Energy Efficient Scotland development: consultation analysis

Timeframe for delivery

The first set of questions in the present consultation seek to gather evidence which could support a change to the proposed timeframe to accelerate delivery of standards in an achievable and realistic way. Questions 1 - 3 concern the owner occupied sector, for which the Route Map proposed that homes should reach EPC Band C by 2040 and that this should be achieved in two phases: an encouraging phase up to 2030, and then a compliance or mandating phase commencing thereafter.

Pace of delivery

Question 1 - With regards to achieving an accelerated delivery of the standards proposed, do you think mandatory action for owner occupiers would be required? Please provide a rationale for your answer.

Responses to Question 1 by respondent type are set out in Table 2 below.

Table 2: Question 1 - Responses by type of respondent.

	Yes	No	Not answered	Total
Organisations:
Academic	2		1	3
Building component manufacturers/services	7		3	10
Energy related private sector	7		6	13
Local authority or interagency partnership	14	1	1	16
Other			1	1
Private landlord or property management	1	3	2	6
Professional or representative body	7	3	6	16
Public sector or body – other	1		1	2
SG delivery partner	3			3
Third sector	2		3	5
Total organisations	44	7	24	75
% of organisations answering	86%	14%
Individuals	19	17	4	40
% of individuals answering	53%	47%
All respondents	63	24	28	115
% of all respondents	55%	21%	24%
% of all those answering	72%	28%

A majority of respondents who answered Question 1 (72%) 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.

‘Individual’ respondents were more evenly balanced.

Among ‘organisational’ respondents who answered the question a substantial majority (86%) thought mandatory action would be required, with ‘private landlord or property management’ respondents the only group in which a majority of those answering gave a negative answer. However, nearly a third of ‘organisational’ respondents (24 of 75) did not answer the closed element. 

Question 1 also asked respondents to explain the rationale behind their answer, and 95 took the opportunity to do so. The analysis of these comments, set out below, is divided broadly according to the respondent’s answer at the closed element of the question: points made by respondents who did not answer the closed element are included where most appropriate.

Issues relating primarily to triggers for mandatory action, the time at which such action might be introduced and possible effects on the supply chain are discussed in detail at Questions 2, 3 and 4 and so are not covered here. A small number of comments at Questions 1 – 3 referred to the Private Rented Sector (PRS), which is covered at Questions 7 - 9.

Yes, mandatory action would be required

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. ‘Building component manufacturers or services’ respondents and ‘local authority or interagency partnership’ respondents in particular made this point. One ‘individual’ respondent observed:

There will be some owner occupiers who neither want nor can afford to make energy efficiency improvements to their properties. They will have to be incentivised to make these improvements and if this doesn't work then it will have to be mandated.
Individual respondent

Several ‘local authority or interagency partnership’ respondents noted their own experience that owners have been unwilling to act even when Home Energy Efficiency Programmes Scotland (HEEPS) funding has been on offer. It was argued that even when energy efficiency measures are cost-effective and affordable, homeowners are unlikely to implement them. One respondent suggested this to be:

… linked to three natural consumer tendencies; discounting future benefits, using defaults (i.e. inertia in decision making, using habitual behaviours or pre-set options) and being influenced by social norms.
Professional or representative body respondent

With respect to meeting targets, respondents also noted that, as set out in the consultation paper, current rates of progress are likely to slow as easier properties are improved leaving those remaining in need of more expensive measures. 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, with some arguing that that there must be support for fuel poor and low income households, or that owners already struggling with household costs must not be adversely affected by the policy. Forms of incentive suggested were: zero interest or low-cost loans; grants; variable rates of Land and Building Transaction Tax (LBTT); Council Tax rebates; and low interest mortgages. It was also argued both that there should be measures to offset any first mover disadvantage, and that there may be increased demand for existing support programmes such as Warmer Homes Scotland or via Area Based Schemes.

The need for consistency between policies was also noted by one respondent who observed that the threshold for eligibility under Warmer Homes Scotland (SAP 64) is lower than the proposed EPC threshold under Energy Efficient Scotland for households in fuel poverty (SAP 69). 

With respect to the cost of energy efficiency improvements it was observed that measures required for older properties may be particularly expensive and hence take a long time to pay back. Other pressures or spending priorities for households were also noted and that, in some areas, there may be an increasing number of elderly owners with limited assets. Some owners were suggested to be ‘asset rich but cash poor’ and so to risk missing out on obtaining financial assistance.

While agreeing the need for mandatory standards in due course, several respondents highlighted the need to encourage voluntary action first. In particular, it was argued that there should be ‘a huge escalation in support’ in advance of regulation coming into force in order to support voluntary action.

Effective communication, awareness-raising and marketing were all suggested to be necessary to promote Energy Efficient Scotland. Providing advice and assistance were also identified as of importance, with suggestions that homeowners require independent advice, or ‘tailored, bespoke and technical advice’. Expansion of the role of Home Energy Scotland to create a one-stop-shop providing advice, quotes, project management, and a central point of contact for complaints and redress was proposed.

Effective enforcement was identified as important if standards are to be made mandatory, with suggestions that resources must be made available for enforcement or that, without strong enforcement and penalties, the policy will not work.

