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Publication - Report

Draft climate change plan: draft third report on policies and proposals 2017-2032

Published: 19 Jan 2017
Part of:
Environment and climate change
ISBN:
9781786527431

Draft of the climate change plan, the third report on proposals and policies (RPP3) for meeting Scotland’s annual greenhouse gas emissions targets.

175 page PDF

1.9MB

175 page PDF

1.9MB

Contents
Draft climate change plan: draft third report on policies and proposals 2017-2032
8. Residential

175 page PDF

1.9MB

8. Residential

The Residential sector covers all of Scotland's housing, including owner occupied, private and socially rented housing. The majority of the emissions in this sector are related to how much energy we use and how we heat our homes.

8.1 Where we are now

8.1.1 Total emissions in 2014 were 5.9 MtCO 2e. This is just under 13% of Scotland's total direct emissions. Residential emissions have fallen 26% between 1990 and 2014, although they vary annually, driven by fluctuating external temperatures, as was seen in 2010. Since the Climate Change (Scotland) Act 2009 was passed emissions have fallen by 17%.

Figure 6: Residential historical emissions

Figure 6: Residential historical emissions

8.1.2 In 2015 there were 2.56 million households in Scotland. The residential sector is very diverse varying in tenure, age, primary heat source and level of energy efficiency. As regards tenure, 23% of Scotland's homes are socially rented, 14% privately rented and 61% owner occupier. It is likely that over 80% of the housing in use today will still be in use in 2050. Three-quarters of our homes were built before 1982 and a fifth were built before 1919. Space heating and the provision of hot water account for over three-quarters of the energy we use in our homes. At present 79% of households use mains (natural) gas as their heating fuel, 12% of households use electric heating, 7% oil and the remainder use other fuels.

8.1.3 The energy efficiency of Scotland's homes has improved in recent years. In 2015, around two-fifths of homes achieved an EPC rating of Band C or above. Scotland now has proportionately 40% more homes with the top three EPC ratings (A-C) than in England. The Scottish House Condition Survey ( SHCS) estimates that in 2015 92% of lofts had 100mm of insulation, while the proportion of insulated cavity walls recorded by the SHCS increased from 62% in 2010 to 71% in 2015. The proportion of solid wall dwellings with insulation was 11%.

8.2 Our ambition

Figure 7: Residential carbon envelopes

Figure 7: Residential carbon envelopes

8.2.1 The Scottish Government has designated energy efficiency as a National Infrastructure Priority, the cornerstone of which will be Scotland's Energy Efficiency Programme ( SEEP). By 2032, through SEEP, Scotland's housing stock will be significantly transformed so that, where technically feasible, all homes will have lofts and walls insulated to the maximum recommended level, and the heating systems will be highly efficient, making our homes warmer and easier to heat. From the mid-2020s we will have stepped up the deployment of low carbon and renewable heating systems, meaning that by 2032 the majority of homes will be connected to low carbon heating systems. This means that in the future an increasing proportion of homes will be connected to renewable and low carbon heating, including district heating and heat pumps, rather than using natural gas.

8.2.2 Over their lifetime, our programmes and policies will have supported thousands of jobs across Scotland and created a substantial Scottish market and supply chain for energy efficiency and renewable heat services and technologies. Furthermore, by improving the energy efficiency of homes across Scotland households will save hundreds of millions of pounds on their fuel bills over the lifetime of the plan helping to maximise disposable incomes - money which could be recycled into local economies - and will also have helped to regenerate communities by improving the appearance of the built environment, as well as contributing to improving health and early years outcomes through people living in warmer homes.

8.2.3 To help guide us towards our ambition and meeting our climate change targets we set the following milestones out to 2050:

  • Where technically feasible by 2020 60% of walls will be insulated and 70% of lofts will have at least 200mm of insulation.
  • By 2032, 80% of domestic buildings' heat [38] is supplied using low carbon technologies [39] , where technically feasible, and will be insulated to the maximum appropriate level.
  • By 2050, all buildings across Scotland will be near zero carbon - homes will be highly efficient and the heat supply will be largely decarbonised.

