Green Heat Finance Taskforce: report part 1 - November 2023

Foreword

Human driven climate change is contributing to the warming of our planet. The climate emergency is the greatest long-term threat humanity faces; the latest Intergovernmental Panel on Climate Change (IPCC) report indicates that approximately 50-75% of the global population could be exposed to periods of life-threatening climatic conditions due to extreme heat and humidity by 2100.

The April 2022 IPCC special report on the impacts of global warming states that we need to half greenhouse gas emissions this decade to have a 50% chance of keeping global warming to 1.5°C. Hard and fast emissions cuts are needed across all sectors and nations to hold warming to safe levels.

The effects on Scotland of global warming can be seen in the shifts in our climate; average temperatures are increasing across all seasons, intense heavy rainfall events are increasing in summer and winter, typical winters are becoming milder and wetter. Such shifts are increasingly negatively impacting on the biodiversity of our land and marine ecosystems, our infrastructure and built environments, human health and the economy. The importance of climate mitigation and adaptation to the future of Scotland and its people cannot be underestimated.

Heat in buildings plays a substantial role in the creation of our carbon footprint and so must play a significant part in our transition away from fossil fuels. Carbon emissions from heat generation in Scotland’s homes accounted for 15% of our total greenhouse gas emissions in 2021 and approximately 30% of Scotland’s total energy consumption^[1]. Non-domestic (commercial) buildings made up 7% of our total greenhouse gas emissions in 2021 and 15% of final energy consumption for 2020^[2].

The decarbonisation of heat in Scotland’s buildings is a vital step in the Scottish Government’s programme to ensure that Scotland achieves Net Zero emissions of all greenhouse gases by 2045, in line with our Climate Change Plan and legislation.

This is a huge challenge, especially in the context of the current cost of living crisis, and it is recognised that such a change to our buildings will require a mixture of public and private financing in various combinations to ensure that this transition is affordable for all. A just transition to Zero Direct Emissions Heating (ZDEH) along with the necessary energy efficiency improvements to ensure ZDEH solutions work efficiently, will also deliver improvements in health outcomes as homes will be warmer, greener and more efficient. The transition will also support environmental recovery and sustainable economic growth.

The work to develop finance options to support the transition to ZDEH is not happening in isolation, but is part of the Scottish Government’s delivery of its Heat In Buildings Strategy, which focuses in on all areas of the journey to ZDEH, including the skills and supply chain, advice and quality assured installation.

This Green Heat Finance Taskforce was established in response to a commitment in the Strategy, with the Taskforce asked to explore and report on the opportunity to secure private finance, including identifying potential products and the commercial drivers and barriers affecting the flow of finance into the retrofit of energy efficiency and ZDEH measures.

We would like to thank our fellow Taskforce members for their valuable contributions, support and expertise in this task and in the development of this report. This is the first of two reports from the Taskforce, with this report focusing on financing options for individual properties, while our final report will focus on mechanisms impacting multiple properties. We look forward to continuing to work with the Taskforce as it completes its work on this vital subject area, which will have implications for all domestic and non-domestic properties over the coming years.

Patrick Harvie, Minister for Zero Carbon Buildings, Active Travel and Tenants’ Rights

Sara Thiam, Chief Executive, Prosper (Trading name of Scottish Council for Development and Industry)

Co-Chairs of the Green Heat Finance Taskforce