Meeting of the Parliament

Meeting date: Tuesday, November 28, 2023

Official Report 903KB pdf

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Heat in Buildings

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

14:22  

The climate crisis is, of course, the greatest challenge of our age. Scotland has halved its emissions since 1990, but the most challenging part of the journey lies ahead. The First Minister and the Cabinet Secretary for Transport, Net Zero and Just Transition will be at the 28th United Nations climate change conference of the parties—COP28—this week to share our experience and learn from others about how we can secure a future for people and planet.

We have a legal obligation to make that journey to which all parties in Parliament signed up. However, we are making that journey not just because the law says that we must and floods and fires show us that we have to act. It is not even just because of the huge economic opportunity for Scotland, which we have set out as one of the Government’s three defining missions. Fundamentally, doing so is in the interests of the people whom the Parliament represents. That is true of the way that we heat our homes and buildings. There is the opportunity to free people from dependence on fossil fuels and the volatile prices that drive fuel poverty, and to free the world from reliance on the brutal and authoritarian regimes that control so much of the global fossil fuel market.

That is why today I am publishing consultations on proposals that, if Parliament approves them, will give the leadership and clarity that Scotland needs to make the transition to clean heat by 2045.

I have had the great fortune in this job to see at first hand the countless examples of the heat transition that is already under way. A retired man told me about how clean heating had transformed the comfort of the suburban bungalow that he and his late wife had shared for decades. A family in Lochaber were amazed by the reduction in their bills after moving from liquefied petroleum gas heating to a heat pump. New homes from Shetland to the centre of Edinburgh are being built to a zero emissions standard by developers who are choosing to act well ahead of our new build heat standard, which will come into force next April. I visited a heat pump manufacturer in Glasgow that is investing in the new jobs and skills that Scotland needs, and I have listened to how Argyll Community Housing Association already has more than a quarter of its 5,000 homes using heat pumps. It is one of many social landlords that are leading the way in some of Scotland’s most rural settings. Just yesterday, I visited the new heat network at Edinburgh’s waterfront, which is one of a rapidly growing number of heat networks in Scotland.

The move to clean heating is not just for tomorrow; it is already here today. Our role, for which all parties in Parliament share a responsibility, is to provide the certainty and long-term time horizon that will accelerate that growing trend, which will give households the information that they need to plan and give businesses the confidence to invest. We will do that by providing the most generous package of financial support in any of the UK nations. Just last week, I welcomed “Green Heat Finance Taskforce Report: Part 1”, which outlined the enormous appetite from private funders to support such work.

We do this in stark contrast to the UK Government, which seems more interested in exploiting climate as a political dividing line than in rising to the challenge. The Prime Minister’s climate U-turns in September may have a bigger direct impact in England, but his signals have a profound impact on what consumers hear and what businesses need throughout the UK.

Today, we take our approach forward by setting out a clear framework of regulation that takes us from now to 2045 and works with the gradient of consumer demand and industry capacity. First, to tackle fuel poverty, reduce energy bills and increase home comfort, we intend to regulate to ensure that Scotland’s homes meet minimum energy standards. Privately rented homes are to meet a minimum energy efficiency standard by no later than 2028, and owner-occupied homes are to meet the same minimum energy efficiency standard by 2033. A new net zero standard will apply to homes in the social rented sector, which will mean meeting a new and higher energy efficiency standard between 2033 and 2040 and all homes moving to clean heat by 2045.

Secondly, I want to help heat networks to grow to meet their full potential of supplying up to a third of heat demand. There are more than 1,000 heat networks in Scotland, but many are small. That is why we are consulting on new powers to safeguard locations and circumstances where heat networks are most attractive and to ensure that heat networks are viable in those places.

Thirdly, we are consulting on all homes and non-domestic buildings ending their use of polluting heating by 2045, with staging posts along the way to avoid a bottleneck as we approach that deadline. If that approach is agreed to, in the first instance, people who buy a home or non-domestic property before 2045 will end their use of polluting heating systems within a specific and reasonable period following that purchase, with a set of exemptions and abeyances to reflect different circumstances.

Fourthly, to demonstrate public leadership, we intend to set an earlier target of 2038 for all public buildings to have clean heat.

I will now address issues of timing, scale and pace. I have confirmed that the key dates in our 2021 “Heat in Buildings Strategy—Achieving Net Zero Emissions in Scotland’s Buildings” remain in place—they are 2028 for minimum energy standards for privately rented homes, 2033 for minimum energy standards for other private homes, 2038 for public buildings to be zero carbon and 2045 for all buildings to be zero carbon.