8.2.4 This compares to a 2015 starting position of 57% of walls insulated, 64% of lofts having 200mm of insulation, around 2% of homes heated by low carbon technologies and fuel and almost negligible zero carbon homes.

8.3 Policy outcomes, policies, development milestones and proposals [40]

Policy outcome 1: Improvements to the fabric of Scotland's domestic buildings results in a 6% reduction in their heat demand by 2032. [40]

There are five policies, five policy development milestones and one proposal which will contribute to the delivery of policy outcome 1.

Policies which contribute to the delivery of policy outcome 1

1) Energy Company Obligation - UK Government scheme which delivers energy efficiency measures across households in Great Britain. From 2017 the scheme will be worth £640 million per annum across Great Britain and is committed out to March 2022. Limited powers over the design and delivery of ECO have been devolved to Scottish Ministers under the Scotland Act 2016 with consideration of how best to use these new powers to be taken forward as part of SEEP.

2) Home Energy Efficiency Programmes for Scotland ( HEEPS) - Scottish Government has allocated £114 million in the draft budget for 2017/18 to support delivery of over 14,000 energy efficiency measures by March 2018. Our funding will continue to help bring together a range of funding streams (including our area-based schemes, Warm Homes Scotland and HEEPs loans) and help to lever maximum investment under the Energy Company Obligation in Scotland.

3) Scotland's Energy Efficiency Programme Pilots - Scottish Government awarded £9 million funding in 2016/17 and will make available further funding to support pilots in 2017/18 to test innovative delivery mechanisms for energy efficiency and low carbon heat.

4) Social landlords will meet the Energy Efficiency Standard for Social Housing in 2020.

5) Smart Meter roll out - the UK Government is committed to ensuring that every home and business in the country is offered a smart meter by 2020, providing the opportunity for a greater understanding of final energy consumption we are keen to ensure an effective rollout of smart meters and that it occurs in such a way as to maximise benefits to consumers - particularly those who are vulnerable or in fuel poverty.

Policy development milestones which contribute to the delivery of policy outcome 1

8.3.1 Energy Efficiency was designated as a national infrastructure priority in June 2015. In that context, the Programme for Government commits the Scottish Government to significant policy development on heat and energy efficiency improvements in buildings across Scotland. Scotland's Energy Efficiency Programme ( SEEP) is a long-term programme to improve the energy efficiency and reduce the environmental impact of Scotland's domestic and non-domestic buildings. It will build on our existing successful delivery programmes and include the development of a package of actions, across the following themes that will contribute to the delivery of the policy outcome:

1) Regulation and Standards

2) Financial Incentives

3) Advice and Information

4) Delivery Programmes

5) Evidence and Evaluation

8.3.2 In the Programme for Government, Scottish Ministers committed to £0.5 billion for SEEP over four years from 2017/18. The Scottish Government will undertake initial consultation on the design of delivery programmes within SEEP in early 2017, alongside consultation on the Energy Strategy, and will publish a SEEP Routemap in 2018 alongside the launch of the programme. The Programme for Government also committed to bring forward a consultation on minimum energy efficiency standards in the private rented sector in early 2017.

Proposal which contributes to the delivery of policy outcome 1

1) Regulation: Review of energy standards within building regulations - to investigate topics that offer the potential for abatement from new homes and where work is undertaken on existing homes.

Policy outcome 2: By 2032 80% of domestic buildings' heat [41] is supplied using low carbon heat technologies [42] .

There are five policies, five policy development milestones and one proposal which will contribute to the delivery of policy outcome 2.

Policies which contribute to the delivery of policy outcome 2

1) Renewable Heat Incentive - delivers renewable heat technologies until 2020/21, with uptake supported by advice and loan schemes such as the Home Energy Scotland Renewables Loan.

2) District Heating Loan Fund and Heat Network Partnership Policy.