Respondents also raised issues relating to public support - or lack of support - for mandatory action. On the one hand it was suggested that mandatory action will be ‘deeply unpopular and expensive’ and that it ‘…could give rise to hardship, resentment, a strain on the public purse.’ However, it was also argued that:

Currently, there is an increasing level of consciousness surrounding environmental issues and impacts. Should public opinion continue to gather momentum, it may be that at some time in the future the public will accept and even demand that standards are mandated in order to prompt action.
Energy related private sector respondent

Another respondent referred to a scoping study to explore consumer attitudes towards investing in energy efficiency produced by The Existing Homes Alliance Scotland^[2] and reported that it argued:

… current communication tends to focus on ‘do-able behaviour change’ which may result in people thinking they have done their bit for the environment and therefore don’t need to carry out larger scale energy efficiency measures. It suggests that a greater focus on moral arguments alongside messages about saving money and increasing comfort could be effective.
Professional or representative body respondent

An opinion poll conducted for Citizen’s Advice Scotland was also reported to have indicated support for action for environmental reasons. Having presented details of the poll and analysis of the results, the respondent recommended that the Scottish Government should undertake its own research on attitudes of owner occupiers to regulation before introducing regulation.

Issues associated with other tenures and with mixed tenure blocks were also highlighted. It was observed that uptake of measures is typically low in mixed blocks and one respondent operating in the social sector welcomed mandatory standards in the owner occupied sector as giving leverage to instigate common works. They noted that at present:

Owner occupiers will have a significant influence, and in many cases control, over what our members can achieve.
Professional or representative body respondent

A possible need for amendment to the Tenement (Scotland) Act 2004 was also suggested, since this requires majority owner participation for repairs to proceed, but lacks clarity around energy efficient retrofitting measures.

Concerns were raised with respect to aspects of the EPC process including the methodology employed, particularly in the context of older buildings, the use of modelled data, assessor training and monitoring and the accuracy of projected costs and benefits.

Other issues, each raised by a small number of respondents, were that:

• The Scottish Government should be looking to move directly to net zero carbon rather than following a phased approach to improving energy efficiency.
• There should be a third exemption category where it is ‘inappropriate to enforce regulation for compassionate social reasons’ to allow flexibility for vulnerable owner occupiers.
• To date, there does not to appear to have been a full financial assessment of the cost implications for the housing sector as a whole of delivering the proposed standards, through either Energy Efficient Scotland or the draft Fuel Poverty strategy.

The Scottish Government’s proposal for a further consultation on how a mandating phase might work was welcomed.

No, mandatory action would not be required

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, that they have the right to choose what is done with their property, or that the Scottish Government should instead encourage owners to take action by providing support and incentives. These views, usually raised by ‘individual’ respondents, are summed up in the comment that:

Homeowners will require encouragement and access to grants, not the threat of legal action… Owners should be allowed to make their own decisions about upgrading their homes, not mandated to by the government.
Individual respondent

A small number of respondents acknowledged the potential need for mandatory action in due course, but argued that the encouragement phase should be maximised as far as possible.

It was suggested that bringing the timeframe forward reduces the time for homeowners to plan, risks creating financial pressures that could leave owners in debt, unable to pay their mortgage, or in negative equity, and could also put pressure on the supply chain. Additional concerns were raised that mandatory action would require monitoring and enforcement, creating an additional burden for local authorities in the absence of additional funding.

Issues were also raised with respect to the EPC process, particularly with traditionally constructed buildings. It was argued that the current methodology does not take adequate account of actual energy efficiency performance, and that many assessors are not suitably trained in evaluation of traditional buildings. One concern that was highlighted was that traditionally built homes, often in rural areas, could be put out of use.

Workshops’ perspectives

Workshop participants thought that some form of mandatory action would be required. Participants generally did not think that homeowners would act voluntarily, but that legislation would be needed. They suggested a range of possible incentives that could be used to encourage action, including the type of ‘carrot rather than stick’ fiscal measures that drove the uptake of solar photovoltaics. Other ideas were: equity loans; a decrease in LBTT to help buyers making energy efficiency improvements; and support for community-based approaches, particularly in tenements. Workshop participants also raised concerns about the impact of the current EPC approach. A suggestion was that Passivhaus offers a more accurate metric and a better indicator of performance.

Question 2 - What trigger points, e.g. sale, renovation, etc. could be used to require owner occupiers to undertaken energy efficiency improvements?

In total, 92 respondents made a comment at Question 2, including some who expressed a view that there should be no mandatory action or no trigger points, or who argued that the Scottish Government should instead encourage owners to act.

Point of sale

A majority of respondents who answered Question 2, across a broad range of respondent types, considered 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. For example:

We believe the simplest way of meeting prescribed standards would be at point of sale, with either the current owner or buyer being obliged to carry out the required work within the specified timeframe.
Local authority or interagency partnership respondent

Reasons given for using the point of sale as a trigger point, in each case by one or a small number of respondents, were that:

• It is a clear point and the point of value assessment.
• It is the time when a seller is required to have an EPC assessment and the Home Report would make clear if the property meets the required standard. There could be a break-down of the measures to improve the building, in the priority that best optimises impact.
• It would encourage owner occupiers to undertake energy efficiency improvements if there is a possibility that the costs incurred might be reflected in a higher sale price. It was reported that there is emerging evidence that energy efficiency is increasingly being considered by buyers and reflected in market prices.
• It would be the easiest option to enforce, with the conveyancing process used to facilitate compliance.
• Incentives could be provided through a variable LBTT rate.

From the viewpoint that an owner has the right to live as they wish in their own home, point of sale was also suggested to be the appropriate trigger.

Purchase

While some respondents proposed a general option for the seller to pass the obligation for energy efficiency improvements to the buyer, others suggested specific circumstances where this might be appropriate, these being:

• An owner moving into residential care.
• The ill health or death of the owner.

It was also noted that a purchaser could undertake work as part of other home improvements and might therefore choose to install best value measures, rather than opting for those that can be achieved at lowest cost.

If responsibility for achieving the minimum standard were to be transferred to the buyer, it was proposed that:

• Funds could be set aside as part of the sale process for future improvements to be carried out by the buyer.
• The sale price should reflect the cost of the work required.
• The buyer could have a fixed timeframe to make necessary improvements before incurring a penalty.
• Monitoring would be required to ensure that the works had been completed, unless this was delegated to mortgage lenders under a hold-back arrangement.

