Official Report 784KB pdf
The next item on our agenda is an evidence-taking session as part of our inquiry into retrofitting of housing for net zero. As I mentioned, we have 75 minutes for this discussion, so I would be grateful if we could keep questions and answers as succinct as possible.
We are joined by Dr Alasdair Allan MSP, Acting Minister for Climate Action, and Scottish Government officials: Gareth Fenney, who is head of heat networks and investment; Sue Kearns, who is deputy director for heat in buildings policy and regulation; Ross Loveridge, who is head of heat in buildings assessment; and Neal Rafferty, who is head of the heat strategy and consumer policy unit. I welcome you all to the meeting.
I begin by inviting the acting minister to make a brief opening statement.
I thank the committee for the invitation. In advance of the meeting, I sent you a letter setting out our recent progress on heat in buildings, and I hope that it has been useful.
Last year, we consulted on proposals for a heat in buildings bill and, as I set out in my letter, we are still considering the responses to our consultation. The proposals would directly affect the lives of many people across Scotland, and we must take the time that is necessary to consider all the issues that have been raised.
That is especially important because, although heat and energy efficiency are, as you know, devolved, progress on making clean heating systems more affordable, and actions in that respect, are reserved to the United Kingdom Government. We need more certainty from the UK Government about its plans to prohibit polluting heating systems, the potential role of hydrogen in providing heat, and proposals to make clean heating systems more affordable by, for example, rebalancing gas and electricity prices.
Our thinking on the bill means that we are also still considering how to take forward related proposals for a new social housing net zero standard. We plan to reconvene our stakeholder review group as soon as is practicable before publishing our response.
I will turn briefly to reform of energy performance certificates—or EPCs. The Climate Change Committee has rightly said that the information in those certificates must be reformed, and that reform will be a critical step in the decarbonisation of our buildings. I am therefore pleased to confirm that the Scottish Government has today published its response to the EPC reform consultation and will, during 2025, lay before Parliament new EPC regulations introducing a new rating system that will come into force in 2026.
The system will ensure better information for consumers on how well a property retains heat and on the emissions and efficiency of its heating system, as well as redesignated and more accessible certificates. Consumers need to be able to trust the EPC assessment process, so the new regulations will be accompanied by tighter governance requirements to improve quality assurance.
EPCs operate across the United Kingdom internal market, so we will continue to work with the UK Government and other devolved Administrations on building new shared technical infrastructure. We will consult further on necessary adjustments to EPC lodgement fees to cover the costs of those changes before laying the revised regulations. I appreciate that EPC reform is technically complex, and I am therefore happy for officials to meet committee members to provide them with an informal factual briefing following the publication of our response.
Our delivery schemes continue to provide funding through grants and loans to homes and businesses for the installation of energy efficiency measures and clean heating systems. The schemes include targeted support for those in or at risk of fuel poverty. So far in the current parliamentary session, excluding 2025-26, we have allocated £1.3 billion of funding through our heat in buildings schemes, and I am delighted that our 2025-26 budget commitment is to invest an additional £300 million in our heat in buildings programmes. That will support more than 20,000 households to save up to £500 on their energy bills each year, helping to make their homes warmer and more comfortable.
I hope that those remarks provide helpful context for members, and I am happy to respond to questions.
Thanks very much for that. Your news about the new EPC rating is very welcome; indeed, I remember its being an issue when I was first elected. At that time, I attended a talk about how that was in the works, so it is good that it is coming forward now.
I will start with a general question, and then we will move on to a number of other themes. The publication “Heat in Buildings: Progress Report 2024” noted that emissions from buildings in 2022 were more than had been planned. What is your understanding of why that was the case? What are you doing to close the gap?
We are taking a great number of combined measures to try to bring down emissions from buildings. We are conscious that, as a country, 20 per cent of our carbon emissions come from our buildings, and we will have to address that fact if we are to reach the ambitious targets that we all have for 2045.
There are individual schemes, which I am sure the committee will want to ask about. For instance, there is our heat in buildings programme and our budget for that, and we also have the area-based schemes for improving the energy efficiency of people’s houses and, we hope, reducing emissions. We must do all that work hand in hand with an effort to ensure that anything that we do in that sphere does not have the unintended consequence of putting people into poverty.
Those are a few of the things that we are doing. Perhaps the officials might want to add something to that list.
My question was more about the fact that the emissions from buildings in 2022 were more than what was planned. Do you have a sense of why that was? It would be interesting to understand the issues in that respect. I know that you have programmes and schemes that can potentially close that gap, but do you understand why that did not happen for the emissions in 2022?
We are confident that we can meet the targets that we have set ourselves in the long term, but there is no doubt that challenges exist in the here and now, and I have mentioned some of the measures that we are taking to address them.
I will bring in officials to talk about this year’s figures.
One of the challenges of taking a year-to-year approach to the emissions reduction targets for, and the emissions that we see from, housing and the building stock more generally is that emissions respond to weather patterns. I do not quite recall whether the winter in 2022 was colder than the previous year, but weather often drives a pattern of fluctuation in the emissions. I would need to go away and consider that point to understand what happened.
