Heat in buildings strategy: business and regulatory impact assessment

2. Purpose and intended effect

2.1 Scope

This Business and Regulatory Impact Assessment (BRIA) accompanies the Scottish Government's finalised Heat in Buildings Strategy, following public consultation.

The Heat in Buildings Strategy provides an update to the Energy Efficient Scotland Route Map (2018) and the Heat Policy Statement (2015) and brings together ambitions for energy efficiency and heat decarbonisation into a single strategy outlining how we will reduce greenhouse gas emissions from homes, workplaces and community buildings across Scotland in line with our statutory climate change and fuel poverty targets.

This document provides an indicative assessment of the impact of the strategy on various parties and sectors within the Scottish economy.

2.2 Objective

The Strategy sets out how we plan to transform Scotland's homes and workplaces so they are warmer, greener and more efficient.

The Strategy:

• establishes principles that will underpin our policies and actions on energy efficiency and heat, including principles to prevent fuel poverty worsening.
• sets out strengthened action and increased investment to support delivery of energy efficiency and zero emissions heat.
• considers whole-system energy issues and how these are to be managed over the course of the transition.
• outlines the scale of the economic opportunity presented and identifies the measures necessary to realise this and to ensure a just transition.

The Strategy sets out actions that will put us on a path consistent with our statutory climate change and fuel poverty targets. As well as an ambitious programme of at least £1.8 billion investment over the course of this Parliament, the strategy sets out longer term action on the market framework for zero emissions heat and energy efficiency and details the Scottish Government's intention to introduce a regulatory framework for zero emissions heating and energy efficiency, subject to consultation and to limits on devolved competence.

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, 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.

Heat in Buildings Outcomes

1. Heating our buildings no longer contributes to climate change

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

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

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

5. 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.

6. Our indoor and outdoor spaces are filled with cleaner air.

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

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

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

These 'heat in buildings' outcomes, aligned with our national outcomes within the National Performance Framework,^[1] will guide our decision making and support the development of a holistic, people centred approach to the transition ahead.

National Outcomes

• 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 health 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

This Strategy is aligned with Scottish Government policy across the areas of Housing, Energy, and Climate Change. The actions the Strategy sets out align with the Buildings chapter of the Climate Change Plan Update (see below) as well as our Housing to 2040 Strategy,^[2] which also presents further details on how our housing can support achievement of our net zero ambitions, whilst also delivering against wider objectives. Transforming our homes and buildings will also have an impact on our wider energy systems and will coincide with action in other sectors to reduce emissions. Scotland's Energy Strategy Position Statement^[3] takes into account the whole system issues raised by the Heat in Buildings Strategy and our wider net zero climate targets. This will be further refined in the refreshed Energy Strategy in 2022, ensuring a coherent whole-system view of the heat transition and its interaction with other sectors. In addition:

• We will set out our approach to eradicating fuel poverty in the Fuel Poverty Strategy by the end of 2021.
• We have committed to carrying out the previous Just Transition Commission's recommendations and we will embed our evolving policies on zero emissions heat and energy efficiency within our wider approach to delivering on a Just Transition
• We will develop our approach to heat in an 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 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.