There was a call for research into better understanding of the best trigger points for carrying out energy efficiency improvements and whether it is the seller or buyer who is more motivated to carry out energy efficiency improvements.

Potential limitations of using point of sale as a trigger

Several respondents, including ‘SG delivery partners’ and ‘third sector’ respondents noted that, as detailed in the consultation paper, 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. It was also thought that homes not coming onto the market over the relevant timescales might include disproportionately more difficult or poorly performing properties.

Other potential issues caused by using the point of sale as a trigger were that:

• Owners could be put off spending money on energy efficiency improvements as the benefits will fall to the buyer.
• Owners might be discouraged from downsizing.
• The cost of works could lead to a slowdown of house sales, reducing turnover and the rate of upgrade.
• Mobility in the labour market might be adversely impacted.
• Homes may be left empty if there is a barrier to selling or changing use.
• A deceased person’s estate might include a sub-standard property but no money to pay for upgrades.
• Owners might have to delay selling and could incur financial penalties as a result or could experience difficulties in the case of ill health or a relationship breakdown.
• There may be little impact in mixed tenure blocks where a common external measure is required.

Overall, there was a concern that there could be an adverse impact on the housing market and that property prices may be skewed, with further research proposed to ensure that unintended consequences for the property market are avoided. 

Renovation

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.

Involving members of the supply chain in promoting energy efficiency improvements during renovation was suggested. On a related point it was reported that since homeowners typically do not see energy retrofit as being distinct from other home improvement, retrofit might also be promoted by focusing on businesses involved with general repair, maintenance and home improvement. 

Potential changes required if using renovation as a trigger

A small number of respondents pointed to potential changes required if renovation work were to be used as a trigger for energy efficiency improvements. It was noted that a change in Building Regulations would be needed since current legislation only allows energy efficiency improvements to be encouraged rather than to be required. Further, it was argued that new legislative powers would have to be accompanied by additional resources to allow enforcement to be carried out, and also that enforcement could prove challenging. It was noted that owner occupiers may not have an EPC at all or, as an EPC is valid for 10 years, it may be out of date.

The need for a definition of the level of renovation that would trigger a requirement was also identified. It was suggested that:

• The definitions in the EU’s Energy Performance of Buildings Directive are not clear in practice.
• Small external changes to a property, such as to a porch, should not be subject to regulation that could impede the owner’s right to make basic home improvements, or could become seen as a tax on home improvements, thus adversely impacting the home renovation market.

The need to prioritise the sequence in which improvements are made at renovation was also raised, with a concern that elements might otherwise not be upgraded in the most beneficial order – for example replacing a boiler before improving building fabric. A ‘building MOT’ with scheduled improvements, or a ‘property passport’ advising owners in what order to make changes were both seen as possible options.

Additional triggers proposed

Respondents also suggested some alternative trigger points that might be used, most frequently:

• When a boiler or heating system is replaced.
• When there is a change of use of a property.
• At an application for finance, particularly for Green mortgages.^[3]
• Receipt of public grant funding.
• Improvement by a certain date determined by the Scottish Government.

With respect to heating system upgrades or repairs it was argued that installers, if trusted by their customers, may be well-placed to communicate the benefits of energy efficiency as well as heating system upgrades. Consideration of energy efficient improvements alongside changes to heating systems is discussed in more detail at Question 6.

Other ideas for trigger points, each given by one or a small number of respondents were:

• Minor renovations such as rewiring, roofing or window replacement. For renovations not requiring planning permission it was suggested that installers could be required to notify building owners of their obligations.
• When switching fuel tariffs.
• Situations such as inheritance, where there has been change of ownership without a sale taking place.
• Length of ownership, to ensure owners cannot avoid upgrades by not selling or renovating.
• Life-cycle changes such as the birth of children and retirement, when retrofitting supply chains could coordinate with health services to identify those involved.
• Council tax valuation or re-evaluation.
• An opportunity to participate in an Area Based Scheme.

With particular reference to common areas in flatted properties, the following were put forward as potential trigger points:

• As above, when Area Based Schemes offer support.
• When co-owners are undertaking whole-building actions, such as structural work or roof repairs.
• Where more than half the EPCs in a building are below Band D.

Whole house retrofit

The option to participate in Area Based Schemes was also seen as presenting an opportunity to promote whole house retrofit of buildings, as a more cost effective and less disruptive alternative to a series of individual measures. Among other respondents who argued that it would be better to encourage installation of multiple measures at the same time, one proposed pilot projects to explore how deeper renovations at trigger points could be encouraged.

Characteristics of a trigger

A small number of respondents commented on what they saw as essential characteristics of any trigger point chosen, namely that it must:

• Be recordable and verifiable.
• Have notification and compliance points so information on requirements is advised to the homeowner.
• Be enforceable and enforced. It was argued both that it must be made clear if there are to be consequences for inaction and that there is no point in putting regulations in place if there will not be enforcement and penalties for those who do not comply.

It was also suggested that rather than seeking to identify points of intervention for regulation, triggers could offer an opportunity to deliver tailored communication including marketing, special offers or support services to prompt energy efficiency upgrades. Offering the opportunity to extend a Local Heat and Energy Efficiency Strategy (LHEES) or HEEPS Area Based Scheme to neighbouring private properties was given as an example.

A phased approach for mandatory action was also proposed, starting with action to ensure homeowners have a valid EPC and then to engage with a trusted organisation such as Home Energy Scotland on how to improve the EPC of their property. It was argued that this phased approach would allow for an exploration of whether awareness-raising is enough to encourage improvements.

Question 3 - If you think mandatory action would be required to achieve an accelerated delivery of standards, when should mandatory energy efficiency targets be introduced in the owner occupied sector?