As the minister has said, a lot of good work is taking place to make up some of the shortfall. The deployment of renewable heating systems is rising year on year; about 1,500 heat pumps were going in per annum in 2013, and we are now in excess of about 6,000 per annum. We are seeing growth and it is starting to scale up, but we need to start to build on that.
We are starting to see a change in public engagement with and public attitudes to the matter. Over the past two years, quite a lot of discourse has played out in the press and the media around heating technologies. An interesting shift is taking place with regard to the appetite for, and the interest in, the technology, with positive movement in that direction. The year-on-year fluctuation is, in part, driven by changes in seasonal patterns and the weather.
On the point about the weather, I am—as are, I am sure, other members who represent the west coast of Scotland—very conscious of the fact that wind chill, as well as degrees below zero, are factors, and they have sometimes been overlooked in, for instance, the UK benefits system.
Thanks for that. What work in the building sector could help to compensate for missing the targets in 2022?
I point to the fact that we are now in a position where new builds will not have gas or oil boilers in them—indeed, we are ahead of the rest of the UK on that point; that we have, as I have said, intervened in area-based schemes and elsewhere in order to reduce acute situations and, in addition, fuel poverty; and that we are producing an EPC system that, for the first time, will give people a clear idea not only of the cost of heating their house but of the environmental impact thereof. Those are good places to start, and they are good ways of engaging the public, too. As I, and many others, have said, no Government can do that work on its own. After all, we are looking at transforming the way in which we heat our houses in Scotland.
Yes, we do need to bring everybody along with us. I think that some questions on that issue are coming up.
In your letter, you state that the timing of the introduction of the heat in buildings bill and its nature are still under consideration. Are the timescales proposed in the consultation still realistic, given current progress on the legislation? How does that provide clarity and certainty for industry and others to move forward with delivery?
I appreciate your point about the need for certainty among industry and consumers. One of the significant things about the bill is the scale and complexity of the response to it. We have had 1,600 responses to the consultation, and they raise many complex themes. Indeed, I have already mentioned one, which is the need to ensure that everything that we do avoids putting people into poverty.
We need a diverse and flexible approach that takes into account the diverse building types across Scotland, which you will be aware of. That approach needs to engage, too, with the reality that many of the really big decisions to be made are still awaited from Westminster; one relates to the relative price of gas and electricity, which is central to the issue. That does not mean that we will not look carefully through the responses and work, as we are doing, on our next steps, but those are all relevant factors.
10:30
Thank you very much for that.
You mentioned the UK Government’s letter to the committee in your opening statement. If you could provide more detail, I would be interested in understanding what decisions you need the UK Government to make in order to progress your legislative plans. What indication has the UK Government given of the planned timing of those decisions, and how dependent on that are your plans for introducing the bill?
I should be clear that, although we are awaiting important information from the UK Government, which we are having good conversations with, I am not suggesting that the timing of our decisions about the bill is based on any of that information.
UK Government decisions are nonetheless relevant. As you are aware, there is an on-going conversation about electricity pricing, the relative price of electricity and gas, the review of electricity market arrangements and the reform of many parts of the network. The decisions that the UK Government takes will clearly interact with our own legislation.
I will bring in others to talk about some of the conversations that we are having.
The UK Government obviously holds more powers than we do, notably around the rebalancing of electricity and gas prices. Decisions in that area are key for heat decarbonisation.
Obviously, there is a lot of stuff that we are doing, or thinking of doing, on the regulatory side. As an ex-colleague once said, those are the sticks; the UK Government holds a lot of the carrots when it comes to encouraging people to change their heating.
Rebalancing gas and electricity prices is a key issue. There is research that shows that electricity is four times the price of gas per unit, but if you can get that down to even about 3.6 times the price, it will make electrical heating cheaper to run. That is not much of a decrease, but it could make a big difference. Those kinds of things sit with the UK Government.
We need to understand what the UK Government is doing about hydrogen for heating, which might be feasible in niche situations in Scotland. We are also looking at what they are going to do around the phasing out of gas boilers. The previous UK Government had a plan for there to be no more sales of gas boilers after 2035. As far as we can see, the current Government is making noises that suggest that that is no longer the case. Given that the UK Government has its own net zero targets, which are for the UK overall, what are its plans for making the change from gas heating?
Those are really significant things that make up the wider context around heat decarbonisation. We really need to know the answers to those questions. We are engaging with the UK Government quite positively at the moment.
One of the things that I often find myself talking to my UK counterparts about in constructive terms is Scotland’s urban landscape and our distinctive tenement landscape. I often find myself visiting colleges, where people who are training to become heating engineers point out to me all the different options that they feel they might have in Scotland’s tenements if the price of electricity were rebalanced with the price of gas. That has a practical impact on our urban landscape.
