Energy Efficiency Standard for Social Housing post-2020 (EESSH2): consultation analysis

2025 Review and Additional Factors in the 2032 Milestone

From 2025, it is proposed that any new energy efficiency measures should be installed on the principle of no detriment to air quality and, where necessary, additional measures should include provision for improving ventilation, and that provision should be included for the monitoring of the performance of proposed measures.

It is also proposed that, from 2025, any new energy efficiency measures should be installed on the principle of no detriment to the modelled environmental impact of a building. This principle is already a condition of EESSH 2020, however, it is proposed that this is strengthened with landlords asked to collect data on the modelled environmental impact of measures installed to improve energy efficiency. This will include any EPCs produced before and after installation and data from other SAP assessments carried out by landlords. This requirement would be supported by an improved reporting mechanism, with the period to 2025 used for monitoring and analysis purposes.

Views on the proposed content of the review

Question 3 - What are your views on the proposed content of the review:
(a) to assess progress towards meeting the new standard
(b) to consider the 2032 milestone in the context of technological developments
(c) to consider any additional requirements of the 2032 milestone regarding air quality and environmental impact?

(a) to assess progress towards meeting the new standard

Some respondents made a general statement of support for the content of the review to assess progress towards meeting the new standard, including support for the principle of assessing progress.

Some respondents, including local authorities and Housing Associations, noted their agreement that 2025 is an appropriate point for the standard to be reviewed. Specifically, it was reported that an equivalent approach has proved successful in monitoring progress towards EESSH1. It was also noted that the uncertainty regarding the future of the gas grid will make it difficult for many landlords to make investment decisions before 2025, and so a review at this time makes sense.

It was thought that a 2025 review will promote knowledge sharing and best practice and allow for mitigating action to be taken in the run up to the 2032 deadline. In relation to the sharing of best practice, it was proposed that the Scottish Government should work with the SHR to encourage RSLs to share learning about successful investment in property types that require exemptions. It was also noted that it would allow for any technological developments to be considered.

An alternative idea was that this review should be delayed until the UK Government has made announcements on hydrogen and the re-provisioning of the gas network. Others thought an earlier review is required, for example:

Given the need for substantial improvements to SAP modelling to ensure the model better represents the real-world situation, costs and outcomes - there should be reviews sooner than 2025.
Housing Association respondent

There was a wider concern that the milestone date is set up as an extension of EESSH1 rather than an obligation to make improvements between 2020 and 2025. It was felt that having a 2025 EPC target of C would be a catalyst for improvements and this would then allow and encourage RSLs to segment their building stock into phased investment towards the 2032 target.

Other comments on the timing of the review were that the inclusion of periodic reviews of progress to allow any emerging issues to be taken into account would be helpful. It was suggested that ongoing feedback after 2020 would also be useful as significant housing investment will take place between 2020 and 2025.

In terms of approaches to assessing progress, it was thought that there needs to be a clear and robust process for measuring progress and that:

• There should be a requirement for EPCs to be completed by a specified date. This would enable a benchmark to be set against which improvements can be measured.
• Using the percentage of housing across the sector that meets the standard and reporting it through the SHR would provide a good, high-level indicator of progress.
• Information should be made publicly available to allow the supply chain and potential funders the opportunity to actively 'pitch' for any works required.
• It is important to build independent formal evaluation into the design and management of all schemes. Where possible evaluation should include sample monitoring of actual behaviour and energy use.
• It will be important to not only monitor progress overall but also any variations, and to identify where additional support may be required.

Respondents also identified other areas which should be covered by the review:

• An assessment of the readiness levels of existing technologies which are currently immature.
• Looking at the supply chain and whether there is sufficient capacity to meet demand.
• Ensuring there are appropriate exemptions and abeyances, much like those used for the SHQS.

(b) to consider the 2032 milestone in the context of technological developments

Some respondents stated their support for the proposal to consider the 2032 milestone in the context of technological changes, with a number of respondents commenting on the impact emerging technologies are likely to have on achieving the milestone. There was also reference to the potential economies of scale that could be achieved in relation to some of the existing technologies, for example around air source heat pumps and solar PV.

To ensure opportunities are not missed, and as at Question 3a (above), it was proposed that emerging technologies and technological developments should be covered at the 2025 review or before. The potential opportunities within existing and new energy markets were also cited as a reason for an interim review.

Alternatively, it was thought that it is critical that information is shared as early as possible and that some form of continuous review from 2020 is required. This was seen as the only way that the rapid and ongoing developments in the industry, and the infrastructure's ability to deliver new technologies, can be evaluated effectively. Allowing established working groups and sub groups to continue their work was seen as a way of delivering this continuous review.

