Today we have published three consultation analysis reports for energy efficient Scotland. This statement is an opportunity to update Parliament on those reports, our recent discussions and our intended next steps.
As we develop energy efficient Scotland, the Scottish Government is continuing to invest heavily. By the end of 2021, we will have allocated more than £1 billion since 2009 on tackling fuel poverty and improving energy efficiency; since 2008, 1 million measures have been delivered through a range of United Kingdom and Scottish programmes to more than 1 million households.
When it scrutinised the draft climate change plan, Parliament asked the Scottish Government to set out a credible framework for decarbonising the heat supply, so in May we set out an ambitious, yet credible, plan to make our buildings more efficient—a plan that would make it the norm to invest in energy efficiency, with the aim that all Scotland’s homes should achieve an energy performance certificate rating of at least band C by 2040.
Those proposals are just a first step; we will do more. However, we are starting in the right place by focusing on energy efficiency. Many of those who responded to the recent consultation supported our proposals and agreed that a 2040 target is the right one. South Lanarkshire Council noted:
“The 2040 target allows 20 years to address building improvements which ought to provide sufficient time to plan for and fund any necessary improvements, where technically feasible and cost effective.”
However, there were those who shared the view of members in this chamber that an earlier target should be set, suggesting 2030, 2032 and 2035 as alternatives. Arguments can be made for going faster, but we are concerned that moving too quickly would not only cause an inflationary effect on prices per intervention but potentially be detrimental to the Scottish economy by driving an increased need to import equipment and installers from outside Scotland, rather than developing and growing locally based supply chains here at home. Our approach will better allow us to seize the opportunity for our local supply chain, bringing local economic and social benefits. It might also undermine public confidence if we were to move too fast; it is imperative that we have credible, deliverable proposals and can take the public with us.
Let us not forget that, when combined with investment in our non-domestic premises, it is anticipated that total public, private and third sector investment will potentially reach £12 billion by 2040.
In its recent progress report, the UK Committee on Climate Change praised energy efficient Scotland, noting:
“The Scottish approach represents best practice in a number of areas, including setting standards well in advance, with a regulatory backstop for owner-occupied homes, and a statutory underpinning. This provides a strong example of an effective policy package to drive emissions reductions and other outcomes, including on fuel poverty.”
Those calling for an accelerated target have yet to set out an alternative credible delivery plan that overcomes the risks and missed opportunities. However, we recognise that there is support for faster action, and we believe that it is only right that we consider that. As such, we will publish a consultation in January on how the programme could be accelerated and seeking views on the risks and how they can be overcome.
Before I go on, I must mention fuel poverty and the important role that energy efficient Scotland will play in addressing it. In June, my colleague Kevin Stewart introduced the Fuel Poverty (Target, Definition and Strategy) (Scotland) Bill, which sets the target that, by 2040, no more than 5 per cent of households will be in fuel poverty.
We are listening. For example, we have introduced new low-carbon heat and enabling measures into the warmer homes Scotland programme. We continue to pilot and discuss greater flexibilities with our rural and islands authorities to strengthen the design and delivery of their area-based schemes.
I am also pleased to inform Parliament that Mr Stewart and I will begin work next year to prepare a suite of legislation to support the delivery of energy efficient Scotland. That will include primary legislation but, given limited parliamentary time and the additional pressures that are being placed on committees by Brexit, we will, where appropriate, also look to use the powers that are already available to the Scottish Government, for example under the Climate Change (Scotland) Act 2009 and the Energy Act 2013.
In the new year, Kevin Stewart will publish draft regulations for minimum energy efficiency standards in the private rented sector and will look to introduce them to Parliament ahead of summer recess, with the aim of having them in force from 1 April 2020.
I confirm that Kevin Stewart will also bring forward proposals later next year that will put more meat on the bones for the owner-occupied sector with regard to the encouragement and mandatory phases that we have set out.
To provide a strategic approach to energy efficient Scotland, we have proposed that local authorities should produce local heat and energy efficiency strategies, or LHEES for short. They will be the foundation of energy efficient Scotland at a local level, and will identify opportunities for energy efficiency improvements and heat decarbonisation around Scotland.
