Meeting of the Parliament (Hybrid)

Meeting date: Thursday, October 7, 2021

Official Report 1077KB pdf

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Heat in Buildings Strategy

The next item of business is a statement by Patrick Harvie, on the heat in buildings strategy. The minister will take questions at the end of his statement, so there should be no interventions or interruptions.

14:50  

Today, we publish Scotland’s heat in buildings strategy and, with it, we mark a significant step towards bringing to an end the contribution that heating our homes and buildings makes to climate change. The ambition that is set out in the strategy is significant, and rightly so on the eve of the 26th UN climate change conference of the parties—COP26—in Glasgow. Urgent action is needed if we are to stand a chance of limiting warming to under 1.5°C.

The strategy presents a pathway towards decarbonising our homes and non-domestic buildings in line with our statutory climate change commitments, which all parties united behind when the Parliament passed the Climate Change (Emissions Reduction Targets) (Scotland) Act 2019. It sets out the Government’s vision that our homes and buildings will be cleaner, greener and easier to heat by 2045. That means improving energy efficiency standards and replacing fossil fuel heating systems with zero emissions ones.

The strategy sets a clear and overarching objective that, by 2030, greenhouse gas emissions from homes and buildings must be 68 per cent lower than they were in 2020. That will require more than a million homes and the equivalent of 50,000 non-domestic buildings to convert to zero emissions heat this decade. It is a huge transition that will affect communities, businesses and households all across Scotland.

To pave the way, it is essential that homes and buildings achieve a good standard of energy efficiency. By 2030, we want to see a large majority of homes achieving a level of energy efficiency that is at least equivalent to an energy performance certificate C, with all homes meeting that standard by 2033 where that is feasible and cost effective. That will ensure that future energy costs are affordable, and that we continue to remove poor energy efficiency as a driver of fuel poverty.

As we address the damaging climate change impact of heating with unabated fossil fuels, we must do so in a way that supports our efforts to tackle social inequality. We must deliver a just transition. The strategy therefore sets out the guiding principles that will ensure that our actions to decarbonise heat do not have a detrimental impact on rates of fuel poverty.

We recognise that there are challenges. Many zero-emissions heating systems are currently more costly to install and can be more expensive to run than fossil fuel alternatives. Just as we have seen with renewable electricity, however, costs are coming down rapidly and they will continue to do so, but we need to work together across sectors and jurisdictions to overcome barriers and build momentum. We will provide support to help people to switch to zero-emissions heating, reducing household costs, improving homes and helping to tackle the climate emergency.

The strategy that we publish today builds on the draft that was published in February. I was pleased that the draft received so many supportive responses, and to see the breadth of stakeholders who welcomed the scale and pace of ambition that it set out. The final strategy reflects much of the insight that was generated through the consultation, as well as the additional actions that have been agreed as part of the Scottish Government’s agreement with the Scottish Green Party.

As we undertake the heat transition, we know that there will be more issues to resolve and we are committed to doing so collaboratively, drawing on the best knowledge and ideas from across society. Today’s strategy sets a clear direction for the heat transition, but it also acknowledges that no one has all the answers at this stage. The strategy lays a firm foundation for on-going work, including through the refreshed energy strategy and energy just transition plan that will be published next year, and the fuel poverty strategy that will be published later this year.

Over this session of Parliament, we will invest at least £1.8 billion in heat and energy efficiency projects across Scotland. As well as helping to meet our targets, that will provide a much-needed stimulus to the heat and energy efficiency sector and the broader construction and home maintenance and improvement industries, thereby contributing to a green economic recovery for Scotland.

I am pleased to announce that we are doubling the social housing net zero heat fund to at least £200 million. That capital funding will support decarbonisation of social housing, and it illustrates our on-going commitment to working with the sector. We are also more than doubling the funding that is allocated to improving public sector buildings such as schools and hospitals to at least £200 million, which will enable the public sector estate to showcase zero-emissions buildings. In addition, we have committed to investing at least £400 million over the parliamentary session in large-scale heat and energy efficiency projects, including zero carbon heat networks and large-scale heat pumps.

