Net Zero, Energy and Transport Committee

Meeting date: Tuesday, April 26, 2022

Official Report 724KB pdf

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Subordinate Legislation

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Local Heat and Energy Efficiency Strategies (Scotland) Order 2022 [Draft]

Agenda item 2 is consideration of a statutory instrument: the draft Local Heat and Energy Efficiency Strategies (Scotland) Order 2022. The Minister for Zero Carbon Buildings, Active Travel and Tenants’ Rights, Patrick Harvie, has joined us. Good morning, minister, and thank you for making yourself available to be at the committee. I also welcome the Scottish Government officials who join the minister: Anastasia Charalampidou is heat planning team leader and Paul Gilbert is a senior policy adviser.

The instrument has been laid under the affirmative procedure, which means that the Parliament must approve it before it comes into effect. Following this evidence session, the committee will be invited, under the next agenda item, to consider a motion to approve the instrument.

I invite the minister to make a short opening statement.

Good morning, colleagues. I am grateful for the opportunity to give evidence on the draft Local Heat and Energy Efficiency Strategies (Scotland) Order 2022.

As we are all aware, achieving our statutory targets for net zero and fuel poverty will mean transforming Scotland’s building stock. As set out in our heat in buildings strategy, we have to ensure that, by 2045, our homes and buildings no longer contribute to climate change, as part of the wider just transition to net zero. More specifically, by 2033, all homes should have achieved a good level of energy efficiency—equivalent to energy performance certificate band C—and, by 2030, emissions from heating our homes and buildings must be 68 per cent lower than 2020 levels. That will require very significant deployment of zero-emissions heating.

Delivering that transformation will require concerted effort across national and local government as well as the wider public and private sectors. Locally led planning will be key to ensuring that the decarbonisation of heat in buildings is delivered in a way that is relevant to local contexts and tailored to the specific needs of communities. Such planning is needed to translate national and local net zero priorities into place-based strategies for heat decarbonisation and energy efficiency improvement.

Local heat and energy efficiency strategies are the principal mechanism for that locally led planning. They will support local planning, co-ordination and delivery of the heat transition across communities in Scotland.

The Scottish Government has been working closely with local authorities to test approaches for local heat and energy efficiency strategies. I express my gratitude to all those who took part in the pilot programme, which involved all 32 Scottish local authorities and was a great example of partnership working between national and local government.

LHEES will be structured in two parts. Local strategies will provide a long-term strategic framework for the improvement of the energy efficiency of homes and buildings in the local authority’s area and the reduction of greenhouse gas emissions resulting from the heating of such buildings. Those strategies will be accompanied by delivery plans, which will set out how a local authority proposes to support the implementation of its strategy.

The Local Heat and Energy Efficiency Strategies (Scotland) Order that we are debating today will place a duty on local authorities to produce strategies and delivery plans by the end of 2023 and then to update them every five years. If the committee and the Parliament approve the order and it is brought into force, it will create a clear statutory basis that will ensure consistency and comprehensive coverage across Scotland against a common minimum standard and raise the profile of local strategies with industry and investors.

The order was developed in co-operation with the Convention of Scottish Local Authorities. I particularly thank COSLA’s environment and economy spokesperson, Councillor Steven Heddle, and COSLA leaders for their support and for the partnership approach that has been taken in developing local heat and energy efficiency strategies.

Local authorities will need to be suitably resourced to undertake the new duty. Scottish Government officials are working with COSLA to deliver appropriate funding to enable local authorities to access the necessary staff capacity and technical skills to produce their local heat and energy efficiency strategies.

It is clear that local government has an absolutely critical role to play in the transition of Scotland’s building stock to deliver net zero and that many local authorities are already driving forward action in that area. Approving the order will ensure that there is consistent, comprehensive coverage of local heat and energy efficiency strategies across Scotland and will enable local planning, co-ordination and delivery of the decarbonisation of Scotland’s homes and buildings.

I look forward to the committee’s discussion and to answering questions.

Thank you for those opening remarks, minister. We move to questions. I will bring in Liam Kerr shortly but, first, I want to ask about the primary purpose of the instrument, which, as you outlined, is to place a duty on local authorities to produce local heat and energy efficiency strategies by 31 December 2023. That is a 20-month timeframe, which might seem to be a sufficiently long period.

However, as you know, local authorities will need more clarity on the Scottish Government’s plans in this area, especially the heat in buildings strategy, a lot of the detail of which has still to be confirmed. For example, the terms of reference for the green heat finance task force show that it will report on heat decarbonisation by September 2023, which is only a couple of months before the deadline for local authorities to provide their strategies. That is not an enormous amount of time.

It would be helpful if you could explain the timing for the establishment of the green heat finance task force, who its members will be and what engagement it will have with local authorities throughout the process.