Having LHEES in place will help to de-risk investment by providing invaluable market information, and will give Scottish businesses the confidence to invest in people, skills and equipment, thereby giving a clear signal of the long-term commitment to energy efficient Scotland.
Due to the comprehensive picture that will be provided by LHEES and their benefits, we believe that it is optimal for delivery against our climate and economic objectives that LHEES are placed on a statutory basis. However, I recognise that there are resource implications for that, and that local authorities would require additional support. That is why Kevin Stewart and I are committed to working with our partners, the Convention of Scottish Local Authorities and local authorities—I will say more about the partnership later—to understand what support they need and enable us to understand the circumstances in which LHEES could be most suitably placed on a statutory footing.
We have already funded 23 local authorities to undertake LHEES pilot projects, and I am committed to supporting the remaining nine local authorities to undertake similar pilots. Alongside the pilots, which are crucial to learning for our future approach, we will shortly establish a working group to produce guidance on the development and implementation of LHEES, with the intention that the group will report in the first quarter of 2019.
I will briefly touch on the supply of low-carbon heat before concluding. Right now, the majority of our heat is supplied using carbon-based fuels and we have a significant challenge ahead if 45 per cent of heat demand is to be supplied by low-carbon fuels by 2032. It is vital that we consider the advice of the Committee on Climate Change and other experts as we respond to that challenge and ensure that the deployment of low-carbon heat is consistent with long-term decarbonisation goals. That is why we are focusing on rolling out low-carbon heat where it makes sense, regardless of long-term decisions.
The Scottish Government currently runs a number of schemes to pilot, test and support low-carbon heat, including the low-carbon transition programme, the district heating loan fund and our home energy Scotland and resource efficient Scotland loan schemes.
To prepare Scotland for life after the UK-wide renewable heat incentive, I confirm that we will shortly start work to strengthen our policy framework for low-carbon heat. That will have a specific focus on off-gas areas and will begin with a call for evidence, to be published in early 2019, which will sit alongside and complement our work to develop a draft bioenergy action plan.
I can confirm that, while further developing our low-carbon heat policy, we intend to prepare legislation to introduce regulation and licensing for the district heating sector, which is a devolved responsibility. That regulation will be commensurate with the scale of this emerging market, and I will shortly commission an advisory group to inform the development of a licensing regime and associated license conditions. Our leadership on this issue has been recognised by stakeholders in Scotland and from further afield, and the Competition and Markets Authority, a respected economic regulator, has agreed with our assessment that the market would benefit from regulation.
We are also investigating the potential for granting permitted development rights and wayleaves, to put district heating developments on a similar footing to other utilities. As part of the consultation in January, we will seek evidence on whether further incentives can be made available to the sector, within the constraints of competition and human rights laws.
Under the current devolution settlement, it is not within our gift to make consumer protection provisions to ensure that customers of heat networks receive the same protections as users of other utilities. However, I am having positive discussions with my counterpart, Claire Perry, the UK Minister of State for Energy and Clean Growth, as we look to agree how the CMA’s recommendations can be implemented as intended, as a coherent package for the benefit of consumers.
I want to close today on an important note about partnership. Achieving our vision will require the Scottish Government to work in partnership with a variety of sectors and organisations. As I have mentioned, local government is a key partner and, earlier this month, I met Councillors Heddle and Whitham, who are the spokespeople for the Convention of Scottish Local Authorities on, respectively, environment and economy, and community wellbeing, to discuss local government’s key role in steering the shape of and delivery of energy efficient Scotland. We have agreed to strengthen that partnership by establishing a high-level strategic group that will embed our commitment to active partnership, shared risk and joint strategic decision making.
Let me be clear: any complaints that the Scottish Government is just kicking the can further down the road with more consultation cannot be further from the truth. As we work together to identify and plan for our transition to a low-carbon future, we are continuing to invest heavily through energy efficient Scotland. As I have said, this Government will by 2021 have allocated £1 billion to energy efficiency since 2009, with over £500 million spent in this parliamentary session alone. However, we also have an obligation to the people of Scotland to get this right. That is why we are investing in maintaining and nurturing a dialogue with individuals, organisations, representative bodies and colleagues right across the chamber.
I look forward to taking members’ questions.