Responses to Question 3 by respondent type are set out in Table 3 below.

Table 3: Question 3 - Responses by type of respondent.

	Before 2030	In  2030	After 2030	Not answered	Total
Organisations:
Academic	1	1		1	3
Building component manufacturers/services	6	1		3	10
Energy related private sector	3	2		8	13
Local authority or interagency partnership	3	6	3	4	16
Other				1	1
Private landlord or property management		1	2	3	6
Professional or representative body		2	3	11	16
Public sector or body - other				2	2
SG delivery partner	3				3
Third sector	4			1	5
Total organisations	20	13	8	34	75
% of organisations answering	49%	32%	20%
Individuals	10	3	22	5	40
% of individuals answering	29%	9%	63%
All respondents	30	16	30	39	115
% of all respondents	26%	14%	26%	34%
% of all those answering	39%	21%	39%

Figures do not sum to 100% due to rounding.

Among those respondents who answered the question, 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. 

A majority of ‘individual’ respondents who answered the question (63%) preferred mandatory action after 2030, while most ‘organisational’ respondents chose action before 2030. ‘Building component manufacturer or services’ respondents, ‘SG delivery partners’ and ‘third sector’ respondents tended to favour action before 2030, while ‘local authority or interagency partnership’ respondents typically thought 2030 to be the right date. However, it should be noted that more than a third of respondents (39/115) did not answer the closed question.

In total, 90 respondents provided a further comment at Question 3. The analysis below broadly follows the respondent’s answer at the closed element, points made by those who did not answer the question being included where most appropriate. 

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. In contrast, it was suggested that delaying mandatory action until 2030 would mean inactivity for the next 5 years and that substantial results would not be achieved until closer to 2040.

Other points raised included that:

• Phased action over a longer period will be more effective so should start as soon as possible.
• Mandatory action prior 2030 will be necessary if a 2040 target is to be met without requiring a trigger involving home improvements in addition to that at change of ownership.

The potential benefits of alignment between sectors were also noted, with suggestions that the owner occupied sector could be brought into line with social sector requirements under the Energy Efficiency Standard for Social Housing or with standards in the PRS. As well as facilitating delivery in mixed tenure blocks, alignment with the PRS was suggested important to avoid property moving from the private rental market into the owner occupied sector in order to avoid meeting a higher standard. (The current PRS target is that properties should meet Band D by the end of March 2025: a proposal that Band C should be required at change of tenancy from 1 April 2025 is discussed at Questions 7 and 8.)

Other proposals, each suggested by a single respondent, were:

• Mandate immediately, allowing the obligation to be transferred to a new owner for implementation within a limited timescale.
• Mandate in 2025, allowing the obligation to be transferred to a new owner for implementation within 12 months.
• Mandate in 2025 if an awareness-raising campaign does not generate sufficient action beforehand.
• Mandate in 2030 if there is not sufficient action by 2025.
• Mandate Band D by 2025 and Band C by 2030.
• Mandate Band E from 2025, Band D from 2030, Band C from 2035.

The importance of encouraging as much voluntary action as possible before introducing a mandatory standard was also emphasised and that independent advice and assistance, a quality assurance framework and financial assistance for homeowners must first be in place.

It was also suggested that households at risk of fuel poverty could be exempted from a mandatory target before 2030, but that such a provision should be applied cautiously.

Mandatory energy efficiency targets should be introduced in the owner-occupied sector after 2030

Among respondents who thought mandatory targets should be introduced after 2030, a majority indicated at Question 1 that they disagreed with such targets being introduced at all, and comments tended to reflect this position. 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. Several respondents who did not answer the closed element of Question 3 expressed a similar view.

With specific reference to the date of 2030 it was suggested that owner occupiers should be given time to plan for any mandatory action:

We prefer not to see mandatory targets, but if they are brought forward, this should not be before a sufficient period of encouragement that lasts at least until 2030, allowing households time to plan and budget for the cost of improvements.
Professional or representative body respondent

Some respondents who agreed that mandatory action would be necessary but thought it should be implemented only after 2030 also made points regarding the size of financial burden being placed on homeowners and the need to allow time to plan. It was also suggested that enough time needs to be allowed to:

• Raise awareness.
• Allow sufficient opportunity for work to be carried out.
• Allow financial markets to plan for possibility that owners will look for improvement loans linked to their mortgage.
• Avoid pressure on supply chains and raised costs to consumers.

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. It was acknowledged that some improvements will be costly, and homeowners might require time to raise capital. It was also argued that a clear signal to owners is required to encourage compliance ahead of 2030, and that early adoption should be incentivised. If there is insufficient action during an encouragement phase prior to 2030 it was suggested both that an earlier date for a mandatory standard could be considered and that there should mandatory action from 2030. Setting interim targets over the next decade was also proposed.

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. A concern was noted that:

…if the supply chain is not immediately ready to respond, then the work and associated economic benefits would go to companies outside of Scotland.
Academic respondent

With respect to the cost of measures, 2030 was argued to allow time for prices to fall, particularly in relation to renewable technologies which, it was suggested, are not currently affordable.

Other issues identified as needing to be addressed before mandatory action is introduced were:

• Capacity of distribution networks.
• Providing resources for enforcement.
• Putting effective support schemes and financial assistance in place.

Other criteria for deciding when to introduce mandatory action

Some respondents who did not answer the closed element argued that timing of mandatory standards should depend on progress during an engagement phase, with a review of uptake in 2025 suggested. Setting interim targets between 2020 and 2030 was also proposed.

Other points raised included that:

• Mandatory standards should not be introduced until the necessary supply chain is in place.
• Mandatory standards should not be introduced until EPC assessment methodology has been improved to better reflect actual performance. A risk of legal challenges from householders was suggested.
• There is a disincentive for early action since the life span of energy efficiency measures means an owner who starts introducing measures more than 10 years beforehand may find they may need to upgrade again closer to the target date.