A huge amount of work is happening in this space, not only in the next year or two, when local authorities have to deliver their first LHEES, but in the longer term. This is a multidecade programme of work.

The green heat finance task force is already up and running, and its membership has been published. If the committee has not been sent that, we can point you to the part of the Scottish Government website that details that work. The task force will be looking at the wide range of finance solutions that will be necessary in the long term to deliver that multidecade programme of work and the large-scale investment—both private and public—that will be required.

It is tempting to think that we will not have gone far or fast enough until we have completed every element of that multidecade programme of work. I am the first to say that Scotland and other countries are not yet where we should be. Many people would say that a lot of the transition should have taken place a long time ago. Now that we are under way, it is clear that local authorities, using the resource that we are discussing with COSLA, will have the capacity to deliver their first LHEES by the end of next year. It would be wrong to assume that they cannot undertake that work until the finance task force has answered every question about the longer-term funding of the whole heat transition.

In many ways, the first iteration of the strategies will be about identifying issues that local authorities are already looking at, such as the nature of their building stock and the likelihood of heat networks in different parts of the country. The maps that have been developed by the Scottish Government to inform the first national assessment of heat networks are already available and more information is coming down the pipeline.

A huge amount of work is already under way, and I have no doubt that local authorities will be able to complete their first LHEES by the end of next year. The green heat finance task force will continue to indicate the longer-term solutions that are necessary for the much more substantial task that lies ahead in the years and decades to come.

Thank you for that response. I have a brief supplementary question. You have indicated in the chamber that the vast majority of funding for the heat in buildings strategy will have to come from the private sector, or at least through public-private partnership co-financing. Where is the Scottish Government with regard to identifying mechanisms and sources of private capital to finance the heat in buildings strategy?

When it comes to local authorities issuing their strategies, the question of how they will be financed will be absolutely central. Will we have further clarity over the next 12 months on the issue of sourcing finance to allow local authorities to put together proper strategies?

The green heat finance task force is already up and running and meeting. It might be more appropriate if I were to provide a written update to the committee in the near future about the work that the task force is already doing. That is rather separate from the question of resourcing local authorities to undertake the work that they will be given a duty to undertake by the order, if it is approved.

The scale of investment that is needed for the development of the strategies in the first instance over the next year and a half or so is of a significantly lower order than the scale of investment that is needed for the transformation of our building stock over the coming years and decades. It would be helpful to separate out those two issues, and I will provide the committee with a written update on the work of the task force at some point in the near future.

That would be very helpful.

Am I right in saying that the strategies are five-year strategies? How far ahead will the strategies that local authorities will publish by 31 December 2023 look?

In the first instance, the first strategies will have to be completed by the end of 2023, and they will be updated on a five-yearly basis from that point.

The nature of the challenge will be different in different parts of the country, which is why locally led planning is so important. It would be appropriate for each local authority to identify in its first strategy the issues and challenges that need to be addressed. It is fair to say that, at this point, no one is able to confidently predict with precision exactly how the strategies will be implemented over the coming decades. That is why we will go through the process of giving local authorities not only the duty but the resources to identify the circumstances that are right in their locations, to develop place-based approaches and to update them on a five-year cycle.

It strikes me that it might be quite an onerous task for local authorities to put together a five-year strategy by 2023 without having an answer to the question of how it will be financed, but I am sure that we will come back to that question at another time.

I bring in Liam Kerr.

Good morning. My questions relate to some of the points that the convener raised. Article 5 of the instrument suggests that the Scottish Government will provide guidance to local authorities to assist them in developing their plans. When does the Scottish Government expect to publish that guidance? From your discussions with the likes of COSLA, how long do you anticipate that local authorities will need between publication of the guidance and production of the plans? How will you ensure that public bodies have sufficient time to prepare their final plans after the publication of that guidance?

09:45  

Our experience of working through the pilot phases gives us confidence that, with the right resources and capacity in place, local authorities will be able to complete that work on the timescale that we have set out. As I said in my opening remarks, we have worked very well and closely with COSLA as a body and with the individual local authorities that have been taking forward their pilots, and I do not think that significant concern has been raised about the timescale for the first strategies.

You have rightly mentioned several times the issue of resourcing and the need for what would presumably be extra resources, or the repurposing of current staffing resources, in order to produce the plans. What are the Scottish Government’s projections of the cost to local authorities of that extra resourcing? Do you expect the Scottish Government to support that resourcing? If so, will that support cover the whole process or just a part of it?

It would be inappropriate to predict the outcome of the discussions that we are having with COSLA. We need to work in a co-operative and collegiate way with local government, and that is the spirit in which we are entering the process.

However, as an indicative example, the most recent pilot phase offered local authorities the option of bidding for up to £50,000 for staff or consultant capacity to allow them to undertake their work. I think that, of those that followed things through to completion, most drew down slightly more than half of the £50,000 on offer—from £25,000 up to the mid-£30,000s. That is an indicative example of the kind of ballpark that we might be talking about but, as I have said, it would be wrong to pre-empt the discussions that we are having with COSLA by trying to predict the outcome at this stage.

