Energy Efficient Scotland: the future of low carbon heat for off gas buildings - call for evidence

The Role of Regulation In Supporting Uptake of Low Carbon

Existing Buildings

We want to consider evidence on the role that regulation could play in helping to support uptake of low carbon heat in existing buildings (domestic and non-domestic). Any regulation that was developed would need to be within devolved competence and could not cover matters reserved to the UK Government. We would be interested in evidence on the form that regulation could take, and on the extent to which regulation could operate in isolation, or alongside additional policy measures.

This latter approach is what we have proposed for introducing new energy performance standards for existing buildings in the Energy Efficient Scotland Routemap – (e.g. that all domestic buildings should reach an EPC 'C' standard by 2040). The Routemap makes it clear that regulation for these standards will be supported by a universal end-to-end offer made by either a local authority or the Scottish Government, which will include advice, finance, and delivery programmes, ensuring consistent, quality level of service to customers. The same comprehensive approach to supporting regulatory standards applies for the non-domestic sector.

In seeking further evidence on the role that regulation could play in supporting uptake of low carbon heat in new and existing buildings, we are not changing our commitment to introducing regulation for energy performance standards that have already been announced. Rather, any evidence for regulation of low carbon heat would be considered alongside, and in addition to already-proposed Energy Efficient Scotland energy performance standards.

Questions

49. What evidence can you provide on the role that regulation could play in helping to support uptake of low carbon heat in existing buildings (domestic and non-domestic)? What form should this regulation take?

50. To what extent could any regulation to support uptake of low carbon heat in existing buildings link to the already-proposed Energy Efficient Scotland energy performance standards? How could a link be made?

New Buildings

Continued action on new build is important to maintain a credible pathway to achieving our climate change targets, which will require all buildings to be near zero carbon by 2050. This includes the setting of challenging energy standards to further reduce emissions associated with new buildings and action that can reduce the need to retrofit new buildings over forthcoming decades.

The Committee on Climate Change (CCC) report, "Next Steps for UK heat policy" sets out that action now on new build is sensible regardless of the longer-term heat decarbonisation pathway. The CCC suggests that "Buildings constructed now should not require retrofit in 15 years' time. Rather, they should be highly energy efficient and designed to accommodate low carbon heating from the start".

Through our building regulations, energy standards for new build properties were improved in 2007, 2010 and most recently in 2015 and mean that new buildings today emit 75% less carbon than similar buildings constructed to 1990 standards. A review of Section 6 (Energy) standards of Scottish building regulations commenced in June 2018, with a 'call for evidence'^[58]. For 2021, the review is considering the next steps to further enhance the energy performance of buildings and contribute to greenhouse gas emissions reduction targets set under the Climate Change (Scotland) Act 2009 and proposed in the new Climate Change Bill.

In 2017, 17,650 new homes were completed in Scotland, and if build rates continued at this rate, approximately a quarter of a million new homes would be built over the next 14 years.

Each year, completion of new buildings only account for a small proportion of the total building stock. However, there are good reasons to start phasing out higher carbon forms of heating in new buildings, as part of a broader overall strategy.

• There are few technical restrictions to the type of heating system that can be provided in a new building (subject to the right solution being selected for the type of building and intended use);
• Installation as part of a new building means that the solution should function as an integral part of the overall design approach for that building; and
• The prescription of low carbon heat solutions for new builds can help to develop the wider market for these technologies in existing buildings.

Installing low carbon heating in new buildings would reduce the need for more costly and disruptive retrofit installation later on. However, there may be situations where it might still make sense to allow new homes to connect to the gas grid or other more carbon intensive solutions. Given that it can be expensive and disruptive to retrofit buildings for low carbon heat, we are keen to explore options for 'future proofing' of new buildings to simplify subsequent adoption of low-carbon heating.

Examples of futureproofing include, larger heat emitters to support circulation of heat at lower temperatures or providing space for hot water storage or battery storage of energy. There may also be actions which support future addition of smart building systems. Futureproofing should be considered relative to the costs and benefits of simply installing a low carbon heating system when built.

Questions

51. How should the Scottish Government respond to the CCC's advice and the UK Government announcement in the Spring Statement that new buildings constructed now should "accommodate low carbon heating from the start"?

52. Have you encountered any specific examples of barriers to the installation of low carbon heating systems in new buildings?

53. Can you provide evidence on the comparative cost of installing low carbon heat solutions in new buildings rather than high carbon systems?

54. Can you provide evidence on the comparative cost of installing low carbon heat solutions in new buildings compared to retrofitting to install low carbon heat at a later date?

55. Are there particular actions that you would identify for consideration as part of any action to 'future proof' new buildings for low carbon heat retrofit?

Consumer Issues

Although heat is a fully devolved matter, under the current devolution settlement, the Scottish Government cannot regulate to protect domestic heating customers because of the reservation on consumer protection.

We have already seen in our parallel consultations on regulation of heat networks that this is one part of the heat market where there is arguably a case for regulation – something that the Competition & Markets Authority recently endorsed in its recommendations to the Scottish and UK Governments in summer 2018, following its market study^[59].

In off gas buildings, only those customers using electrical heat are currently protected by a regulated market (with Ofgem as the electricity regulator, ensuring consumer protection on issues such as pricing, billing, transparency and consumer redress mechanisms). For customers of other forms of heat – such as solid fuels (coal, biomass), heating oil (kerosene) or gas (LPG, LNG, biokerosene, biogas), there is currently no regulation for consumer protection.

As the off gas heating market transitions towards low carbon heat, the Scottish Government wants to hear evidence of what further consumer protection provisions may be needed to ensure that households and businesses receive fair and transparent prices for low carbon heat, and to ensure accurate billing and appropriate consumer redress mechanisms.

As we have recognised in the case of heat networks, where regulatory powers to protect consumers are held by the UK Government, the Scottish Government wants to work with the UK Government to ensure that new regulation can be introduced to protect Scottish consumers. The evidence from this consultation will inform discussions with the UK Government on the protection of off gas heat consumers, as they transition to low carbon heat.

Questions

56. In light of the reservation of consumer protection powers, how else could the Scottish Government ensure consumer protection on a robust basis? For example, through commercial agreements.