However, not all respondents were as optimistic about the impact new technologies may have:

….. building fabric improvements towards 2032 are likely to be very incremental and offer small to negligible improvements in performance… Significant technology-driven changes in energy, and particularly emissions, performance are more likely to arise through greater use of renewable and low carbon fuel supplies…..and from household consumer technologies, which could serve to increase or decrease demand according to the technology and how householders use it.
Academic respondent

In terms of what any review process should cover, ideas were:

• The deliverability of any emerging technologies. It was seen as important to consider costs and whether landlords are able to afford and make best use of them, especially in relation to traditional buildings.
• The embedded carbon emissions of those new technologies.
• Ensuring that any new technological solutions are taken into account in measures of performance and for meeting the standard. A Housing Association respondent reported that, based on their current experience, the issue is not a lack of innovation but an inability of the Reduced Data SAP (RdSAP) and EPC calculation to acknowledge the positive impact that a technological solution has achieved.
• Progress in systems, advice and guidance in guiding landlords as to how they can implement a long-term improvement plan for their properties.

In terms of what should be avoided, it was seen as important that some innovation is not stifled in favour of a pre-approved list of solutions which, if not fully reflective of the opportunities available, could result in an increased number of exemptions on the grounds of 'new technologies' before and after 2025.

Other factors that respondents wanted to be considered as part of the review were that:

• For some areas, the re-provisioning of the gas network will be the key technological development from which other opportunities may flow.
• Rural and island communities may not benefit from technological developments in the way that other areas might. Milestones that take account of the challenges of delivering new technologies in remote rural Scotland need to be reviewed, along with the carbon value of electricity generated in rural areas.

Finally, it was thought that the pace and scale of technological innovation means that while the 2032 target may seem sensible now, it may be rendered obsolete by technological advances:

There are likely to be new innovations emerging over the next 10 - 15 years which will contribute to addressing the fuel poverty and carbon consumptions issues…A rush to a 2032 target may seem sensible now, but the concept could be rendered obsolete if there are other technological approaches on the horizon.
Local Authority respondent

Conversely, it was thought that:

…. it would be unwise to rely on technological advancements to help us achieve targets that are set. HAs have already adopted an innovative approach with technology and in many cases, we are in advance of the private sector.
Housing Association respondent

(c) consider any additional requirements of the 2032 milestone regarding air quality and environmental impact

Some respondents stated their agreement with the review considering any additional requirements of the 2032 milestone. Others commented on the importance of addressing issues of air quality and environmental impact, for example because of the potential positive impact on health.

However, there was a concern that these two issues appear to have been conflated in terms of the target. It was suggested that improved air quality should be a standalone obligation, with environmental impact calculated using the Environmental Impact rating that is used to accompany the EPC 'Energy' rating.

Respondents also raised concerns about how the air quality element can be achieved in parallel with other work, particularly in relation to air tightness, to improve the energy efficiency of homes in the social rented sector. A Housing Association respondent reported that:

One of the adverse effects on social housing as a result of energy efficiency improvement works is the increased risk of condensation and mould growth.
Housing Association respondent

Widening the requirement to include not just air quality but condensation, mould growth and damage to building fabric was one proposal. Another was that:

Tenant education will need to be part of this process to ensure behaviours are not detrimental to air quality (e.g. drying clothes indoors, blocking vents).
Housing Association respondent

However, others commented that air quality and environmental impact are not a first consideration for tenants and that some people would regard increased ventilation as having a negative impact on heating costs. There was also a view that no amount of education will change the behaviour of some tenants.

Others had concerns about how environmental impact will be measured. For example, that electricity generated with significantly lower carbon would need to be recognised in a future methodology for the calculation of carbon content. An energy-related private sector respondent raised issues about the assessment used for EPCs: assessments are inconsistent and can vary in quality, that although the price of fuel is taken into account this does not reflect the energy performance of buildings, and that specified energy measures have varied performance in situ compared to the modelled performance.

Proposed topics or issues for the review to cover were:

• The implications of any UK Government announcements on hydrogen and re-provisioning of the gas network.
• Whether a lower target of EPC C for detached houses and houses reliant on specific fuel types is still appropriate.
• The environmental impact of carrying out works to properties in rural, remote and island communities.
• The role of Low Emission Zones and other planning matters, including green infrastructure, in mitigating any effects on indoor air quality.