I echo the point that Sue Kearns made about the importance of UK Government decisions, and a potential consultation on the relative prices of electricity and gas, in the context of the bill and the timing of its introduction. Our assessment of the cost of the various measures that the bill might contain will be hugely dependent on decisions and progress in such areas. That is one of the reasons why we are assessing things as carefully as we are.
Thank you. Meghan Gallacher has a question in this area.
Good morning, minister. Can you give us a general comment on the reaction to the consultation on the heat in buildings bill, and on the work that has been undertaken to develop the proposals before the bill comes to the Parliament?
I would not like to pre-empt a Government response, although I appreciate the point that you are making. Just now, a lot of work is going on at official level to analyse the 1,600 responses to the consultation.
This is not to pre-empt anything that the Government will say, but some of the things that are foremost in our minds are about responding to the diverse types of housing that exist and the need to ensure that everything that we do is poverty-proofed, to make sure that it addresses fuel poverty, rather than by any inadvertent means exacerbating it. As you are aware, 31 per cent of people in Scotland are assessed as being in fuel poverty and 18 per cent are in severe fuel poverty, and those numbers are much higher in rural areas. Those issues are at the forefront of our minds.
We have had good quality responses to the consultation. I have mentioned the need for conversations with the UK Government on some issues. Without pre-empting what the Government will say in its response, I hope that that gives a flavour of the things that are important to us.
Thank you very much for that. Were there any areas of contention to note in the responses?
I will refer you to the people who are ploughing their way through the consultation responses as we speak. A lot of the people who have been in touch are keen to ensure that what we do has flexibility and takes account of fuel poverty. I will bring in others to talk about some examples of the issues that have been brought to our attention.
All the responses have been published online, so you can look at them, and an analysis of the responses will be coming. To sum it up in one line, the reaction to the consultation was positive overall, but the devil is in the detail. Some of the details that the devil is in are about the need for financial support through grants and subsidies; the expense of changes that could be made; fuel poverty issues—as the minister has already said—such as the risk of an increase in fuel poverty if we get the proposals wrong; and the feasibility and practicality of making the changes, because of the diverse stock. Those are all the kinds of things that we have mentioned already. There is also the issue of looking at exemptions and flexibility in what we do, so that it is not a one-size-fits-all solution.
It is interesting that private landlords were not mentioned in that mix. As things stand, the targets for EPC C have been set to 2028, and roughly 50 per cent of private lets have not yet achieved EPC targets.
Minister, I appreciate what you said in your opening statement about looking at EPCs and a new system that would likely come in from 2026, all being well and being approved. However, what will happen to the 50 per cent of landlords who have already invested to get their lets to EPC C standard? Will there be a new target for landlords who have not yet managed to reach that target?
You make a lot of important points.
Many of the responses to the consultation have come from private landlords. As a Government, we acknowledge the importance of that sector, and you are right to point to the fact that work would need to be done in that sector, as well as others, in the future.
It is important to say that the revised EPCs do not of themselves mandate that people do things—making it possible or impossible to sell properties. It is important for the private rented sector that we get EPCs right, from the point of view of both the landlord and the tenant. One of the reasons why we are proposing to move from a 10-year EPC to a five-year EPC is to introduce a bit of equality for people in that sector, so that the consumer has more up-to-date information. We are also keen to ensure that there is a conversation with the private rented sector in the context of another bill, for which I am not directly responsible, about investment in housing.
The EPC issue highlights the fact that 50 per cent of the private rented sector will need to improve in the future if the targets that we have set on energy efficiency are to be met, whereas 65 per cent of the social rented sector already meets those targets.
I am a bit concerned about what the Government is saying. Through the Housing (Scotland) Bill, rents will be capped and, through the proposed heat in buildings bill, private landlords will have to fork out even more money to meet the required energy standards. In effect, we are either forcing smaller landlords out of the market completely or trying to bankrupt them as a result of the amount of money that they will have to pay in order to make their homes energy efficient. As it stands, meeting the EPC target, particularly for rural housing, is incredibly difficult.
What is the overall strategy? We are in a housing emergency. What will happen to the housing stock of private landlords if we keep introducing such measures, putting more pressure on them and forcing them out of the market completely?
As I said, I cannot answer direct questions about the Housing (Scotland) Bill—you would need to ask another minister to answer them—but you have raised important questions. The Government is alive to the need to balance the rights of tenants and consumers with the need for investment in the system. That is the focus of that bill.
The purpose of the new EPC system is not to force, or to require by law, landlords or others to make changes, but we hope that it will assist people in moving towards them. Ultimately, it is in everyone’s interests for people in Scotland, whether they are house owners or private or social tenants, to be warm and healthy, and we have work to do to get to that point. As I said, the purpose of the EPC system is to provide information to people, because it is right that potential tenants of a private landlord are aware of how warm their house is likely to be.
We are alive to the risk of cumulative impacts of regulation on heat in buildings beyond EPCs, which, as the minister said, are just to provide information. In relation to their being used in any other way in further regulation on heat in buildings, we are alive to the risk of cumulative impacts on private sector landlords from the Housing (Scotland) Bill. We are actively engaging with our housing colleagues to bring the two sides together and ensure that, if we introduce further regulation on heat in buildings, there is alignment.
