Heat in Buildings: Local Government Oversight Group minutes: February 2024

Attendees and apologies

• James Fowlie, COSLA
• Robert Nicol, COSLA
• Calum Lindsay, COSLA
• Mike Callaghan, COSLA
• Sue Kearns, Scottish Government
• Catherine Williams, Scottish Government
• Madeline Plater, Scottish Government
• Amy Tickell, Scottish Government
• James Hemphill, Scottish Government
• Gareth Fenney, Scottish Government
• Ross Loveridge, Scottish Government
• Alex Chatzieftheriou, Scottish Government
• Drew Murphy, Scottish Government
• Joseph Deans, Scottish Government

Items and actions

Overview of the Climate Delivery Framework

COSLA advised we are still on a journey on cooperation and joint delivery, on heat and beyond. How can we take strategic engagement further and deeper, and ensure it is fit for purpose. 

The premise behind the Climate Delivery Framework is from the work done by the Net Zero, Energy and Transport (NZET) committee at the Scottish Parliament. There is a gap between ambitions and delivery. The Scottish Cities Alliance took the initiative and recorded ideas that have moved us on to build support to get political agreement for the framework.

The idea is to consider the high carbon sectors, how to bring those together under one programme. Two key areas are heat and transport. Need to understand how these interact. Shared issues around funding and public appetite. Bringing together into one place where Ministers and Local Government can scrutinise delivery. Hopefully will draw out complementary solutions, arena to work through difficult challenges. 

Need to prove the concept works. Intent is to resource within existing staff and funding. Likely to be led by the Net Zero Public Sector team at the Scottish Government and the COSLA Environment and Economy team. Could grow in future. 

Climate Intelligence Service will be a key part of this and feed in. Need to be data led, steered by the facts.

SG raised questions of governance, lots to work through on the Heat in Buildings programme. Supportive of the concept. Aim is to optimise governance structures for heat to meet challenges, whilst also progressing action in the meantime. Have to make sure everything is adding value, and not adding layers of bureaucracy, needs to be streamlined. 

Audit Scotland report asked us to complete review of governance and new vision. Question of where we are going, influences key questions. Revised our ambition at launch of the Heat in Buildings Bill consultation. Need to clarify what new ambition means for different areas and feed out into wider areas such as transport and housing. Where are the compromises likely to be. Looking at longer term vision to 2045. Setting ourselves up to do this right.

COSLA agreed there is no intention to add bureaucracy. Any new framework should aim to reduce this. Not going to replace all the programme management is going on. Pathway has changed, timelines of the HIB bill, challenges in transport. So what are we focusing on, how can we maintain momentum. Need these strategic conversations.

SG advised sequencing of decisions are a key point. Not all for Scottish Government or Local Government to decide, lots for UK Government e.g. the gas grid.

First 12 months looking at the strategic space. Questions of what the role of local authorities, where do individuals act. Looking at 5 year trajectory and having an common understanding of that.

COSLA seeking to solve problems together. Funding is tight, but let's make the most efficient use of the resources we collectively have. Aligning resources.

The just transition hinges on heat and transport sectors, need to ensure they are prioritised and money isn't diverted elsewhere.

COSLA response to the Heat in Buildings Bill consultation

COSLA response will focus on strategic high level elements rather than specific questions. Want it to be a supportive response, agree with ambition around carbon targets. Recognise need for difficult actions that won't necessarily be popular.

However there are areas of concerns from COSLA members they want to cover. These include the supply chain, resources (not just affordability, but certainty of resources - e.g. potential enforcement and monitoring burden on local authorities, impacts of deadlines, e.g. 2028 Private Rented Sector deadline and 2038 public sector deadline). 

Process - aiming to have draft response by the end of this week, paper to go to the COSLA policy board for agreement in March before submitting.

Are hearing critical voices but want to be constructive and supportive of ambition and direction.

SG advised we need views to inform. Need evidence and detail on what are the issues with the deadlines and what would be better. On enforcement and monitoring it has come out clearly from other stakeholder engagement that we need more clarity on this. 

COSLA advised that the supply chain concerns are around capacity and how will it be scaled up. How to ensure we have consumer protection built in from the start. How to avoid previous issues. How to protect individual consumers but also reputational damage of whole programme (e.g. Green Deal). Colleagues at Trading Standards will be able to offer more advice. 

Lots of smaller local authorities concerned about the 2038 target and not being able to access the supply chain or compete with larger public bodies. Resources - cost is daunting, trying to be helpful in targeting where more certainty over resources is needed. 

SG noted interest in the public sector supply chain concerns. Need to consider how we manage pipelines. On quality assurance we need to learn lessons from the past. If a lot of it is privately financed then those institutions will have a stake in quality assurance and will apply pressure. Whole system is working towards a more quality product.

SG advised we are at the limits of our devolved powers, could look at some sort of supplier obligation but we are limited. Appreciate desire to be constructive but do not hold back concerns. Need to make sure the regs are practical and that they will work, can't just be about targets. How can we change things to make it work? We want to hear ideas/solutions.

Discussion on  delivery and private investment for heat decarbonisation

Heat network delivery models

SG presented slides from Scottish Futures Trust (SFT) on potential heat network delivery models. 

Targeting support and regulatory framework being brought in through the Heat Network Act. 

Estimate of £5 billion to meet 2030 heat network target. We have £300 million in Scottish Government heat network fund. Need private investment

How to bring in investment? Heat networks are revenue generating projects. Local Heat and Energy Efficiency Strategies (LHEES) take first steps. E.g. Glasgow LHEES map. Estimate of £6 billion cost to decarbonise heating across Glasgow.

Various barriers to public delivery of heat network projects.

SFT report explored 12 potential delivery models, with 5 recommendations. Looking at financial, commercial, and governance arrangements.

Models include: service concession - public sector procures a private sector business to own and operate heat network; joint venture - 50/50 partnership between a local authority and private sector; regional Energy Service Company (ESCo) – local authorities & public sector working together with private sector, e.g. SFT Hub model for schools; central government role - government direct development and ownership of HN infrastructure..

Findings from the Green Heat Finance Taskforce

Green Heat Finance Taskforce (GHFT) update postponed to next meeting due to lack of time. Keen to get COSLA's view. 

Any other business

COSLA advised Social Housing Net Zero Standard (SHNZS) consultation response going to COSLA policy board later this month for approval. 

SG looking at SFT project on funding and finance for social housing sector, keen to share with and get input from COSLA.

Action

Items for next agenda to include GHFT and social housing funding.