Thank you. That was helpful. I have no further questions, convener.

I call Fiona Hyslop.

Good morning, minister. As you will be aware, the committee is conducting an inquiry into local government and its partners in delivering net zero. In your opening remarks, you said that the strategies and delivery plans would need to be comprehensive and place based, but the fact is that local authorities do not have control of all the levers in that respect, nor do they own all the properties, space or land that is required for a place-based approach to be taken. As a result, they are dependent on working in partnership with others.

In the evidence that we have taken, we have heard that, although councils understand their leadership role here, there are certain skills that they just do not have, and I have to say that paying £50,000 for a consultant will not necessarily help with the finance side of things. You have indicated that the finance aspect will be separate, but it is quite clear that it will be integral to helping local authorities to mobilise private capital and so on, which is one of the skills bases that authorities have said that they need support with or something that they need a better collective approach to.

I realise that that is not covered in the strategy and delivery plan duty in the order before us today—in fact, it is only common sense that it has not been—but the guidance should perhaps set out better, quicker and more comprehensive support for councils to ensure that they can deliver a comprehensive place-based approach. Do you acknowledge that it is not just a case of putting a duty and a responsibility on councils and leaving them to get on with things, and that providing integrated support through guidance and other aspects will be absolutely critical?

Yes, I do, and it is nowhere near our intention simply to give the duty to councils and leave them to get on with things. We intend to continue the very strong collaborative work between central and local government that has got us to this stage, which shows that, in many parts of the country, there is great enthusiasm for taking forward this agenda.

Fiona Hyslop is quite right to say that needs with regard to capacity and skills might change over time, and what councils will need to go through the first iteration and get their first strategies and delivery plans published might well be different from what they will need two, three, five or seven years down the line, as they continue to deliver the strategies and see a range of different solutions in place.

For example, there will be differences not only in building stock, geography, climate and so on, but in the mix of energy sources that local authorities can draw on. Some authorities will already have their own local energy companies delivering heat networks and decarbonisation, while others might not be at that stage yet but might see the opportunity to develop those. The capacity that has been developed through that experience will also vary from council to council. That is why we need to work with councils on their own terms and in a way that is empowering to them. We aim to achieve the Scotland-wide net zero and fuel poverty targets, while empowering each local authority to decide the best way to do that in its local circumstances.

Mark Ruskell, who is joining us remotely, has a question.

There has been a lot of debate about the need to democratise energy, and there has been much debate in the Parliament about the idea of a national energy company. Minister, do you see the potential for local energy companies to be developed as a result of the work on the strategy? I think that you have already mentioned that there are examples of that being done. Do you see that as something that could accelerate as local authorities work through what is appropriate for their own areas?

That will be one area of work of the new national public energy agency, which we will launch later this year.

When we published the heat networks delivery plan, I visited Queens Quay in West Dunbartonshire. That is one example of where a local authority is already giving leadership. It is showing that the development of capacity in heat decarbonisation and heat networks can be of benefit to the local economy and to democratisation in our energy system, and it is working in a way that will also create opportunities for the private sector to connect to that network and gain co-benefits.

There will be other local authorities that have not yet gone down that road, but will see the opportunity to do so in future. They will need support to share skills and gain the capacity that is required to make that happen. The experience to date, as well as the potential support that would come from not only Scottish Government resourcing but from working with the new agency, show the huge potential for that to happen.

Good morning, minister and officials. This has been quite a good discussion. It seems that there is a lot of support for the order, but issues to do with resourcing, capacity and timescales have been raised. It is therefore good that we are having a proper discussion today.

I agree with what you said, minister, about locally led planning, which you emphasised in your opening remarks. Do you recognise that local government planning departments have been shrinking in recent years? Through this committee’s inquiry, we have heard that there has been a reduction of around 20 per cent in planning officers. We also know that there is quite a lot of work to do on skills, particularly as we need to take a multidecade approach to this work, as you have said. Alongside the discussions about resourcing, does the Government realise that there has been quite a big reduction in the planning workforce? What is being done to actively address that?

The question of resourcing needs to respect the discussion that continues to take place between the Scottish Government and COSLA. After the upcoming elections, we will see new leadership in some local authorities and, I hope, many local champions of this work across the political spectrum and across all local authorities.

The Scottish Government will work actively and constructively with individual local authorities and COSLA to address the capacity issues. Once again, however, I have to say that the discussions on specific resourcing need to be allowed to continue, and we will need to take account of Parliament’s decision on passing the order before we are able to specify exactly what the funding is going to be.