Our intention is to have in place by 2025 the main legislative foundation for the heat transition. I have worked through stakeholder feedback, detailed evidence and the very significant changes in the cost pressures that households and businesses have faced in the past two years, and I can now set out a more detailed timescale for the current decade.

If Parliament has, by 2025, passed the bill that I intend to introduce, detailed secondary legislation will be required, and it will be the next parliamentary session before those regulations have an impact. To ensure that we are fair, just and proportionate, it might be 2028 at the earliest before the first home or building owners are required to act under those regulations.

In turn, that timeline has two implications. First, the position that we set out in our 2021 strategy of starting the heat transition at different times in off-gas and on-gas areas—in 2025 and 2030 respectively—is no longer our intended approach. A single timeline that takes effect from 2028 will be fairer and clearer. We will still take account of the different contexts in urban and rural areas, but we will do so through our delivery programmes, our funding and our use of exemptions rather than through primary legislation.

Secondly, our intention for clean heat to play the maximum possible role in our 2030 climate plans would have meant more than 1 million homes decarbonising by 2030, but the single timeline that I have now set out from 2028 means that that scale of change is not achievable by that date, and more of the transition to clean heat shifts into the early 2030s instead. That approach allows us to gain the full benefits of the technological innovation that is already taking place to build the workforce capacity, consumer demand and economies of scale that we will need.

The timeline that I am outlining today will place Scotland on by far the most ambitious path within the UK, with the deployment of clean heating systems at scale and at a pace that is very much faster than the prevailing take-up rate. Coupled with our pioneering work on the new build heat standard, on standards for social housing and on energy efficiency, it is clear that, by driving the development of heat networks into the next decade and beyond, and—to repeat—by providing the most generous package of funding support in the UK, Scotland can have the most ambitious zero carbon programme for buildings that has ever been seen in the UK.

I know that some people in this chamber and beyond regard clean heating merely as the latest front in a climate culture war. They can expect to be disappointed. The days of heating our homes and buildings with fossil fuel and polluting systems are numbered. However, during the consultation, I intend to take an open and constructive approach with any MSP or party that chooses to take the issue seriously. That approach extends beyond political parties to a wide range of stakeholders, from businesses investing in clean heat to fuel poverty campaigners, and from private landlords to funders. Bring forward positive ideas and I will listen. The consultation and our final proposal will be shaped by those views.

However, those who wish to pretend that the heat transition is not necessary, who want to treat it as a shallow political game or who trade in vague promises with nothing to back them up will not only be abandoning the commitments that they made when they voted for the climate targets and betraying the clear majority of the public who want ambitious climate action; they will be undermining Scotland as we seek the maximum social, environmental and economic opportunity from this ambitious transition. That would serve no one.

Today is the next big step in meeting our climate ambitions and embracing a warmer and cleaner future. Let us all rise to that challenge.

Thank you, minister. I intend to allow around 20 minutes for questions, after which time we will move on to the next item of business. It would be helpful if those members who wish to ask a question would press their request-to-speak button.

I thank the minister for the advance sight of his statement.

Today will mark the start of a 10-year time bomb for more than half of Scotland’s home owners. SNP and Green ministers have come to the chamber today with a timescale but not a plan for how they will achieve what they have set out.

There is nothing in the statement today to provide reassurances that SNP and Green ministers understand the true costs that will face home owners the length and breadth of Scotland. Estimates have suggested that it may cost more than £30,000 to achieve the minimum energy efficiency standards in a rural property for example. What estimation of the costs of compliance for the average home has been undertaken?

To be honest, I am not entirely sure whether Miles Briggs thinks that giving 10 years’ notice of the measures coming in is in some way bad for home owners. It is important that we give people clarity to plan and that we give businesses clarity and the timescale in which they can invest. That long-term time horizon will drive up investment in skills, capacity and innovation.

The member should also be aware that the green heat finance task force’s first report, which was published last week, begins to set out some of the innovation that is happening in, for example, financial products, green mortgages and other forms of driving more investment.

The assessment of the overall costs will vary significantly throughout the country and in different building types. Part of the consultation is considering the issues of abeyances and exemptions, to look at different circumstances.

