Heat in Buildings Strategy - achieving net zero emissions in Scotland's buildings

Annex A Summary of Actions

1. We are undertaking analysis to better understand the extent to which building-level storage technologies (including heat batteries, electric batteries and thermal storage cylinders) could help to support the widespread deployment of zero emissions heating in domestic properties by reducing household energy costs when installed alongside zero emissions heat systems.

2. We will publish a review of evidence on heat pumps in Scotland alongside this Strategy. The review found no evidence to suggest that heat pumps could not operate effectively in Scotland, but also found that correct specification and sizing of heat pumps and heat emitters are critical determinants of heat pump performance.

3. We will further improve the non-domestic buildings evidence base, including work to develop a database of this part of the building stock in Scotland.

4. We are undertaking further modelling and analysis to better understand the role of energy efficiency in unlocking the deployment of zero emission heating systems, which will inform future delivery and regulatory programmes.

5. We are keeping the role of hybrid systems under active review as the evidence base develops.

6. We have been working with BEIS to understand the cooling needs of our building stock, and this will inform future policy development in this area.

7. Building on the Climate Change Public Engagement Strategy, we are developing a bespoke public engagement strategy for heat in buildings.

8. Over the next year, we will establish a virtual National Public Energy Agency to bring new coordination and leadership to our existing advice and delivery programmes, including informing the public on the changes needed and providing expert advice. We will then scale up this approach within a single dedicated physical Agency by September 2025.

9. We will respond to the Climate Assembly’s recommendations and take action on them.

10. We will continue to ensure our schemes easy to identify and navigate, helping to build trust and awareness.

11. We will identify and support disengaged and vulnerable groups, ensuring that support is available to all of society. We will give due regard to equalities, and will not unfairly discriminate based on any protected characteristics.

12. We are investing in growing our advice services so that they continue to meet people’s needs. This includes improving our digital presence and continuing to provide in-depth support for installing zero emissions heating systems.

13. We will expand our Green Homes and Business Networks so that people can learn from other householders, businesses and organisations who have already made the transition to warmer, greener and more efficient buildings.

14. We have published here a set of guiding principles to underpin our commitment that no one is left behind in the heat transition, ensuring we only take forward actions where they are found to have no detrimental impact on fuel poverty rates, unless additional mitigating measures can also be put in place.

15. We continue to build the evidence base on the interactions between our fuel poverty and climate commitments, and are applying that knowledge to our policy design and to our programmes, mitigating any risk of unintended consequences, and tracking progress and learning by doing in order to adjust immediately where unintended consequences nevertheless arise.

16. We continue to prioritise energy efficiency measures through our delivery programmes, as this will enable the roll-out of zero emissions heating, as well as help to tackle fuel poverty.

17. We are taking action through our delivery programmes to maximise the number of homes with households in fuel poverty achieving a level of energy efficiency equivalent to EPC C by 2030 and EPC B by 2040.

18. We are taking a zero emissions first approach in our delivery programmes and will phase out funding for fossil fuel heating systems by 2024, where it is not detrimental to our fuel poverty objectives. We have already phased out oil and LPG boilers from Warmer Homes Scotland, Area Based Schemes or Home Energy Scotland Loans.

19. We will continue to work with energy retailers to ensure households have access to the right tariffs, that tariffs tailored to zero emissions heating systems are available, and continue to press for customers with pre-payment meters to access similar tariffs to direct debit customers.

20. We are conducting analysis to consider the distributional impacts of decarbonising our homes and buildings and to further quantify the impact of making our homes and buildings warmer, greener and more efficient for those on lower incomes and those in or at risk of fuel poverty.

21. We are working closely with consumer groups to continuously monitor and identify potential issues and take mitigating action where they arise.

22. We are working with the Energy Consumers Commission, Consumer Scotland and a range of Scottish consumer representative organisations to ensure that issues of consumer detriment are identified and addressed, focussing on consumer understanding, accessibility, costs, redress, and support for vulnerable consumers.

23. We are exploring how to integrate heat decarbonisation into community climate action initiatives such as Climate Action Towns and Community Climate Action Hubs.

24. We are supporting communities to work together to address, and champion, heat decarbonisation through the new CARES programme and are working to understand further the models and solutions most appropriate for communities in Scotland.

25. We are also working in collaboration with the Scottish Cities Alliance and the seven cities on the opportunities to accelerate activity at pace to ensure the Scottish cities cumulatively play their role in meeting our heat decarbonisation and energy efficiency ambitions whilst maximising the economic and well-being outcomes across cities.

26. We have commissioned a full evaluation of the LHEES pilot programme.

27. We are working with local authority partners and wider stakeholders to finalise the LHEES methodology and guidance, with a view to introducing legislation to establish LHEES on a statutory basis so that Strategies and Delivery Plans are in place for all local authority areas by the end of 2023.

