Official Report 459KB pdf
09:33
The next item on our agenda is to take evidence on the draft climate change plan from the Cabinet Secretary for Housing. We are joined by the cabinet secretary, Màiri McAllan; Gareth Fenney, the Scottish Government’s interim deputy director for heat in buildings delivery; Henry Hardy, climate change plan team leader; and Jess Niven, interim deputy director for heat in buildings policy and regulation. I welcome you all to the meeting. There is no need for you to operate the microphones, as we will do that for you.
If you wish to make a brief opening statement, cabinet secretary, you are welcome to do so.
Good morning and thank you, convener—I will indeed take the opportunity. Thank you for inviting me to give evidence today on Scotland’s draft climate change plan, which sets out the actions that we will take to 2040 to reduce emissions and to meet the first three statutory carbon budgets.
Specifically, I will discuss the buildings chapter, which is central to the plan, because homes and buildings are one of the largest remaining sources of emissions and one of the most challenging areas. It is felt directly by people in how warm their homes are, how much they pay in bills and the decisions that they make about their property, which is probably the most important asset that most people will ever own. It is therefore essential, in my view, that the transition is fair, affordable and practical, and it must not exacerbate fuel poverty.
From our perspective, delivering the transition to clean heat is not about a single policy lever. It requires a coherent strategy that brings together many elements that I am sure we will touch on today. It is about providing long-term market certainty, so that households and industry know the direction of travel and can plan, and about supporting households and organisations with advice and financial support where needed. Building public awareness is also important, as is investing in the workforce and supply chain, so that we can deliver at scale.
I believe that we are already making strong progress. Through Home Energy Scotland we are continuing to deliver generous loans, grants and tailored advice to help households move to clean heat. We have a wider package of support, with £1.67 billion allocated to heat and energy efficiency programmes over the course of this parliamentary session.
The buildings chapter of the draft CCP builds on that progress and sets out further planned work, including a heat in buildings strategy and delivery plan, which is to be published at the end of 2026 and which will set out how action is sequenced and how we will work with partners, taking account—crucially—of actions by the United Kingdom Government that we are expecting in the interim period.
As the committee knows, the heat in buildings bill will now be introduced early in the next parliamentary session, subject to the outcome of the election. I put on record that that does not represent a reduction in our ambition; it is part of the practical and fair approach that I mentioned earlier, which I am sure that we will get into today.
Moreover, the Parliament has now approved new regulations to reform the energy performance certificate, on which I recently gave evidence to the committee. We have also set out proposals to accelerate heat network development.
Crucially, regulation alone will not deliver the transition. Advice, consumer protection and financial support, particularly for those at risk of fuel poverty, will be fundamental. I take this opportunity to mention our warmer homes Scotland and area-based schemes, which are supporting those at risk of fuel poverty.
While the Government is committed to delivering net zero, the pace and affordability of the transition do not depend only on devolved levers, as will emerge in our conversation today. This area of policy is highly integrated across the United Kingdom and I am in close on-going contact with the UK Government Minister for Energy Consumers, Mr McCluskey, in particular, as his decisions will be integral to what we can take forward.
I believe that, in the meantime, the draft climate change plan provides a clear and credible pathway to net zero. I look forward to discussing it.
Thanks very much for that opening statement. I will start this morning’s conversation with a number of general questions.
Annex 3 of the draft plan shows that emissions reductions of only around 0.4 megatonnes of carbon dioxide equivalent are expected from residential buildings in the first carbon budget period, with the vast majority of that backloaded into the 2030s. Given that, I would be interested to understand how publishing a new heat in buildings strategy and delivery plan at the end of 2026 can be considered to be aligned with the pace of action that is required now to stay within the first carbon budget, rather than deferring delivery and risk to later periods.
First, carbon budget 1 is very much about the continuance of our existing schemes and provision, understanding that those will have to increase. We will review our schemes in the next financial year to ensure that they continue to deliver as efficiently and as well as they can.
There also needs to be a significant scaling up. When it comes to the timing of the strategy and delivery plan, I am conscious that we have a number of documents, strategies and delivery plans in the heat in buildings space—almost starting from the 2021 strategy, through the climate change plan, the heat in buildings bill that is to come and the delivery plan at the end of the year. I appreciate that that might seem to be a bit of a cluttered landscape, but I think that it reflects the complexity of this area, the fact that there are so many moving pieces and the fact that we are having to challenge ourselves all the time on how up to date our planning and delivery is. It also reflects our being able to sweep up actions that the UK Government takes as it takes them.
On publishing the heat in buildings strategy and delivery plan at the end of 2026, I hope that, by then, I—if it is me who is in this post—will be able to include the framework that the climate change plan offers and perhaps add to that the critical action that I expect the UK Government to take in respect of reducing the cost of electricity. That would almost be an on-going layering of action, all of which would take us towards the level of carbon emissions that we need to see.
Will you clarify what you mean by schemes and provisions that already exist? Do you mean things such as the Home Energy Scotland programmes?
Exactly. I mean Home Energy Scotland programmes, the warmer homes Scotland scheme, area-based schemes and so on.
You said, “if” it is you who is in post. That is concerning. How can we ensure that, later in 2026, the work that you are taking forward with the wonderful officials who are with you, and others in the team, is taken forward by whoever is in your seat?
There is a fundamental issue that I cannot escape, which is that I cannot bind future Administrations. The climate change plan will be completed, as you all know, before the end of this parliamentary session. Subject to fundamental change, it will contain a 2045 target for decarbonisation and the policy levers that we think are required to achieve that. The fact that the UK Government is changing electricity cost arrangements will not change. What I can say is that anyone who picks up this work will appreciate that every lever has to be pulled, and the cost of electricity is a very significant lever.
I think that that will be a theme throughout the meeting.