Alongside that support, the strategy sets out further detail on how we will accelerate the transition more broadly. We estimate the total investment that will be required to transform homes and buildings across the country to be in excess of £33 billion. It is clear that that cost cannot be borne by Government alone. We are establishing a new green heat finance task force to identify innovative solutions to maximise private sector investment and find new ways to help to spread the up-front cost of making properties warmer, greener and more energy efficient.

Investment in the heat transition will generate significant opportunities for Scotland. We estimate that 16,400 jobs will be supported across the economy in 2030 from the deployment of zero-emissions heat. We will continue to flex our delivery programmes to support local jobs and create opportunities for young people. Over the next few months, we will co-produce with the sector a supply chain delivery plan to create new investment opportunities and support high-value local jobs.

We will also bring forward a framework of regulations that sets clear standards for property owners across all tenures and building types. That framework will provide the certainty and assurance to secure investment and give confidence to the supply chain.

Our regulatory framework will build on existing standards that are already in place and will require action on energy efficiency and zero-emissions heating. In 2025, we will introduce regulations that will require all homes to reach a good level of energy efficiency—EPC C or equivalent—for example, at point of sale or change of tenancy. All homes will have to reach that standard by the backstop date of 2033, with the private rented sector having an earlier backstop of 2028. That will support our commitment to phasing out the need to install fossil-fuel boilers in off-gas properties from 2025 and in on-gas areas from 2030, to the extent that devolved powers allow.

Public engagement will be critical. While technologies such as heat pumps and heat networks have long pedigrees in other European countries, they are unfamiliar to many of us. We will increase public engagement by building on our existing advice services and taking steps to raise awareness. To support that, we will establish a national public energy agency to provide leadership and harness the potential of scaled-up programmes to decarbonise heat. In addition, we are working with local government to put in place local heat and energy efficiency strategies for decarbonising homes and buildings for all parts of Scotland.

The heat transition is an unprecedented challenge that will directly touch the lives of virtually everyone in Scotland. Building owners and supply chains need to have confidence in the long-term pathway and the policies that underpin it. The scale of the challenge requires a cross-party approach. I have therefore invited party spokespeople to come together to discuss how we can work collectively to take forward our heat in buildings strategy, just as we acted collectively to set the climate change targets.

The strategy sets out an ambitious package of work and maximises the Scottish Government’s impact within the confines of the devolution settlement. However, we do not have all the powers that are necessary to deliver the transformational change that is required. We are therefore calling on the United Kingdom Government to take urgent action to support the just transition to decarbonised heating.

The delayed UK heat and buildings strategy must set out how the UK Government will use its regulatory and policy levers to incentivise rapid deployment of zero-emissions heat technologies. We urgently need a stronger commitment and a clearer action plan from the UK Government, including reforms to energy markets and decisions about the future of the gas grid. Recent volatility in global natural gas markets further underscores the urgency of action in reserved policy areas to maintain security of energy supplies and to support vulnerable customers.

This morning, I had the opportunity to visit a communal air source heat pump project in Springburn in Glasgow. The project, which is co-funded by North Glasgow Homes, the district heating loan fund and the Scottish Government’s low-carbon infrastructure transition programme, delivers zero-emissions heat to six high-rise social housing tower blocks. Not only will that significantly reduce emissions, but it will reduce heating costs for 600 homes by up to 60 per cent, improving tenants’ wellbeing by making their homes warmer and cheaper to heat.

We must get the transition right for every community. The heat in buildings strategy is the foundation for doing so; securing the necessary reduction in emissions from our buildings to respond to the global climate emergency, demonstrating tangible commitments to our international partners at COP26, creating economic opportunities in Scotland and improving the buildings in which we live, work and play.

I commend Scotland’s heat in buildings strategy to Parliament.