I hope that Miles Briggs and his party colleagues will come to recognise not only that heat transition is necessary, but that investing in it and giving people a long-term time horizon to plan for it will maximise the economic benefits to Scotland and the cost-saving benefits to households in the long run.

I thank the minister for advance sight of his statement, and I draw members’ attention to my entry in the register of members’ interests.

Timescales for action are already slipping since the first heat in buildings strategy was published. Why will the legislation take two years to introduce, given that people need to have homes now that are affordable to heat and power?

We have been told that £33 billion is needed to implement the strategy, so where will the money come from? People do not need warm words; they need warm homes, and they need Scottish Government leadership.

Given the failure to spend £133 million on retrofitting last year, what lessons have been learned to ensure that people are not ripped off when they try to do the right thing?

It is important that we not only take account of the cost of living pressures that many people have faced in the past couple of years—that is one reason why we have to adapt our plans to cope with what people can realistically afford—but look through the implications of the UK Government climbdown on climate a couple of months ago.

Some of the direct impacts from Rishi Sunak’s bizarre speech announcing the scrapping of climate action will be felt more significantly in England. However, we already see the UK slipping down the league table of green investment, and that will have an impact if we do not counter that narrative here. As investors look across Europe and the wider world in considering where they want to put their money in investing in net zero, it is important that we send a crystal-clear signal that Scotland is serious about getting the job done and about making this an attractive place for the investment to come to make that possible.

On the commitments that we have already made, Sarah Boyack is aware that we have committed £1.8 billion over the course of this session of Parliament. More than £1 billion of that has already been committed through the budget process, at the halfway point in this session. We will continue to build on that strong track record.

Queens Quay in my constituency, where my office is located, has the first 100 per cent carbon-free district heating system in the UK. The system, which heats council buildings, West College Scotland, Clydebank leisure centre and a new care home, is a great example of innovative delivery of carbon-free energy. What emphasis will be put on the expansion of that scheme and other major heat network projects to help to deliver more green energy to homes and businesses?

Marie McNair is absolutely right to draw attention to that scheme, which is an excellent example, not just at the technical level of how heat networks can provide affordable and reliable decarbonised heat, but at an economic level, where leadership by the local authority is making sure that we get the maximum social benefit in developing it.

We have worked with our colleagues in Denmark and, in the previous session of Parliament, we passed heat network legislation. Just last week, I brought to Parliament a target for the amount of heat that we expect to be delivered through heat networks by 2035. Almost all political parties managed to bring themselves to support that target. That is the kind of signal that we need to give to ensure that local authorities, social landlords and other organisations see the delivery of new heat networks and the decarbonising and expansion of existing ones as a huge opportunity for them to achieve the heat transition in a way that works for their local communities.

What punishment will there be for home owners who fail to carry out the required work after the purchase of a property from 2033? The consultation seems to suggest civil penalties or building societies and banks getting involved. Can the minister guarantee that home owners will never be punished or even evicted by their building society for non-compliance?

I encourage Mr Lumsden to read the detail of the consultation documents that we have published today—

You only published them two minutes ago.

I am not sure whether the member wants to hear the response.

Minister, please resume your seat. We need to hear the person who has the floor. In this instance, it is the minister. Please resume, minister.

I encourage Mr Lumsden and all members to read the detail of what we have published today, as well as the “Green Heat Finance Taskforce Report: Part 1”. Some in the media have picked up on individual lines in that report relating to things such as council tax. The vast bulk of what the task force has written in its report and of what we have written in the documents that we are consulting on is about support and incentives and making the system work for people.

We have looked at the option of civil penalties in relation to landlords who fail their tenants by not investing in bringing properties up to standard. We have not suggested that there would be, at least in the foreseeable future, a role for civil penalties in relation to home owners. I repeat that the balance of the benefit of the heat transition will be achieved if we place far more emphasis on support and incentives than on amplifying people’s fears by using words such as “punishment”.

Although domestic heat pumps and other technologies that are powered by electricity are very welcome, significant upgrades to the electricity grid will be required, particularly alongside the roll-out of electric vehicle charging points. What detailed analysis has the Scottish Government done to ensure that there is the grid capacity to support the delivery of its heat in buildings strategy in the targeted timeframes? Is that analysis in the public domain?