Policy development milestones which contribute to the delivery of policy outcome 2

8.3.3 Energy Efficiency was designated as a national infrastructure priority in June 2015. In that context, the Programme for Government commits the Scottish Government to significant policy development on heat and energy efficiency improvements in buildings across Scotland. Scotland's Energy Efficiency Programme ( SEEP) is a long term programme to improve the energy efficiency and reduce the environmental impact of Scotland's domestic and non-domestic buildings. It will build on our existing successful delivery programmes and include the development of a package of policies, across the following themes that will contribute to the delivery of the policy outcome:

1) Regulation and Standards

2) Financial Incentives

3) Advice and Information

4) Delivery Programmes

5) Evidence and Evaluation

8.3.4 In the Programme for Government, Scottish Ministers committed to making available £500 million for SEEP over the next four years. The Scottish Government will undertake initial consultation on the design of delivery programmes within SEEP in early 2017, alongside consultation on the Energy Strategy. As part of this consultation, we will consult specifically on regulation of district heating. The Scottish Government will publish a SEEP Routemap in 2018.

Proposal which contributes to the delivery of policy outcome 2

1) Develop and identify best approach to the long-term decarbonisation of the heat supply, to commence after 2025. We intend to include a proposal on how we may realise this potential, in a future Climate Change Plan, taking into account decisions that the UK Government will take on the future of the gas network and the outcomes of the consultation on the draft Energy Strategy.

8.3.5 Full details of policies, policy development milestones and proposals are set out in the tables below. The delivery of these will be tracked through the monitoring framework (see section 6).

8.4 Wider impacts

8.4.1 The following co-benefits and adverse side effects have been identified for the residential sector:

Co-benefits to be realised

8.4.2 Support through SEEP for investment to improve the energy efficiency of domestic buildings will help to make the homes of people across Scotland easier to heat, enabling households to reduce fuel bills and tackle fuel poverty. There is also evidence to suggest that improving the energy efficiency of homes will improve health outcomes - both physical and mental - particularly among households affected by fuel poverty. Through SEEP we will continue to provide support to tenants living in rented accommodation, who are not always in a position to take action themselves to improve the energy efficiency of their homes. This will build on the successes of our Home Energy Efficiency Programmes for Scotland and the Energy Efficiency Standard for Social Housing. We will consult specifically on minimum energy efficiency standards for privately rented homes in early 2017.

8.4.3 Improving the energy efficiency of homes will also help households collectively to save hundreds of millions of pounds on their fuel bills over the lifetime of this Climate Change Plan, money which is then available to be recycled into local economies. Some of the measures needed to improve a building's energy efficiency, e.g. external wall insulation, lead to changes to its outward appearance, which contribute to community regeneration objectives.

8.4.4 SEEP will help to support jobs and businesses within the local and national economy. Scottish Government analysis suggests that for every £100 million spent on energy efficiency improvements in 2017, approximately 1,000 full-time equivalent jobs are supported across the Scottish economy. SEEP will help to realise economies of scale, thereby helping to drive down the cost of energy efficiency measures. There will be opportunities for SMEs and third sector organisations to deliver and/or support the delivery of energy efficiency measures.

8.4.5 These proposals will affect the majority of households, however they will most positively affect those households living in poverty, both in rural and urban areas, who struggle to pay their bills, and who spend more time at home or where they require higher indoor temperatures, including:

  • retired households
  • households where one or more members is living in poor health or with a disability
  • households with young children not of school age who are cared for at home

8.4.6 The energy bills savings will most positively affect those households living in poverty, both in rural and urban areas, who struggle to pay their bills.

8.4.7 SEEP's delivery programmes will be designed to emphasise cost-effective energy efficiency and heat decarbonisation measures that reduce energy bills and enhance competitiveness. Scottish Government grants will continue to target low income and fuel poor households as has been the focus through our Home Energy Efficiency Programmes for Scotland to date. SEEP will also develop a range of support and incentives, including loans for households able to make a contribution.

Adverse side effects to be managed

8.4.8 If the capital costs of improving the energy performance of domestic buildings and of installing low carbon heat technologies, and the operating costs of running them, are higher than current systems, then households could find energy bills are less affordable, which could have adverse effects on fuel poverty. Current energy prices mean that gas is the cheapest heating fuel for many households. Running costs for heating homes in the future will depend greatly on energy prices at that time which cannot be predicted with certainty in the long term.

