Energy Efficient Scotland development: consultation analysis

Executive Summary

Background

This summary sets out key findings from the analysis of responses to ‘Energy Efficient Scotland: consultation on further development of the programme’. The consultation opened on 26 March 2019 and closed on 17 June 2019.

The consultation paper (available at: https://consult.gov.scot/better-homes-division/energy-efficient/) explains that the Energy Efficient Scotland Route Map published in May 2018 set out the Scottish Government’s overall objective that all homes should achieve a standard of Energy Performance Certificate (EPC) Band C by 2040. The present consultation seeks to gather evidence which could support an acceleration of that schedule, bringing the target for all homes to achieve EPC Band C forward to 2030. It also explores issues associated with standards in the Private Rented Sector beyond 2025, considers recommendations made by a Short Life Working Group for quality assurance and consumer protection in relation to Energy Efficient Scotland, and seeks views on how the growth of heat networks in Scotland can be accelerated.

In total 115 consultation responses were received, of which 75 were from groups or organisations and 40 from individual members of the public. In addition to the main consultation, the Scottish Government held two consultation events, one in Stirling, the other in Inverness.

Pace of delivery

The first set of questions in the consultation sought to gather evidence which could support a change to the Route Map’s proposed timeframe, accelerating delivery of standards in an achievable and realistic way.

Mandatory action for owner occupiers

A majority of respondents - 72% of those who answered the question - thought that, with regards to achieving an accelerated delivery of the standards proposed, mandatory action for owner occupiers would be required, while 28% thought it would not. Some respondents who did think that mandatory action would be required in order to achieve accelerated delivery suggested that owner occupiers are otherwise unlikely to prioritise spending on energy efficiency measures, especially if costs are high and payback is not clear. It was argued that a clear policy signal for future mandatory action will be required, both to encourage owners to act and to stimulate the supply chain. Respondents from a wide range of respondent types referred to the need to provide home owners with incentives in order to encourage compliance.

Common arguments put forward by respondents who did not think mandatory reaction would be required to achieve accelerated delivery was that there should be no mandatory action in the owner occupied sector, that owner occupiers may not be able to afford the necessary measures, and that they have the right to choose what is done with their property.

Trigger points

A majority of respondents who commented considered point of sale to be an appropriate trigger point at which to require energy efficiency improvements to be made. Some of these respondents made a distinction between sale and purchase, suggesting that any necessary work could be carried by either vendor or buyer.

However, several respondents noted that the expected rate of turnover means that many properties will not change hands before 2040. As a result, it was suggested that a trigger only at point of sale would not produce sufficient energy efficiency improvements to allow targets to be met and would leave a large number of properties to be improved at a backstop date, meaning other triggers would also be required. 

After point of sale, renovations or major renovations were the trigger point suggested most frequently by respondents across a broad range of respondent types, with the planning and building warrant processes put forward as providing opportunities for a minimum energy efficiency standard to be required.

A number of additional trigger points were also proposed – the most frequent suggestion being when a boiler or heating system is replaced.

When mandatory action should be introduced in the owner occupied sector

Opinion was evenly divided between those who thought that mandatory standards in the owner occupied sector should be introduced before 2030 and those who thought they should be introduced after 2030 - at 39% in each case - while 21% considered 2030 to be the right date.

Mandatory energy efficiency targets should be introduced in the owner-occupied sector before 2030: Some respondents taking this view pointed to the urgency of addressing climate change or simply stated an opinion that mandatory action should be introduced as soon as possible. It was argued that a strong signal of an intent to mandate was necessary as a driver for action, giving owners confidence that energy efficiency measures are a positive investment.

Mandatory energy efficiency targets should be introduced in the owner-occupied sector after 2030: Respondents argued that it is an owner’s right to choose how to maintain their property free from government interference, that the target is unachievable for many properties, or raised issues concerning affordability.