We engage with network operators and the Office of Gas and Electricity Markets on that. Ivan McKee is quite right that the application of electrification for heat and transport has implications for grid upgrades, but it also offers opportunities. As we create more storage, in relation to either vehicles or domestic energy through heat or electricity, there will be the opportunity for energy providers to use smart tariffs to ensure that we get the maximum benefit from low-cost renewables when they come on to the grid in large volumes. People will then be able to use that energy when they need it. There are therefore advantages to the issue, not just challenges in relation to grid upgrades.

As I said, we engage actively with network operators and Ofgem. We believe that there is capacity in the system to continue to develop in line with the trajectory that we are taking on heat decarbonisation. I am sure that the Net Zero, Energy and Transport Committee will continue to take an active interest in the matter in the months and years ahead.

In his statement, the minister said nothing at all about how we reduce the amount of heat that we need. My constituents suffer the highest levels of fuel poverty in Scotland due to living in old, draughty and poorly insulated homes. There was nothing at all in the statement about insulation and how we tackle the fabric of our buildings. When will the minister address that fundamental question?

I am sorry that Rhoda Grant got that impression. In my statement, I addressed the issue of energy efficiency standards in the private rented and owner-occupied sectors. There is also detail on that in the consultation documents.

The work that we have done prior to the current consultation on reform of energy performance certificates addresses how we give people the information that they need to invest in their homes in order to reduce energy demand. The work that we have done to extend the fabric-first measures—the energy efficiency-only measures—in the social rented sector is also important. The social rented sector asked us to extend the funding for that type of investment, and we have responded positively to that.

Hydrogen will play a vital role in Scotland’s future net zero economy, and it could and should play a part in heating our homes as we move forward. Will the minister outline what engagement he has had with the UK Government, academics, energy companies and industry leaders to ensure that Scotland fulfils its hydrogen potential?

Scotland has immense potential in the production of green hydrogen, and its application could decarbonise many aspects of our economy. There is an emerging consensus that hydrogen will play a significant role in some parts of our transport system, in industry and in a number of other sectors, but there is an expectation that it will not play a central role in home heating.

The process of generating renewable electricity, converting it into hydrogen, transporting it and converting it back into power that can be applied in heating will always involve efficiency losses at every stage. There will be far greater benefit from using renewable electricity directly, especially through devices such as heat pumps that achieve more than 100 per cent efficiency by drawing energy from the ambient environment. The UK Government is moving to the position, which we took some time ago, of recognising that, although hydrogen might have some role to play in heating, it is not expected to be a central one.

We, of course, continue to engage with all stakeholders that are interested in the green hydrogen economy in a wider sense. We in no way play down or seek to ignore the immense opportunities that hydrogen will present for our economy, the rest of our energy system and industrial uses.

I declare an interest as someone in receipt of feed-in tariffs and the renewable heat incentive.

As the First Minister jets off to Dubai for COP28, his Government is downgrading its plans to decarbonise buildings. A clear mission to get 1 million homes on to climate-friendly heating by 2030 has now gone. What will the minister do differently in relation to the first hurdle of getting private rented homes up to minimum standards by 2028, given that the only Government support scheme for the sector has upgraded only 215 properties in three years?

The reality is that, as a result of the decisions that I have announced, Scotland will have far and away the most ambitious programme of heat decarbonisation of any part of the UK. That is a very sharp contrast with the UK Government’s announcements on scrapping important measures on energy efficiency. In a pantomime bit of rhetoric, it announced that it was scrapping some non-existent policies, but it scrapped significant policies on heat decarbonisation as well. The Scottish Government is taking the opposite approach—an approach that is achievable and affordable but also ambitious—and is ensuring that we offer the most generous package of grants and loans to householders in Scotland to ensure that it is achievable.

Denmark is a European leader in district heating, as the Scottish Government recognised when it signed a memorandum of understanding on the green energy transition with the Danish Government in 2021. How is Scotland sharing best practice with our neighbours as we expand our heat network ambitions, which are a key part of the heat in buildings strategy?

We have engaged actively with colleagues from Denmark, who advised the Government on the shaping and framing of the heat networks legislation in the previous session of Parliament. I have also had the opportunity to visit Denmark to see the continued expansion of heat networks.

It is important to recognise that Denmark has had 50 years of experience in building modern heat networks, which now cover something like two thirds of households there. We do not have 50 years to wait to decarbonise our homes—we need to act more quickly. Heat networks will play an important role, as will individual systems such as heat pumps.

We will continue to be informed by our European partners, including those who are already installing clean heating systems at a significantly faster rate than they did in previous years. We need to learn those lessons and show that Scotland will gain the greatest possible economic benefit from joining that rapid heat transition.