I would like to talk a bit about policy coherence. You talked about there being lots of different documents, although I am probably paraphrasing you. I have been looking at annex 3, in which the baseline for buildings assumes that, without further policy intervention, emissions remain largely flat—you have already kind of said that—meaning that almost all reductions will depend on co-ordinated housing and heat policies. Will you be explicit about how and when the housing emergency action plan and housing to 2040 strategy will be aligned with the carbon-budgeted emissions pathway for buildings, and what mechanisms will ensure that housing and planning decisions that are taken now do not lock in emissions beyond what the climate change plan assumes?
Yes, I can have a go, convener—sorry, there are a couple of parts to that question.
Housing to 2040 and the emergency action plan are certainly distinct from the climate change plan, but they are very much linked. I am overseeing them both, so the work to integrate and balance them is being led by one cabinet secretary, which is always helpful.
The housing emergency action plan sets the target for affordable homes delivery and introduces a new all-tenure target, while the climate change plan will set the regulatory environment that will impact that. When I consider how we achieve our all-tenure house-building target, I also think of all the regulatory measures that are coming down the track as part of the climate change plan. In that way, they will be integrated. That is just an example within house building; there is also an example in the private rented sector. The housing emergency action plan is clear that a well-functioning PRS is critical to avoiding homelessness. In the climate change plan, I am taking decisions about when and how to introduce a private rented sector minimum energy efficiency standard.
They are distinct documents, but they are very much linked, and the fact that I am overseeing them both will help to integrate them.
It is interesting that they are distinct documents, yet how we get out of these silos has been a theme in session 6. It has been a challenge in the Parliament to recognise that climate change is upon us, and that also needs to be recognised in all those documents. I think that you are saying that we will achieve the housing to 2040 goals because you are overseeing those documents.
09:45
However, something more is needed to make a clear link between all those different pieces. How can we rush to tackle homelessness, as is very important, and address the commitment to 110,000 affordable homes, if we do not have the climate change plan thread that you are bringing in on the heat in buildings issue—if that is not, somehow, threaded through some coherent document? You are saying that it sits there because you oversee it all, and the committee is absolutely thrilled to have had a housing minister and, now, a housing cabinet secretary, but how do we make sure that all the plans that are being set up at the end of session 6—at a critical time—do not end up being looked at in a siloed way?
I will come to Jess Niven on housing to 2040. However, I should have been clear that it is not just about my overseeing those things. Sustainability and good places are built into the housing to 2040 vision, of which the housing emergency action plan is a part. I suppose that all of it forms part of the public policy landscape. The registered social landlords with whom I meet about the affordable homes targets are very conscious that they will have to look across the board at what the Government asks them to do—whether in house building, the environment or emissions reduction—and they know that they have to comply with the suite of asks. Jess may want to add something.
Within the Scottish Government’s teams, the strategies definitely reinforce each other. I was just reminding myself of some of the things that we have already delivered that were included in the housing to 2040 strategy—for example, the new-build heat standard, EPC reform and the green heat task force. I emphasise that, within Government, the strategies are integrated, and we expect to see that in the heat in buildings strategy and delivery plan that will be forthcoming this year. I absolutely accept the point that collaboration within Government is key to achieving that.
Thanks for that reassurance.
I move to a theme that you have already brought up, cabinet secretary, which is about the dependency on the UK Government’s decisions and managing the risks in that regard. My favourite annex of the plan—annex 3—makes clear that the buildings emissions pathway is highly sensitive to the UK Government’s decisions on electricity pricing and energy market reform, and that much of the post-2030 delivery is uncosted as a result of that unknown. I think that you have already answered this, but I will ask about it again: how dependent is the buildings emissions pathway on UK Government action that is outwith Scotland’s control, and what specific risk management or contingency measures are in place if those decisions are delayed or do not materialise?
I deliberately referred to that in my opening remarks because it is an important part of the mix. We are trying to achieve decarbonisation across homes and buildings in a landscape of a devolved/reserved split of powers, expected technological advancement and a differing availability of public money versus the likelihood of private investment—all of it over a long period. That is the challenge, and one main part of it is the cost of electricity. We have been clear for many years about the importance of rebalancing the relationship between the costs of electricity and gas. The Climate Change Committee has been clear that that is one of the most important—if not the most important—UK Government actions that can be taken.
To put a bit of colour around that, we can look at fuel poverty and unit costs. Right now in Scotland, it is estimated that, based on the recent energy price cap announcement, around 33 per cent of all households in Scotland are in fuel poverty and 17 per cent are in extreme fuel poverty. That is before we even get to those who rely on alternative fuels. We can set that against the fact that heat pumps are estimated to be three times as efficient as gas boilers, but the unit costs for electricity are currently around five times higher than for gas. Although about one third of our population are in fuel poverty, the cost of heat pumps is still running about five times higher compared with gas, despite a massive efficiency benefit. I therefore hope that the committee can see how important it is that, as we legislate for our population to make the transition, we have to be able to tell them that it will be affordable and that it will not exacerbate fuel poverty.
Much of what the UK Government is going to do is expected in its warm homes plan, which is now much delayed. I hope that it is delayed because its content is going to be refined and well developed, and that my counterparts are taking their time with it because they are thinking seriously about how to do it as well as possible. Nonetheless, I am in the dark, and I do not know what the UK Government intends to do to rebalance electricity and gas costs. Until I do, I cannot assure Scotland’s population that, in asking them to decarbonise, the schemes will not cost them more to run.
The CCC has been clear that the UK needs to take that action. We cannot bake it into our projections, which is another aspect of our legislation that is difficult to wrestle with. However, as and when the UK Government takes that action, which I hope it does, we will be able to look at our projections and see how they can change.
In your discussions with your UK Government counterparts, have you gained an understanding of what the barrier is to making the decision?
I do not believe that I can say that with the accuracy that is required at a committee. I am keen not to politicise the question because I really just want to see progress. Minister McCluskey and I have on-going dialogue, but that does not involve the detail of exactly what is intended to be in the warm homes plan. In the absence of that detail, it is difficult to take forward the bill; that was partly why I felt that it had to be paused. Our energy performance certificate work is also underpinned by the home energy model, and we have not had much of an update on that recently. All those delays are causing me and the industry some concern.