8.4.9 Any increase in running costs is mostly likely to have adverse effects on households already living in poverty, particularly those households that spend on average more time at home, including households where members are retired, living with a disability or have young children cared for at home as well as households living in the least energy efficient homes.

8.4.10 Scottish Government grants will therefore continue to target low income and fuel poor households, as has been the focus through our Home Energy Efficiency Programmes for Scotland to date. SEEP will also develop a range of support and incentives, including loans for households able to make a contribution.

8.4.11 The Scottish Government will work with end users and delivery partners to ensure that SEEP's delivery programmes will be designed to emphasise cost-effective energy efficiency and heat decarbonisation measures that reduce energy bills and enhance competitiveness. We will work with households on how to ensure SEEP supports these cost-effective measures, including on evidence and evaluation where needed.

8.5 Summary of policies, development milestones and proposals

Policy outcome 1: Improvements to the fabric of Scotland's domestic buildings results in a 6% reduction in their heat demand by 2032 [43]

Table 8-1: Policies which contribute to the delivery of policy outcome 1

Policy

EU, UK or Scottish policy

Public sector partners

Delivery route

Energy Company Obligation - from April 2017 worth £640 million per annum across Great Britain - delivers energy efficiency measures to homes across Scotland until March 2022

UK

ECO requires obligated energy supply companies to deliver energy efficiency measures to homes - mainly insulation based measures and boiler replacements. It is funded via a levy on energy bills and from April 2017 will be worth £640 million per annum across Great Britain and is a market-based mechanism allowing for delivery where it is most cost effective. Historically, 11.5% of measures have been delivered in Scotland, exceeding our population share. Limited powers over the design and delivery of ECO have been devolved to Scottish Ministers under the recent Scotland Act.

We have allocated £114 million in the 2017/18 draft budget to our Home Energy Efficiency Programmes for Scotland ( HEEPS) to support delivery of over 14,000 energy efficiency measures by March 2018

Scottish

Local Authorities; Registered Social Landlords

The Home Energy Efficiency Programmes for Scotland ( HEEPS) include:

Area-based Schemes - designed and delivered by Local Authorities in areas at risk of fuel poverty. The schemes install a range of energy efficiency measures, predominantly solid wall insulation, and are targeted toward areas vulnerable to fuel poverty.

Loans - offered at zero interest and available to both Registered Social Landlords, to enable them to improve the energy efficiency of their properties and assist some of our most vulnerable households, and all private sector households to help spread the upfront cost of investing in energy efficiency improvements.

Warmer Homes Scotland - our national fuel poverty programme - worth up to £224 million over seven years, which helps vulnerable households make their homes warmer and more comfortable by installing energy efficiency and heating measures. It is available to households no matter where they live and is accessed via Home Energy Scotland (the Scottish Government programme that provides a network of local advice centres covering all of Scotland offering free impartial advice on energy savings).

Provide £9 million funding to support SEEP Pilots in 2016/17 and make available further funding to support pilots in 2017/18 to test innovative delivery mechanisms for energy efficiency and low carbon heat

Scottish

Local Authorities

Pilot projects funded to test innovative approaches to integrated, area-based energy efficiency and heat decarbonisation programmes across domestic and non-domestic sectors from 2016-20. Will be evaluated and contribute evidence to support the design of SEEP.

Energy Efficiency Standard for Social Housing ( EESSH)

Scottish

Local Authorities and Registered Social Landlords

Introduced in 2014 social landlords must ensure their properties meet the first milestone for minimum energy efficiency standards by 2020. Standards are based on Energy Performance Certificate ( EPC) Energy Efficiency Rating and vary by property type. EESSH will be reviewed in 2017 and the review will consider progress towards both the 2020 milestone and further milestone(s) towards 2050.