Benefits of aligning an Energy Efficient Scotland target for owner occupiers with interim targets in the Fuel Poverty Bill were identified, such as creating economies of scale. It was also argued that:

…combining the fuel poverty target of EPC Band C by 2030 with the “all homes” target encapsulates owner occupiers who are fuel poor in the same target. This prevents confusing messaging for homeowners, who might otherwise be left asking “am I or am I not considered fuel poor- and therefore which target applies to me?”
Third sector respondent

Workshops’ perspectives
Workshop participants tended not to focus on a specific date for mandatory action, although some did feel that regulation should be introduced straightaway. Other comments were that the Scottish Government should work in 5-year increments, outlining clearly what industry needs to do.

Quality and supply chain implications

The consultation paper notes it to be widely acknowledged that the capacity of the supply chain will need to increase in line with the scale of Energy Efficient Scotland, and that it is estimated that around £12 billion in investment will be needed to fully deliver its objectives. Whilst this presents both a challenge and an opportunity for suppliers in Scotland, it is acknowledged that there are a number of considerations relating to supplier capacities and capabilities.

Question 4 - From a supply chain perspective, do you think bringing forward the timescales for the Programme would have a positive or negative effect on quality, skills & capacity and consumer protection? Please provide a rationale, and evidence where possible.

Responses to Question 4 by respondent type are set out in Table 4 below.

Table 4: Question 4 - Responses by type of respondent.

	Positive	Negative	Not answered	Total
Organisations:
Academic	1		2	3
Building component manufacturers/services	6	1	3	10
Energy related private sector	3		10	13
Local authority or interagency partnership	6	6	4	16
Other			1	1
Private landlord or property management		3	3	6
Professional or representative body	3	7	6	16
Public sector or body - other		1	1	2
SG delivery partner	1		2	3
Third sector	1		4	5
Total organisations	21	18	36	75
% of organisations answering	54%	46%
Individuals	12	22	6	40
% of individuals answering	35%	65%
All respondents	33	40	42	115
% of all respondents	29%	35%	37%
% of all those answering	45%	55%

A majority of those 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. As at earlier questions, a substantial number of respondents (42/115) did not answer the closed element.

While 54% of ‘organisational’ respondents who answered the question expected positive outcomes, only within the ‘building component manufacturers or services’ group did a majority of all respondents suggest positive effects. In contrast, 65% of ‘individual’ respondents who answered the question foresaw negative effects.

In total, 92 respondents provided a further comment at Question 4 and, while arriving at different conclusions in terms of an overall positive or negative perspective, respondents raised very similar issues. For example, some respondents predicting negative consequences, suggested there is not enough time to train sufficient staff to deliver the programme, and some of those taking a positive view argued that training must be addressed as a matter of urgency. To avoid repetition the analysis below is arranged thematically.

Capacity and certainty for the supply chain

Respondents took differing views of the capacity to deliver the Programme at an accelerated rate. While some, including ‘local authority or interagency partnership’ and ‘professional or representative body’ respondents, 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. Substantial reduction in insulation installation levels under the Energy Company Obligation (ECO) were cited as evidence that spare capacity could be available.

It was also noted, however, that having carried out their own surveys, the Energy Saving Trust and the Existing Homes Alliance have reported differing findings with respect to supply chain capacity, and further research to look at the ability of the supply chain to deliver to an accelerated timescale was proposed. It was also suggested that consideration of capacity issues should include local authority planning departments.

The importance of providing clarity for the supply chain, including certainty that funding will be in place over a period of years, was highlighted. Previous changes in funding policy, for example in relation to the Feed-in Tariff scheme, was cited, particularly by ‘energy related private sector’ respondents, as having led some companies to pull out of the market or to cut jobs and capacity. For example:

The energy efficiency installer market has often suffered due to the stop-start nature of previous obligations; a clearly laid out long-term, large scale plan is likely to encourage investment by the supply chain…
Energy related private sector respondent

Provided that there is confidence in demand, it was argued the industry will invest and there will be opportunities for job creation in a range of trades and for Small and Medium-sized Enterprises (SMEs). However, there was also a view that SMEs may not be able to gear up in time to compete with larger firms.

The effects of energy efficiency targets in other sectors on building supply chain capacity were also referenced with a suggestion that the implementation of LHEES could give local authorities and public sector bodies a role in developing the market and identifying gaps. While earlier targets in other sectors were seen as helpful, it was noted that avoidance of a ‘cliff-edge’ fall in demand after a target date would be beneficial.

Skilled labour and training

The limited time available for staff recruitment and training were seen as likely to lead to shortages of skilled labour, particularly by ‘local authority or interagency partnership’ respondents and by ‘professional or representative body’ respondents. Potential shortages of specialists with experience in traditional building types were also predicted, as were uncertainties in the labour market as a result of Brexit.

A risk of skill shortages outside the Central Belt, particularly in rural and island locations was also highlighted. It was reported that customers already struggle to find qualified contractors, or that the additional premiums charged by mainland contractors can lead to increased costs.

An urgent need to address skill shortages and training issues was of importance to a number of respondents across a range of respondent types, and there were associated calls for increases in the provision of college places for relevant trades. It was observed that that, since apprenticeship programmes can last up to 4 years, a supply of trained workers may still lag behind demand, and an argument was made that investment in apprenticeship programmes needs to be provided now, whether accelerated delivery is implemented or not.

A forthcoming requirement under PAS 2030 and PAS 2035 for installers to hold, or be working towards, an appropriate Scottish/ National Vocational Qualifications was also noted and a case made for providing Scottish Government funding to help industry support further training of the existing work force.