Thank you for that. I will move on to theme 2 and bring in Willie Coffey on heat decarbonisation, energy efficiency and skills.
My question is about the scale of the challenge that faces us, and you were leading us in that direction a wee bit, cabinet secretary, when you spoke about electricity prices.
In our evidence sessions, our council colleagues have told us that they do not yet have the resources to scale up delivery of their local heat and energy efficiency strategies. That is tied in with issues around how we develop and grow our housing-related green workforce, whether we do that through apprenticeships, colleges or otherwise. Could you say a little bit about that difficult area, which, I am sure you will agree, is key for us if we are to make any progress down this road?
I will take your question in two parts. If I remember correctly, the local heat and energy efficiency strategies are all complete and we have funding for their development and delivery. I will let one of my colleagues confirm the arrangements for that shortly. There is no doubt that local authorities are critical partners. The funding for the development and delivery of the strategies is committed over a number of years but, again, my officials can confirm that.
On the skills side of things, I have wrestled with and discussed with stakeholders the question of how much of the preparatory work has to be done in the supply chain, skills development or even public readiness before we legislate, and how much legislation will drive that. It is a kind of chicken-and-egg scenario, and we need to get the balance right.
A lot of work is being done on skills by the Government and industry. For example, Scottish Gas has the start at home scheme where it allows teams to practise the heat pump installation by doing it in their own homes. That is an example of a major employer such as Scottish Gas leading the way. For our part, our warmer homes Scotland scheme has a contractual requirement for training and I believe that that is producing quite a number of modern apprentices.
That is all happening now, but the setting of the 2045 target as a backstop for decarbonisation will, ultimately, drive what we do. It says, “This is the direction of travel and the way that we are going. Some preparatory work has been done, but it now needs to be stepped up.”
I will bring in Gareth Fenney, who can correct any of the numbers that I have used and give a bit more detail on apprentices.
To build on what the cabinet secretary said with regard to the support to local government, we fund LHEES officers in each local authority; we are providing £75,000 per annum to each local authority up to the financial year 2027-28. That is baked in—we have committed to that, and we are working on it.
One of the key delivery mechanisms for the LHEES is the area-based programmes, and I am keen to work with local government on those. As the cabinet secretary said in her earlier answers, a scheme review is planned, so we will be looking at what role local government, and in particular LHEES, will play in delivery as we go forward.
We are also working with, and supporting the resourcing of, local government in other areas such as heat networks. We work closely with local government through the heat network support unit, which is a partnership between the Scottish Government, the Scottish Futures Trust and Zero Waste Scotland. It provides support to local government on key aspects, and we are working with local authorities on both the technical and commercial aspects of heat network development.
On apprenticeships, as the cabinet secretary said, we do a significant amount of work through our schemes. To add a bit of flavour to that, I highlight that the warmer homes Scotland scheme is one of the Scottish Government’s key primary delivery mechanisms. It is a significant contract—£90 million is committed to it in the current financial year, and there has been significant spend on it to date. The new phase of the scheme has been running for just shy of two years, and its delivery has supported 120 modern apprenticeships and upskilled 694 further workers in the supply chain to support delivery. The spend in our capital programmes is directly helping to drive a lot of that upskilling.
Sorry, convener—I mentioned the start at home scheme, which asks staff members to practise fitting a heat pump in their own home. I am not sure that it was provided by Scottish Gas; my colleague Jess Niven says that it might have been Nesta, so I will check and let you know.
Thank you—I was curious about that, and I wondered how much uptake there would be.
We go back to Willie Coffey.
Cabinet secretary, I want to talk about numbers, volume and so on for a wee minute, in order to illustrate the scale of the challenge that lies ahead of us.
The UK Climate Change Committee tells us that we need 35,000 heat pump installations by 2030, which is a challenge in itself; I think that Scotland is installing about 6,000 or 7,000 per year on average. However, there are about 2.7 million homes in Scotland, and 300,000-odd council houses, so it does not take a magician or a mathematician to work out that that is a huge challenge in the years beyond 2030, up to 2045. It requires roughly—or more than—100,000 installations per year from where we currently are, at about 6,000 per year.
How on earth are we to meet that challenge, given the constraints that you have told us about? Principal among those constraints is the price of electricity, as you said. However, in my view—and in the view of members of the public who talk to me—another barrier is the installation cost for heat pumps, which can be as high as £14,000. I know that we have grants to assist with that, but we do not provide grants of £14,000.
The scale of the challenge is enormous, as we have been saying in this committee in recent years. Is the Government aware of the scale? How can we possibly scale up to deliver on that kind of target within the timescale?
Yes—we are very much aware of the challenge, which is extensive. There are a number of barriers and, conversely, a number of things that, if they happen, will clear the pathway a little. You are right—as you were talking, I was scribbling down that we need to go from about 5,000 annual installations in 2026 to more than 8,000 annually by 2030, with significant climbs thereafter. Our schemes and support mechanisms are one of the main tools that are in our power. The combination of grants and loans that we offer, with more in rural areas, is an important part of supporting people to make those changes.
10:00
People have told me that the cost of installation and the running costs thereafter are barriers for them. We can support people with the cost of installation, but we will still need the cost of electricity to reduce in order to make running heat pumps viable. There will be a process of providing support through schemes; working to build a heat networks industry, which will be an important part of how we decarbonise in urban Scotland or in conservation areas; and making it the easier choice with the best consumer advice possible, with clear support from the likes of Home Energy Scotland. Ultimately, it has to become people’s choice to make those changes, which will happen when that makes financial sense—so, when the unit cost of electricity is not five times higher than gas. Again, that is why I go back to the critical UK Government action.
There is a basket of things that are in our power to do, which we will seek to maximise. As I have said, we cannot factor a change of costs into our planning; our legislation does not allow us to do that, because the UK Government has not given us the time by which that will be done. Once we have clarity on that, the process will be clearer and that is likely to be the point at which people will say, “This is going to make financial sense for me. My house is going to be warmer, my bills will be lower and I am going to make the switch.” That will make the difference.
