Climate Change Plan: third report on proposals and policies - written statement

Buildings

Services

Economy, Jobs and Fair Work Committee

1. The Committee noted the practical measures planned by the Scottish Government, such as the public sector energy efficiency procurement framework, but believes that behaviour change is also key to achieving the targets. The Committee asked the Scottish Government to report back on how behaviour change considerations were used to inform the selection of policies, proposals and delivery routes in the services sector. (157)

• The Scottish Government's Resource Efficient Scotland (RES) programme provides support to businesses which is focused on influencing behaviours. The RES Advice and Support Service for Small and Medium Sized Enterprises (SMEs) provides free advice on all aspects of resource efficiency - energy, waste, water, materials - as well as bespoke reports on actions individual businesses can take. Other RES behaviour-change activity includes:
  • Green Champions training - training for individuals to be able to influence behaviour change within their organisation.
  • Resource Efficiency Pledge and pledge ambassadors - where businesses pledge to make changes.
  • Green Business Network of businesses willing to share their experience of resource efficiency action, to encourage others.
  • Events, webinars, case studies, regional campaigns.
• The 2 phases of SEEP pilots now underway address behaviour change and the Scottish Government will also build behaviour change into the transition programme. The provision of advice and information will evolve as SEEP evolves, and this will help drive behaviour change in future.

2. The Committee asked for more detail regarding how the work to transition from gas heating to low carbon heating between 2025 and 2032 will progress. (140)

• SEEP will focus to the mid-2020s on reducing energy demand in all buildings across Scotland - establishing solutions for switching heating supplies from high to lower carbon or renewable sources for properties off the mains gas grid.
• SEEP is also developing a new framework for Local Heat & Energy Efficiency Strategies (LHEES), creating a strategy to guide investment in energy efficiency and heat decarbonisation at a local level. Led by local authorities, working closely with their communities, this will set out a long term prospectus for investment in new energy efficiency, district heating, and other heat decarbonisation programmes. It will provide opportunities for communities to not only develop their own energy projects, but also to have their voices heard in the planning processes for energy developments.
• We expect the UK Government to have taken these decisions on the long-term direction of heat decarbonisation by the early 2020s. We will continue to work closely with the UK Department for Business Energy and Industrial Strategy, urging them to come to a decision as rapidly as possible - and to carefully consider Scottish circumstances and the aims of this Strategy as they take decisions on the future of the gas network, and the overall mix of heat decarbonisation in reserved areas.
• The Scottish Government will thereafter develop and identify the best approach to the long-term decarbonisation of the heat supply in a future Plan, and will adjust the actions under the Energy Strategy accordingly.

3. The Committee raised concerns regarding the 2025-2032 window for transforming the energy supply to mainly low-carbon sources in the services sector. The Committee expressed the view that this timescale was unrealistic and urged the Scottish Government to consider beginning this process sooner. (159)

• Emissions will be reduced through continued deployment of low carbon heat in off-gas properties and other low regrets options on-gas over the period of the Plan. From 2025, the pace of emission reduction increases as we begin to supply an increasing proportion of heat to on-gas buildings using lower carbon fuels, where they are a low or no regrets option. (The UK CCC describes low regrets options as measures to increase energy efficiency and decarbonise heat that are sensible regardless of which long-term options are chosen.) This is in line with UK Committee on Climate Change advice that 'low regrets' decarbonisation technologies should be deployed while the UK Government gathers evidence on options for wider heat infrastructure, such as decarbonisation of the gas grid. To do otherwise would result in far greater risk of significant investment into stranded assets.

Residential

Local Government and Communities Committee

1. The Committee welcomed the Scottish Government's ambitious targets in the residential sector but noted that achieving this will require consumer behavioural change, energy advice and information and potentially regulation in order to achieve these targets. (225)

• Behaviour change is already at the heart of our energy efficiency programmes and will continue to be so as SEEP is developed and rolled out. In addition to our delivery programmes, the Scottish Government also funds Home Energy Scotland and Resource Efficient Scotland who provide free, impartial advice to property owners including on energy saving behaviours. Advice is also embedded into our domestic area-based schemes to help households maximise the benefits of energy efficiency improvements, for example by adjusting heating systems.
• As we develop SEEP, the Scottish Government continues to review how we can best act to influence behaviours. To support this we have undertaken a series of ISM workshops examining how to:
  • create demand for energy efficiency in housing
  • encourage uptake of loans (for energy efficiency improvements)
  • engage householders with their heating controls.
• The findings of these workshops are helping to inform the development of SEEP, which will be set out in more detail in a routemap later in 2018. As set out in the SEEP consultation of 2017, SEEP will put in place regulation and standards providing long-term certainty and making it the norm to invest in energy efficiency.

