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

Chapter 1 Introduction

This Strategy outlines the steps we will take to reduce greenhouse gas emissions from Scotland’s homes, workplaces and community buildings and to ensure that we remove poor energy performance as a driver of fuel poverty. The focus of this Strategy is on energy demand for space and water heating in homes, workplaces and community buildings.

Building on the policies and actions set out in the Climate Change Plan Update^[i], this Strategy sets out a pathway to zero emissions buildings by 2045 and details a series of near-term actions to put us on a clear path towards this, as well as a range of further, longer-term commitments to accelerate the transformation of the nation’s building stock. It sets out the principles we will apply to ensure our zero emissions heat delivery programmes support our fuel poverty objectives.

This Strategy provides an update to the 2018 Energy Efficient Scotland Route Map^[ii] and the 2015 Heat Policy Statement^[iii], and brings together our ambitions on energy efficiency and heat decarbonisation into a single framework. It is aligned with wider Scottish Government policy on housing, energy and climate change. The actions it sets out are reflected in our Housing to 2040 Strategy^[iv], which also presents further details on how our housing can support achievement of our net zero ambitions, whilst also delivering against wider objectives.

Vision

Our vision is that by 2045 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.

The Climate Change (Emissions Reduction Targets) (Scotland) Act 2019 set legally binding targets for us to achieve net zero greenhouse gas emissions by 2045, with interim targets requiring a 75% reduction by 2030, and 90% by 2040.

Our statutory fuel poverty targets are similarly ambitious requiring that in 2040 no more than 5% of households are fuel poor, no more than 1% are in extreme fuel poverty and the fuel poverty gap is no more than £250 (in 2015 prices)^[1]. It is critical to a just transition that, as we take action to cut emissions from Scotland’s homes, we do so in a way that supports and enables the eradication of fuel poverty.

Our established fabric first approach is critical to the transition, reducing demand for energy, making homes warmer and easier to heat, and preparing them for zero emissions technologies. However, fabric improvement alone will not get us close to our targets for net zero. We need a strong focus on heating system change as set out in Chapter 2 and throughout this Strategy.

Developing the Heat in Buildings Strategy

The Shared Policy Programme^[v] between the Scottish Government and the Scottish Green Party strengthens our ambition and commitment to transitioning to zero emissions heat, going faster and mobilising more resources. This Heat in Buildings Strategy consolidates this ambitious approach, finalising the draft published in February and providing a firm foundation for the heat transition in Scotland.

We consulted on a draft of this Strategy in February 2021. 178 individuals and organisations responded, providing an invaluable resource to support ongoing policy development. We are publishing analysis of the consultation alongside this Strategy^[vi].

Respondents generally supported the vision and actions set out in the draft Strategy. Responses largely agreed with Scottish Government’s commitments, which were widely regarded as a welcome step forward. Respondents also agreed with the challenges identified in the draft, in many cases presenting more detail or specific examples.

We are working to incorporate this wealth of insight into our approach to the heat transition. This Strategy is an opportunity to reflect much of this insight, but we will continue to build the new ideas generated through the consultation into our policies and programmes. We also continue to be responsive to the fast changing landscape, including the decisions urgently needed from the UK Government.

In addition to the consultation, we welcome the input from Scotland’s Climate Assembly, which reported in June 2021^[vii]. A cross-Government response to the full recommendations will follow, in-line with the requirements of the Climate Change (Scotland) Act.

We also welcome the recent report of the Zero Emissions Social Housing Taskforce, and will give the recommendations careful consideration.

This Strategy forms the foundation of our ongoing work, which will build on the insight and evidence generated by the consultation and wider input. Our next steps include:

• We have committed to publish a refreshed Energy Strategy and have also committed to an Energy Just Transition Plan in Spring 2022. This will allow us to further refine our approach to heat in buildings, ensuring a coherent whole-system view and further embedding our evolving policies within our wider approach to delivering on a just transition.
• We will set out our approach to eradicating fuel poverty in the Fuel Poverty Strategy by the end of 2021.
• We will develop a bespoke Public Engagement Strategy for heat in buildings to raise awareness of the support and advisory services available and to encourage home upgrades.
• We will develop our approach to heat in islands and remote rural contexts in our forthcoming Islands Energy Strategy.
• We will co-produce with the sector a Supply Chain Delivery Plan focussed on the development of energy efficiency and zero emissions heat in the buildings supply chain in Scotland.
• We will establish a Green Heat Finance Taskforce by the end of this year.

Delivery

Central to delivering our vision is an ambitious programme of at least £1.8 billion investment over the course of this Parliament to make our homes easier and greener to heat – progressing our commitments both to decarbonise the heating in 1 million homes by 2030 and to remove poor energy efficiency as a driver of fuel poverty. As set out in the Programme for Government, we will provide increased funding this year for home energy programmes and measures to reduce poor energy efficiency as a driver of fuel poverty. We will allocate £200 million for heat and energy efficiency projects in social housing over this parliamentary term.