If we force people who live in tenements to pay potentially ruinous amounts of money, it could be a breach of their human rights. That is why we set up the tenement maintenance working group in the previous session of the Parliament and why that area of law reform now sits with the Scottish Law Commission. Does the minister agree that the sweeping changes that he wants to make should be made in conjunction with the work that the Scottish Law Commission is undertaking?

Absolutely. We have also been working with the tenements short-life working group. I had a meeting with the chair only last week to talk about its recommendations.

I have said before and I say again that, as we frame some of the exemptions and abeyances as a result of some of the views that we will hear in the consultation, no one will be at all surprised that traditional tenements might take significantly longer than the rest of the housing stock to adapt. Many of those properties will need to benefit from heat networks rather than individual flat-by-flat heating systems. We will work with the grain of the technology development that is taking place and the recommendations of the short-life working group. As a tenement dweller myself, I understand the challenges, but I know that people—including my constituents and, I imagine, Mr Simpson’s—want the solutions, and that is what the Government is determined to give them.

I welcome the clarity with which the minister set out the pathway to 2045. I also welcome the stark contrast between our trajectory and the UK Government’s, because the Prime Minister’s decision to scrap minimum energy efficiency standards for private landlords will cost tenants in England £8 billion over the next decade in higher bills.

Will the minister confirm that private landlords in Scotland will be required to meet minimum energy efficiency standards? Will he outline what the resulting benefit will be to Scotland’s 300,000 private tenants?

Absolutely. I have been clear in my statement about the 2028 target that we intend to bring forward on minimum energy efficiency standards for the private rented sector. Mark Ruskell rightly highlights the cumulative impact across the whole UK of the UK Government’s decision to scrap that policy. On the household-by-household impact, some £300 a year has been added to the bills of PRS households because of that decision by the UK Government to scrap its policy. We will not impose those additional costs on people. If the UK Government was remotely serious about making the transition to net zero affordable, it would have broken the link between electricity and gas prices, rather than adding even more to the energy bills of people in the PRS. That is not the approach that Scotland will take.

Much of the discussion about heating in the future has been about heat pumps. In a lot of situations, however, it seems that district heat networks or communal heating systems are better suited. Does the minister agree that heat networks should be a bigger part of the picture? If so, what action is the Scottish Government taking on that?

Absolutely: there will be places where individual household-by-household or building-by-building solutions will be right, but there will be many parts of Scotland where district heat networks and communal systems across large multiple-occupancy buildings will be the right way to go.

As I said earlier, we have learned a great deal from the experience of our colleagues in Denmark. Last week, we brought the secondary legislation to set the 2035 heat target of 7 terawatt hours of heat through heat networks to Parliament, and it was agreed. We have a range of support from the Heat Network Support Unit, which shares skills and expertise to bring projects forward. The heat network fund is there to invest in pre-capital and capital support, which is needed to bring networks to fruition. We are also working with a wide range of institutional investors, who view this sector as a great place to put their money. I would far rather that all of our collective pension funds were invested in the kind of technology that we need in Scotland, such as heat networks, than in some of the industries that are making the problem worse.

What does the minister have to say to people whose homes cannot physically be retrofitted? Last year, 1,464 photovoltaic devices were installed, with loans of £7.25 million from the Scottish Government. That scheme has now been scrapped—unless it is combined with a renewable heating system, which not everyone can afford. Surely half a loaf is better than no bread, and people should not be discouraged from installing solar panels, given their positive impact on climate change.

We certainly do not discourage people from installing solar—far from it. In fact, no funding for solar was scrapped; the same funding is available. We need to maximise the heat decarbonisation potential of that funding, which is why we changed some of the rules on how people access it.

Just recently, the Scottish Government published a tenfold ambition for expanding the deployment of solar in Scotland. It has huge potential, not just to add renewable energy on to our grid but to ensure that householders, businesses and communities generate some income for themselves to reinvest in the built environment.

I have just seen the first response from the chief executive of the Climate Change Committee. He has responded to our proposals, saying:

“These are bold proposals to decarbonise Scotland’s buildings ... They recognise the importance of a long-term plan ... with a very welcome focus on upgrading properties at the point of sale.”

I very much hope that that spirit of co-operation and constructive engagement will characterise our political debate on the issue over the coming months.

That concludes the statement.