Quality control and accountability

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, with a risk of ‘cowboys’ seeking to exploit demand. Experience of previous energy efficiency schemes were cited in this respect, including of installation companies going out of business, meaning any guarantees become worthless.

Maintaining high standards, protecting customers and creating trust in the supply chain were all highlighted as key issues:

For the programme to develop as suggested, property owners have to have and maintain confidence in the assessments, advice, work and effectiveness of those involved. There is the perpetual risk of this sector acquiring a less than satisfactory reputation which could then prove difficult to tackle.
Professional or representative body representative

Specific suggestions made regarding oversight, enforcement and monitoring were that:

• A national delivery body should oversee the Programme.
• A robust, independent enforcement agency is required.
• The roles of existing agencies such as Gas Safe and the National Inspection Council for Electrical Installation Contracting could be expanded.
• Recommendations of the Each Home Counts Review should be implemented, requiring all work to be delivered through a quality mark framework.
• Any quality framework in Scotland should have equivalent quality & competency requirements to the existing UK TrustMark scheme^[4]. Having different requirements in Scotland was argued to have the potential to be a barrier to delivery or to result in poorer products being available in the country with the lower standard.
• There should be post installation monitoring.

Specific suggestions made regarding qualifications and accreditation were that:

• Specific qualifications are required for both EPC assessors and those working on traditionally constructed historic buildings.
• The Scottish Government should mandate qualifications for all those operating in the sector.
• There should be an accredited supply chain or a trusted trader scheme with continuous review of membership.

The ‘local authority or interagency partnership’ respondent suggesting a trusted trader scheme also argued against any further bureaucracy for traders:

Any scheme does not need another badging system. The industry has been badged to death and with little improvement in tackling the cowboy hit and run approach. Cowboys are very efficient at obtaining badges. They are not efficient at fulfilling promises. Thus the government should consider a 100% post install monitoring scheme rather than adding further levels of bureaucracy for the quality practitioner to negotiate.
Local authority or interagency partnership respondent

It was noted that in a typical rural supply chain, with many small and one-person trades, businesses may be deterred by the administrative burden or accreditation costs of operating in the energy efficiency market. It was considered important to find a way to develop local supply chains to allow small companies to participate, but without compromising standards.

Engaging with consumers

The importance of awareness-raising and public engagement was highlighted by a small number of respondents, some of whom felt that acceleration of the Programme will leave limited time to engage with and educate consumers.

Aftercare and engagement with households once tradespeople have worked on the property was seen as a means of ensuring that households are able to operate any new heating systems correctly. Post-occupancy evaluations were proposed - not only to provide information on actual performance of technologies and properties, but also to look the degree to which user awareness has improved.

Workshops’ perspectives

In terms of skilled labour supply, some participants felt there is a skills and, by extension, capacity shortage across the country. Others thought that while there may even be over-supply of some trades in the Central Belt area, the position can be very different in the Highlands. There was particular reference to those trained to fit wall insulation. A shortage of skilled labour in the north east of Scotland was also reported. Other points raised were that: Brexit will have an impact on the supply of skilled workers. The age of the workforce is a problem and getting younger people interested in the work can be challenging. It takes five years (a year to recruit and four years to train), to have a newly qualified worker. With regards to quality, comments were: There need to be clear standards, including around the quality mark and the qualifications required. A quality mark for designers could also be considered. While some participants supported bringing forward the timescales for the Programme, certainty was seen as key to allowing the industry to respond and adapt in terms of capacity. It was also noted that it is difficult to assess whether there is, or can be, enough capacity until the nature of, and timescales for, the challenge are understood. Some respondents did feel that meeting the 2030 target is unrealistic and that the supply chain will need until 2040 to grow, and that this growth will be in line with and stimulated by the Programme. However, HEEPS: Area Based Schemes were cited as an example of a programme which has not increased capacity despite being in place for a number of years and offering guaranteed work. The annual funding structure was seen as contributing to this outcome. Other points raised were that: Clarity about the nature of the target, and in particular whether it is for net zero carbon, is required. A 2030 net zero carbon target would be particularly challenging for the retrofitting industry.

Impact on Fuel Poverty & Climate Change

As the consultation paper notes, the Energy Efficient Scotland Route Map already sets out additional targets for households in fuel poverty, which would see them prioritised so that they achieve EPC Band C by 2030, and then EPC Band B by 2040, where technically feasible, cost-effective and affordable. It is acknowledged that accelerating the target for all homes may risk increasing levels of fuel poverty by forcing households to install low carbon or renewable technologies that may be more expensive to run, therefore increasing fuel costs before the cost of the technologies have been further driven down by innovation in the sector. 

With respect to climate change, meeting the targets for the various sectors set out in the Energy Efficient Scotland Route Map, including making steady progress in the owner occupier sector towards achieving at least an EPC Band C by 2040, is in line with the trajectory for the reduction in heat demand set out in the Climate Change Plan. Bringing the target forward to 2030 would support efforts to reduce emissions more quickly, but risks forcing some households to take decisions about their heating systems prematurely. 

Question 5 - In your view, how would accelerating Energy Efficient Scotland help, and/or how would it hinder, plans to address fuel poverty?

In total, 89 respondents answered Question 5. Some took a relatively clear position: 

• 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. 

However, many added caveats to their remarks, and others were of a more nuanced view, identifying potential positive and negative effects.

Irrespective of their position, respondents raised similar themes and the analysis below is structured accordingly. A series of potential positive or negative outcomes are presented first, followed by a number of issues respondents highlighted as needing to be addressed.

