard, such as the need for specialist building assessment, more specialised installation skills and the use of specific materials. We are proposing to use variations to provide flexibility to reflect individual circumstances, and this will include traditional and protected buildings. These may include one or a mix of options:

• Varying the minimum energy efficiency requirement, which would mean that such buildings are not required to install measures that would have a negative effect on the building (or its occupants);
• Giving the property owner more time to allow the building to be assessed and necessary works agreed, or to secure suitable installers or products;
• Giving the property owner more time where property owners cannot secure the necessary permissions or consents to carry out the necessary works.

4.2.13 Issue - Availability of the required level of skilled supply chain for installation, and maintenance for clean heat.

4.2.14 Key mitigation - We published a 'Heat in Buildings Supply Chain Delivery Plan' which provides an overview of Scotland's heating and building improvement sector, and provides background to the challenges and opportunities of developing the supply chain for Green Heat.

4.2.15 Issue - Consideration of local infrastructure in the roll out of clean heating including availability of national electricity grid and resilience.

4.2.16 Key mitigation - Local Energy Scotland manages the Community and Renewable Energy Scheme (CARES), which helps communities to engage with and benefit from the energy transition to net zero emissions. It provides advice and support – including funding – to communities across Scotland, looking to develop renewable energy, heat decarbonisation and energy efficiency projects.

4.2.17 Issue - Ongoing community engagement

4.2.18 Key mitigation - As part of the consultation process we will work with stakeholders in island communities to ensure that feed in is as widespread as possible. The findings from this will then we fed into the design process for the final Bill.

Supporting positive impacts

4.3 The mitigating actions outlined above will not only help address identified issues and challenges, but enhance the positive impacts heat decarbonisation will bring to islands communities including the following:

4.3.1 Abundant renewable energy resources (ability to generate heat locally) - Through CARES we will continue to support and champion the opportunities for communities to engage with heat decarbonisation project models

4.3.2 Opportunities for engaged and motivated communities to be part of the heat transition - The Energy Strategy & Just Transition Plan (a draft version of which was consulted on from January to May 2023) considers how, for example, the islands' abundant renewable energy resources can further contribute to meeting Scotland's climate commitments whilst supporting strong local economies, and addressing existing social and economic inequality

4.3.3 Enhanced island community engagement and sense of community - We will continue to support Carbon Neutral Islands.

4.3.4 Opportunities for more niche technologies (such as water source heat pumps and heat networks for small communities) - Overall we recognise some properties may be more constrained in terms of technology options available, limited by location and property type, proximity to the gas network, impact on the fabric of historic buildings, space constraints, and capacity of the electricity grid. Such considerations are factored into the proposed variances and abeyances within the consultation.

4.3.5 Opportunities for the local supply chain & Harness the opportunity for development of skills and jobs within island communities to deliver change - In 2022 we published a Heat in Buildings Supply Chain Delivery Plan which provides an overview of Scotland's heating and building improvement sector, and provides background to the challenges and opportunities of developing the supply chain for Green Heat.

4.3.6 Opportunities to promote renewable tourism and local business - We will work with the Scottish Government Islands Team to ensure that heat decarbonisation projects are linked in with opportunities to promote local business and projects as part wider tourism strategies and plans.

4.3.7 Promoting resilience in islands building stock (by improving the fabric) for future generations, and Opportunities for increased thermal comfort and health. - The proposals set out in this consultation to improve the energy efficiency of privately owned homes mean that households will use less energy, potentially reduce their bills, and help to cut greenhouse gas emissions. A good standard of energy efficiency also helps the performance of many clean heating systems, such as heat pumps.

4.3.8 Our proposed approach to non-domestic building stock provides a transparent approach, giving non-domestic consumers more flexibility to choose the best way to reduce emissions depending on their particular circumstances, reflecting the diversity within the non-domestic building stock

4.3.9 Protection of the unique natural environment of Scotland's islands and rural communities through climate change mitigation - We will feed in the outlook of island communities into the proposals set out in this consultation in order to achieve our ambition to remove emissions from the way we heat our homes and buildings.

Conclusion

4.4 Prior to publication of this consultation, previous work to assess the impacts of the Heat in Buildings Strategy was reassessed to ensure its continued relevance to these proposals. The material gathered for the Heat in Buildings Strategy includes public consultation and continuous engagement with key stakeholders including in the Heat Decarbonisation External Advisory Group.

4.5 Desktop evidence gathering, consultation with island communities, local authorities and other relevant stakeholders has provided an understanding of the unique island issues in relation to the proposals

4.6 This ICIA has been undertaken to assess the impacts of proposals for inclusion into the Heat in Buildings Bill. The context of the bill itself will be shaped by the findings of this consultation and a further ICIA will be undertaken to assess the impacts of the specific policies for inclusion in the final bill following the input of findings from this consultation.