Thank you.
We were going to come on to the EPC system later but, given that the issue is already up in the air and being discussed, I want to get a sense of how you will ensure that consumers are aware of the new system and have confidence in the assessment process.
Ensuring confidence is very important, which is one reason why we are not just changing the information that is available to people but seeking means to ensure that it is accurate and to eliminate anything fraudulent from the system. For instance, as I mentioned, we are reducing the validity of EPCs from 10 years to five years to make them more accurate. We are also introducing tighter governance arrangements for EPCs and measures on the competence and training of EPC assessors who operate in Scotland. Legitimate concerns were raised, so we are ensuring that we do both those things.
That is great. Did anything come up from the consultation on damp and mould? There has been quite a bit of concern about the move to a fabric-first approach, and I have heard horrific stories from people in my region who have had insulation installed by people who might not have been properly certified, which has resulted in an increase in damp and mould. Are you taking that into account?
We are. That is an important point. We are seeking not merely to provide the proposed three areas of broad information—which I will mention—but to provide an interface that will allow a technical assessment of individual properties to avoid unintended situations in which people take measures that make their houses damper. I will bring in others who might be able to talk about that.
The three areas that the EPC would cover would be: heating system rating, which would allow consumers to compare emissions, thermal efficiency and running costs; heat retention rating, which is a new rating and is a direct measure of how well a building holds heat; and energy cost rating, which is the focus of the current EPC. I will bring in others to talk about some of the additional technical offers that are made to avoid the situation that you describe.
10:45
Thank you for that question. It is well understood that we do not want to see the wrong sorts of measures installed in buildings. We hear things about damp condensation and spray foam insulation in lofts, and you will have seen a lot about that in the media over the autumn.
The Government’s response to the EPC reform consultation that the minister has issued today shows that we have heard loud and clear from stakeholders about the importance of ensuring that EPCs provide a basic, standardised assessment for all properties. However, EPCs can never give the level of technical competence that can compare a croft on a Scottish island with a modern detached house in Glasgow.
It is therefore important that we can work with the industry to drive up standards around retrofit assessment. That means looking at the technical suitability assessment, which was part of the consultation on the proposed heat in buildings bill. As the minister said, we are still considering our response to that. However, just to be clear, that process would be about ensuring that building owners had bespoke technical advice about which measures were suitable, precisely to avoid the sort of things that you are talking about, such as damp or mould.
Just for clarity, are we saying that every home in Scotland will have its own technical assessment done? Is that the idea?
The consultation was done on the basis that that would be available in circumstances in which it might be needed, particularly in the context of proposed mandatory standards or eligibility for Government funding schemes. For example, 40 per cent of homes do not have an EPC, because they have not been sold or let because people have remained in the same property. There is no trigger for that. We would have to think about the impacts of when it would be appropriate to make sure that people had that additional information, if it was necessary.
That is welcome. I have certainly heard people in the sector calling for something like an MOT, for example, where every home has its own assessment.
I will come back to a question that I asked earlier, but did not quite get an answer. It is in the committee’s interest to have a sense of the proposed timescales on the heat in buildings bill. Do you have any clues?
I can really only say that the Government has not reached a decision about a timescale that I can give you today, but we are working our way through the consultation. I have mentioned some of the issues that it is important to get right and some of the unintended consequences that we want to avoid, but I cannot give you a timescale beyond that.
We will be knocking on your door, continually. Mark Griffin has questions on social housing.
What can you or the Government do to ensure that registered social landlords have clarity about the new requirements for social housing that would give them the ability to plan for the investment required? That question is against the backdrop of the regulator’s concerns about a lack of financial planning and decarbonisation.
Again, those are important issues. I mentioned earlier that almost two thirds of social housing in Scotland is in EPC band C or better, but we appreciate the scale of the task ahead. That is why the social housing net zero consultation proposed the prohibition of polluting systems by 2045.
I understand that social landlords have made representations and I am aware of the cost burden. The Scottish Government is committed to delivering vital support through the social housing net zero heat fund and we have been using that fund for some time to support social landlords to retrofit houses.
The budget proposals offer £300 million in funding for the heat in buildings programme more generally across sectors.
Has any modelling been done on the impact of the targets for replacing polluting systems on tenants’ rent, and the balance between Government intervention and support, and the investment being made by individuals through rent?
We are conscious of that issue. As I have said, we are trying to avoid the scenario that you have set out while, at the same time, addressing fuel poverty and ensuring that the heating of houses is made more sustainable.
The Government recognises that the sector is under increasing pressure, not least due to the cost of living crisis and the additional costs of building and retrofitting houses. That is why the social housing net zero heat fund is there.
It is important that we keep rents affordable in the sector. All landlords, be they private or social, have a responsibility to ensure that that is the case, and the Scottish Government is working with them on that. I will bring in others to say more about our engagement with the social landlord sector.
