Retrofit the majority of existing homes in Scotland to be net zero by 2030, while establishing Scotland as a leader in retrofit technology, innovation and installation practice.

Our Heat in Buildings Strategy, published in October 2021, sets out an ambitious policy package to deliver energy efficiency and zero emissions heat to ensure our homes and buildings are cleaner, greener and easy to heat, and no longer contribute to climate change. We have committed to invest at least £1.8 billion over the course of this Parliament to kick-start market growth and support people who are least able to pay. We have committed to phase out the need to install new or replacement fossil fuel boilers and will regulate as far as we are able to within devolved competence, to help stimulate the market for zero emissions systems – in turn, supporting green jobs and driving down costs for households. We are already supporting households to improve their energy efficiency and transition to zero emissions heating in across various schemes, including Warmer Homes Scotland, our local authority-led Area Based Schemes, and Home Energy Scotland interest-free loans and cashback grants. We are working towards a longer-term market framework that will help consumers overcome the upfront investment costs and help to attract private investment to help meet the costs of the transition. We also recognise that it will be important to understand the need of passive cooling measures to respond to increased summer temperatures, such as ventilation and shading, and opportunities to apply these during the course of improving buildings’ fabric efficiency.

We agree with the Assembly’s observation that energy efficiency retrofit will make an important contribution to lifting people out of fuel poverty. We also recognise there are challenges to achieving our decarbonisation and fuel poverty objectives together, as the running costs of zero emissions heating can, in some cases, be higher than fossil fuel heating.

We therefore published a set of guiding principles in the Heat in Buildings Strategy to ensure we will only take forward actions to decarbonise heat where they are found to have no detrimental impact on fuel poverty rates, unless additional mitigating measures can also be put in place. This is fundamental to ensuring heat decarbonisation contributes to a just transition to net zero.

The Heat in Buildings Strategy aims to reduce emissions from buildings by 68% from 2020 to 2030. Achieving this will require a large majority of homes reaching a good standard of energy efficiency (at least equivalent to EPC C) by 2030, and we want all homes to reach this standard by 2033. In addition, we need over a million homes to switch from fossil fuels to a zero emissions heating system, which will need conversion rates to peak at over 200,000 per year later this decade. To put that into context, there are around 2.2 million homes in Scotland that currently use fossil fuel heating, and around 120,000 of these replace their boiler each year. Recent years have seen zero emission heat installation rates around 3,000 per year, so we need to see substantial growth in supply chains, particularly in the availability of skilled heating and energy efficiency installers. We will work with industry to co-produce a new ‘Heat in Buildings Supply Chain Delivery Plan’ by Summer 2022.

Following analysis of the Assembly’s recommendations, the Scottish Government will take the following actions:

  • We will co-produce a new ‘Heat in Buildings Supply Chain Delivery Plan’ by Summer 2022 which will set out further detail on support for workforce development and retraining, in line with the Assembly’s recommendations.
  • We will keep our fuel poverty targets under review, and in 2025 will identify whether it is possible to bring the target dates forward.
Photo of Shona Robinson MSP

Cabinet Secretary for Housing and Social Justice, Shona Robison MSP

“A fifth of our emissions come from heating buildings - I agree with the members that reducing this whilst also tackling fuel poverty is one of the most important things we can do to help end Scotland’s contribution to climate change.”


Recommendation 12: Workforce Development and Retraining

Invest in workforce development and retraining to deliver retrofitting and construction work to high standards and ensure we have the ability to implement an ambitious retrofit plan across Scotland.

 

Scottish Government Response

The Scottish Government supports the Assembly’s recommendation that investment in workforce development and retraining is required to ensure we have the ability to implement an ambitious retrofit plan across Scotland.

 

We anticipate that the heat in buildings transition will require a substantial growth in supply chains, particularly in the availability of skilled heating and energy efficiency installers. The specific scale and timing of the required workforce growth will depend on a range of factors including the demographics of the existing workforce and supply chain demand across the construction sector.

To understand the skills demand better, we have partnered with Scottish Renewables and Skills Development Scotland to undertake a ‘Heat in Buildings Workforce Assessment Project’ which will help us define the timing of workforce growth and how best to support people transitioning into key roles. This work will report back in Spring 2022. This will improve our understanding on how best to support workforce investment and ensure that jobs will be available for people to move into as they complete their training.