In relation to the timescale, there was a proposal that the air quality requirement should be included in the current targets for the 2032 milestone. An associated comment was that introducing the requirement in 2025 could mean that improvements carried out until 2025 may have an effect of air quality and an environmental impact that RSLs will need to return to address at a later date. A similar perspective was that the criteria around air quality should be introduced as soon as possible to avoid any unnecessary reworking of stock and further costs.

Respondents also raised issues that they felt needed to be addressed if the target is to be met. These were:

• Lack of adequate ventilation being installed in RdSAP insulation schemes.
• The need for cost effective and high-quality mechanical ventilation systems.
• The impact on EPC ratings of fitting positive pressure ventilation.
• Increased airtightness in new build leading to overheating during hot summers, and the environmental impact of having to use cooling systems.
• The administrative burden and resource constraints in the social housing sector.

Respondents also highlighted other ways in which they thought social landlords could be supported or encouraged to address issues around air quality or environmental impact. Proposals were:

• Making changes to Building Standards to support retrofit and new build. If required, installation standards for both installers and materials should be updated or implemented to ensure an energy efficiency measure will not have a negative impact on air quality.
• Ensuring that Building Standards take account of local air quality targets.
• Looking at and making available information on any materials, such as heavy metals used in insulation materials, which are found to cause air quality issues. Bodies such as the British Research Establishment, British Standards Institute or British Board of Agrément could take on a role in ensuring products do not cause harm.
• Providing guidance on air quality monitoring. The approach should be robust and affordable, with in situ monitoring used rather than modelling tenant behaviour. A Local Authority respondent reported that they are currently piloting the collection of temperature and humidity data for both new and existing housing stock. They sought clarification on whether this data would be required for all housing stock or only for a representative sample of property and fuel types.
• Providing guidance on how landlords should monitor environmental impact.
• Clarifying what the Scottish Government will consider as good practice in relation to engaging with tenants.
• Providing financial support for the installation of ventilation measures if required as part of a retrofit package to meet the standard.

The timing of the review

Question 4 - In terms of the timing of the review, what are your views on:
(a) the proposal to review the new standard in 2025?
(b) the proposal to review the standard earlier if UKG has made announcements on hydrogen and the re-provisioning of the gas network?

(a) the proposal to review the new standard in 2025

A majority of those commenting noted their agreement with the proposal to review the new standard in 2025. Reasons given were that it would allow the Scottish Government to assess progress to date and would allow for any changes to be made that would help with achieving the 2032 milestone.

As covered at Question 4b, it was also noted that the timescales would be in line with the UK Government's dates for announcements on hydrogen and the re-provisioning of the gas grid. It was seen as important to consider the implications of these announcements as part of the review. One perspective was that the full review should be held earlier if the UK Government has made significant announcements on hydrogen and the re-provisioning of the gas network.

In terms of other agendas to be taken into account, it was thought that:

It would also be advisable to tie this together with the interim review stages for the Climate Change Bill target such that any additional or relaxation of emission reduction targets can be factored in.
Housing Association respondent

Other comments were that there should be interim reviews in the run up to the 2025 review and, following on from that, in the run up to the 2032 milestone. Reasons given were that this would allow for developments within what is a fast-moving environment to be taken into account. On a similar theme, it was suggested that adopting a process of regular monitoring, such as publishing annual returns, would help advance progress. Providing a road map that highlights the expectations landlords will be required to meet was also proposed.

Other respondents thought that the review should take place earlier because of concerns that neither the proposed standard, nor other Scottish Government policy, creates a strong enough driver for social housing providers and that:

…5 years after commencement seems too long if Local Authorities are to meet the standard by 2032.
Local Authority respondent

An alternative perspective was that no review is required. A review in 2025 could undermine landlords' investment strategies and delivery plans and the EESSH2 parameters should therefore be clearly defined from the outset.

Finally, respondents raised concerns about lack of certainty or information. For example, whether the target will change again creating consequences for landlord's financial and investment planning. It was also seen as difficult to comment on the timescales for a review without knowing what that review would cover.

(b) the proposal to review the standard earlier if UKG has made announcements on hydrogen and the re-provisioning of the gas network

Some respondents noted their support for this proposal, making further comments emphasising the importance of the UK Government's announcement. This was in relation to the significant effect any changes would have on energy provision and energy efficiency more generally, and on meeting the EESSH2 target in particular.