Potential positive outcomes

In addition to addressing fuel poverty at an earlier date, the following possible benefits were identified:

• Avoiding the wider cost burden to society created by fuel poverty.
• Positive impacts in other areas of public spending, for example, savings in the NHS:
  It is important that the cost of accelerated targets takes into consideration the positive impact on health and wellbeing, savings in the NHS, reduced need for charitable intervention and improved quality of life…
  Building component manufacturers or services respondent

• Job creation. It was argued increased employment and earnings in Scotland's energy sector could more than offset the cost of supporting those in need of help.

Other points tended to apply to the supply chain as a whole – such as developing the supply chain and/or encouraging development of new products.

Potential negative outcomes

Possible negative outcomes identified were that:

• Existing targets are already challenging or unrealistic.
• In the PRS there is a risk of increased rent levels, property being lost from the sector, or that landlords will not accept potentially fuel poor households as tenants.
• Since an EPC score is not a measure of fuel poverty, improving an EPC will not necessarily improve fuel poverty.

Potentially negative consequences for the supply chain as a whole were also noted, such as acceleration of the Programme leading to shortages and elevated costs.

The focus on the householder in fuel poverty rather than the property per se, was also highlighted, with an observation that householders may move. However, it was noted that, as a result of accelerated delivery, more energy efficient properties will be available to fuel poor households.

Other drivers of 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. In particular, the damaging effect of high energy prices was raised by several respondents, noting that this is especially the case in remote or rural areas. When tackling fuel poverty, a focus on reducing fuel bills was seen as more important than reducing carbon emissions.

Need for funding

Potential installation costs and the resulting financial pressures on households were identified as a negative factor by some respondents while others argued there to be a need for increased investment and funding, for subsidies to the less well off, or that energy efficiency programmes should be targeted at fuel poor households. One respondent observed:

…we must ensure any regulations are rolled out in a way which does not adversely affect owner occupiers who are already struggling with household costs. Energy efficiency improvements must not be pursued at the cost of making housing unaffordable for people.
Third sector respondent

Concern for households just above any threshold for assistance was also highlighted:

Our main concern is for owner occupiers that sit above the fuel poverty threshold, but are labelled as ‘self-funded’. These are the type of homeowners that could really be impacted under Energy Efficient Scotland in general, and could become fuel poor – or experience wider poverty – if some of the observations raised in the consultation document are realised.
Local authority or interagency partnership respondent

Identifying fuel poor households

A small number of respondents commented specifically on issues associated with identification of fuel poor households, suggesting that:

• Better identification of fuel poverty is needed or that working jointly with services such as Care and Repair can pick up potential cases.
• Fuel poverty figures in the owner occupied sector are not well understood.
• There should be further assessment of fuel poverty in rural or island areas, since measures installed under ECO have typically been focused on urban areas.

It was also proposed that, if ECO continues, powers under the Digital Economy Act 2017 should be used to allow government and suppliers to share information for the purposes of identifying eligible households and targeting delivery to ensure that those in most need receive support.

Further guidance and support from the Scottish Government to facilitate consistent, accurate targeting of fuel poverty areas at a neighbourhood/ area-based scale was also requested.

Risks associated with installations

As set out in the consultation paper, a risk that low carbon technologies may result in increased energy prices was noted by several respondents. Others suggested that this is not necessarily the case, provided properties are well insulated, and that this demonstrates the importance of a fabric first or whole house approach, although it was also noted that current funding is unlikely to cover both insulation and heat generation technologies being fitted at the same time. Specific proposals were:

• Providing help to avoid householders being significantly financially disadvantaged as a result of installing a low carbon heating system.
• Careful modelling of the outcomes of costly interventions, which may/may not provide appropriately scaled benefits.

One risk highlighted was that households will be required to spend money on other installations that prove to be poor or inappropriate solutions, with possible negative outcomes such as poor air quality predicted. Further concerns were raised that energy savings may not be as high as predicted or that installation costs may outweigh the benefits in savings. However, it was also noted that even in such circumstances, households may experience greater comfort from warmer homes.

Relationships with other schemes/policies

Clarity was sought as to how support for fuel poor household will be achieved in practice – whether by using the fuel poverty definition as a criterion for eligibility for different schemes, or by focusing resources and programmes, such as Area Based Schemes, in areas where there is a high rate of fuel poverty. It was also argued that the final Fuel Poverty Strategy, expected in late 2020, must outline its relationship with Energy Efficient Scotland, along with setting out what new support mechanisms will be available and how fuel poor households will be identified.

The potential effect of accelerated delivery requirements on fuel poverty on other elements of Energy Efficient Scotland or related programmes was noted with suggestions that:

• Partner organisations’ ability to participate could be affected due to the additional resources required to enable programme delivery.
• Accelerated delivery might impact ECO funding and could require increased customer contributions to facilitate fuel utilities obligation.
• Energy efficiency requirements relating to fuel poverty should be aligned with related programmes such as ECO, or that the current focus of ECO on support for fuel poor households should be continued.
• To ensure the accelerated targets do not negatively impact plans to address fuel poverty, there should be a substantial increase in the size of the ECO budget to allow its use in conjunction with the Energy Efficient Scotland programme.

It was also argued that without a clear focus on fuel poverty, there is a risk that accelerated delivery for the owner occupied sector could divert the attention of stakeholders and the supply chain towards self-funded households and, potentially, that finance might be diverted away from alleviating fuel poverty to support such self-funding households. An alternative perspective was that if funding is diverted towards alleviating fuel poverty at an earlier date, fewer non-fuel poor homes, and fewer homes overall, may be treated.

Finally, it was suggested that energy efficiency and fuel poverty programmes such as Area Based Schemes and Warmer Homes Scotland should aim to achieve EPC Band C or above by 2030, thus avoiding the need to return to the same area for further work, and minimising costs and disruption. It was argued that programmes should be front-loaded to identify and incentivise treatment of the worst performing properties first.

Need to advise and educate households

Provision of better energy efficiency advice or education to households was also seen as necessary, including a need for face-to-face support. Education was argued to be particularly important after upgrades involving new technologies, to ensure costs of installation are offset as effectively as possible.