28. We will use LHEES Delivery Plans to pinpoint areas for targeted intervention and early, low-regrets measures.

29. Through National Planning Framework 4 we will look for opportunities to strengthen planning policy to enable and encourage energy efficiency and low and zero emissions heating.

30. We have included low and zero emissions heat networks and micro-renewable technologies in the review programme for Permitted Development Rights.

31. We will work with stakeholders, including Historic Environment Scotland, to develop approaches and solutions to transition Scotland’s historic buildings to low and zero emissions heating while respecting and preserving the special characteristics of our buildings and places

32. We will publish an Energy Strategy and Just Transition Plan for consultation in Spring 2022, taking into account the whole system issues raised by our net zero climate targets and the wider needs of our energy system.

33. We will continue to conduct analysis to understand generation and network requirements, in terms of the scale and location of the demand that heat electrification could bring.

34. We continue to press the UK Government to continue to provide the support needed to develop Scotland’s renewable electricity pipeline needed to meet a decarbonised future for heat.

35. We are commissioning work to explore the potential network investment costs of the heat transition for Scotland, to provide greater clarity on the likely range of costs, and likely impacts on consumers, including those in, or at risk of, fuel poverty and help inform further decision-making.

36. We will conduct research into the role of energy storage in buildings in reducing consumer costs.

37. We will continue our Heat Electrification Strategic Partnership with Scotland’s electricity network operators, and use this forum to ensure that the upgrades required are delivered when and where they are needed and that the LHEES framework can inform this.

38. We will investigate demonstration projects through our delivery programmes strategic priorities to allow us to model real time network impact of heat pump deployment, smart-enablement, energy storage and demand management.

39. We continue to engage Ofgem and work with them in line with the Principles we agreed for development of Scotland’s Gas and Electricity Networks to ensure that Scottish Government targets and ambitions as set out in this final Strategy are fully considered as part of decisions on network investment.

40. We will continue to work with SGN and National Grid Gas Transmission to provide evidence on the role gas decarbonisation can play in meeting our targets, and a timeline for resolving uncertainties.

41. In cooperation with stakeholders, including network companies, local authority and delivery partners, we are working to identify strategic areas most likely to have access to hydrogen in the future, and high-potential areas for the use of hydrogen for heat in Scotland

42. We will work with the UK Government to ensure that the Green Gas Support Scheme meets the needs of Scotland. We will monitor the impact of the Green Gas Levy on end user costs, especially in relation to fuel poverty levels, and we will continue to urge the UK Government to make progress on the transition to a volumetric mechanism for the levy.

43. We will work with the Gas Network Operators and the UK Government to explore opportunities for increasing the blend of hydrogen in the gas network.

44. We will urge the UK Government to expedite progress on amending regulations and legislation to support hydrogen blending, accelerate decisions on the role of 100% hydrogen in the gas grid and to enable our ambition to maximise volumes of renewable hydrogen in our energy system as quickly as possible.

45. We will continue to support the development of evidence on the potential role of hydrogen in decarbonising heat including demonstration projects such as H100.

46. We will continue to press the UK Government to progress the consultation on enabling and requiring hydrogen-ready boilers.

47. We will support initial action by SGN on their pathway to converting large segments of their network to 100% hydrogen, wherever those actions are commensurate with keeping options open and limiting consumer costs.

48. Consult on the use of sections 44 and 63 of the Climate Change (Scotland) Act 2009 to introduce mandatory connections for large and publicly-owned buildings in next Parliament.

49. Consult on how new powers under section 15 of the Non-Domestic Rates (Scotland) Act 2020 could be used to de-risk investment and drive net zero behaviour, including connections to heat networks.

50. Develop a set of common technical standards for development and operation of heat networks across Great Britain which will help support the development of skills and the sector’s supply chain.

51. Include heat networks in our ongoing programme of reviewing Permitted Development Rights (PDR) and, subject to the findings, lay Regulations.

52. We will consult in 2021-2022 on whether the need for further regulatory measures or support measures to increase the utilisation of waste or surplus heat, for example from Energy from Waste plants, to be supplied and/or used through heat networks.

53. Publish a Heat Network Investment Prospectus during the next financial year that will demonstrate the size and location of heat network opportunities across Scotland, as well as information on the decarbonisation requirements of existing networks in Scotland.

54. We will launch the Heat Network Pre-Capital Support Unit in 2021, expanding on the previous role of the Heat Network Partnership to provide enhanced support to the public and private sector in developing a pipeline for delivery.

55. We will establish a single dedicated National Public Energy Agency by September 2025 to accelerate transformational change in how we heat and use energy in homes and buildings, aid public understanding and awareness, and coordinate delivery of investment.

