Heat in buildings - National Public Energy Agency: consultation - call for evidence 2021/2022

2. Dedicated Agency

This section addresses design and development of the dedicated Agency, committed to launch by September 2025 as a single dedicated public body with a physical presence.

2.1. Strategic Purpose, Remit and Objectives

In line with public statements to date, it is expected that the dedicated Agency will take ownership of an agreed national delivery plan for how the heat decarbonisation transition will be implemented in Scotland.

In order to carry out this role, a strategic framework for the new Agency will need to be developed. The following presents a summary of some of the areas that the Agency may have a role:

• lead on public communication and advice provision to raise awareness on heat and drive uptake of zero emissions heat and energy efficiency options at the scale and pace needed to meet our climate change targets;
• bring together delivery of heat decarbonisation and energy efficiency capital investment and advice programmes for small-scale domestic and non-domestic consumers, streamlining our offering where appropriate and simplifying navigation of the advice, support and financial assistance system;
• accelerate the pipeline of investable large-scale heat decarbonisation and energy efficiency retrofit projects, particularly in the social housing and public sectors and to support heat network growth, through the provision of a package of financial and non-financial support from pre-capital feasibility and business case development to delivery of a range of grant and loan products;
• coordinate national, regional and local government delivery of heat decarbonisation and energy efficiency rollout by supporting development of Local Heat and Energy Efficiency Strategies and local energy plans, and bringing these together into an overarching National Heat Decarbonisation Delivery Programme; and
• act as a "centre of expertise" by providing dedicated resource, expertise and coordination to government and others to facilitate local heat transitions and supporting those with an interest in exploring "public energy company" models, including those with a local focus.

Aims and Objectives

Subject to proposed energy efficiency and zero emissions heat regulations as set out in the Heat in Buildings Strategy, there is an opportunity for the dedicated Agency as part of its overarching strategic framework to consider its role in supporting delivery of the following:

The dedicated Agency could support delivery of:

• By 2028, all private rented properties having met at least Energy Performance Certificate (EPC) Band C standard, where technically feasible and cost effective to do so; and
• By 2032, all social housing to have met, or be treated as meeting, EPC

B, or to be as energy efficient as practically possible.

The dedicated Agency could lead and coordinate delivery of:

• By 2030, the transition of over 1 million homes, and the equivalent of 50,000 non-domestic buildings to convert to zero emissions heat systems;
• By 2030, a large majority of buildings having achieved a good level of energy efficiency, which for homes will be at least equivalent to an EPC Band C;
• By 2033, all owner occupied homes having met at least EPC Band C standard, where technically feasible and cost effective to do so;
• By 2038, all publicly-owned buildings to have met zero emissions heating requirements;
• By 2040-45, all mixed tenure buildings to have reached a good level of energy efficiency, equivalent to EPC Band C, where technically feasible and cost effective, and have installed a zero emissions heating supply; and
• By 2045, all homes to be using zero emissions heating (and cooling) systems.

By 2045, the dedicated Agency could contribute to:

• The Scottish Government's vision that our homes and buildings are cleaner, greener, and easy to heat, with our homes and buildings no longer contributing to climate change, as part of the wider just transition to net zero.

Questions:

1) What is needed to achieve the transformational change that is necessary for heat decarbonisation in Scotland?

2) How can the new dedicated Agency best support this change programme?

3) What are the opportunities and challenges for delivery presented by this agenda, and how might these best be overcome through the Agency?

4) Based on the proposed purpose, remit and objectives of the dedicated Agency, do you have any evidence, or insights based on experience, that demonstrate the need and potential added value of a new public body of this nature in the heat decarbonisation delivery landscape?

5) Are you aware of any case studies – UK or international – or research that can help inform design of a new public sector delivery body to ensure it is able to delivery effective outcomes, and to be consumer focused across its operations? What do you think are some of the key factors that need to be built into the strategic framework – and corporate design – of the new body to best enable this?

2.2. Delivery Functions

The 2021/22 Programme for Government indicates that, at a minimum, the new dedicated Agency will have a key set of responsibilities that have informed development of the Remit, as set out earlier in this Call for Evidence.

At an operational level, these responsibilities, or functions, may translate into practical actions that include the introduction of an overarching Heat Decarbonisation Implementation Plan for Scotland, providing the Agency a mechanism through which to guide and steer various interventions and support programmes in collaboration with partners and in line with shared goals.

As part of this work, it will be important for there to be an appropriate balance between what the Agency will take on direct control and delivery responsibility for, versus what the Agency will steer strategically while working with others to implement on the ground. This will involve collaboration and co-production with stakeholders and existing delivery partners.

Some further potential functions have emerged through our preliminary stakeholder engagement activities, and which could - if pursued and possible to introduce - strengthen the dedicated Agency's leadership on heat and energy efficiency matters. They can be broadly summarised as:

• Operate a national level data hub
• Co-ordinate supply chain development and expansion
• Oversight of quality assurance standards
• (subject to further investigation and consideration) Taking on some regulatory functions such as monitoring and compliance of the proposed energy efficiency and zero emissions heat regulations as set out in the Heat in Buildings Strategy

These proposed additional functions will require further development and testing before a decision on whether or not to include any one of them under the strategic framework of the dedicated Agency can be made. We would welcome your views.