Your constituents must tell you what my constituents tell me, which is that they do not know who they can trust, where they can go to buy a heat pump, or whether the company that they might buy one from will still be there next year or the year after. Is there a role for local authorities to somehow step into the territory and become the trusted partner? Perhaps they could be the volume supplier in order to bring prices down. We expect local authorities to sustain until 2040 or 2045; they could be a trusted partner that local people can go to for help, support, maintenance and so on. There is not much evidence of that; perhaps there is some kind of legislative barrier to it.
Where I live, my neighbours ask me all the time whether councils can play a role for residents in the private sector, in which the retrofit problem that we face is nine times higher in volume terms than in the public sector. My neighbours and constituents ask me whether the council can help to supply heat pumps, maintain them or provide them at a better price. It could be attractive and worthwhile for local authorities to be able to step into that space, possibly. In looking at the scale of the challenge and at how we can go from 8,000 installations a year to 100,000 installations a year, could Scotland look at engaging councils much more directly in the work?
First, that reflects what my constituents say to me. I visited a constituent in Carstairs village in Clydesdale who had installed a heat pump and various bits and pieces through our warmer homes Scotland scheme. He told me that his motivation was that he wanted a warm home and wanted to do the right thing for the environment and his grandkids. On the same day, I could speak to a constituent who would tell me, “This is so far off my priority list. I would love it; I would love to have lower bills and to have a wind and waterproof home, but I don’t know how to navigate the system.”
Trust is really important. Of course, we know that certain past experiences have worn away people’s trust. That is why the Home Energy Scotland piece is important, and why we are trying to clarify that Home Energy Scotland is the single window in Scotland to go to for support and for trusted advice on what people might be entitled to and how to move through the system. Sometimes, when I speak to stakeholders, they say that there is too much hand holding and that, in order to achieve the kind of scale that we need, we will have to change the system to become a little more hands off. However, I am wary of that; many of the people whom our schemes support are in fuel poverty, and we are talking about fundamental changes to their home. As soon as the work starts, quite a lot of my constituents panic a little bit, and think, “Now the work’s begun, have I signed up to the right thing here?” and so on. Therefore, I think that that support mechanism is important, and I would be very open to looking at how local authorities could play a role in that. I guess that they do play a role just now, but you are talking about a more fundamental, strategic delivery partner role.
I cannot claim credit for the idea. Believe it or not, it came from the House of Lords; it suggested that local authorities throughout the UK could play a decisive role, given that the scale of the transition is an absolutely fundamental issue and would, at the moment, appear to be beyond us. After all, the supplier network is nowhere near able to deliver 100,000 installations a year. Therefore, not only the price of the electricity but something else needs to shift: the cost of the equipment and the trust factor that a lot of constituents have mentioned.
Finally, cabinet secretary, you said in your remarks that it is difficult to make projections and to put timescales and targets into the draft plan when there is so much that we do not know and are depending on others to help us with. Will the Government try to put some kind of assessment in the plan to show us how we will reach the target, even if that is dependent on decisions being made elsewhere? Can we look ahead and see what the targets beyond 2030 will be, or is the Government not going to do that until it is more certain of support from other areas?
We are trying to offer that sort of thing on an on-going basis, using the best information that we have at the time. What we have in the draft climate change plan is our best projection of the policies and proposals that we think can help meet our trajectory. The strategy and delivery plan that we will be producing at the end of this year will be another articulation of our attempt to set out in a really clear way the steps, the funding and what needs to come together in order to make this work. We will just have to keep doing that on an on-going basis, such is the complexity of this work. Moreover—and this brings me back to your previous point—we will always be drawing on all our delivery partners, because the Government cannot do this ourselves; it just would not work if we tried to.
My colleagues have just reminded me of something that I neglected to mention: I am responsible for the policy in this chapter of the plan, but Ms Martin oversees the whole of it, and she chairs a climate oversight group jointly with the Convention of Scottish Local Authorities. That group is asking itself, “Here’s the challenge in front of us, and here’s what we know Government can offer. What can local authorities do, and how do we work with industry and the public, too?”
Just for clarity, we will try to provide that step-by-step policy, funding and delivery with as much information as we have at any time as we move forward.
Thank you very much for that.
Just before I bring in Alexander Stewart to ask some questions about the regulatory framework, I am going to come to Meghan Gallacher, who indicated that she wanted to ask a supplementary to some of Willie Coffey’s questions.
Good morning. I will go back to your discussion with Willie Coffey on heat pumps to ask about something that I hope can be expanded on.
When we started talking about heat in buildings back in 2023, there was a huge emphasis on heat pumps, even though there are, in fact, other clean energies that can be used to heat homes efficiently and effectively. Has there been any change in direction from the Government? Businesses and stakeholders tell me that they want to help and be part of this story. Are you now having those kinds of conversations to inform any legislation that might come forward?
I have been working on heat in buildings policy for a number of years, and the one thing of which I am absolutely certain is that there is no one-size-fits-all approach. Having too much rigidity or too small a remit will not work.
As I hope that you have seen in the draft bill that we have published, I was really keen for the bill to reflect a technology-neutral approach to cover the different housing types—there are many throughout Scotland—and the different geography and demography. Basically, the draft bill says that there is a route to decarbonisation for the vast majority of us, and we will find the appropriate route for the individual. That will absolutely involve heat pumps—in fact, it is safe to say that it will still mean heat pumps for most people—but it is also about building the heat networks industry, which, as I have said, is really important for urban Scotland and conservation areas where, say, items on the outside of houses are not going to be acceptable.
The approach is about other fuel types, too. I live in a property that is off the gas grid, so I am conscious that certain technologies are not available to me. Technology neutrality sits at the heart of the bill.
Very quickly, I will note that I was pleased to hear what you said about the private rented sector. When the initial proposals came out, the sector felt that it was being unfairly treated, as it would have been required to have everything in place, particularly for new tenancies, before other parts of the housing sector.