The minister will now take questions on the issues raised in his statement. I intend to allow around 20 minutes for questions, after which we will move on to the next item of business. Members who wish to ask questions should press their request-to-speak button now or enter R in the chat box.

I thank the minister for advance sight of his statement.

I am concerned by the length of time that it has taken to get to this point. If the Government is to meet the target that is set out in its statement—to decarbonise 1 million homes by 2030—more than 335 homes must be decarbonised every day from now until 31 December 2029. The strategy is heavy on what must happen but light on how. I will try to help by asking three straight questions.

First, the strategy estimates that the total investment required to transform our homes and buildings is likely to be in excess of £33 billion. The Scottish Government will make £1.8 billion available. From where, or from whom, does the minister expect the other £31 billion to come?

Secondly, decarbonisation requires a huge number of people to retrain or upskill in new technologies and methods, which requires people to teach them in properly funded schools, colleges and universities. The strategy suggests that the private sector will drive that, but it also says that there will be another plan for that in the summer of 2022. Has the private sector confirmed that it is comfortable with the coming costs and responsibilities, and what is the Government doing now to upskill colleges and schools?

Thirdly, the statement says that the Government wants to upgrade all homes to EPC band C by 2033. It has been reported that that could cost £17,000 per household. Interest-free loans of up to £15,000 will be available, but not many households will have the extra £2,000 to make up the difference. What funding will be put in place to support owners and private landlords to achieve those targets?

Mr Kerr knows that I and members from a number of parties across the chamber have been pushing for action on this not for years but for decades. I hope that he is not suggesting that we should not have consulted on the draft strategy that was produced earlier this year. I hope that he recognises the value of consultation. The final version of the strategy is stronger and richer for having had constructive input from many stakeholders. I hope that Mr Kerr will welcome that.

The total cost of investment between now and our target date of 2045 is immense. I made that clear in my statement. The commitment that the Scottish Government makes during this session of Parliament will not be the end of the story. This is a multi-decade programme that we must all commit to. As my statement said, costs will be met not only from public funding but from a wide range of sources. I hope that Mr Kerr will engage constructively with our proposal for a finance task force to look at those challenges.

Colleagues who are responsible for other portfolios will address some of the issues affecting schools, colleges and universities. Those are important points. Many private sector companies and contractors that install conventional heating systems see big opportunities if we can give them the right support to access the work and take on more people to do the incredible job of addressing the climate change emergency, and if we make sure that all communities across Scotland can do so affordably.

I refer members to my entry in the register of members’ interests as the owner of a rental property in North Lanarkshire. I thank the minister for early sight of his statement and for providing a copy of the strategy earlier today.

In the strategy, no longer does the minister who is responsible say,

“We will transform Scotland’s homes”;

instead, the strategy says that homes “must be” transformed. We agree that we need to decarbonise, improve the fabric of our homes and cut fuel poverty, but the strategy pushes a £33 billion bill and all the risk and disruption on to home owners, tenants and landlords, without enough funding or a partnership approach being evident so far. The extra £200 million that has been announced will not come close to reducing the burden on those who are least able to pay.

Tony Cain of the Association of Local Authority Chief Housing Officers told the Local Government, Housing and Planning Committee last week that the Government

“has not allocated enough resources”

and that its plans put

“an unbearable burden on social housing tenants’ rents.”—[Official Report, Local Government, Housing and Planning Committee, 28 September 2021; c 25.]

Low-income households have been the guinea pigs so far. They have been subjected to useless, costly infrared heating panels in the Western Isles and have been disconnected from district heating systems in Glasgow. The Glasgow city region deal says—

Mr Griffin, will you please bring your question to the fore? Thank you.

Certainly, Presiding Officer.

Can the minister say when householders will know what their share of the £33 billion will be and what support they will get, or whether the Government just intends to regulate them into submission and debt?

I thank Mr Griffin for his question. I have to admit that I am a little disappointed by its tone, because, as I said, this is a huge challenge for us all and it is one that requires cross-party collaboration. I would have hoped that the Labour Party would welcome the idea that we are going to set out an ambitious way to achieve the agenda for all of Scotland.

