New Build Heat Standard: consultation - part two

2. Regulatory Proposals

2.1 Prohibition of Direct Emissions Heating Systems in New Domestic Buildings

2.1.1 Background

As was made clear within the NBHS Consultation: Part I, we cannot meet our legislated climate change targets unless the greenhouse gas emissions produced from heating (and cooling) our homes are eliminated.

The continued deployment of DEH systems is not compatible with Scotland's net zero targets and, as set out within section 2.2 of this document, there are a number of readily available technologies already in use across Scotland which can deliver the requirements of a zero direct greenhouse gas emissions standard.

Welcome progress has been made in decarbonising our building stock (both new and existing). However, as noted earlier within this document, direct emissions from buildings still account for almost 20% of Scotland's total greenhouse gas emissions.^[10]

To illustrate the need for regulation: analysis of the Energy Performance Certificate (EPC) register^[11] for all new build homes completed in the 12-month period to end 2020 shows that over 80% of new properties were served by mains gas fired boilers as their main heating system, with a further 3% using heating oil and LPG. Only around 10% were served by non-DEH systems.

Therefore, a 'business as usual' approach is no longer viable. This was recognised by the UK Government during the development of the Future Homes Standard (FHS).^[12] The impact assessment^[13] for the FHS identified numerous market failures preventing a successful transition away from the use of DEH systems in homes. Intervention is, therefore, necessary to stimulate the use of ZDEH systems.

Within the Future Homes Standard impact assessment, it was noted that 'building regulations and standards are widely recognised as an appropriate point of intervention to overcome these market failures in construction'.

2.1.2 Proposed Approach

The Scottish Government agrees that intervention is necessary and, therefore, it is our intention to use existing powers under the Buildings (Scotland) Act 2003^[14] and regulate to prohibit direct emissions heating (DEH) systems being installed in new buildings applying for a building warrant from 1 April 2024.

This will be achieved through amendments to the Building (Scotland) Regulations 2004.^[15]

By prohibiting the use of DEH systems through building regulations, this ensures simplicity in how the NBHS is implemented and offers a straightforward mechanism to ensure compliance.

It is proposed that the NBHS will be monitored and enforced through the building warrant process – ensuring consistency with practices already familiar to developers.

This is consistent with the feedback received to the NBHS Consultation: Part I, where a majority of respondents were in favour of creating an easily understood and enforceable standard for new buildings that stipulates permissible heating systems.

2.1.3 Defining Direct Emissions Heating

As set out within the Building (Scotland) Amendment Regulations 2022:^[16] a 'direct emission heating system', in relation to a building, means a system (other than a heat network)^[17] by which the building is heated or is cooled, or by which hot water is made available in the building, which uses thermal energy produced by a source of production that:

a) is located within the building, or the curtilage of the building, and

b) during normal operation produces greenhouse gas emissions^[18] at the point of production of that thermal energy.

In practice this means that, from 1 April 2024, new buildings applying for a building warrant in Scotland – which are not served by a heat network – must meet their space heating, cooling and hot water demand by using systems that produce zero direct greenhouse gas emissions at the point of use during normal operation where the system(s) is located within the building or curtilage of the building.

2.1.4 Focus on Direct Emissions

We propose that the focus of the NBHS will be to regulate direct emissions produced at the point of use. As set out within NBHS Consultation: Part I, this will mean that:

• Any indirect or upstream greenhouse gas emissions that are produced during the generation or distribution of purchased thermal or electrical energy – which is delivered via a heat network or heat produced from grid electricity – would be considered out of scope.

This ensures that wider energy-system decarbonisation is correctly-assigned to the appropriate actors, who have the capability and responsibility to take action.^[19]

The Part I consultation asked:

• Do you agree with approach taken to focus only on direct/point-of-use emissions that a building owner has responsibility over?

The analysis of responses to this question in the NBHS Consultation: Part I found that 68% of respondents were in agreement, therefore, this approach has not changed.