Are you having an on-going conversation with the private rented sector to inform any future pieces of legislation? The feedback that I have had is that the sector does not want to have to meet a lot of up-front costs for putting the new policies in place before other parts of the housing sector. It is really all about fairness.
Fairness has to be at the heart of all of this. I know that we are asking quite a lot of people, but I hope that, by giving a clear explanation of why this is required because of the climate situation and by making it clear that it will benefit people by giving them warmer homes and lower bills, we will be able to make the case. That applies to the private rented sector, too.
When I came back from maternity leave, I felt that a suite of commitments had been made across the board in the heat in buildings space. As I think that I have explained to the committee before, I wanted to take a moment to ensure that they were sequenced properly, with fairness as a key part. The regulatory review group, overseen by Professor Russel Griggs, offered me a bit of insight in that respect.
It is all about sequencing, fairness and practicality. When we ask the private rented sector to abide by a minimum energy efficiency standard, I want to ensure that it will benefit tenants and be workable for landlords. That will require reasonable lead-in times, reasonable support and early engagement.
That brings us to our next topic. We might have touched on some of these questions already, but Alexander Stewart will ask about the regulatory framework.
Good morning. In your opening statement, you talked about the transition being fair, affordable and practical. With regard to the regulatory framework, what assessment has the Scottish Government made of the impact of the delay in the heat in buildings bill on the carbon emissions reductions that are required? What would be the knock-on effects of delays in the run-up to the 2045 target?
The answer to that question is in two parts. First, the decision to delay the bill was not a straightforward one, and there were a number of reasons behind it. Our having to wait on the UK’s warm homes plan was certainly part of it, but all of that fed into my judgment on the costs that are associated with all of this.
There was also the time issue. I did not think that it was reasonable to put something in front of Parliament and ask parliamentarians to consider, scrutinise and legislate on the matter in a very short period. Although I did not want to pause the bill, there could have been more disruption, more delay and more difficulty if we had not taken that time to come back to it. I hope that, having published the draft bill in the meantime, we are still offering certainty about where we are going.
As for your technical question about the impact, I do not think that the impact should be too great. I am not going to pretend that there will be no impact whatsoever from a time gap, but the 2045 backstop is already Government policy. If we are returned as the Government, we will legislate after the elections, but, in the meantime, that remains Government policy, and we will continue to take forward all the strands that will help to deliver it.
If we do not ask owners to switch to zero-carbon heat systems, how will we meet the target? If that opportunity is not taken, that will create limitations not only for owners but for the Government in trying to achieve the 2045 target.
That is a fair question. The committee will know that the Government has wrestled with that issue and that previous iterations of our proposed bill contained trigger points at which people would be required to switch.
My judgment—it is simply a judgment, informed by advice from my officials—is that that would not be fair. It could catch people at points of difficulty and potentially exacerbate fuel poverty. Therefore, rather than prescribe trigger points, we should set the long-stop date and fill that period with the right support, industry building and regulatory elements, such as the PRS MEES, to encourage behaviour. I have to say again that the greatest encouragement of all will arise when electricity is cheaper.
10:15
We all understand that the driving force behind the process is tackling fuel poverty. How will the funding schemes and policies in the CCP ensure that carbon reduction targets are met while targeting fuel poverty?
I will come to Gareth Fenney, because he is the expert on our schemes.
In essence, our warmer homes Scotland scheme and our area-based schemes are already targeted at those who are at risk of fuel poverty or who are experiencing it. To drive uptake of our schemes, we recently did some marketing that was directed at those who might be in or at risk of fuel poverty.
For my part, I have to speak again to managing to rebalance the costs. A third of the population is in fuel poverty, and unit costs for electricity are five times more expensive.
We spent about two thirds of the budget on fuel-poverty-focused schemes—the warmer homes Scotland scheme, area-based schemes and the social housing net zero heat fund, which works with social housing providers to retrofit their stock.
The schemes are designed such that they predominantly involve installing energy efficiency measures. Doing so saves between 5 and 10 per cent of a building’s emissions. There is some comfort taking, as people have historically underheated their homes, so they take some comfort from energy efficiency installs. Through those schemes, we also deploy clean heat measures, such as heat pumps and other clean heat technologies.
The warmer homes scheme provides a good example of where we do a whole-home assessment of what is appropriate for a building and consider the right packages. For example, if it can take clean heat without that being detrimental to the running costs and affordability of the household, the home will get the whole package. Solar photovoltaics and battery storage might be needed to help offset some of the running costs.
Where it makes sense, we take a whole-house approach, which gets us closer to emissions reduction. However, energy efficiency measures also contribute. We do a significant amount on that through the schemes. About 12,000 homes are forecast to be supported by those schemes alone this year.
I am sorry if Gareth Fenney said this while I was flicking through my notes, but so far during the current financial year, the average saving on a fuel bill because of warmer homes Scotland has been £350 per year.
Ensuring energy efficiency and conservation is quite important, and it is about consistency of approach. Gareth Fenney touched already on what we are trying to achieve, and the cabinet secretary gave an indication of a costing and savings.
However, there is an issue with trying to ensure that mixed-tenure properties, such as flats, can also get efficiency and conservation. Are you considering how you can manage or mitigate some of that in tenures of that type? Out of the stock that you have, those make up quite a large proportion that need to be managed to ensure that you achieve what you set out to.
That is a very good question. It ties in with what Meghan Gallacher asked me previously about consistency or rigidity of approach. I can see that a consistent approach would be favourable in a mixed-tenure block but, at the same time, I want to try to retain the right property approach for the individual, depending on their circumstances.
We can probably do more to consider consistency in an all-tenure setting but, just now, I am trying to emphasise that what is a big ask will be made according to the needs of the individual and that it will not be about blanket provisions. I think that you have raised a good point, however, about mixed-tenure blocks, where a bit of consistency would be helpful.
Mark Griffin will ask questions about public engagement, advice and funding programmes.