2. The Committee requested an update on the current status of the Scottish Government's work regarding the methodology the current EPC system. (149)

• The Scottish Government are reviewing the methodology of the current Energy Performance Certificate (EPC) system and its application as we develop and rollout SEEP. Further details on SEEP, including our long-term ambition and interim milestones, will be set out in a routemap for the programme in May 2018.

3. The Committee was supportive of the area-based approach taken to Homes Energy Efficiency Programmes for Scotland) (HEEPS) but was concerned that there was a lack of information on how the programme will be funded post-2021. The Committee requested further information in the final Plan. (172)

• In the Programme for Government 2016 - 2017 we committed to investing £500 million in energy efficiency improvements over four years, helping to reduce greenhouse gas emissions and tackle fuel poverty. SEEP is a long-term programme and will be funded from a mix of public and private sources. As we set out in the Infrastructure Investment Plan we will continue to provide grant funding to help improve the homes of those vulnerable to fuel poverty, and will seek opportunities to create low-cost loan facilities to help those who can afford to invest in energy efficiency spread the cost of doing so.
• We will publish a routemap for SEEP in 2018, setting out our long-term ambitions for the programme and the milestones along the way. This will include details on how our existing programmes, including HEEPS: Area Based Schemes, will be transitioned to SEEP. Funding decisions for delivery post-2021 are for the next administration and Parliament, and will be decided following the Scottish Parliament elections in 2021.

4. The Committee sought an explanation as to why progress regarding the transfer of regulation in the private residential sector from a proposal to a policy, between RPP2 and RPP3 had been slow. However, it welcomed the Minister's commitment to consulting on the private rented sector in March 2017 and to provide a timeline for consulting on the owner-occupied sector.

• The previous administration took the decision to delay consultation on minimum energy efficiency standards due to unexpected UK Government changes to the energy efficiency funding landscape, which removed Green Deal loan finance and reduced the scale of grant funding available.
• In 2017 we consulted on minimum energy efficiency and condition standards for homes in the private rented sector. We will confirm our proposals for minimum energy efficiency standards in the private rented sector as part of the SEEP routemap publication in 2018. The Programme for Government confirmed our commitment to seek the views of owner‑occupiers on improving the energy efficiency of their homes, including the role of standards and the use of financial and fiscal incentives. More information will be set out in the SEEP routemap.

5. The Committee highlighted that the Scottish Government may wish to consider the views expressed in the section of Local Government and Communities Committee report entitled "Priorities for SEEP" during the development of SEEP. (144)

• The Scottish Government is considering the recommendations made by Parliament and stakeholders (via the 2017 SEEP Consultation) as the programme is designed and developed.

6. The Committee recommended that further details of the implementation of the roll out of smart meters be included in the final Plan. (178)

• The Scottish Government supports the aims of the smart meter roll-out; however, we continue to press the UK Government to ensure that the programme is delivered to the greatest number of Scottish consumers, at the lowest possible cost, whilst enhancing the benefits to the most vulnerable in our society and those at risk of fuel poverty.

Economy, Jobs and Fair Work Committee

1. The Committee recommended that the Scottish Government reconsider its target to make improvements to the fabric of Scotland's domestic buildings resulting in a 6% reduction in their heat demand by 2032. (109)

• Additional modelling has been undertaken in order to finalise the Plan, including modelling a broader set of energy efficiency measures. As such, in the final Plan energy efficiency improvements to the fabric of Scotland's domestic buildings will result in a 15% reduction in heat demand by 2032.

2. The Committee noted the potential barriers to developing district heating projects, including housing tenure, persuading people to sign up, the need for sufficient resources for such projects to proceed and the need to ensure that consumers are protected. The Committee asked the Scottish Government to report back to it on what steps are being taken to address these issues. (141)

• The Scottish Government published Scotland's Energy Efficiency Programme: Second Consultation on Local Heat & Energy Efficiency Strategies, and Regulation of District and Communal Heating^[14] in November 2017. This follows a high level policy scoping consultation paper published in January 2017 as part of the broader Scotland's Energy Efficiency Programme (SEEP). This paper was developed on the back of advice from a Short Life Working Group on Heat Regulation established by the Minister for Business, Innovation & Energy in September 2017.
• The Scottish Government recognises that a central element of developing a coordinated programme for energy efficiency and heat decarbonisation through SEEP is to consider the role that local strategies could play in helping coordinate local delivery programmes for SEEP. The Scottish Government is proposing a statutory strategy to guide investment in energy efficiency and heat decarbonisation over a 20 year period at a local level. Prior to commencement of any statute, local authorities would be offered capacity and support to develop LHEES.
• To support appropriately sited, low carbon affordable district heating developing in a strategic manner with accelerated delivery, this consultation also proposed the creation of a new regulatory framework for the development and operation of district heating. The aim is to deliver a framework where district and communal heating serves its customers well, delivers affordable low carbon heat, where there is increased confidence in the investment in new and expanded district heating and wherever possible Scotland secures the economic opportunity presented from these schemes. The consultation closed on 20 February 2018.
• More broadly, SEEP aims to radically improve the energy efficiency of Scotland's homes, and buildings in the commercial, public and industrial sectors. SEEP will focus to the mid-2020s on reducing energy demand in all buildings across Scotland - establishing solutions for switching heating supplies from high to lower carbon or renewable sources for properties off the mains gas grid. It will also encourage appropriately-sited low carbon district heating, where that is the most appropriate 'low regrets' heat decarbonisation technology. SEEP will build on existing successful programmes. It will build upon a transition programme which offers local authorities incrementally greater opportunities to deliver integrated energy efficiency projects.