56. We will expand existing delivery programmes to focus on accelerating deployment over the next 5 years against the following four strategic priorities: (1) those least able to pay, (2) investing in strategic technologies in low or no regrets areas, (3) showcasing Net Zero Leadership and share learning through early adoption in key areas of focus and (4) investing in innovation and demonstration to drive forward competitive advantage.

57. We will offer interest-free loans for heat and energy efficiency technologies via Home Energy Scotland, with an additional commitment to run our cashback scheme (or a grant replacement) until at least 2023 to help households overcome the upfront cost of taking early action.

58. We have increased the cashback available to home and building owners on measures to improve the efficiency of buildings and install zero emissions heating, and to replace in 2022/23 with a grant scheme to support energy efficiency and zero emissions heat improvements.

59. We will undertake user research and market testing to understand what further products may be needed to support and smooth the consumer journey, including the option for a self-funded pre- and post-installation service.

60. We are evaluating the area-based equity loans pilot and will consider any future equity scheme in light of this evaluation.

61. We will continue delivery of energy efficiency investment to support fuel poor households in order to make homes warmer and easier to heat and to reduce the impact of any increased running costs from zero emissions systems, including recognising the distinct challenges faced by island, rural and remote communities, and seek to improve targeting so that we can reach more households in fuel poverty.

62. We will continue our investment in Area Based Schemes, extending their reach to support higher numbers of households in or at risk of fuel poverty. We will continue to develop ABS as a ‘whole house’ retrofit programme for fuel poor households based upon a ‘zero emissions first’ approach to improving heating and making more effective use of micro-generation.

63. We will procure a new, enhanced successor to Warmer Homes Scotland following expiry of the current contract in September 2022, which will provide support for fuel poor households at its heart, and embed increased support for zero emissions heating, adopting a zero emissions first approach.

64. We will support SME businesses via Business Energy Scotland (BES) (from April 2022 – currently Energy Efficiency Business Support (EEBS)) advice service and SME Loans to take action to reduce their energy use and cut emissions.

65. We will continue to run our SME loan cashback schemes (or grant replacement) until at least 2023 to help reduce the cost of investing. In order to understand the support and investment SME businesses need to secure an accelerated rollout of energy efficiency and zero emission heating systems, we will consult and work with the sector to develop new policies and proposals for SMEs.

66. We will expand our Green Homes and Business Networks, so that SMEs can learn from people, businesses and organisations who have already made the transition to warmer, greener and more efficient buildings.

67. Throughout the next 4 years, we will continue to support communities to take the necessarily steps to transform their assets so that they are ready for a net zero Scotland through our new CARES programme, delivered by Local Energy Scotland.

68. We will set out further detail on how we will support island communities in our forthcoming Islands Energy Strategy.

69. We will invest at least £200 million in the new Scottish Green Public Sector Estate Scheme launched in June 2021 – drawing together capital grants, loans, and other support mechanisms – as the main government-led capital funding mechanism to support leadership for energy efficiency and heat decarbonisation right across the public sector.

70. We are developing a successor programme to LCITP as the primary mechanism for deploying zero emissions heat at scale, co-ordinating our support for the roll-out of heat networks and heat decarbonisation infrastructure. To achieve this, we will invest £400 million over the next five years in large-scale heat decarbonisation infrastructure.

71. We commit to extending the Social Housing Net Zero Heat Fund until 2026 and investing £200 million of support to further accelerate the decarbonisation of our social housing stock, and considering how this financial support will work in tandem with our other programmes, such as ABS, to deliver a comprehensive approach to decarbonising our social housing stock.

72. We continue to support affordable housing providers who wish to install zero emissions heating systems in homes through our Affordable Housing Supply Programme, ahead of regulatory requirements in 2024.

73. We will continue to align Scottish Government delivery programmes and advice services with UK Government funding to ensure these target need and are cost-effective.

74. We continue to press the UK Government to provide more funding for energy efficiency and zero emissions heating via GB-wide schemes, including working with UK Government to identify a more progressive way of funding these programmes.

75. We will establish a new Green Heat Finance Taskforce in late 2021 to provide advice and recommendations to Scottish Government on potential new financing models and routes to market.

76. We will set out options for future financing and delivery in 2023 ahead of the introduction of proposed regulations (see Chapter 8), with a view to implementing these new mechanisms from 2025 where applicable and allowed within our legislative competence.

77. We will work with the UK Government to develop new market led incentives to drive delivery of low and zero emissions heating.

78. We will continue to undertake market and consumer research while working with industry and the regulator to understand when and where ‘Heat as a Service’ could be used in Scotland and consider different routes for bringing this concept to market.

79. We will consider how our local tax and charging powers, such as council tax and non-domestic rates, could be used to incentivise or encourage the retrofit of buildings, alongside our planned approach to regulation. We will commission further analysis to identify potential options, to be implemented from the middle of the decade where appropriate, subject to consultation and public engagement.