2.1.5 Interaction with the Building Standards Energy Review

Following the Energy Review consultation in 2021, amended standards for new buildings – which will apply to all building warrants applied for on or after 1 December 2022 – were published in June 2022.^[20]

As well as setting improved standards for energy efficiency, the 2022 building regulations already set out provisions intended to support the implementation of the NBHS:

• NBHS will require that all new wet heating systems are designed to operate at lower temperatures, to be compatible with efficient use of non-DEH solutions (such as heat pumps and heat networks).
• The approach to connecting new buildings to heat networks has also been simplified by putting a focus on the performance of the building itself, as opposed to the network which serves it.
• New buildings constructed without DEH systems will be exempt from the need to demonstrate compliance with a Target Emissions Rate (TER) in respect of Standard 6.1^[21] of Scottish building regulations, but will still require to meet the new delivered energy target.
• New buildings constructed with DEH systems will be required to show they are designed to enable simple retrofit to a non-direct emissions heat solution.

As a result, from 1 April 2024, new buildings will only need to achieve compliance with a delivered energy target,^[22] which is set using the 'notional building' approach familiar to developers. This is illustrated below:

DEH v ZDEH

1 December 2022:

ZDEH System

• Compliance with new energy target
• Meet requirements of notional building

DEH System

• Compliance with TER
• Design building for simple retrofit to ZDEH
• Compliance with new energy target
• Meet requirements of notional building

1 April 2024:

ZDEH System

• Compliance with new energy target
• Meet requirements of notional building

X DEH System

• X Compliance with TER
• X Design building for simple retrofit to ZDEH
• Compliance with new energy target
• Meet requirements of notional building

2.1.6 Interaction with Future Reform of EPCs

For new buildings post 1 April 2024, an EPC will be required upon completion as is the case now.^[23]

For wider awareness, EPCs are being reformed.

To ensure EPCs align with our net-zero targets, and provide relevant information for our heating and energy efficiency standards (including for new builds), EPCs will be reformed to indicate whether or not the heat source(s) installed at a dwelling is ZDEH- compliant.

The initial proposals were consulted on in July 2021^[24] and a response to this consultation will be published this year.

Consultation Question: Approach to Regulation

1. Do you agree with the approach set out in 2.1 to regulate direct emissions heating (DEH) systems in new buildings?

2. Do you envisage any unintended consequences as a result of this approach? Please provide reasons for your answer.

2.2 Technologies

The NBHS will remain technology-agnostic, as proposed in the Part I consultation.

Feedback received to the Part I called for 'a technology-agnostic approach which would allow for a range of different technologies to be considered in order to meet different needs'. Being technology-neutral ensures that newly developing ZDEH technologies would not be prohibited in future.

To identify existing and emerging technologies that could be compliant with the NBHS, the Scottish Government commissioned independent research, which was undertaken by ClimateXChange (CXC).

This research considered the direct greenhouse gas emissions associated with the most common and readily available zero and low carbon heating technologies (Direct greenhouse gas emissions from low and zero carbon heating systems).

The research split these technologies into the following three categories:

Non-DEH Technologies, Hydrogen and Bioenergy Pyramid

• Non-DEH Technologies
• Hydrogen
• Bioenergy

2.2.1 Non-DEH Technologies

The research confirmed that the following technologies produce no direct, in-building greenhouse emissions from normal operation at point of use – and would, therefore, be compliant with the NBHS:

• heat pumps;^[25]
• heat networks;
• solar thermal and solar thermal storage systems;
• electric storage heaters;
• electric boilers;
• fuel cells; and
• direct electric heaters (including electric panel heaters, electric fan heaters, thermal fluid-filled radiators, and electric radiant heaters).

As set out within our Heat in Buildings Strategy, heat pumps and heat networks are the two technologies (other than improvements to the energy efficiency of buildings) which have been identified as being no/low-regret options for existing buildings:

The Scottish Government proposes that this principle is also considered for new buildings: meaning that, while there will be flexibility in how compliance with the NBHS can be achieved, there should be a focus on the deployment of technologies which are considered to be 'no or low regrets'.