Good morning. We have heard evidence that the plan is not as strong as it could be on public engagement, and there are concerns about the lack of a clear strategy for raising awareness and behaviour change on heat in buildings. How do you respond to those comments that we have heard? Are there any plans for the final climate change plan to address concerns about accessibility of information and funding?
Henry Hardy will respond to the question on updating the climate change plan.
Consumer engagement is absolutely critical. I come back to the point about the level of need in the country and the fact that 33 per cent of people are in fuel poverty. I am conscious that, when people are trying to heat their homes or make ends meet, they do not have the capacity to navigate something that is complicated and feels risky and which they do not trust.
I think that I mentioned to Willie Coffey that we are trying to respond to the consumer research that we have done on the issue, to make Home Energy Scotland the trusted number 1 door through which you walk if you want to engage in the question of energy efficiency and clean heat, and to make the process as easy as possible.
I also come back to the marketing and investment that we have done, which is about communicating in a really public-friendly way about the opportunities that are ahead. I think that we started that work towards the end of last year.
The greatest driver of the public’s confidence will come when we can all say, “This will make your home warmer and bring your bills down.” Until we have the warm homes plan and the certainty on what Mr Griffin’s colleagues will do, we cannot quite say that, but I have confidence that we will get there.
I will come to Henry Hardy to say something about the plan update.
This is a draft plan, which we are planning to finalise before the end of this session of Parliament. There are three legs to the process of scrutiny that we are undertaking: the Net Zero, Energy and Transport Committee is undertaking parliamentary scrutiny and will be reporting through the next month; the Climate Change Committee will be producing a report on the content of the plan; and the 12-week public consultation is under way—we are expecting to get quite a lot of responses to it, and it is crucial to the process. Many of those responses will be institutional and will repeat some of the topics that we are talking about.
Another part, which is really important, is that we are looking to get more local representative engagement. We are working with trusted partner organisations to drive information raising and responses to consultation through local communities, both in areas that are most impacted by climate change and the transition and in under-represented groups. We are working with organisations such as YouthLink Scotland to ensure that youth engagement takes place, and with the Royal Scottish Geographical Society to engage with other under-represented groups.
We are broadening our approach to ensure that the consultation is as broad as possible. We will be taking on board the outputs of that consultation as part of finalising the plan through to March.
We are doing that work, and we can update the plan according to what we are told. It is also worth remembering the work that I talked to the committee about on EPC reform. Part of that was about creating a more user-friendly product that people can navigate more readily. We are trying to build that in across the board.
We have spoken previously about the scale of the challenge of what we need to do to decarbonise homes. Will Home Energy Scotland’s supporting resources be scaled up to meet the scale of the challenge?
Have there been any discussions about the pathway for a householder to go through with Home Energy Scotland? We have heard concerns about how complex and daunting that sometimes seems to be for home owners. If the number of households is going to be scaled up, the process could be made more efficient and less daunting to home owners at the same time. Has that been considered?
We definitely want to improve that pipeline, and I have said several times that I want Home Energy Scotland to be the repository for that advice. You are right that it will be required more as we scale up; equally, there is nothing more effective than seeing your neighbours go through the process. There is a floodgates argument that, when more homes in a street have had the work done and more neighbours are talking to each other about their personal experience, that is more of a positive encouragement than anything that politicians can do. Of course we will all support constituents in our own areas.
The budget announcement is happening later today. I will resist pre-empting the content of that in relation to support for the likes of Home Energy Scotland.
I have one supplementary question. You are right about the neighbour effect that occurs when people see their neighbours getting a heat pump installed and hear the rave reviews about how warm it is and about the cost of heating coming down. One frustration has been when a neighbour speaks to the contractor who is installing the system and says, “Could you do that in my house as well?”, and they say, “No—we’re just contracted. You need to go through Home Energy Scotland and go through that process.” In relation to your point about neighbour-to-neighbour communication, is there any way to make it simpler for neighbours to speak to the contractor and for the contractor to offer a similar service in the same street while they are there, rather than going through a whole different process with Home Energy Scotland?
That is a good point. It would be fair to say that we do not see there being a system in the future in which everybody is referred through the process. Increasingly, people will take it upon themselves to organise the work. It will not happen as much that they will have to come through the scheme in order to engage with us; people will be able to have the work done outwith schemes. There will be a mixture.
In order to access the funding from the grants and loans, people have to go through the scheme.
Yes. My point is that, as we scale up, more people will not access it through the scheme but will do it off their own bat.
Maybe I should not put this on the record, but I have an air-source heat pump and went through that process, which was interesting. It was a few years ago now—we found the installer first, before we got to Home Energy Scotland. It was great; we had a super installer. So, we did it in a different way.
I want to pick up on what Mark Griffin said. We had an informal session with people who had gone through the process or who had tried to go through the process. Things might be different from when those people and I went through the process, but it was a difficult process—it was not smooth. Communication response times from Home Energy Scotland were slow. An email would come in asking for a bit of information, but not all the information that could have been asked for at that time. There was difficulty in not being assigned a case worker and being bumped back into the system instead. That all might have been tidied up since those people told us about the experiences that they had, but it is something that we need to look at.
Absolutely—that is a fair point. As a minister, I receive correspondence about issues across my portfolio and a substantial part of it is from MSPs who come to me on behalf of their constituents who have had experiences such as those that you mentioned or who have had some difficulty.
From my perspective, albeit this is only anecdotal, the correspondence that I receive from MSPs now leans more towards complex cases where there has been difficulty, as opposed to run-of-the-mill cases where there has been difficulty. That is positive, but I have no doubt that there is still work to do.
Gareth Fenney knows a great deal more about the operational aspects of the scheme. Do you want to give any views on that, Gareth?
10:30
Absolutely. That is a good question, convener. It would be good to hear more about the private sessions that you had with members of the public and about their experiences.