80. We will work with the UK Government as it progresses its call for evidence on affordability and fairness to ensure that any reforms do not disadvantage Scottish consumers and that they fit with and enable delivery of our more ambitious climate targets.

81. We will publish research on the balance of consumer levies on electricity and gas bills.

82. We will introduce primary legislation, subject to consultation and to limits on devolved competence, that provides the regulatory framework for zero emissions heating and energy efficiency, and underpinning powers to support this transition and the wider Heat in Buildings programme.

83. We will engage with the UK Government ahead of introducing this legislation to secure agreement on changes that are necessary to the energy markets in reserved areas, to ensure a just transition to zero emissions heating, or securing further devolution of the powers needed to make such changes in Scotland.

84. We will introduce any regulation in a way that promotes a just transition and which considers the health and wellbeing of Scotland’s people.

85. We will also ensure sufficient periods of transition to allow people and the market to adjust and prepare for new standards coming into force.

86. We will tailor our delivery support to set out a clear path of support and advice for those affected, and will also take account of the recommendations of the Green Heat Finance Taskforce ahead of the introduction of regulations (as set out in Chapter 7), so that there is a clear and identified range of financial support mechanisms available to support building owners to meet proposed regulatory obligations.

87. We are consulting on a reformed domestic EPC assessment process to better align with wider net zero objectives whilst meeting our fuel poverty obligations during summer 2021, and will publish an analysis of this consultation in early 2022.

88. We will bring forward proposals for regulating, to the extent that devolved powers allow, to require the installation of zero or very near zero emissions heat in existing buildings from 2025, with a backstop of 2045.

89. We will phase out the need to install new or replacement fossil fuel boilers, in off gas from 2025 and in on gas areas from 2030, subject to technological developments and decisions by the UK Government in reserved areas.

90. We will bring forward regulations requiring domestic private rented sector properties to achieve an equivalent to EPC C by 2028.

91. We will consult on detailed proposals to introduce regulations from 2023-2025, to require owner occupied private homes to meet a minimum level of energy efficiency (equivalent to EPC C) by 2033.

92. We will aim to bring forward the review of EESSH2 with a view to strengthen and realign the current standard to meet wider net zero requirements.

93. We will consult on introducing regulation to require mixed tenure, multiple ownership and mixed-use buildings such as tenements to reach a good level of energy efficiency (equivalent to EPC C where technically feasible and cost effective), and to install a zero emissions heating supply by 2040-45, including provisions on ensuring cooperation between building owners to carry out works and recover costs.

94. We will work with Historic Environment Scotland to consider what specific support may be needed within regulations for buildings designated as listed or in conservation areas.

95. Develop and introduce strengthened regulation for non-domestic buildings, to ensure they reduce demand for heat where feasible and install a zero emissions heating supply; and launch a consultation on these proposals in 2022.

96. For the public sector, we will develop and agree through consultation a series of phased targets starting in 2024, with the most difficult buildings like hospitals being decarbonised by 2038, and for all publicly-owned buildings to meet zero emission heating requirements, with a backstop of 2038.

97. We will develop guidance for minor refurbishments and heating system replacements in the public sector.

98. We will consult on area or zone-based triggers to complement those at the individual property level.

99. Develop and bring into force the 2024 New Build Zero Emissions from Heat Standard, requiring all new buildings to have zero direct emissions heating systems.

100. Review energy standards within current building regulations to deliver further improvement in energy efficiency and emissions reductions in new buildings in 2021 and 2024.

101. Work with wider public sector partners to support the application of the Net Zero Carbon Public Buildings standard that was published in March 2021, and work to introduce regulation across the non-domestic sector more widely from 2023-25 onwards.

102. By Spring 2022 we will publish the results of our Heat in Buildings Workforce Assessment Project in partnership with Scottish Renewables

103. By Summer 2022, we will co-produce a new Heat in Buildings Supply Chain Delivery Plan with the sector. This will specifically focus on the development of energy efficiency and zero emissions heat in the buildings supply chain in Scotland.

104. We will respond to the final recommendations of the Heat Pump Sector Deal Expert Advisory Group following their final publication.

105. We will work with our Enterprise Agencies and Scottish Development International to understand more about the potential for generating export growth through utilising Scotland’s technical expertise and manufacturing capabilities.

106. We will adopt the UK PAS 2035/30 standards for our delivery programmes.

107. We will respond to our energy efficiency, zero emissions and low carbon heating systems skills requirements consultation in late 2021.

108. We will publish a monitoring and evaluation framework in due course.

109. We will build in evaluation to our delivery programmes, to ensure lessons are learned and inform future approaches and rollout.

110. We will refresh our governance arrangements to provide appropriate oversight and strategic direction as we expand our investment and delivery.

111. We will continue to work with COSLA to strengthen and integrate governance arrangements on heat and energy efficiency to ensure effective delivery over the long term.