Can I tell every home owner what the precise share of investment for every private home is going to be between now and 2045? Of course I cannot. What we are doing is committing to looking at a wide range of sources for the investment. It cannot all come from public funds. Even I might blanch at the idea if Mr Griffin came forward with a proposal for a £33 billion tax rise so that we could fund it all from public sources.

On the social housing issues that he mentions, I recently spoke at the Scottish Federation of Housing Associations conference about the zero emissions social housing task force report. I note that there is a real positivity and, I think, an appetite across the sector to work with the Scottish Government to rise to the challenge. Many social housing providers know that reducing heating costs is one of the most effective ways that they can reduce not just fuel poverty but poverty more widely, because the saving does not get clawed back by the UK benefits system.

I really hope that Labour and all other political parties will respond positively to the invitation that I have put out for us to sit together and talk about how we take this forward, because it is going to work only if we are willing to work together between political parties, between levels of government and across the whole of society.

I allowed a bit of latitude for the front-bench exchanges. I have 10 back benchers seeking to ask questions, and we need to finish this item of business by 15:25. I just put that out there.

I call Stuart McMillan, who is joining us remotely, to be followed by Brian Whittle.

I welcome the statement and the £1.8 billion of investment, but can the minister provide an assurance that communities with high Scottish index of multiple deprivation rankings and growing older populations will be at the forefront of any roll-out of the investment?

That is an important issue. Funding allocations for local authority-led, area-based schemes reflect need, and councils use the Scottish index of multiple deprivation to target areas with higher numbers of fuel-poor households. In our area-based schemes, the funding enables fuel-poor households who live in their own home to benefit from energy efficiency improvements, and over a third of those people are older people. We also continue to support people to convert their heating systems to zero-emissions ones, targeting that help—again—to those who are least able to pay. Our delivery schemes that target households in fuel poverty already take a zero-emissions, heat-first approach.

I am conscious of the time, Presiding Officer. There is a great deal more in the strategy that will help to answer Stuart McMillan’s question, but I will leave it at that.

It is clear that hydrogen-powered boilers could play a substantial role in the replacement of natural gas boilers. Although I note that there is a strong emphasis on heat pumps in the strategy, when does the Scottish Government expect to be able to provide home owners with greater guidance about the likely availability of a mains hydrogen network in Scotland and help them to make an informed choice about the best route to take when replacing their heating?

I thank Brian Whittle for that question, which is an excellent question to put to the UK Government. As he will know, it is the UK Government that regulates the energy economy, including decisions on the gas network.

Mr Whittle is shaking his head. I am sorry, but I am speaking about the reality. This Government cannot currently control the gas network and cannot make those decisions.

The UK Government’s heat and buildings strategy has been delayed for so long. I was really hoping that it would make a big splash announcement at the Conservative Party conference about how it will take some of these issues forward, but what did we hear on this agenda? The UK Government wants to make it easier to arrest the people who are campaigning and protesting for insulation and other energy efficiency measures.

That response—blaming the messenger—is not the response that we need. This Government hears the message and is cracking on with doing the work that it can with the powers that it has.

Cultural venues such as Dundee Museum of Transport, Dundee Contemporary Arts and Dundee Heritage Trust are all keen to play their part in Scotland achieving net zero. Can the minister advise on potential support for cultural venues to undertake retrofitting?

I am pleased that Joe FitzPatrick sees that the cultural sector is enthusiastic. It not only has a direct role to play in terms of its buildings; its buildings can also be showcases, because many of them are publicly accessible and can lead on the public awareness of the transformation that we need.

Cultural venues will be eligible for support, but that will depend on their ownership. Public sector support schemes can help to decarbonise those buildings that are in public ownership, whereas our small to medium-sized enterprise loan scheme can provide support to independent cultural venues. There is also support available to community organisations and national or regional non-profit organisations with charitable aims and objectives.