One proposal was that:

As the re-provisioning of the gas network appears to be a key support element to the delivery of EESSH2 it should be subject to annual updates or reviews.
Housing Association respondent

An alternative proposal was that the timing of the review, be that earlier or later than 2025, should be influenced by the timing and content of any UK Government announcements:

The decision to bring the review forward should be considered in the case of an announcement from the UK Government but would ultimately depend on the nature of such an announcement.
Professional or representative body

There were suggestions for preparatory or additional work the Scottish Government could be doing in advance of any UK Government announcement. These were carrying out an impact study on changing to hydrogen, and looking at the impact on the network and boiler systems as well as the impact on costs for householders and landlords.

Other comments reflected themes raised at Question 4a, such as the need for the impact of wider technological advances to be considered, and that energy supply is only one of several important issues to be kept under review.

A small number of Housing Association respondents did not agree with the proposal. Reviewing the standard before 2025 was described as unhelpful, and it was felt that:

Any earlier review would have an even greater detrimental effect on RSLs ability to plan and manage income/expenditure effectively.
Housing Association respondent

There was an associated concern that revising targets could be counter-productive, and that sticking with the EPC C target by 2025 would help landlords avoid a temptation to 'wait and see' what comes out of a UK Government announcement.

Finally, it was noted that this discussion of review timescales highlights the complex and interrelated policy initiatives over the next few years, and that this means it is too early to settle on goals for 2032 and 2040.

The further requirements proposed for the EESSH 2032 target

Question 5 - Do you have any other comments on the further requirements proposed for the EESSH 2032 target?

The further requirements proposed in the consultation paper are covered in turn below.

That the new standard is to allow for small variations i.e. ±1 SAP point in measuring progress, to recognise potential inconsistencies in reporting

A small number of respondents noted their agreement with this requirement. One Housing Association respondent reported their own experience that SAP ratings can vary from assessment to assessment. As per Question 1, there were also wider concerns about the overall approach to assessing for EPCs and the inconsistency of EPC reports and assessors. There was a view that, whilst the SAP is a valuable tool for energy assessment, the number of variables involved means it makes sense to allow for small variations.

A query was raised as to whether the measure of compliance will be EPC B or C or an SAP score.

The installation of measures must allow sufficient time for engagement with tenants to ensure best use is made of measures

A small number of respondents noted their agreement with this requirement. Reasons given were that user engagement and education are essential factors in combating fuel poverty, and that providing advice on heating controls and other energy efficient behaviours as part of an holistic energy advice service should be integral to energy efficiency work going forward.

Other comments were that guidelines would be helpful, such as in relation to how the requirement will be monitored. It was also proposed that any funding arrangements should reflect the additional time required for a successful engagement programme.

One concern raised was that smaller Housing Associations may struggle to find staff resources within their property sections to dedicate to the required level of tenant engagement.

Landlords must factor in the maintenance of measures and allow for deterioration over time

A small number of respondents noted their agreement with this requirement and there was a comment that:

…maintenance of measures to ensure continued effectiveness could easily be an important but overlooked area of work.
Housing Association respondent

Further comments were that the schedule of reasonable measures assumes that all storage heating is problematic but that it can be appropriate if there is a lower cost, a green or low carbon tariff, or if it is connected to demand side response equipment that charges heaters linked to a grid balancing service or local renewable energy scheme.

Proposals for how this requirement might be taken forward were:

• Extending the requirement to ensure that end of life replacement is also factored in.
• Considering the availability of skilled local approved contractors. One Housing Association reported their experience of there being only one engineer in Scotland who could service a particular system that was under warranty.
• Considering additional funding.

Local authorities must support the EESSH2 milestone as part of their Local Authority energy efficiency strategy. This will include appropriate use of district heating schemes.

A small number of respondents noted their agreement with this requirement. A further comment was that:

These strategies will need to include full costs for the planned improvements, including maintenance, and allowing for deterioration over time. In this context, we would reiterate the importance of sustaining funding streams to support the necessary works.
Energy-related private sector respondent

Scottish Government proposals for introducing a statutory requirement for Local Heat and Energy Efficiency Strategies (LHEES) were noted. It was advised that further consideration be given to the extent to which the statutory regime related to social housing domestic energy efficiency can be integrated effectively with multi non-domestic asset investment programmes that include private owners and businesses.

There was a query about the district heating element of the requirement and whether stock transfer local authorities, or those who do not own the greater proportion of stock in their area, will have the ability to influence the appropriate use of district heating schemes as a means to achieve the EESSH2 milestone.

Finally, it was thought that information, advice and guidance will be required. It was also reported that retrofitting can be both challenging and costly, particularly in areas where the type and distribution of stock creates additional challenges. There was an associated query as to whether there would be any form of financial help to support the delivery of this element.