In particular, whether or not the dedicated Agency should take on a regulatory function will depend on several factors that will need to be explored further, such as: the feasibility and appropriateness for an existing regulatory body to take on any new enforcement responsibilities through an expanded, or amended strategic framework. It will also be necessary to determine the extent to which, corporately and legally, a single public body could hold responsibility and authority over both delivery and enforcement related to the same policy agenda.

Questions:

6) What tools and support will the dedicated Agency need in order to effectively establish leadership and coordination of heat decarbonisation in Scotland?

7) Do you have any evidence, or further insights regarding the potential added value that the functions set out can deliver within the heat decarbonisation landscape? This may include both examples of where these types of functions have, or have not been conferred on a national body as part of leading a programme of delivery and change, and the resulting implications (positive or negative).

8) Do you have any evidence, or case studies that demonstrate the effectiveness or not of new regulatory standards being enforced at a national versus local level? This may include international comparisons.

9) Are you aware of any existing, or previous, public bodies that exercise both an advisory and regulatory role within the same organisation – and how this dual remit has been translated at an operational level to avoid any risks relating to conflicts of interest, governance and lines of accountability? This may include examples from the international landscape, and/or UK context.

2.3. Institutional Form and Governance

A key consideration in designing the future dedicated Agency is the level of independence from Scottish Government – and lines of accountability, or governance – it should, or will need to have in order to carry out its responsibilities effectively within the broader landscape. This would be particularly important if the Agency was to act as the enforcer of future Heat in Buildings regulations, something that is yet to be determined at this stage.

In light of preliminary stakeholder engagements, and with a focus on ensuring the dedicated Agency can be effectively future proofed to take on any new functions as appropriate, we are considering establishing it on a statutory footing. This would ensure that the dedicated Agency is invested with the necessary authority to fulfil its remit. With the respect and permanence afforded by statute, and staffed with the right expertise and the powers to marshal and target resources as needed, the dedicated Agency would have the necessary tools to galvanise the heat and energy efficiency landscape to deliver at the pace and scale needed over the next two decades.

We believe that the proposed Heat in Buildings Bill would provide a suitable legislative vehicle to achieve this, and aligns with the timescale for the dedicated Agency becoming a physical body by September 2025.

Questions:

10) Are you aware of any case studies, or recent research that considers the opportunities and challenges of establishing a public sector body that is tasked with programme delivery functions on a statutory footing?

11) In terms of potentially establishing the dedicated Agency on a statutory footing as part of future proofing it to be able to take on any new functions or responsibilities as heat decarbonisation delivery progresses over the coming decades, are there any other considerations related to this that you think we need to be aware of and why? This may include, for example: upcoming evidence and research, other strategic policy developments and targets, wider industry and sector led developments in the heat and energy efficiency landscape or related delivery areas.

2.4. Strategic Partnerships and Wider Stakeholder Relations

The Agency will need to garner respect and recognition of its position and authority amongst stakeholders if it is to be able to perform its strategic leadership and coordination roles effectively.

Delivery partners, including local authorities, and a broader set of advocacy and research organisations, as well as industry and members of the general public, amongst others, will all need to understand what role the Agency will play to support them in responding to the heat decarbonisation transition. In this way, we are keen that the Agency, from the start, seeks to create a strong sense of co-ownership of the agenda, and collaboration in its implementation.

The scale and complexity that heat decarbonisation presents is too much for any one organisation to deliver on its own for Scotland. Securing support, and making best use of the wider landscape and what it has to offer will be essential – both through continuity in delivery where appropriate, and through managing any change that may be required. This will require the Agency to have a full understanding of the capacity and capabilities of the delivery landscape, in order to be able to target support and draw on a wider pool of existing expertise, resources, connections and experience. This approach has the potential to deliver efficiencies, and to maximise capacity in ramping up both the pace and scale of transition required.

In line with these considerations – and to give the Agency a good foundation to build on in terms of partnership working with others – we are committed to ensuring that the design and development of the dedicated Agency (that is. how it will function in practice) will also reflect these principles of participation and of being a collective endeavour. The process that is gone through to establish the new body must be open and transparent. This includes ensuring effective processes are in place for not only stakeholder organisations, but general members of the public to be able to meaningfully participate throughout, reflecting our commitment to the Open Government agenda in Scotland.

Questions:

12) Who will the Agency need to work closely with in order to best facilitate delivery of the transformational change required, and how do you think this should work in practice?

13) Are you aware of any case studies that demonstrate (in)effective partnership working by a public body to coordinate a broader delivery landscape to achieve a shared goal? What lessons can be taken from these examples?

14) What role do you see your organisation playing in relation to the Agency once established?

15) What role do you see for your organisation during the development process of the Agency, and do you have any examples of the type of collaborative approach to design of a new public body or delivery programme that you would like to see implemented? What lessons can be taken from these?

16) What types of approaches to civic participation do you think could work most effectively in supporting development of the dedicated Agency, and why? How can these be best implemented to work alongside wider stakeholder engagement? Please provide any examples, or case studies you may have to support your response.