I would encourage all such organisations to contact the energy efficiency business support service, Local Energy Scotland or the Scottish Government directly to find out what may be available. If the member has in mind specific issues in his own area, he is very welcome to write to me.

I call Sarah Boyack, who is joining us remotely.

I refer members to my entry in the register of members’ interests.

The statement does not include reference to the opportunity to develop community and co-operative-launched heat and power networks. In the Non-domestic Rates (Scotland) Act 2020, we agreed to rates relief to such low-carbon heat networks. Will the minister agree to build on the experience of existing networks such as the Aberdeen Heat and Power network and the Edinburgh Community Solar Co-operative network, so that we get the win-win of low-carbon networks benefiting our communities?

I hope that Sarah Boyack knows that I would be very enthusiastic about working with her on that issue.

I see a really important role for the public energy agency in supporting the development of skills in this area. I know that there has been a little bit of political back-and-forth about whether we need an agency or whether we should crack on and create a single national energy company in the first instance, but the national public energy agency that is being created will be able to do a great deal to skill up local communities and make sure that we are sharing best practice and facilitating our ambition for communities to take control of the agenda.

There is a great deal about the agenda to be enthusiastic about and, again, I very much hope that we can work on a cross-party basis to achieve that.

Covid-19 has put a strain on every household in Scotland and many are no doubt wondering how we can achieve net zero while rebuilding from the hardships of the pandemic. What part does the minister believe that the strategy will play in Scotland’s Covid recovery?

As I said in my statement, we see the strategy as really critical to a green economic recovery for Scotland. We estimate that an additional 16,400 jobs will be supported across the economy by 2030 as a result of the investment that will be deployed in zero-emissions heat. In the immediate term, as outlined in the strategy, an investment of at least £1.8 billion over the course of this parliamentary session aims to strengthen demand and to support an increase in jobs and skilled workers through investment in the supply chain. The pace of the transition will require substantial growth in supply chains, particularly in the availability of skilled heating and energy efficiency installers. We will be working with Scottish Renewables to undertake a heat in buildings workforce assessment project and, towards summer next year, we will co-produce with industry a heat in buildings supply chain delivery plan. I hope that we will be able to maximise the opportunities that Rona Mackay has identified.

I welcome the strategy. The minister says that public engagement will be critical to the strategy, but recent changes to the warmer homes Scotland scheme took place with no prior consultation, leaving some of my constituents in the dark and without the new boilers that they were due to receive. Will the minister commit to island proofing the strategy to ensure that areas that suffer the worst fuel poverty have their needs properly reflected? Will additional resources be made available in recognition of the higher costs of low-emission technologies and their deployment in island and rural areas?

Yes—absolutely. I very much recognise Liam McArthur’s concern about this issue as the constituency member for island communities. He has written to me and lodged a number of questions on it. I have sought to make it clear in my answers to him that we want to give the right support in the right places. We recognise the distinct challenges that remote, rural and island communities face, and we are making sure that, even as we move away from some of the worst and most polluting fossil fuel heating systems, we are making available in all those communities the right renewable, zero-carbon heating systems and energy efficiency measures. I will continue to engage with Liam McArthur if he wants to continue writing to me. I hope that he is aware that we are making those offers available to people in his constituency and elsewhere in Scotland.

I welcome this transformative strategy and, in particular, the commitment that the minister has given to work across the chamber. I hope that that will set a better tone for the rest of this parliamentary session.

I want to ask the minister about the commitment to a renewed ambition for decarbonising public sector buildings. Does he recognise that there is often a lack of capacity and skills in councils and other public sector organisations to bring forward new projects such as heat networks and the complex innovation that will be required to meet targets? How does he envisage us building capacity over time so that we can innovate and deliver?

I have already set out the doubling of the funding that we will give to the public sector to engage in this agenda. I come back to the answer that I gave earlier about the national public energy agency, because, as well as supporting community organisations, it will have a critical role in building skills and capacity at local government level. Councils around Scotland want to be part of the agenda and want to show that it can work for their communities. I put out a call to members across the chamber and all political parties to work with the Scottish Government—if there are opportunities in their constituencies and regions that they think we need to be aware of and should be working with them and their local authorities on, we would be very happy to hear from them.