Question 6 - With regards to reducing the emissions associated with the supply of heat, what are your views on consideration of energy efficient improvements alongside changes to heating systems?

A total of 84 respondents provided a comment at Question 6.

A majority of those commenting, across a broad range or respondent types, thought it would be desirable to consider energy efficient improvements alongside changes to heating systems. Some of these respondents argued that this would be essential, or noted their approval for a fabric first approach. There was support for a whole house approach, with installation of multiple measures at the same time, to minimise disruption relative to installation as single measures. Insulating a building before fitting a new heating system was seen as a way to avoid wasting heat and maximise the benefit of the new system, while also allowing the heat requirement to be assessed properly. This, in turn, was seen as important in ensuring the capacity of the new system to be appropriately specified so as to be as economical as possible. It was suggested that the Scottish Government should consider extra quality controls - for example under a Quality Mark accreditation scheme - to ensure that sizing has been calculated correctly.

A holistic approach was advocated by several respondents who argued that a cost-effective combination of energy efficiency measures and low carbon heat supply installations will be needed. It was suggested such an approach would influence the choice of the most suitable technology in each area.

Reducing heat demand was reported as providing greater scope for low carbon technologies (such as air source heat pumps) which are more efficient and have lower operating costs in well-insulated buildings. Without insulation it was acknowledged that low carbon heating systems could be more expensive for the consumer and it was argued that while low carbon heating is desirable, energy reduction must remain the primary goal of Energy Efficient Scotland.

A further benefit was identified with respect to demand for electricity. 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 and to reduce the need for further infrastructure spending on electricity generation. However, it was also suggested that District Network Operators should be asked for permission before a heat pump is installed, to ensure that the local grid connection can cope with the additional demand.

Several additional factors were identified as important, including by respondents who took no clear view, or a more negative view of installing energy efficient improvements alongside changes to heating systems. These are discussed below. 

Timing

There were mixed views on whether the point at which a heating system is changed would be a good time to consider other measures. These were that:

• In practice, heating systems are often replaced when the existing system has broken down and hence considering installation of other measures at the same time might not be practical.
• Replacing a heating system may be a time at which a household is receptive to energy efficiency advice and it may be a good time to consider other measures.

Advice on selection and education on use

Good quality, independent advice to consumers was seen as essential, including to help ensure the most appropriate combination of products are selected. It was also suggested that pressure to make energy efficiency improvements might lead to uneducated decisions. Two respondents argued that:

A joined up approach is required alongside delivery partners to ensure alternative heating choices are available and realistic and practical information on these heating choices are available to the householder.
Local authority or interagency partnership respondent
Professional or representative body respondent

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

… public education around behaviour change will be essential to make all the interventions worthwhile. There’s no point in installing excellent low-carbon technology and other interventions if it is not used/implemented effectively and efficiently.
Professional or representative body respondent

It was also suggested that householders with new heat pumps should be advised of the most appropriate, cost-effective tariff.

One ‘local authority or interagency partnership’ respondent argued that Energy Efficient Scotland does not place sufficient emphasis on behavioural change, and that putting standards in place for technical measures alone will not be sufficient to address climate change and fuel poverty.

Cost and funding

High cost was identified as a barrier to installation. There were contrasting views, however, on the degree to which multiple measures are currently supported, with one respondent suggesting that ECO offers uplifts for the installation of multiple measures, while another argued ECO scoring rules do not incentivise this and that grant funding on Scottish Government schemes is largely limited to one measure per household.

Financial support was seen as critical to delivery, with a specific proposal that there could be ‘demonstrator areas’ where early action is incentivised by a proportion of grant funding to owner occupiers. It was also noted, however, that if access to grants and funding is only available to those in receipt of welfare benefits, a section of the population that does not receive these benefits may be unable to afford upgrades, irrespective of any potential penalties. Incentivised pricing for heating systems with reduced emissions was also proposed.

It was argued that requiring multiple measures could be a disincentive to changing an inefficient heating system at all:

… a change to Air to Air heating is popular in Orkney. To require internal wall installation in addition may cause some to keep with an old inefficient system based on a number of factors including costs.
Local authority or interagency group partnership respondent

Quality of installation

Correct installation of energy efficiency measures was considered essential if their benefits are to be maximised, with a suggestion that suppliers should be encouraged to verify actual performance. Advice emphasising the quality of installation given in the Sustainable Renovation Guide^[5] was recommended.

Low carbon heating and emissions

A small number of respondents commented specifically on emissions that may be associated with low carbon heating systems. Points raised were that existing assessment systems may not take account of emissions associated with higher service and maintenance requirements, or reduced lifespan and replacement costs. It was suggested that in remote locations, the distance travelled for servicing may offset carbon saved.

It was also argued that for much of Scotland’s older housing stock, retrofitting energy efficiency measures will have relatively little impact on emissions and that a national programme of demolition and replacement with EPC Band A properties would be the best approach.

Finally, two ‘individual’ respondents referenced the recent recommendation by the Committee on Climate Change that no gas boilers should be installed in new homes after 2025^[6]. It was argued that greater clarity is required before mandating improvements.

Workshops’ perspectives

There was support for a ‘fabric ‘first’ approach and for considering energy efficient improvements alongside changes to heating systems. However, it was also noted that a change in heating system may not be sufficient to bring a property up to standard. The possible phasing out of older models and replacement with more efficient alternatives was noted, with the step up to High Heat Retention Storage Heaters cited as an example. Participants raised the possibility that earlier targets could mean that functioning heating systems would have to be replaced. The financial impact on householders of having to replace a boiler earlier than they might otherwise do so was also highlighted. The importance of adequate funding to support successful delivery was raised.