All homes to be offered a smart meter by 2020

UK

The UK Government is committed to ensuring that every home and business in the country is offered a smart meter by 2020, and to delivering this as cost effectively as possible. Smart meters provide the opportunity for a greater understanding of final energy consumption; an accurate metering and billing system which eradicates estimated bills; the potential for positive behavioural change and a reduction in energy costs; as well as creating opportunities for innovation. The smart meter rollout is a supplier-led obligation.

Table 8-2: Policy development milestones which contriubte to the delivery of policy outcome 1

Policy development milestone

Delivery route

SEEP - Regulation and Standards

The Programme for Government commits the Scottish Government to consult on regulation and standards for energy efficiency and for heat. This includes a commitment to consult on the phased regulation of existing buildings, and to look at financial incentives. The Scottish Government will undertake initial consultation on the wider role of regulation and standards within SEEP in early 2017, alongside consultation on the Energy Strategy, and this will then inform future programme development. We will consult specifically on regulation of district heating and will also consult on minimum energy efficiency standards for privately rented homes in early 2017.

SEEP - Financial Incentives

The Programme for Government delivers the Infrastructure Investment Plan 2015 commitment to long-term multi-year financing for SEEP, and includes a commitment to £0.5 billion for SEEP over the first four years of the programme. Availability of loan finance, grants and appropriate incentives introduced at the right times will be necessary to stimulate the market for investment or to help building owners and tenants to meet energy efficiency or heat standards set by regulation. The Scottish Government will undertake initial consultation on the role of financial incentives within SEEP in January 2017, alongside consultation on the Energy Strategy, and this will then inform future programme development. Limited powers over the design and delivery of ECO have been devolved to Scottish Ministers under the recent Scotland Act. Consideration of how best to use these new powers will be taken forward as part of SEEP.

SEEP - Advice and Information

Our existing advice and support services for residential (Home Energy Scotland), business and public sectors (Resource Efficient Scotland) will continue to deliver during the design phase of SEEP. As SEEP develops over the longer term, we will consider the future provision of advice and information to homes, businesses, and the public sector, to support them in improving the energy efficiency and decarbonising the heat supply of their buildings. The Scottish Government will undertake initial consultation on the role of advice and information within SEEP in January 2017, alongside consultation on the Energy Strategy, and this will then inform future programme development.

SEEP - Delivery Programmes

SEEP will build on our existing successful delivery programmes for domestic and non-domestic buildings by developing new, integrated programmes to offer advice, information, financial incentives, and access to managed, trusted installers, to building owners and tenants. The eventual delivery programmes will build on the evidence and lessons learned from existing programmes and from pilot projects, such as the £9.1 million announced in September 2016. The Scottish Government will undertake initial consultation on the design of delivery programmes within SEEP in January 2017, alongside consultation on the Energy Strategy, and this will then inform future programme development.

SEEP - Route Map

The Scottish Government will publish a SEEP Route Map in 2018 setting out the steps we will take to deliver our commitments on energy efficiency and low carbon heat.

Table 8-3: Proposals which contribute to the delivery of policy outcome 1

Proposal

Delivery route

Regulation - Review of energy standards within building regulations

Staged improvements to energy standards within building regulations have resulted in emissions from new homes built to current standards being, on aggregate, around 75% lower than those built to standards in force in 1990. A further review of energy standards will commence in 2017 and will investigate a number of topics that offer the potential for further abatement from new homes and where work is undertaken in existing homes.

Table 8-4: Policy outcome 1 over time

Policy outcome 1

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

Number of insulation measures installed as a consequence of policies listed above to reduce heat demand

45,000

32,000

32,000

32,000

32,000

32,000

0

0

0

0

0

0

0

0

0

0

Number of insulation measures installed as a consequence of proposals listed above (once policies) to reduce heat demand

0

58,000

58,000

58,000

58,000

58,000

90,000

90,000

90,000

90,000

90,000

90,000

90,000

90,000

90,000

90,000

Total change in policy outcome as a result of policies and proposals

45,000

90,000

90,000

90,000

90,000

90,000

90,000

90,000

90,000

90,000

90,000

90,000

90,000

90,000

90,000

90,000

Policy outcome 2: By 2032 80% of domestic buildings' heat [44] is supplied using low carbon heat technologies [45] .