We have an on-going programme of work looking at how we can improve the customer journey through Home Energy Scotland. We have started to strip out some of the early challenges around verification; online verification is helping to simplify that part of the process. We are also trialling having an assigned caseworker, so that people are always in touch with the same person, who is familiar with their case. That is helping support individuals through the customer journey.
There are other areas where we are trying to make improvements. You noted the piecemeal requests for information that come in. We now have much better customer guidance on what is needed and what is required, so that customers can make sure that they are getting the requests from the installer, and the installer can make sure that they are sending that information en masse in a package to Home Energy Scotland for approval. Ditto, we have much better engagement with and support guidance for the supply chain, which explains what the householder needs to be given to make sure that the process is a bit more seamless—so there will not be things such as invoices on unheaded paper. We are making sure that we are dotting the i’s and crossing the t’s.
We are exploring how we can streamline the payment process and whether we can work more directly with the supply chain on that. Our loan offer complicates that somewhat. That is a difference between our scheme and the UK Government’s boiler upgrade scheme: we provide a loan, which complicates the customer journey. We need to navigate that and we are looking at ways in which that process can be streamlined.
To pick up on the cabinet secretary’s point, we are looking at having a more triaged approach to delivery. Some people might not need to go through the over-the-phone service to access the support that is available. They might be able to access the grant and the loan via a digital interaction, rather than going through the over-the-phone advice that everyone is required to get at the moment. We are looking at how to support different groups of people depending on their needs.
That is very reassuring. I hope that I will not have to go through an air-source heat pump process again, but it sounds as though you have looked at the process and have introduced improvements.
Fulton MacGregor joins us online with questions on cost and finance.
Good morning and thank you for the evidence so far. As the convener said, I am going to ask a couple of questions on cost and finance.
The first report of the green heat taskforce was published in 2021 and the second in April 2025. However, as the committee has heard, there was little detail about the costs associated with specific policies and proposals. Will the final plan give more information on the anticipated costings?
Among a couple of key issues, costs are paramount in all those considerations, whether for the individual, the public purse or industry—it will be a combination of those that will meet the costs of all this.
It is important to say when we are discussing costs that we are talking about a 15-year trajectory, which makes it inherently difficult to be as accurate as we might like to be. That is not only because technological advances will undoubtedly happen in that period—who knows what technology will emerge, and the cost of certain products will come down as they become more readily manufacturable—but because changes in UK Government policy will affect the cost of running clean heating systems. I put that on the record so that the committee can understand the uncertainties that we are dealing with.
Henry Hardy is the expert on the climate legislation, which is not so much my bag any more. Despite that uncertainty, we set out more detail on costs than other Administrations throughout the UK, because our legislation requires us to do that. We already have more detail than others might provide, despite the uncertain horizon. For the buildings piece, we have included as much detail as we can, as accurately as we can.
That is an understandable answer, cabinet secretary. I will bring my final couple of questions together, if that is okay, but if you need me to come back in to clarify anything, that is okay, too. That might be easier, as I am online. How will the recommendations in the green heat task force’s second report be prioritised, and will a range of funding solutions be mobilised quickly? What are the implications if alternative funding solutions do not materialise as you anticipate?
It is absolutely fine to bring those two questions together. I will make some remarks and then go to Gareth Fenney on the green heat task force. The questions give me the opportunity to thank the task force for its excellent work across both reports. We formally responded at the end of December last year, and there was a great deal of alignment with what was recommended of us.
Some of the actions are ones that we can take quite rapidly, some are already under way, such as working with the banking industry, and some are a bit more long term. I will come to Gareth on this, but my impression is that a significant number of banking products are already available. There are also differing views: some people think that they need a bespoke green mortgage and others believe that existing products that are not necessarily green can be used to help individuals to work through the process.
That is one part of the issue. The other part is about industry creating an investable pipeline to draw in private funding. For example, much of our work on heat networks is about trying to make the case for investment and bringing in as much private funding into this expensive area as we possibly can. Gareth, do you want to add anything to that?
I can add a small amount. As the cabinet secretary said, one of the task force’s key findings was that there is no shortage of finance. It is about growing demand in the supply chain for that finance. We already have a number of products on the market, such as green mortgages.
We will start to see finance products becoming a bit more widely available for the likes of heat pumps. That is an area that I know that suppliers are looking at and are interested in.
The part 2 report was much more focused on place-based initiatives. Heat networks were a big aspect of that, but we will be looking at how we could take a more collective place-based approach. The scheme review that the cabinet secretary touched on will be looking at how we can scale and build on our place-based approach through the area-based schemes that we have at the moment.
In the near term, a big focus of our action is on heat networks and building out support through the heat network support unit and the heat network fund that is in operation, which the cabinet secretary extended to 2030 in terms of applications for funding for heat network projects. That is our short-term focus in place-based initiatives off the back of the part 2 report.
A huge amount can be done, but a lot of it can be industry led. That is what we are seeing in the finance sector. We have worked closely with the Green Finance Institute on a number of the early actions in the part 1 report.
It is worth noting how exciting the prospect of industry building is when it comes to the opportunity that we have with heat networks. It is a critical part of solving the puzzle of decarbonisation, but it is also a huge economic opportunity, and we are trying to make sure that we do everything that we can to support it.
We will move on to another theme. Evelyn Tweed is going to ask some questions about monitoring.
Good morning. Thank you for your answers so far. What early warning indicators will be published annually for buildings?
I will come to Henry Hardy on that question, which is about the technical aspects of the plan itself.
For my part, on buildings, I will report annually in the way that the legislation requires us to do. I do not think that there are any recent developments that have changed that.
I will set out the overall approach, and Gareth Fenney or Jess Niven might be able to give a few more specific examples on heat in buildings. The monitoring requirement for the CCP is unchanged from the climate change plan update. Every year, after the first year that the plan is published, we publish a monitoring report that sets out how we are progressing towards the indicators that are in the monitoring and evaluation annex, which I will come on to in more detail in a second. Ultimately, that feeds into our overall progress reports on emissions reduction. Those reports are published every June on the previous year-and-a-half. At each point, we will make an assessment about whether we are still on track to meet the carbon budget, which will be the key driver for evaluation.