We work very closely with the sector and always have. Indeed, we co-produced the consultation proposals on the standard with a review group taken from across the sector. We are very clear on the concerns and the questions that you have described, which the sector has raised and which we know about.
We have been doing a lot of work not just across the range of issues that were raised in response to the consultation, but on costs, future finance and how we can achieve investment to retrofit social housing. We have worked not just with the sector but with the Scottish Futures Trust, looking at the options in that space. When we publish our response on the next steps, we will be a little bit clearer about some of the outcomes and outputs from that work.
Thank you.
We will move to the issue of delivery schemes and funding.
Good morning, minister. Looking at the targets and the funding strategies that we have had, I note that, between 2021-22 and 2023-24, only £575 million of the £1.3 billion for energy efficiency and the decarbonisation of buildings was spent. Why was that budget underspent by more than 40 per cent?
As you mentioned, we allocated £1.3 billion in funding. To be candid, I would say that the elephant in the room is that, some months ago, the Scottish Government faced quite a task in reaching what was euphemistically called a path to balance. We are now in a better position, but there was a point at which getting there did not look simple or straightforward. The member will be very well aware of why. However, we have, as I said, committed that money, and we are confident that we are going to make use of it. It is also important to say that all the money has been committed to energy and efficiency projects, which will directly benefit people by addressing fuel poverty and making their houses more sustainable.
In the draft 2025-26 budget, you have allocated a sum of £349 million for energy efficiency and decarbonisation. You have indicated that the previous money was not spent but that you will try to continue to fund the budget line and spend the money that is left. Now you are allocating another £349 million. Can you tell us how that money will be spent to maximum effect and how you can ensure that the budget is fully spent? At the end of the day, that is what we are trying to achieve. You can allocate funding, but if it is not used and then you allocate more, the question is this: how effective is that? How do we fully spend the sums of money that you are allocating?
It is important that we spend the money in an effective way. As you mentioned, our 2025-26 budget commits over £300 million to heat in buildings programmes. In answer to your question about how we make that effective, I point out that that includes supporting more than 20,000 households to save up to £500 a year on their energy bills by making their houses healthier and more comfortable. I think that that is an effective use of public money, and one that I would strongly defend. It is worth pointing to other schemes, such as the area-based schemes, which concentrate spending on areas of fuel poverty, as well as the extra £20 million allocated to the warmer homes Scotland scheme, which takes that scheme’s budget to £85 million—the highest budget that we have had in that area.
The other elephant in the room is Covid. Most of our schemes are demand-led, and that, to a large degree, is why there was an underspend in previous years. Now that the momentum has built, those schemes are doing well and we expect to do very well in getting the money out the door this year—Gareth Fenney can correct me if I am wrong. It is about building interest. Some of the schemes were going through early feasibility studies and so on and have come through a pipeline. These things take time, particularly on the heat network side. Although it is a long-term thing, the trajectory is certainly going in the right direction.
I reiterate that both the difficulty of working during Covid and the cost of materials in its wake were deterrents to many contractors.
Good morning. I have a few questions about heat pumps and associated technologies. We are way behind the target that we hoped for, and you have explained some of the reasons for that. Gareth Fenney commented earlier that we managed to install 6,000 new heat pumps last year. I am interested in whether those installations were people converting from gas or were in new builds. Gareth, can you tell us what that picture looks like?
I will bring you in, Gareth. The figures that I have for annual heat pump installations are as follows: 2,448 in 2019; 2,993 in 2020; 4,667 in 2021; 5,146 in 2022; and 6,388 in 2023. The importance of heat pumps in our effort to decarbonise and improve Scotland’s housing stock is increasingly significant as the years go by.
We were originally hoping for a million conversions in 10 years. That is a huge transformation; it is roughly 100,000 a year and we are nowhere near that.
My predecessor, Patrick Harvie, made it clear that that particular target was not achievable. I agree with Mr Harvie on that. It is as well that the Government comes to the Parliament and presents targets that are achievable. It is not honest to do anything else.
What will the catalyst be for complete transformation? For me, it seems that it will be the price. People in private sector housing are looking at prices. Electricity is four times the price of gas, so they are essentially making a decision based on that.
Are they also making their decision based on trusted partners? In other words, who can they trust on the systems that are being recommended to them and where can they see evidence of such systems working that would enable them to make the transformation?
In your view, are those two factors crucial for solving the issue and getting the transformation to work at a better pace?
On the point about trust, I will deal in anecdotes, which ministers should never do. It is clear that there is much greater—and increasing—public trust in the technology as it develops, particularly for the newer generation of heat pumps. I have seen that, and I am sure that other members have seen it from people who have had heat pumps installed in their houses. I recently visited a house in my constituency where a very discerning pensioner tenant, who turned out to have been a plumber in his previous life, offered a very high rating of his heat pump.
On the point about ensuring that people feel supported more generally, the Scottish Government has the Home Energy Scotland grant and loan scheme, which provides a grant of up to £7,500, and the same amount in loan, to install a heat pump, plus a £1,500 uplift for remote rural and island areas. Those are tangible support measures for people in that situation. It is important to add that we can point to evidence that shows that heat pumps are three times more efficient than oil boilers, for instance, so that people can see the benefit.