Indeed. Just for clarity, the deputy convener mentioned finance skills as an example of a skill set that will be required. Can you be specific about some of the other skills that you feel are integral to this work to enable us to deliver on the ambition for local heat and energy efficiency planning Scotland-wide? What examples of skills do you have in mind when you think about this discussion?

I ask Paul Gilbert to jump in and say a little more about local authorities’ experience of the pilot phase and the types of skill sets that they have built up during it.

The pilots have not just been about the planning teams in local authorities. They have been a real success in bringing a lot of the local authority together and enabling work across teams that did not normally work alongside each other. They have brought together the expertise of people in energy services, housing, fuel poverty, planning and other parts of the local authorities. That has allowed those teams to look across the challenge that they have with heat decarbonisation and work collectively on addressing greenhouse gas emissions, addressing elements of building energy efficiency, and tackling fuel poverty. The work has involved the full skills of the local authorities, including procurement.

There is a technical element to such planning activity. Some local authorities have that capability in house and others, when they have had the opportunity, have chosen to procure consultants for technical work visualising what the pathways might look like. The work also requires skills on engagement with, and reaching out to, communities.

Thank you. It will obviously be a really multidisciplinary approach.

We have talked a little bit about routes into local government, including apprenticeships. We understand that there is an opportunity for a planning apprenticeship in England and, possibly, Wales but not in Scotland. Given the national importance of the work, what is the Government doing with colleagues in education and skills to make communities aware that the work provides really important green jobs and to promote it? Right now, young people are sitting exams and thinking about life after school. Perhaps local government does not seem to be the most exciting place for them to work. How can we promote that work and get people enthused about it?

I am sure that Monica Lennon and I agree that not only local government but the heat in buildings agenda more generally are extremely exciting places to work.

Beyond LHEES, we also have the clear commitment to introduce a phased schedule of regulations to ensure that our homes and buildings are brought up to standard on energy efficiency and the transition to zero-emissions heating. The clear sense that the Scottish Government and local government working together are committed to that long-term agenda will give the industry confidence to invest in the recruitment, training and skills that are necessary. That, in turn, will send strong signals to the further education sector about the opportunities.

I believe firmly that there are not only good jobs but long-term, high-quality careers to be had in the transition. It is a massive investment in the transformation of our building stock. That must be done to a high quality and in a way that meets people’s needs on fuel poverty. It has to be a just transition. That means that a huge amount of work needs doing. The Scottish Government is committed not only to signalling the long-term commitment to seeing that work through but to maximising the investment from public and private sources to ensure that it is well funded.

We should see the situation more as an opportunity than a challenge. It is a huge technical challenge, but it is a really big opportunity for our economy as well.

Thank you. That is helpful.

Minister, you mentioned the national energy agency. The Cabinet Secretary for Net Zero, Energy and Transport, Michael Matheson, told the committee that it will be a virtual-only agency with no additional staffing. Is that really a sufficient response to the scale of the challenges that you have just outlined?

The launch of the agency on a virtual basis in the first instance is the right way forward. We already have a huge amount of work in the area that can be brought together under the auspices of that agency, and can continue and develop from there on. It would be a mistake to think that the creation of the agency is simply about infrastructure such as a building and a front door rather than about cracking on with the work that is already happening and continuing to develop it. The launch of the agency on a virtual basis in the first instance will support the continued, incremental improvement to the agenda that is already being taken forward across Scotland. I also see it as a huge opportunity for sharing the skills and best practice that will be necessary to support the public, private and community sectors to take that forward.

10:00  

I understand the virtual part of it, in terms of the speed of the response, but I am struggling to understand the no additional staffing part of it, given the scale of the challenge.

Given that that is separate from the LHEES order that we are debating, it might be appropriate for either me or the cabinet secretary to write to the committee if there has not been a recent update on that.

We are already working with agencies and organisations to deliver not just the heat in buildings agenda but support on fuel poverty and energy efficiency. That work is already resourced, and there have been increases in resources since the beginning of the current cost of living crisis. We have been keen to ensure that we maximise the uptake and availability of the grant, loan and other advice services that are available as we continue to develop and embed that throughout Scotland. The new agency will take on a key role in not only bringing that together but improving how it is delivered throughout Scotland.

Okay. Thank you very much. There are no further questions.

The next item is formal consideration of motion S6M-03605.

Motion moved,

That the Net Zero, Energy and Transport Committee recommends that the Local Heat and Energy Efficiency Strategies (Scotland) Order 2022 [draft] be approved.—[Patrick Harvie]

Motion agreed to.

The committee will report on the outcome of the instrument in due course. I invite the committee to delegate authority to me as convener to approve the draft report for publication.

Members indicated agreement.

That is approved.

Minister, I thank you and your officials for joining us this morning. I will now briefly suspend the meeting to allow for the set-up for the next item. Thank you—and have a good day.

10:02 Meeting suspended.  

10:06 On resuming—