Additional private investment will be required to secure delivery over the longer term and will require innovative approaches to securing the necessary investment, which cannot be met by public funding alone. Respondents to the consultation also highlighted this issue. This Strategy considers the funding and finance routes already available and where further work is needed – with a new Green Heat Finance Taskforce to support this established by the end of this year.

Transforming Scotland’s building stock will create numerous opportunities for investment, regeneration as well as the realisation of wider social, environmental and health outcomes. As we accelerate our efforts to make our homes and non-domestic properties warmer, greener and more energy efficient, we must lock-in and secure a wider set of outcomes that will benefit Scotland’s people and places. These Heat in Buildings outcomes (see following page), aligned with our National Performance Framework, will guide our decision making and support the development of a holistic, people-centred approach to the transition ahead.

Outcomes

National Performance Framework

Economy

We have a globally competitive, entrepreneurial, inclusive and sustainable economy

Environment

We value, enjoy, protect and enhance our environment

Poverty

We tackle poverty by sharing opportunities, wealth and power more equally

Health

We are healthy and active

Fair work and business

We have thriving and innovative businesses, with quality jobs and fair work for everyone

Communities

We live in communities that are inclusive, empowered, resilient and safe

Heat in Buildings Strategy

Heating our buildings no longer contributes to climate change

The cost of heating our homes and businesses is affordable and those occupying them have a high comfort level.

We have reduced our demand for heat and poor energy efficiency is no longer a driver of fuel poverty.

The systems we use are smart and resilient and provide us with a reliable source of heat.

We have a secure supply chain with high value, local, sustainable jobs across Scotland and people have been helped to transition to new, secure jobs as part of a just transition.

Our indoor and outdoor spaces are filled with cleaner air.

Our heating systems enable and efficiently use Scotland's renewable energy resources

Electricity and non-electrical fuels are produced from sustainable sources in a way which is consistent with net zero emissions and biodiversity targets

Our heating systems enable the flexible and stable operation of our energy networks

UK Government action

While we are taking action in areas where we can, we do not have all the powers necessary to deliver the transformational change required in our homes and buildings. The delayed UK Heat and Buildings Strategy must set out how the UK will use its regulatory and policy levers to incentivise rapid deployment of zero emissions heat technologies. Industry, businesses and consumers need certainty about how and when regulation will apply to them, and how and when the energy markets will be reformed to make zero emissions heat the cost-effective choice.

This year we will continue to press the UK Government to urgently set out a route map to a net zero heat sector that is crystal clear on these points, whilst doing everything we can within our powers to accelerate progress in a way that is just and fair.

In the absence of certainty from the UK Government, we continue to press ahead with the heat sector to support their efforts to bring costs down; we are helping to train installers to ensure a high-quality service for customers; and we are working with Scotland’s public sector bodies and developers to facilitate investment in new infrastructure.

We urgently need a stronger commitment and clear action plan on heat from the UK Government, and we need private investors and the financial sector to develop the products and services that help consumers make the right choice and spread the upfront costs of investing in improving their properties where they are able.

Structure of this strategy

• A 2045 Pathway for Scotland’s Homes and Buildings – the trajectory we must take to meet our net zero ambitions
• People – a people-centred transition, ensuring that we address fuel poverty and that the most vulnerable in society are protected as heating systems are replaced
• Place – ensuring our actions are tailored to Scotland’s communities, resources, built environment and designated places
• Preparing Scotland’s Energy Infrastructure for Decarbonised Heat – ensuring our energy networks are robust and fit for the future
• Kick-starting Investment in the Transition – how we will invest to stimulate the transition
• Working Towards a Long-Term Market Framework – taking action to ensure that the heat transition can be enabled by a stable, long term market framework
• Developing a Regulatory Framework for Zero Emissions Buildings – to underpin our delivery and provide certainty
• The Economic Opportunity – growing supply chains to meet rising demand, and ensuring that Scotland maximises the economic benefits of the transition
• Working with the UK Government – agreeing the steps the UK Government must take to ensure and enable delivery
• Monitoring, Evaluation and Future Decision Making – monitoring our progress

Alongside consultation on the draft Strategy we have been working with stakeholders to develop a series of impact assessments:

• Equality impact assessment
• Islands impact assessment
• Fairer Scotland Duty
• Child rights and wellbeing impact assessment
• Business and Regulatory Impact Assessment (BRIA)

We will publish these impact assessments following Strategy publication and they will be taken into account as we continue to develop our programmes and specific policies.

We conducted a Strategic Environmental Assessment to identify the likelihood of significant environmental impacts – positive or negative – that could arise from the policies and programmes covered by the Strategy. This included the production of an Environmental Report which was published during the consultation phase. We will publish a Post Adoption Statement, setting out how the findings of the Environmental Report and consultees’ views on both the Environmental Report and draft Strategy, have been taken into account in the finalisation process. This will be published as soon as possible, and made available through the SEA Database^[viii].