Table 8-5: Policies which contribute to the delivery of policy outcome 2

Policy

EU, UK or Scottish policy

Public sector partners

Delivery route

Renewable Heat Incentive delivers renewable heat technologies until 2020/21, with uptake supported by:

Advice and loan schemes such as the Home Energy Scotland Renewables Loan scheme, which help households to identify renewable heat technologies and provide the capital they require to access the regular payments available from the RHI once the renewable heat technology has been installed

UK

Scottish

The Renewable Heat Incentive is a UK-wide scheme created by the UK Government (with the agreement of the Scottish Government). The domestic RHI was launched in April 2014 and provides financial support to the owner of the renewable heating system for seven years. The non-domestic RHI provides finance to the owner of the renewable heat technology for 20 years, including where this is supplied to householders through district heating schemes. The scheme covers England, Wales and Scotland and is targeted at - but not limited to - off-gas heat use. There is no commitment to funding the RHI beyond 2020/21 and during the development of SEEP we will consider what sort of funding mechanisms are needed into the 2020s and 2030s to enable continued take-up of these technologies.

Uptake is supported by Scottish Government programmes providing advice, such as Home Energy Scotland Specialist Advisors providing in-house visits, and loan finance including the Home Energy Scotland Renewables Loan ( HESRL) scheme.

District Heating Loan Fund

Scottish

Local Authorities, Scottish Enterprise, Scottish Futures Trust, and agencies delivering SG programmes

The District Heating Loan Fund helps address the financial and technical barriers to district heating projects by offering low interest loans. The scheme is open to local authorities, registered social landlords, small and medium sized enterprises and energy services companies with fewer than 250 employees. During the development of SEEP, we will consider what sort of funding mechanisms are needed to continue to support the expansion of district heating networks.

As noted above these programmes will be reviewed as part of the SEEP development work which initially focusses on delivering existing programmes more effectively, trailing new innovative approaches and designing new policies to support delivery.

Heat Network Partnership

The Heat Network Partnership is a collaboration of agencies focused on the promotion and support of district heating schemes in Scotland. Through its support to local authorities and practitioners, it is building capacity and project development capability to support heat planning and programme delivery work that will be developed by local authorities, the Scottish Government and its partners, as part of the wider SEEP programme in future.

Table 8-6: Policy development milestones which contribute to the delivery of policy outcome 2

Policy development milestone

Delivery route

SEEP - Regulation and Standards

The Programme for Government commits the Scottish Government to consult on regulation and standards for energy efficiency and for heat. This includes a commitment to consult on the phased regulation of existing buildings, and to look at financial incentives. The Scottish Government will undertake initial consultation on the wider role of regulation and standards within SEEP in January 2017, alongside consultation on the Energy Strategy, and this will then inform future programme development. As part of this consultation, we will consult specifically on regulation of district heating.

SEEP - Financial Incentives

The Programme for Government builds on the Infrastructure Investment Plan 2015 commitment to long-term multi-year financing for SEEP, and includes a commitment to £0.5 billion for SEEP over the next four years. Availability of loan finance, grants and appropriate incentives introduced at the right times will be necessary to stimulate the market for investment or to help building owners and tenants to meet energy efficiency or heat standards set by regulation. The Scottish Government will undertake initial consultation on the role of financial incentives within SEEP in January 2017, alongside consultation on the Energy Strategy, and this will then inform future programme development.

Through this programme we will also consider impacts of UK Government's GB subsidy regime beyond the potential end of the RHI in 2020/21, particularly on off gas grid and vulnerable households; including how any changes can be mitigated to maintain uptake of low carbon heat technologies.

SEEP - Advice and Information

Our existing advice and support services for residential (Home Energy Scotland), business and public sectors (Resource Efficient Scotland) will continue to deliver during the design phase of SEEP. As SEEP develops over the longer term, we will consider the future provision of advice and information to homes, businesses, and the public sector, to support them in improving the energy efficiency and decarbonising the heat supply of their buildings. The Scottish Government will undertake initial consultation on the role of advice and information within SEEP in January 2017, alongside consultation on the Energy Strategy, and this will then inform future programme development.