11:00
What is the great catalyst that will get a substantial transformation? Is it price, or reliability and trust? Or is it both?
Those are all important. I mentioned that reliability and public approval of the technology has climbed and that people are more and more confident about it. It is also important to say—as, I think, I mentioned at the beginning—that no Government can do the work on its own. Government can be a catalyst: it can provide support, grants and loans, but it cannot claim to take on all responsibility for people replacing heating systems for ever more—no Government anywhere in Europe would make such a claim. What the Government can do, as I said, is provide encouragement and support, ensure that the technology is advanced and out there, and that the people who need it are helped.
I can bring in others, if anyone wants to add to that.
No, that is fine.
Do you see a role for local authorities to step in and be that established, trusted partner? My constituents who ask me about this are not sure who to turn to in order to get that transformation done in their homes. As you know, companies come and go, so there is an element of risk. Local people are telling me that they are unsure about taking that step. Could local authorities have a role to play in being that long-established, trusted partner to get involved in, for example, the heat pump transformation programme that we hope for? Could they reach out to offer that service to their private sector residents?
Local authorities already have a very important role, particularly through things such as the area-based schemes. You point to an equally important issue, but I will finish my point about local authorities—or, rather, local companies. People are very keen to be able to go back to a local point of contact if things need fixed, and that probably brings us into some of the criticism of the way in which eco-schemes have been operated in the past. Those eco-schemes are not Scottish Government schemes—they were funded at a UK level through industry. You might be alluding to the significant criticism of some of the companies that were involved in installations under that scheme. However, it is important that we maintain public confidence and make it clear to the public that the Scottish Government-funded schemes are not the eco-schemes and that some of the well-publicised problems that were associated with those schemes are not the Scottish Government’s area of activity.
What alternative schemes can people choose? Are all our eggs in the heat pump basket, or can people find out about other technologies that they could deploy and whether those would be appropriate for their homes?
I will bring in officials to try to give a comprehensive list, but there are many other types of technology, such as ground-source heat pumps—although they will not be suitable for every single house. Some people are in a position to have solar or small-scale wind energy. There will not be one single solution, because heat pumps will not be suitable for every house. I mentioned, too, that if gas and electricity prices were rebalanced in the future, we would be able to electrify houses in all sorts of other ways that are perhaps not cost-effective at the moment.
I will bring in others, as I have no doubt forgotten some forms of heating.
A broad range of technologies could be picked up. The minister has mentioned the wide array of electric heating. Storage heaters, with which I guess that we are all familiar, are much more advanced and sophisticated than the ones that we remember, so that is one option.
District heat networks and communal heat networks are another option. We will probably see a lot more of those in denser urban areas, but they also have potential in the denser rural towns and villages, so heat networks will play an increasing role. There are obviously heat pumps. In some areas, where you need higher temperatures to run a property, it makes sense to continue to deploy bioenergy.
There will be a spectrum of heat technologies and we need to guide consumers through it. There is the national advice service—Home Energy Scotland—which provides free and impartial advice, digitally and over the phone. As you say, local government can also help to guide people. The local heat and energy efficiency strategies help to do some of the initial planning, from a local government perspective, by looking at the best technology for a given place, based on building characteristics, density and so on. That can help to guide individuals’ decision making at a more local and building level.
Does the UK Government’s clean heat market mechanism apply to Scotland, too? I think that there is a requirement to balance the number of heat pump installations per the number of gas installations to improve the pace of transformational change. Will that apply to us, and do you welcome the mechanism?
Yes, it is certainly welcome. From memory, the figure that has been quoted is 6 per cent of installations, and, yes—it would apply across the UK.
Willie talked about local authorities being an established partner, but have you given thought to the network of climate action hubs that the Government funds in the community? Could you see the hubs as a vehicle for catalysing more people to take that step?
Yes. The Government has supported the establishment of a number of hubs. I visited one in, I think, either Musselburgh or Portobello, but I am going to have got that wrong and I will have offended people along the whole coastline of East Lothian. It was clear from the visit that the hubs are able to draw together different interests in the community, to push Government and other agencies and to activate people to think about wider environmental issues. Therefore, yes—the Scottish Government is very happy to support them in what they do.
Is the Home Energy Scotland advice service sufficiently resourced? Constituents have contacted me about challenging communication situations, where people have taken up the grant and loan scheme but communication has been slow, which led to difficulties with getting installations happening, because the money was not coming. The process needs to be timely—the installer needs to come, but they need to get paid and all those kinds of things. Is Home Energy Scotland sufficiently resourced and are staff trained well enough to achieve the roll-out that needs to happen?
The Government has funded the service for more than 15 years, and the Energy Saving Trust administers the Home Energy Scotland advice service on our behalf. Demand for the service has been high, although it has decreased from the 138,000 households that the service supported in 2022-23. As a Government, we are committed to ensuring that the funding is applied to ensure that the advice service exists in the future, and the Scottish Government regularly reviews the grant to ensure that that happens.