We know that, ultimately, investment in the supply chain must start with clear demand for its products and services. Our investment of at least £1.8 billion, as outlined in the Heat in Buildings Strategy, aims to strengthen demand for zero emissions heating and energy efficiency, and support an increase in jobs and skilled workers. We will work with the sector to ensure that this demand stimulus unlocks private sector investment in workforce development, and will work with partners including Skills Development Scotland and the Scottish Funding Council to scope any requirement for public funding. Our commitment to a skills guarantee for those in carbon intensive sectors will provide targeted support where needed.

As mentioned earlier, we are also working with industry to co-produce a new ‘Heat in Buildings Supply Chain Delivery Plan’ by Summer 2022, specifically focussed on strengthening the broad supply chains needed to deliver at the pace and scale required. We will use the plan to set out further detail on support for workforce development and retraining, in line with the Assembly’s recommendation.

A principle aim of the Covid Recovery Strategy is to ensure a cross-cutting approach to delivering good green jobs and fair work. The Strategy will actively support recovery plans for Manufacturing and Construction in addition to the Zero Emissions Affordable Homes Strategy, co-ordinating partnership working with business, the public and third sectors to provide upskilling and retraining opportunities that support people into work.


Recommendation 13: Implement Fuel Poverty Strategy by 2030

Ensure the Fuel Poverty Strategy, as required by the Fuel Poverty (Targets, Definition and Strategy) (Scotland) Act (2019) but currently still in its 2018 draft form, is implemented immediately and is effective by 2030 not 2040.

 

Scottish Government Response

The Scottish Government supports the principle of the Assembly’s recommendation to ensure the Fuel Poverty Strategy is implemented immediately and for it to be effective as early as possible.

 

Today in Scotland, a quarter of households are in fuel poverty with around half of these living in extreme fuel poverty. Our goal, as set out in the Fuel Poverty (Targets, Definition and Strategy) (Scotland) Act 2019, is to address the four drivers of fuel poverty so it can be eradicated. Eradicating fuel poverty is crucial to achieving a fairer, socially just and sustainable Scotland. As the Assembly recommendations recognise, tackling fuel poverty will improve people’s lives, provide support to people who need it most, creating jobs and driving industry confidence to invest in energy efficiency and low carbon heating.

Our Fuel Poverty Strategy, due to be published by the end of 2021, sets out our new and ambitious approach to tackling these drivers. However, it will not be easy. We have legally devolved powers to promote and support energy efficiency in buildings, one of the four drivers of fuel poverty, and we set out in our Heat in Buildings Strategy in October how we intend to decarbonise Scotland’s buildings, including our commitment to fuel poverty principles. The independent Scottish Fuel Poverty Advisory Panel (a non-departmental public body established as a requirement of the Fuel Poverty Act) will have a crucial role in advising on and supporting the actions we will take to meet our statutory fuel poverty targets and holding us to account for making the progress required. Legal powers relating to the other drivers: income, energy costs, and how energy is used in the home are either reserved or, for example with the welfare system, only partially devolved. We will continue to work with the UK Government and where necessary raise our concerns in relation to reserved matters.

As we decarbonise our homes, we must ensure that our guiding principle, that no one is left behind, is met. The process of decarbonising our homes must not increase the fuel poverty rate nor the depth of existing fuel poverty, and it must not have an adverse impact on people in, or at risk of, fuel poverty. 

Our Fuel Poverty targets are incredibly ambitious and what we have set out is a credible and realistic plan to deliver those targets. We do, nevertheless, understand the challenge set by the Assembly and will therefore keep the timescales under review. As part of our ongoing monitoring and evaluation of the fuel poverty strategy, we will review progress again in 2025 and identify whether it is possible to bring these target dates forward.


Recommendation 14: Retrofit All Existing Homes by 2030

Develop an ambitious plan across Scotland to enable the retrofitting of all existing homes by 2030 to be net zero.

 

Scottish Government Response

The Scottish Government supports the Assembly’s recommendation to ensure we have an ambitious plan to enable the retrofitting of all existing homes and to achieve this as soon as possible.

 

We recognise the scale of the challenge of reducing emissions from our homes and buildings in a way that leaves no one behind. The actions we've committed to in the Heat in Buildings Strategy set out the steps required to invest, regulate and innovate, ensuring that action to decarbonise heat also tackles fuel poverty and social inequality. We are clear these actions are only the beginning. We must act with urgency, ensuring we put effective policies and programmes in place to deliver a just transition and minimise the risks of unintended consequences. For example, respondents to the consultation on our draft Heat in Buildings Strategy identified a shortage of those with the necessary retrofitting and heat installation skills as a risk to the delivery of our existing ambitions. Therefore a more stretching target would not necessarily secure greater impact. As mentioned in Recommendation 12 we have plans in place to address supply chain readiness and skills shortages through our commitments on workforce and the Supply Chain Delivery Plan.