SEEP - Delivery Programmes

SEEP will build on our existing successful delivery programmes for domestic and non-domestic buildings by developing new, integrated programmes to offer advice, information, financial incentives, and access to managed, trusted installers, to building owners and tenants. The eventual delivery programmes will build on the evidence and lessons learned from existing programmes and from pilot projects, such as the £9.1 million announced in September 2016. The Scottish Government will undertake initial consultation on the design of delivery programmes within SEEP in January 2017, alongside consultation on the Energy Strategy, and this will then inform future programme development.

SEEP - Route Map

The Scottish Government will publish a SEEP Route Map in 2018 setting out the steps we will take to deliver our commitments on energy efficiency and low carbon heat.

Table 8-7: Proposals which contribute to the delivery of policy outcome 2

Proposal

Delivery route

Develop and identify best approach to the long-term decarbonisation of the heat supply, to commence after 2025

We will work with our partners, including the UK Government, Local Authorities and utility providers to determine the best approach to heat decarbonisation for buildings currently heated by natural gas which are not in areas of sufficient heat demand where district heating is a low regrets option. This will include consideration of technological solutions, including district heating, electric heat pumps, repurposing of the gas network for use of biogas and/or hydrogen, etc. We will look to put forward a more detailed proposal on how we will realise this potential in subsequent Climate Change Plans as our understanding of the best approach develops.

The Gas Network is reserved to the UK Government (whatever gas is transported through those pipes): The UK Government is developing work considering long term heat decarbonisation - post 2030. This will over the coming years gather evidence and analysis and try to fill key gaps relating to options such as future of the gas grid, electrification of heat and district heating and the significant impacts on infrastructure requirements that picking one or a mix of these options would have. Policy decisions are not expected to be made by the UK Government until the next parliament. i.e. from 2020.

Table 8-8: Policy outcome 2 over time

Policy outcome 2

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

By 2032 80% of domestic buildings' heat [46] is supplied using low carbon heat technologies [47] , and are near zero carbon

18%

18%

80%

8.6 Progress since RPP2

Table 8-9: Progress on RPP2 policies

RPP2 Policies

Summary of progress

Smart Meters

The UK Government is committed to ensuring that every home and business in the country is offered a smart meter by 2020, and to delivering this as cost effectively as possible. Smart meters provide the opportunity for a greater understanding of final energy consumption; an accurate metering and billing system which eradicates estimated bills; the potential for positive behavioural change and a reduction in energy costs; as well as creating opportunities for innovation.

The rollout has commenced and 4.2 million meter installations have taken place across GB. However some meters being rolled out do not meet the highest specification due to delays by the Data and Communications Company, who provide the communications platform for the technology.

The Scottish Government supports the aims of the smart meter roll-out, however, we continue to press the UK Government to ensure that the programme is delivered to the greatest number of Scottish consumers, at the lowest possible cost, whilst enhancing the benefits to the most vulnerable in our society and those at risk of fuel poverty.

Domestic Building Energy Standards (2010) New Build Properties

Policy was implemented on 1 October 2010 and results in lower emissions from new buildings. Standards set under this policy were further strengthened by a subsequent review which introduced further improvements to energy standards in October 2015 (see RPP2 proposals). Improved energy standards encourage both innovation and the deployment of low carbon solutions in construction.

Renewable Heat Incentive (Domestic)

The Renewable Heat Incentive ( RHI) is a UK Government scheme established to encourage uptake of renewable heat technologies amongst householders, communities and businesses through financial incentives. The non-domestic RHI scheme was launched in November 2011 and the domestic scheme was launched in April 2014.

Through its various programmes, the Scottish Government fully endorses and actively promotes the GB-wide RHI scheme to the benefit of householders and businesses across Scotland. Scotland currently accounts for 19% and 21% of all GB non-domestic and domestic accreditations respectively; well above pro-rata.