2.2.2 Hydrogen

With regards to direct emissions, the findings of the research were inconclusive for 100% hydrogen due to a lack of available real-life data.

The Scottish Government is seeking to clarify this and will commission independent laboratory testing of hydrogen appliances to determine what, if any, greenhouse gas emissions are produced from the combustion of 100% pure hydrogen (under normal operating conditions).

Once the testing has concluded, we will set out our position on the use of 100% hydrogen for space and hot water heating in new buildings.

2.2.3 Bioenergy

The research, which had a biomass focus, found that combustion of this fuel is associated with direct emissions of carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O).

With the focus of the NBHS being on direct emissions, this means that bioenergy systems would not be considered to be compliant with the regulations (in relation to both new domestic and non-domestic buildings).

This stance is aligned with that set out within our Heat in Buildings Strategy, where the Scottish Government made clear our agreement with the Committee on Climate Change (CCC) recommendation^[26] that bioenergy does not have a significant long-term role in providing heat in buildings as it emits greenhouse gases at point of use.

Furthermore, at any one time there is only a finite amount of sustainable bioresource available and there are a number of potentially competing demands for its use.^[27] We must consider how it should be prioritised for the most appropriate use in the wider economy.

Our approach is to see bioenergy used where it has the greatest value in reducing emissions, and where the value of wasted bioresources can be harnessed efficiently – therefore, we have established a Bioenergy Policy Working Group which will consider these issues before publishing a Bioenergy Action Plan in 2023.

2.2.4 Wider Considerations for Technology Choice: Heat Networks

As noted, the NBHS will not mandate the use of any specific non-DEH technologies. However, developers should be aware of heat network zones, existing or permitted heat networks, and local heat and energy efficiency strategy (LHEES) plans when designing new developments.

The NBHS Consultation: Part I responses indicated broad support for new buildings being required to be designed in such a way as to enable a connection to any existing heat network, where that development is in a designated heat network zone^[28] or where there is a heat network zone permit.

As set out in the Heat Networks Delivery Plan^[29] in more detail, subject to devolved competence, we will consult on proposals to address the issue of demand assurance. In doing so, we will consider the UK Government's proposals to mandate connection to heat networks in England.

The Decarbonisation of Heat Networks

The Heat Networks (Scotland) Act will see the introduction of the licensing of heat networks as part of a wider regulatory regime, which the Scottish Government aims to have in place by early 2024. The licensing regime will require existing networks (in existence prior to the licensing regime) to transition to zero emission heat sources. Details on the Heat Network Decarbonisation Plans, which we propose that licence holders who operate existing networks in Scotland will be required to prepare and then implement, are provided in the Heat Networks Delivery Plan and will be built on in a subsequent consultation relating to the heat networks regulatory regime.

From early 2024, the legislative framework will require that new heat networks, and extensions of existing networks, are powered using low and zero emissions heat sources. Heat from sources such as surplus or waste heat, electric heat pumps, solar thermal or plant using green hydrogen would be considered low and zero emissions.

The Scottish Government also recognises that, in the near term, a small percentage of annual heat provided through some new networks may need to be sourced from natural gas for the purposes of peaking and backup, while the vast majority of heat provided by those networks will be using low and zero emissions heat sources. The exact percentage will be determined on a case-by-case basis and the need for heat from natural gas will have to be evidenced, while showing other options have been explored. Such new networks will be required to have a plan as to how that percentage is expected to reduce over time, with significant progress made by a set year: for example, by 2035.