I recently met Tighean Innse Gall, a trusted insulation provider in my constituency, which is encountering serious difficulties because of the new UK-wide industry standard, PAS 2035. Among other things, the new ventilation standard requires fixed mechanical ventilation and large permanent window vents. In Hebridean properties, the strict requirements result in a permanent and significant draft—made worse by a requirement to remove the bottom 2cm of every internal door—which is significantly deterring people from using insulation schemes. Is the minister willing to meet Tighean Innse Gall and me to discuss the company’s concerns about that?

I will of course be very happy to have a discussion with Alasdair Allan about that. I am aware that PAS 2035 introduces a new retrofit co-ordinator role to ensure compliance with standards and to co-ordinate work so that the intended outcomes are achieved.

That includes provision for improvements in indoor air quality and is particularly true when the energy efficiency improvements are detrimental to natural air flow, in which case the co-ordinator may insist on additional measures to address that.

However, we understand that the retrofit co-ordinator ultimately decides on the course of action alongside the designer. We are in continual discussions with the British Standards Institution to ensure that Scottish stakeholders’ views are factored into the development of those standards. I would be happy to meet Alasdair Allan and the provider that he mentions to look into those issues.

Is the £1.8 billion of funding that was announced in today’s statement in addition to the core budget that is allocated to these portfolios? In other words, is that extra money or is money being reallocated from other areas? Will Mr Harvie acknowledge that the massive amount of additional Scottish Government funding that is required in the area and to deliver the transition to net zero will have to come from the Barnett formula, given that the Scottish Government is running a fiscal deficit of £36 billion?

In relation to the first question, at least £1.8 billion is the total commitment over the course of this parliamentary session; I hope that that is clear.

As I have referenced to other members, we need to recognise that the strategy is by no means the end of the story. If we are to commit to a programme of work that is as transformational as it needs to be to reach the targets that we have all voted for, it will have to be a substantial, multidecade programme of work. It would be absurd for any Government minister to stand here in 2021 and say that we know exactly what will happen right through to 2045. The strategy for this parliamentary session lays a strong foundation for beginning that work. Of course all the funding will not need to come from the Barnett formula, because we will be independent well before 2045.

The minister will be aware that the first large-scale district heating system in Scotland was officially opened in my constituency last week. It uses water from the River Clyde to create green energy that will heat homes and buildings in Queens Quay in Clydebank. Will the minister outline what lessons can be learned from that pioneering system to ensure that it can be rolled out across Scotland?

Absolutely; that is an example of the importance of delivering such flagship heat networks. The project is now commissioned and open, and we will be working closely with West Dunbartonshire Council to produce a lessons learned report that we will share widely to ensure that heat network projects such as that one can be replicated across Scotland.

Lessons from the delivery of such a project will help us to develop a successor programme to the low-carbon infrastructure transition programme and a refocused district heating loan fund that will seek to address the barriers to the delivery of heat networks and large-scale zero-emissions heating infrastructure projects.

Thousands of householders are currently worried about how they will pay for new heat and smoke alarms by next February, but the minister says that by 2025 he will bring in regulations that could land householders with bills of tens of thousands of pounds. He has twice failed to say how he will help people to pay for that; will he do so now?

I have laid out in detail how we support that work. I see the scepticism on Mr Simpson’s face; I ask him to acknowledge that decisions need to be made at every level of Government, including in relation to regulating prices. The Scottish Government cannot do that; the UK Government can and must change the pricing structure so that it is more affordable for people to operate low-carbon heating systems.

As I said to Labour colleagues earlier, if Mr Simpson wants to come forward with a proposal for a £33 billion tax increase and persuade us to do that so that the public sector funds all that work, he is welcome to write to me about that.

That concludes the statement on the heat in buildings strategy.