In addition, while we are maximising activity in devolved areas, we recognise that there are limits to what we can achieve on our own. We are continuing to urge the UK Government to take urgent action across a number of reserved policy areas, for example rebalancing gas and electricity prices so that the running costs of zero emission systems are comparable to fossil fuel incumbents. The UK Government’s Heat and Buildings Strategy gives helpful signals, but the commitments lack the urgency and clarity needed. We will continue to work with the UK Government, seeking a cross-government approach to reforming our energy markets – one that puts consumers first and is aligned with our shared, net zero objectives.

For these reasons, we have not adopted 2030 as the target date for all homes to be retrofitted with zero emissions heat. However, as set out in our Heat in Buildings strategy, we need over one million homes in Scotland to convert from fossil fuels to zero emissions alternatives, contributing to a 68% reduction in emissions from heat across the whole building stock this decade. This is a very ambitious pace – twice the pace of the UK Government’s aspiration to reduce emissions from heating by 25-37% over the same period – and our policy package is accordingly bold, including significant investment and plans for new legislation.

We are developing a monitoring and evaluation framework which we will publish to help us track progress on our pathway to zero emissions heating. This will help assess the scope to bring forward the date by which we aim for all homes to reach a zero emission heat standard from our current backstop of 2045, ensuring Scotland’s existing homes no longer contribute to climate change.


Recommendation 15: Robust Retrofit Quality Standards

Ensure immediate development of robust quality standards for assessing what needs to be done to retrofit existing homes to become net zero.

 

Scottish Government Response

The Scottish Government supports the Assembly’s recommendation to ensure development of robust quality standards for assessing what needs to be done to retrofit existing homes to become net zero.

 

The Heat in Building Strategy sets out the Scottish Government’s intention to regulate all housing tenures for both energy efficiency and zero emissions heat by 2045. This is underpinned by a robust assessment of homes’ standards of energy efficiency and how to improve them. As set out in our response to Recommendation 11, we are reviewing the underpinning assessment to ensure it provides a robust basis for regulations that will drive homes to become net zero.

The Scottish Government has also agreed to adopt the latest British Standards Institution (BSI) energy efficiency retrofit standards as a requirement for Scottish Government funding for retrofit work in Scotland. These standards cover the entire retrofit process in homes from initial assessment and design, through to installation and evaluation. A core part of these BSI standards is to ensure that any retrofit work delivers on the clients’ needs, both in terms of carbon savings and cost savings. These standards will continue to evolve over time and we are working with BSI to ensure the standards are fit for purpose for Scotland.

We are also considering using the UK Government endorsed TrustMark quality assurance framework to ensure compliance with these BSI standards when using Scottish Government funding, and will shortly publish a policy statement covering quality assurance for our Heat in Buildings Strategy.


Recommendation 16: Decarbonise Heating by 2030

Scotland should lead the way in reducing to net zero the carbon emissions caused by domestic and non-domestic heating systems, by investing in the exploration and early adoption of alternative fuel sources for buildings, aiming to decarbonise the gas grid and heating systems by 2030.

Children’s Parliament: Make sure new houses are built to be environmentally-friendly. This would involve making them energy efficient.

Children’s Parliament: Make using only smokeless fuel a law in Scotland.

 

Scottish Government Response

The Scottish Government agrees that exploration of alternative fuel sources for buildings is an important component of the path to decarbonised heat, and that different approaches will be suited to different parts of Scotland.

Significant and urgent action must also be taken by the UK Government in reserved areas to decarbonise the gas network, reform electricity and gas markets, support deployment of zero emissions heat technologies and protect consumers.

 

The Heat in Buildings Strategy sets out strategic technologies as near term priorities in buildings where they are known to be low and no regrets. These technologies (energy efficiency, heat pumps and heat networks) are supported through our existing delivery programmes. We are supporting the deployment of these technologies both through our delivery programmes and market development policies, including working towards a Heat Pump Sector Deal and implementation of the regulatory framework provided for by the Heat Networks (Scotland) Act 2021, which will underpin confidence and boost growth in the sector.

We are working with industry, energy network companies and the regulators to put the right enablers in place for the heat transition in Scotland. This includes forming a new Heat Electrification Strategic Partnership, working with the gas network operators on greening Scotland’s gas grid, and building the evidence base on where hydrogen is most likely to play a role for heating. Our Low Carbon Infrastructure Transition Fund also provides innovation funding to support this agenda.