Have the costings for decarbonisation been updated? The heat in buildings strategy estimated that the cost of decarbonising homes would be around £33 billion. Has the Government reassessed the estimate in the light of inflation and the comments from the Just Transition Commission, which said that it thinks that decarbonisation could cost three times that?
The estimate of £33 billion comes from our heat in buildings strategy. Updating that to reflect inflation and increased costs means that the cost is £45 billion in 2023 prices.
The other figure that you refer to, from the Just Transition Commission, does not reflect our proposed approach to decarbonising heating, particularly with regard to the role of heat networks, which do not seem to be factored into that figure. However, Scottish Government officials have met the Just Transition Commission to discuss the basis for its figures, and although it is fair to say that the cost of heat transition will be substantial, we do not accept that it would be £130 billion for Scotland, which is what the commission quoted.
Minister, can you tell us a wee bit more about the progress of the green heat finance task force and the alternative funding mechanisms that you are considering? Can you give us some detail on the headlines from the task force’s new report, and what timescales are you working to to respond to its work?
Those are all important questions. As we have touched on a couple of times, financing the transition will need to involve everyone in Scotland—householders, landlords, the Government and many other agencies. The independent green heat finance task force has been considering all those issues, particularly how private finance can support the transition, and we will respond to its recommendations in spring.
As I mentioned, our 2025-26 budget commits to investing more than £300 million to help households to save in the here and now. In the future, we are keen to get advice about private finance for individuals, too.
Do you expect the level of ambition for emission reductions in heat in buildings to be reduced in the light of the Scottish Government’s plans to reset its climate ambitions via five-year carbon budgets?
I am sorry—I did not catch that. Which changes are you referring to?
I am talking about the changes to the carbon budgets and through the task force.
There was consensus on changing to a system of carbon budgets across most of the political spectrum—perhaps not all of it—and on the need to ensure that the targets that the Scottish Government sets are achievable and meaningful. However, that does not alter the fact that we are committed to getting the best advice on ensuring that there are green finance options for home owners and other individuals, so that we get to a position in which those budgets become possible.
I will bring in others to see whether they can add anything to that.
We expect to get advice on carbon budgets from the Climate Change Committee in spring, so we will take it from there. That advice will cover the different sectors under the climate change plan, and heat in buildings will be part of that.
Fulton MacGregor asked whether the move to five-year carbon budgets will have an impact on the expected level of ambition for emission reductions through heat in buildings, which you mentioned. About 20 per cent of our emissions come from housing. Will the shift in how we measure things have an impact, or will you keep doing what you are doing?
Will the shift have an impact on our goals for 2045? The answer is no. We want to do this in a way that is achievable and to have meaningful figures, but that does not take away from our ambitions for 2045. The green heat finance task force is considering how to foster a greater flow of private finance, which would help to achieve that aim.
Finally, we will move to delivery issues. Willie Coffey has a number of questions on that.
I have a few questions to wrap up the meeting. In your letter to the committee, you told us that 27 of the 32 local authorities have published their local heat and energy efficiency strategies, so some have not. Have you got any indication as to why we do not have a complete set?
It is difficult to tell why that is the case if councils have not responded to us or given us the information. I will ask my officials whether local authorities have given reasons for that.
There is a mix of issues, including delays in resourcing and consultancy access. We have provided on-going funding to help to resource local authorities to deliver the LHEES. I think that we have now received draft strategies from 30 out of the 32 local authorities, so we are making progress, and we are hopeful that they will be finished in the not-too-distant future.
11:15
Based on what you know and what you have received, are local authorities’ submissions chiming with the Government’s aims and direction of travel? Do you see co-operation being at the heart of local authorities’ strategies for progressing the work?
We are working with local authorities to ensure that the aims are met, and we continue to support them in delivering their strategies. For instance, we have funded Zero Waste Scotland to help it to provide support for capacity building. We are working to align what we do as a Government with local authorities’ delivery plans through, for example, our heat network support unit, which works with local authorities. In the future, we look forward to local authorities being entirely decarbonised, but we realise that we have to work with them to achieve that.
Heat networks were mentioned earlier. The cabinet secretary gave the example of Glasgow City Council, which is ahead of the game and doing some really good work to establish heat networks and leverage private sector investment to help us on that journey. Could you say a wee bit more about where we are across Scotland with heat networks?
We have set ourselves targets for 2027, 2030 and 2035. The statutory targets provide a signal to assist the private sector and provide greater certainty for investors. We are committed to working with and encouraging projects of that kind. We offer grant support for the construction of new zero direct emission heat networks, and we are providing funding and advice during pre-capital stages of development for a pipeline of projects. That pipeline is important so that the sector has greater certainty and has the signals that it needs to invest in the future.
The cabinet secretary mentioned that cities and bigger towns might have an advantage over smaller communities in establishing heat networks. When providing funding support, is there a balancing act to encourage activity more widely across rural parts of Scotland and smaller communities?