Mandatory energy efficiency targets should be introduced in the owner-occupied sector in 2030: Some respondents who considered 2030 to be the right time to introduce mandatory targets suggested this to be sensible, or to allow owners 10 years to achieve the required standard. Waiting until 2030 before taking mandatory action was suggested to allow sufficient opportunity for the supply chain to develop, while an earlier date might lead to an overheated market or increased costs.

Quality and supply chain implications

A majority who answered the question (55%) thought that from a supply chain perspective, bringing forward the timescales for the Programme would have a negative effect on quality, skills and capacity, and consumer protection, while 45% expected a positive effect. Respondents took differing views of the capacity to deliver the Programme at an accelerated rate: while some argued that there will be skills shortages or that suppliers will struggle to meet demand, others felt that with resources and support, the industry has the necessary capacity or that supply will respond to demand.

The importance of providing clarity for the supply chain, including certainty that funding will be in place over a period of years, was highlighted.

The limited time available for staff recruitment and training were seen as likely to lead to shortages of skilled labour, and an urgent need to address skill shortages and training issues was identified. Leading on from the reports of shortages of qualified contractors or assessors, there was a concern that market forces are likely to lead to increased costs or poor quality. Maintaining high standards, protecting customers and creating trust in the supply chain were all highlighted as key issues.

Impact on Fuel Poverty & Climate Change

In terms of how accelerating Energy Efficient Scotland would help or hinder plans to address fuel poverty, around 2 in 5 of those who commented suggested that accelerating the Programme would (or could) help plans to address fuel poverty. Around 1 in 4 thought either that it would not help or that it would hinder plans to address fuel poverty.

A number of respondents noted that lack of energy efficiency is only one driver of fuel poverty, which needs to be tackled in an integrated fashion. Potential installation costs and financial pressure on households was identified as a negative factor by some respondents while others argued the need for increased investment and funding, and for subsidies to the less well off.

With regards to reducing the emissions associated with the supply of heat, a majority of those commenting thought it would be desirable to consider energy efficient improvements alongside changes to heating systems. Some respondents argued this to be essential, or noted their approval for a fabric first approach.

Reducing heat demand was reported as providing greater scope for low carbon technologies (such as air source heat pumps) which are more efficient and with lower operating costs in well-insulated buildings. Further, since low carbon systems are often reliant on electricity, fitting insulation and so reducing demand was seen as offering the potential to reduce pressure on the national grid. 

The importance of educating households was also highlighted, both with respect to general behavioural changes that can save energy and to ensure that new heating systems are used correctly.

Private rented sector

Using change of tenancy as a trigger point

A majority of respondents expressed broad agreement with use of change of tenancy as an appropriate trigger with comments including that it is sensible or logical, reasonable, obvious or useful. It was noted, as outlined in the consultation paper, that high turnover rates in the private sector mean that change will be driven relatively quickly.

Respondents who opposed use of change of tenancy as a trigger generally expressed objection to other aspects of Energy Efficient Scotland policy, arguing that proposed EPC levels are not realistic in some cases, costs to landlords are too high, property may be left empty, and that the size of the PRS will be reduced.

When to start applying a minimum of EPC Band C

In terms of the date to start applying the minimum standard of C when there is a change in tenancy, a majority of respondents who expressed a clear view did not think 1 April 2025 to be the right time. Reasons given most frequently were that: the date is, or may be, too early; the minimum standard is too high; the proposals are not achievable, practical or possible; and that owners will sell and property will be lost from the PRS, or rents will increase to cover costs.

Among respondents who suggested alternative start dates or minimum standards the most frequent suggestion was Band C in 2030.

Respondents who agreed that 1 April 2025 is the right date suggested to it to be reasonable or sensible, to provide certainty and to allow landlords time to plan. The need for effective awareness-raising both for landlords and tenants and for financial support to landlords were both highlighted.