Hydrogen has the potential to help decarbonise key parts of the energy system in Scotland including the provision of heat to homes and buildings. We have invested £6.9 million in the H100 Fife project which we expect to be trialling hydrogen for heat in 300 domestic properties in Leven, Fife by 2022/23. We will continue to support the development of evidence on the potential role of hydrogen in decarbonising heat including the potential expansion phases of the H100 Fife project, along with close working with the UK Government. We also expect hydrogen to be providing decarbonised heat for parts of industry by the mid-2020s. As set out in our response to recommendation 14, our targets are ambitious, requiring us to achieve heating system replacement rates well above the natural boiler replacement rate. However, our assessment is that the conversion of parts of the gas network to 100% hydrogen is unlikely to play a large part in reducing emissions from buildings before the late 2020s, and we do not think it is feasible to fully decarbonise all heating by 2030 in line with a fair and just transition.

The Heat in Buildings Strategy set out that, by 2030, we would like at least 20% of the volume of the gas in the GB gas grid to be alternatives to natural gas. Given that the gas grid is under reserved UK powers we will work with the UK Government to further advance this aim.

In relation to alternative fuels derived from biomass, we agree with the UK Climate Change Committee’s recommendation that these resources should only be used in those applications across the economy where their carbon reduction impact is maximised or where alternative options are not available. There may be a small minority of buildings for which bioenergy may play a role for home heating, for example where it displaces fossil fuels in the small number of off-gas-grid buildings which are unsuitable for a heat network, electric heating or a heat pump. We have established an internal Bioenergy Working Group, and will set up an Expert Panel to consider and identify the most appropriate and sustainable use of bioenergy resources within Scotland. This will inform a Bioenergy Action Plan which we will publish in 2023.

In relation to smokeless fuels, an issue raised by Children’s Parliament, restrictions on the sale of coal, wet wood and manufactured solid fuels for burning in the home were implemented by the UK Government on 1 May 2021.


Recommendation 17: Grants to Retrofit Homes

Make a grant available to ALL homeowners in Scotland by 2025 to bring their houses to zero emissions standards by 2030, starting by prioritising houses in fuel poverty.

Children’s Parliament: Give money and help to people who struggle to heat their homes.

 

Scottish Government Response

The Scottish Government recognises the importance of continuing to provide financial support to retrofit homes.

 

We are increasing our investment over the next five years and will allocate at least £1.8 billion over the course of this Parliament to support the accelerated deployment of heat and energy efficiency measures in homes and buildings across Scotland.

The Scottish Government continues to invest in energy efficiency and zero emissions heating, supporting people living in fuel poverty, and encouraging others to retrofit their properties to reduce their energy costs and emissions. We are committed to ensuring that no one is left behind in the heat transition and this is underpinned by the principles in our Heat in Buildings Strategy. We will set out our wider approach to tackling fuel poverty in the Fuel Poverty Strategy by the end of 2021.

We continue to provide additional support through Warmer Homes Scotland – the Scottish Government’s national fuel poverty scheme – and our Area Based Schemes, which help fuel poor households to benefit from low emissions heating and improved energy efficiency at little or no cost. This year we have increased funding for these schemes, allocating £50 million for Warmer Homes Scotland and £64 million for our local authority led Area Based Schemes, supporting approximately 15,000 households.

We offer cashback grants to homeowners as part of the Home Energy Scotland (HES) Loan Scheme. The scheme offers cashback of up to £6,000 (up to 40% of the cost) for energy efficiency improvements and up to £7,500 (up to 75%) for new renewable heating. These are available to all homeowners.

From 2022/23, we will replace current cashback arrangements with a new grant scheme to support energy efficiency and zero emissions heat improvements.

The Heat in Buildings Strategy sets out the scale of investment needed, which we estimate could be as much as £33 billion between now and 2045. This cannot be fully funded by government alone so it will be important that the heat transition is underpinned by an appropriate market framework, which helps consumers overcome the upfront investment costs and attracts private investment and finance.

We are establishing a Green Heat Finance Taskforce this year, to advise on ways in which the Scottish Government and private sector can collaborate to scale up investment. The Taskforce will provide an interim report by March 2023 and final recommendations by September that year. To complement this work, we will also look at additional options, such as how our local tax powers could be used to incentivise or encourage retrofit, or opportunities for market actors, such as suppliers, retailers and manufacturers to drive investment.

Photo traditional tenement buildings in Scotland

Photo of traditional tenement buildings in Scotland