As you say, the circumstances in some communities lend themselves more to heat networks than to other solutions. In large parts of my constituency, many houses are half a mile or more away from others. The circumstances of such areas do not lend themselves to some solutions, although plenty of other sustainable forms of heating would meet their requirements. There might be areas that we can concentrate on. We look to other countries—everyone looks to the example of Copenhagen, where a huge proportion of the population in that urban area is looking at heat networks. I have met a number of the companies that are involved and have offered encouragement and as much certainty as we can provide about investment in heat networks in the future.
Public engagement is crucial. We need to bring the public along with us by making them aware of what is available to them and what support they can get. Are you confident that public engagement is as good as it can be, or are you planning to do any more work to give the public more and better information to enable them to make the choices that they will have to make?
We are always looking to provide more support and information. For example, we have a van that goes around Scotland to provide advice, support and assistance to small companies that want to get involved in installation of heat pumps. It travels to many rural areas to ensure that information is available to businesses and the sector. Much of the work is about raising awareness among the wider public and providing information and facts about newer or different forms of heating for houses. It is also about providing clearer information through EPCs and about all the other efforts that I have talked about. Ultimately, it is a shared enterprise between the Government, businesses, householders and landlords—all four have to combine their efforts to get information out there.
When you talked about the air-source heat pump van—which I am well aware of—another couple of questions came to mind.
Earlier, you talked about Scotland having really diverse types of housing. In rural areas, as well as in Edinburgh, we have a lot of historical buildings. How do you handle that? In the committee, we have learned that we need to take a fabric-first approach, but that needs to be balanced with preserving areas where there is conservation. I am particularly concerned about how we fit traditional building skills in the mix in places where we need to keep the vernacular of a community’s buildings.
I would be very supportive of that. I know that Angus Robertson has mentioned the issue in the context of Historic Environment Scotland and promoting skills, whether it be for stonemasons or for people who can slate traditional roofs. Those skills are very important, and a lot of effort has gone into promoting them—quite successfully.
The other side of the issue is about making sure that the information—again, I come back to EPCs—takes account of whether a building is of a vernacular or unusual type. Work is going on to ensure that we do just that.
With your permission, convener, I will bring in somebody who can tell us more about how your point fits into the issue of EPCs.
I will make a similar point to the one that I made earlier about the development of a technical suitability assessment. As the minister said, we are working with Historic Environment Scotland and other experts in that field to be clear about the appropriate retrofit assessments and about where we would want more technical advice. The work is about getting it right for historical buildings—buildings that have stone walls, traditional roofing and so on—and making sure that we are not using the wrong measures.
We see that work as complementary to the EPC reforms. Ultimately, we have EPCs because we need to have a standardised piece of information that enables somebody buying a house in Shetland or in Stranraer to make a reasonable comparison. However, that is not a substitute for a bespoke technical assessment, and we are working hard on that.
I mentioned the air-source heat pump van because an idea that has been proposed to me is to have something that is more like an articulated lorry—as they have in Canada, apparently—which could bring equipment, not necessarily for stonemasonry but for leading, slating and so on—to rural and island communities. The committee is well aware that we do not have enough people who have the skills to build or retrofit houses, so I am interested in the idea of taking the skills training to people. A concern that has been raised with me is that, although young people want to get involved, they do not necessarily want to travel to Kent to get the training that they need for specific skills.
I cannot comment on the example from Canada. However, when I was in Shetland, I met people from a business who pointed out that, for a small building firm or contractor in an island setting, one of the huge advantages of having a van, as you mentioned, is that, otherwise, they might have to put their staff up in a hotel or somewhere else for a week so that they can attend a course for three or four days. Therefore, a remote van provides considerable advantages to small contractors in islands and other very rural areas.
It is great to know that you are aware of the issue. It is also good to hear that Angus Robertson has been talking about it, so I might take that forward with him.
On another area of interest, we talk about bringing empty homes in Scotland back on board as a way of addressing our housing emergency. I know that housing is not your area, but is there scope for retrofitting those houses before we put people in them? Is that something that you have thought about?
I do not have detailed knowledge of that area of housing policy, but I know anecdotally that, when local authorities have had empty homes officers, they have taken a fabric-first and heating-first approach to ensure that houses are sustainably insulated and heated before they are let out. I think that that is integrated in the efforts that are made by the Government and local authorities, but I am afraid that I cannot offer much detail on it.
It is helpful to know that you are aware of the issue. We can look into it ourselves.
That brings us to the end of our questions. I thank the witnesses for coming to give evidence, which has been very helpful.
The one bit that has not been so helpful is that we have not got a timeline for the proposed bill. That matters to us so that we can plan our work programme, so we would appreciate hearing about the timeline as soon as possible. I take your point that you have had a lot of analysis work to do, and I get the sense that there are quite a lot of technical considerations, given the complexity of the diverse array of buildings in Scotland.
I briefly suspend the meeting to allow the witnesses to leave the room.
11:25 Meeting suspended.Air ais
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