3. The Committee noted the concerns expressed in relation to non-domestic rates for district heating and changes to non-domestic rates for renewables. The Committee will examine the issue of non-domestic rates in more detail during its work on the draft Energy Strategy. (143)

• The Scottish Government is driving a number of improvements to non-domestic rates, following the external Barclay review that concluded in 2017, with our approach continuing to be informed by wide-ranging dialogue with energy sector stakeholders. Support measures include a 50 per cent rates relief for district heating schemes in place since April 2017, relief of up to 100 per cent for community schemes in place since April 2016, and a new 60 per cent relief for hydropower schemes (with rateable value up to £5 million) commencing April 2018. As per our implementation plan following the Barclay review, a fast-tracked review of plant and machinery rateability for hydropower will also commence shortly, with further detail on a wider plant and machinery review covering district heating and wider renewables to follow.

4. The Committee noted that appropriate resources are required to deliver the planned changes and asked the Government for further details on the proposed budget, including incentive-based schemes, grants and loans. (114)

• As we set out in the Infrastructure Investment Plan, we will continue to provide grant funding to help improve the homes of those vulnerable to fuel poverty, and will seek opportunities to create low-cost loan facilities to help those who can afford to invest in energy efficiency spread the cost of doing so. We will also bring forward regulations and standards, as appropriate and necessary, to make it the norm to invest in energy efficiency.
• The Programme for Government 2016- 2017 committed to investing £500 million in energy efficiency improvements over four years, helping to reduce greenhouse gas emissions and tackle fuel poverty. Funding decisions for delivery post-2021 are for the next administration and Parliament and will be decided following the Scottish Parliament elections in 2021.

5. The Committee recommended that the Scottish Government produce a detailed plan on how the retro-fitting of domestic buildings will be carried out and resourced, including owner-occupied and the private rented sectors. (110)

• We will publish a routemap for Scotland's Energy Efficiency Programme in 2018, setting out our long-term ambition for the Programme, as well as interim milestones.

6. The Committee noted the support being given to Home Energy Scotland and the roll out of smart meters but asked for further detail in the Plan regarding other actions planned to address the behavioural change required to reduce heat demand. (113)

• Home Energy Scotland provides national advice and support through a network of regional advice centres which, among their services, provide advice on how to keep reduce their energy costs, provide behaviour change advice on how to use their home efficiently and encourage the uptake of low carbon heat options. The Scottish Government also funds HEEPS low cost loans scheme open to individuals and businesses. This supports and encourages the uptake and installation of energy efficiency measures and low carbon heating systems to improve the energy efficiency of, and reduce carbon emissions from homes and buildings.
• In addition, the 2 phases of SEEP (Scottish Energy Efficiency Programme) pilots now underway address behaviour change, and the Scottish Government will also build behaviour change into the transition programme. The provision of advice and information will evolve as SEEP evolves, and this will help drive behaviour change in future.

Local Government and Communities Committee and Economy, Jobs and Fair Work Committee

1. Both Committees requested further information regarding the transformation of Scotland's heating supply from gas to low carbon sources and noted concerns regarding the short timescale between 2025-2032 for this change. The Committees however noted that evolving technologies to deliver this change as well as the reliance on UK Government policy decisions explains to some extent this planned intense period of change. ( EJFW 139, LGC 210)

• Additional modelling has been undertaken in order to finalise the Plan, including incorporating new data, amending delivery assumptions in line with advice received from stakeholders, the Committee on Climate Change and Parliament. As such, the final Plan requires 35% of domestic buildings' heat to be supplied from low carbon sources by 2032, compared to 80% in the draft Plan.
• We are consulting on proposals for local authority-led Local Heat and Energy Efficiency Strategies, which will be a mechanism to identify the most appropriate means for decarbonising the heat supply across local authority areas. In addition, once SEEP is fully deployed from 2020, it will help to decarbonise the heat supply to off-gas buildings and look for opportunities to deploy low-regret low-carbon heating options where they make socio-economic sense in on-gas areas.
• We will continue to work with the UK Government on options for the future decarbonisation of the mains gas network. Once UK Government decisions have been taken, SEEP will be reviewed to consider its role in supporting delivery.