In March 2016, the UK Government published a consultation to seek feedback on proposed reforms to both schemes. The UK Government is currently assessing the response and are expected to implement their chosen reforms in spring 2016.

Energy Company Obligation and Green Deal

The Energy Company Obligation and the Green Deal are UK Government schemes introduced in 2013 to improve the energy efficiency of homes in Great Britain. ECO is currently worth around £820 million per annum across GB, reducing to around £640 million pa from April 2017. UK Government changes have reduced its value by over 50% since it was introduced. Scotland has received more than its proportionate share of ECO measures, with latest statistics showing that as of June 2016 it has received just over 220,000 measures, representing 11.5% of all measures installed compared to a household population share of 9.2%. The UK Government ceased funding for the Green Deal Finance Company in July 2015, effectively bringing end to the Green Deal which significantly underperformed against all expected predictions.

Home Energy Efficiency Programmes for Scotland

Our Home Energy Efficiency Programmes for Scotland ( HEEPS) has made available almost £400 million since 2013 (including the budget for 2017/18) in tackling fuel poverty and improving the energy efficiency of Scotland's housing stock. It has also leveraged additional funding from the Energy Company Obligation and the public sector of well over £300 million to date. Including 2016-17 activity, over 100,000 households in Scotland will have received an energy efficiency install through HEEPS contributing to a reduction in domestic CO 2 emissions and helping to save millions of pounds from fuel bills.

Warm Homes Fund

The Warm Homes Fund operated from the end of 2012 to March 2015, and during that time supported five renewable energy projects (including district heating) with loan funding of £2.36 million, and gave 48 development grants totalling £626,000. Take up of the loans was lower than expected. Loans for district heating remain available through the District Heating Loan Scheme.

District Heating Loan Fund

Since 2011, the District Heating Loan Fund has offered capital loans to support the development of district heating networks in Scotland. The scheme is available to provide loans for both low carbon and renewable technologies in order to overcome a range of technical and cost barriers. To date, we have offered over £10 million in loans to over 40 projects. These include our first £1 million loan to Aberdeen Heat and Power, announced in February 2015.

In March 2016 the then Minister for Business, Energy and Tourism, Mr Fergus Ewing MSP, announced a further £7 million for investment in district heating for the 2016/17 financial year, which brings the total Scottish Government investment in district heating to over £17 million.

Table 8-10: Progress on RPP2 proposals

RPP2 Proposals

Summary of progress

Domestic Buildings Energy Standards (2014) New Build Properties

Proposal is now a policy, implemented in October 2015 and delivering intended outcomes. Emissions from new homes are now in the region of 75% lower than for buildings constructed to the standards applicable in 1990. Standards continue to encourage both innovation and the deployment of low carbon solutions in construction but show poorer cost/benefit as performance sought is more challenging.

Regulation of Private and Social Housing

The Energy Efficiency Standard for Social Housing was introduced in 2013, setting minimum energy efficiency standards for landlords to meet in 2020. A review of the Energy Efficiency Standard for Social Housing is scheduled for 2017/18. Due to UK Government changes to the UK Government funding landscape for energy efficiency in 2015, Scottish Ministers took the decision to postpone a consultation on minimum energy efficiency standards for private housing. The Programme for Government commits Scottish Government to consulting on minimum energy efficiency standards for privately rented sector homes in early 2017.

Continuation of Home Energy Efficiency Programmes for Scotland

Ministers designated energy efficiency as a National Infrastructure Priority in June 2015. This commitment was confirmed in the Infrastructure Investment Plan 2015 and the recent Programme for Government. Scotland's Energy Efficiency Programme will be the cornerstone of the infrastructure priority and will transform our approach to energy demand reduction and decarbonisation of the heat supply across the domestic and non-domestic sectors. These proposals have been superseded by Scotland's Energy Efficiency Programme, which is in development.

Low Carbon Heat (Domestic)

Additional Technical Potential through improvements to carbon efficiency of housing stock


Contact

Email: Kirsty Lewin

Phone: 0300 244 4000 – Central Enquiry Unit

The Scottish Government
St Andrew's House
Regent Road
Edinburgh
EH1 3DG