With the successful passage of the Heat Networks (Scotland) Act, the Scottish Government has published the First Nationwide Assessment of Potential Heat Network Zones (FNA),^[30] which has taken the first steps to identify potential heat network zones across Scotland, where heat networks can be considered a suitable long-term solution.^[31]

2.2.5 Wider Considerations for Technology Choice: Local Heat and Energy Efficiency Strategies (LHEES)

LHEES^[32] aim to establish local authority area-wide plans and priorities for systematically improving the energy efficiency of buildings, and decarbonising heat. The Scottish Government has suggested that LHEES adopt a local authority area-wide approach and cover a long-term period (15-20 years).

In line with the goals of Energy Efficient Scotland, LHEES should reflect and support local and national policies, frameworks, strategies and targets, and identify opportunities for energy efficiency improvements and heat decarbonisation.

The first LHEES are due to be finalised by the end of 2023 and will identify key areas in the local authority for heat decarbonisation.

Consultation Questions: Technologies

3. Are there any limited, specific situations where the use of bioenergy^[33] systems would be required in new buildings?

4. If 'Yes', what do you believe the criteria should be for introducing such an exemption? Please provide evidence to support your answer.

2.3 Approach to Conversions

Scottish building regulations define situations where the change to the occupation or use of a building cause building regulations to apply. These changes are defined as a 'conversion'.

The subject of a conversion, and any work needed to support the change in occupation and use, is subject to the building regulations in force at the time the conversion is proposed. A building warrant must be obtained for a conversion before undertaking such work.

There are 10 categories of change which constitute a defined conversion. These are set out in Schedule 2 to Regulation 4^[34] of the building regulations. The same information on conversions can be found in section 0 (general) of the Domestic and Non-Domestic Technical Handbooks.

Within the NBHS Consultation: Part I, the Scottish Government proposed that the NBHS would cover both (a) any property built for the first time and (b) any property created by the conversion of an existing building.

While our Heat in Buildings Strategy outlines Scottish Government plans for decarbonising all buildings from 2025 (both newly constructed and existing ones whether there is a conversion or not),^[35] we recognise that, at this stage, more significant changes to buildings should be treated differently to minor works.

To balance these objectives, we propose that conversions would be prohibited from installing a DEH system where the work to be undertaken would already require the installation of a new heat generating system.

Including conversions with a specified criteria ensures that we utilise the opportunity presented by disruptive works to install ZDEH systems, while balancing this with not unduly burdening minor conversions.

We propose that the NBHS will apply to conversions as defined within Schedule 2 to Regulation 4 of the Building (Scotland) Regulations) 2004. However, the regulations would only apply where:

a) heating is introduced to the building for the first time; or

b) an existing heat generator is located within a part of the building which is the subject of the conversion.

Further advice will be provided on the circumstances where it may be shown that replacement of the heat generator is not 'reasonably practicable'.^[36]

Consultation Question: Conversions

5. Do you agree with the proposed approach to conversions as set out in section 2.3?

6. Do you envisage any unintended consequences as a result of this? Please provide reasons for your answer.

7. What criteria would you use to define the replacement of a direct emissions heating (DEH) system as being 'reasonably practicable'?

8. What criteria would you use to define it as being 'not reasonably practicable'?

2.4 Ensuring Equality

In continuing to develop the NBHS, we are mindful of the three needs^[37] of the Public Sector Equality Duty (PSED) as set out in section 149 of the Equality Act 2010.^[38]

Therefore, given the importance of assessing the impact on each of the protected characteristics listed in the Act (sex, age, disability, race, sexual orientation, gender reassignment, religion and belief, pregnancy and maternity, and marriage/civil partnership), the Scottish Government wishes to consider:

• how the NBHS may affect people with one or more of the protected characteristics;
• whether these proposals could constitute direct and/or indirect discrimination;
• how these proposals might advance equality of opportunity; and
• how they might foster good relations persons who share a protected characteristic (and those who do not).

Consultation Questions: Equality

9. How might these proposals impact upon people with one or more of the protected characteristics listed in the Equality Act 2010 (for example: a positive, negative or neutral impact)?

10. How might these proposals help the Scottish Government ensure due regard of the three needs of the public sector equality duty (PSED)?