Basing any cap of required works on a definition of cost-effectiveness and technical feasibility

Respondents who expressed broad support suggested the proposed approach to be sensible, practical or reasonable. Others noted that it is difficult to comment until definitions of cost-effective and technically feasible are available or argued that clear definitions must be provided. As an alternative to a flat rate cap regardless of property size or value it was suggested there could be: a variable spending cap, to take account of building styles and local costs; a relationship between the level of spend and rent level, property value or property size.

The importance of the method chosen to define what is cost effective was highlighted, with an argument that there is no single correct solution. A definition of cost-effectiveness was also seen as potentially excluding works in the most rural areas where installation costs are likely to be highest. Points raised with respect to what is considered technically feasible included that a definition will need to take account of the wide variety of building types within the PRS, in both urban and rural areas.

Impact on Supply chain: skills and capacity

An industry-led Short Life Working Group (SLWG) established to develop a set of actions to achieve and fully implement a robust quality assurance framework for Energy Efficient Scotland made 19 recommendations in their report published in March 2019.

SLWG recommendations

Among those respondents who answered the question, a majority - 63% - agreed with the SLWG’s recommendations, while 37% did not.

Some respondents noted their broad agreement, or agreement in principle, with the recommendations which were described as welcome, relevant and comprehensive.

Some respondents who did not agree with the SLWG’s recommendations made comments relating to wider aspects of Energy Efficient Scotland or remarked on previous bad practice, lack of enforcement, or lack of redress.

Recommendation 2 attracted the most comments, with many of those who commented directly on this recommendation noting support for a Quality Mark. However, a few respondents commented on the need to avoid duplication of UK-wide standards where possible.

Ensuring maximum participation from suppliers across Scotland regardless of their size and geographical location

Several respondents pointed to the importance of long-term policy, predictable demand and sustained funding in order to create interest within the supply chain and ensure small companies see the benefits of being accredited. Respondents suggested that any scheme should be easy to join to encourage engagement with small local suppliers, that assistance could include funding for training or certification, and that consumer protection schemes should be ‘seen to support legitimate honest business to get things right’.

The role of Scottish Government in ensuring the quality criteria are consistently met

In terms of the role of Scottish Government should play be in ensuring the quality criteria are consistently met, key high-level roles were suggested to be providing policy, creating an appropriate legal framework, and having strategic oversight of standards to ensure quality criteria remain fit for purpose.

It was also argued that while standards could be agreed at a national level to ensure consistency, responsibility for compliance should be devolved to local authorities who would require additional resources.

Suggestions on quality assurance included that the Scottish Government should ensure the requirements of the Quality Mark accreditation are met, support existing quality assurance frameworks where possible and avoid duplication that adds to costs. ‘Individual’ respondents in particular were amongst those who suggested inspections, or independent inspections and sanctions for substandard work to be priorities.

Heat Networks

The consultation paper notes that the Scottish Government wants to see the growth of heat networks in Scotland continue and accelerate, and asks whether there may be further ways it can assist with this.

In terms of what further incentives could drive further heat demand onto networks, a number of respondents commented on the importance of funding and incentives continuing to be in place going forward.

Specific incentives suggestions included tax incentives, loans or interest free-loans, and grants. One proposal was that public funding could be structured as a form of bond issue (such as a low carbon heat bond). Another was that the Scottish Government could develop and deliver new heat networks through the Scottish National Energy Company and a Scottish Energy Development Agency, supported by financing from the Scottish National Investment Bank.

In terms of further assistance that could support the growth of appropriately sited, low carbon heat networks, a number of respondents commented on the importance of the Scottish Government giving a clear message about the future of heat networks.

A number of respondents commented on the role of Local Heat and Energy Efficiency Strategies, including that their strengthening will be important, and that they will need to have teeth in order to address a central issue for heat policy - demand risk. Other respondents made the connection between risk, regulation and consumer protection; and it was recommended that a statutory framework should be established that underpins regulation of all heat networks. It was suggested that the regulations should cover price, quality of service, transparency and minimum technical standards^[1].