Underpinning that, for each sector that is covered by the plan, there will be a more granular assessment of the progress that is being made towards the actions that have been set out. Annex 3 provides an indication of our process for setting that out. We have not yet set out exactly what all the indicators will be for each sector, partly because that will be dependent on the final policy position, but it will be in the final plan. We need to ensure that we are reflecting what is in it. That will mean that, every year, as we currently do, we will have an update to say, “These indicators are on track, off track, or it is too early to say.” That will be followed up by the report on overall emissions levels. Taken together, that will give us an idea of the trajectory towards meeting the targets.
We publish an annual progress report for heat in buildings. The last one was published at the end of last year. In addition to the technical points on carbon emissions reductions, it assesses our delivery across schemes and policies. This year’s report will be published towards the end of 2026, at the same time that we will publish our strategy and delivery plan. It will be an early culmination of monitoring and evaluation across the piece on the building side.
What actions might follow if there is slippage against carbon budgets?
If there was any indication that we were falling behind on where we had planned to be, we would follow the usual process of providing advice to alert ministers to that and advising them on the options available to them. As I said, the strategy and delivery plan is already pencilled in for publication this year. Incoming ministers will have the option to shape it. Each year, we will provide ministers with advice on the implications of any expected setbacks. Particularly for carbon budget 1, we have modelled the delivery more specifically; it has all been costed, so we would not anticipate slippage.
I have a few more questions on monitoring. Annex 3 describes monitoring progress against an emissions envelope, supported by early warning indicators. However, effective parliamentary scrutiny, which is what the committee is trying to do, depends on understanding the assumptions that the Government is making. I am interested to know whether it will be possible to see key modelling assumptions for the building sector before the final climate change plan is published, including the assumed installation rates, uptake trajectories and delivery timelines. We have built the plan on certain modelling, and I am also interested to understand how current the datasets that are being used are, so that we can understand whether we are starting from the right place.
10:45
I undertake to update you on the extent to which the datasets are up to date—they will be, but we will provide you with the detail.
The other thing to say on the housing portfolio is that we have not just taken a pure emissions model approach. Our approach is the culmination of the policies that are available to us to pursue and the scale at which we think they need to be deployed in order to reach the trajectory, and we have set them out in the chapter. Our judgment is that the 2045 target, the creation of heat networks, the PRS MEES, the social homes net zero standard, EPC reform and all those things coming together can meet the carbon budgets at certain points.
I come back to the elephant in the room, which is whether, as soon as the UK Government takes effective action to rebalance gas and electricity prices—something that we cannot currently factor in—that will make a significant improvement and change the picture. We will remain flexible and continue to keep the committee up to date.
Annex 3 shows that emissions reductions in buildings are largely policy dependent, which is what we have been talking about, although you pointed out that some degree of preparation can be done before we legislate. Delivery costs are shared across the Government, local authorities and households. Something that came up in one of our previous evidence sessions was a sense from stakeholders that there is a plan but they do not understand how it is going to be delivered—there is no clarity on that.
On the building sector, I am interested in knowing whether you would be willing—or able, because we are in a very time-constrained situation—to publish a policy-by-policy delivery table, at least for the carbon budget. I think that there is a route map element, but could you set out the expected emissions impacts, who is delivering it, the start date and the expected funding route? We should have that clarity so that we can take the plan and actually deliver it. In that way, we would have clarity in Parliament and, when we come back to look at the matter in the next parliamentary session, we would have a measurable model of what was committed to and what we have achieved. Is that possible, particularly in relation to carbon budget 1?
I want us to provide the detail on policy, emissions reductions and cost that the legislation requires us to. My judgment is that what is in the draft chapter now does that, but that is why we are speaking to Parliament and to the public about it. I will take on board what is said on that, but I come back to the fact that we have committed to the strategy and the delivery plan at the end of the year. I understand that there is a call from you, convener, and from stakeholders for more information on who will do what and when. We have certainly captured a lot of that here. I am on the record about who will do what and when for energy performance certificate reform, so the information is available. I will make sure that that is being provided as much as it can be just now, and I give a commitment that more information will be made available via that plan at the end of the year.
Thanks very much for that. I suggest that you look at the Official Report of the evidence session that we had with COSLA and other local authority-related organisations, which was a very good evidence session. I see nodding heads, so perhaps that has already been referred to.
It may be that something is already in the plan, but there is a point about how we translate that into people saying, “This is really easy to pick up” and “This is my bit and I need to do it”. We heard earlier about the good ideas around consumer engagement and such things. Perhaps there needs to be something for people who are delivering engagement to help them to understand that that is what they need to be doing.
That is exactly our intention with the strategy and delivery plan.
Brilliant. My final question, which is connected to that, is about next steps for the final CCP. How will you put in place processes to ensure that the final CCP takes account of consultation and parliamentary scrutiny? We are scrutinising the draft plan, but we are coming to the end of the parliamentary session in March. Where does Parliament come in on the final plan? What feedback has already been integrated into the final plan? I imagine that you are picking things up and adding them in.
We are. You mentioned the session that you had with COSLA and others, and I read the Official Report of that in preparation for today. For us, it represents an important part of understanding what people think about the draft plan and how it might need to change. We are taking all of that on board.
Henry Hardy spoke earlier about the processes that the climate change plan team and Gillian Martin will go through to update the plan, and he can say more about that.
As I said, the consultation will close at the end of this month, and parliamentary scrutiny and the CCC report will follow that. We will have a bit of time—although not as much time as would be ideal—between that and the end of the session to work through that.
Ultimately, there will be an assessment by the Cabinet of which changes should be implemented. That assessment will be delivered to the Parliament in advance of the end of March. It will be for Ms Martin to set out the next steps in that process when we get nearer to that point.
That concludes our questions. Thank you for a good discussion this morning. We appreciate it.
That concludes the public part of the meeting.
10:51
Meeting continued in private until 11:09.