Home heating legislation ‘absolutely essential’ to meet multi-billion cost of net zero targets

First Minister John Swinney has been urged to include “absolutely essential” legislation to decarbonise homes in his forthcoming programme for government next month.

The Existing Homes Alliance (EHA) – a coalition of housing, consumer, fuel poverty and industry organisations calling for the transformation of Scotland’s housing stock – has said the Heat in Buildings Bill is needed to provide “certainty and clarity” as the government seeks progress on its net zero ambitions.

This will promote investment, it said, and therefore cause the cost of decarbonising homes and businesses to fall in the coming years.

The Just Transition Commission (JTC) last week warned that ministers had so far been unrealistic about the true cost of the aim to decarbonise Scotland’s buildings.

Writing in the commission’s latest report, Stephen Good – the CEO of BE-ST who joined the advisory group last year – called on the government to “get real about the costs”.

Ministers have previously estimated the cost of decarbonising buildings would be £33bn, but the JTC believes this is well short of the investment that will be needed.

Good said £33bn would “just about cover” the installation of heat pumps in “easy-to-treat” properties. “To meet the tougher end of the net zero objectives, we’ll need likely four times that investment,” he added. “So circa £45k/building to do it once and do it properly. Which is more like £130bn, not £33bn”.

Gillian Campbell of the EHA agreed. “We do need to be realistic about cost, but we also need to be realistic about the fact that these are for long-term programmes of work, potentially up to 20 years, and markets are going to mature over that time. Industry is going to scale up enough to meet growing demand and as that happens costs will fall,” she said.

“The cost of actually carrying out the work over the coming decade or two is going to change significantly and become much more affordable, particularly if governments – both the UK and the Scottish Government – start to give more certainty to industry and to investors about what they're expected to do and when.”

The Scottish Government began consulting on its Heat in Buildings Bill last year, which includes two main strands.

The first is reaching its target to end the use of gas boilers – or “polluting heating systems”, to use the government’s terminology – by 2045. As part of that, ministers propose that those who purchase a home or new business premises must end their use of these systems within a fixed period after completion of the sale.

The second part is on energy efficiency. The consultation proposed a new “reasonable minimum energy efficiency standard” that would come into force by 2033 for owner-occupiers (and earlier for private landlords).

Already the government is behind on its ambitions, though. As the consultation was launched, then zero-carbon buildings minister Patrick Harvie was forced to ditch the target to decarbonise a million homes by 2030. This was in part due to delays to bringing forward the legislation.

That followed an Audit Scotland report warning plans to phase out gas boilers was at “significant risk”. Stephen Boyle, the auditor general, said: “The Scottish Government now needs to carefully consider how to maximise its public spending and set out a clear delivery plan. It also needs to help the private sector to roll out funding deals that will support people to change how they heat their homes.”

The report also said the delay to delivering the Heat in Buildings Bill was in part due to “resource constraints”. It acknowledged the government had taken time to build a team to deliver on the Heat in Buildings Strategy, published in 2021, but added that ministers should have addressed capacity needs sooner.

The JTC report echoed Audit Scotland, saying “pace, scale [and] skills” were the primary risks to the programme. Decarbonising one million homes by 2030 would have meant doing 614 properties per day. Just 19 homes per day are currently being decarbonised. Those three risks are all linked, Good said, because there are not enough skilled people to meet the demand to scale up and increase pace of delivery. But he also said the creation of skilled construction jobs was a “hidden win” if the government gets this right, particularly as many of those jobs will be local to communities and could therefore be a boon to local economies.

It all feeds in to the wider need for a just transition that ensures all of Scotland is brought on the journey. This is particularly important for housing because if it is not a just transition, there will be no transition at all because the costs associated with switching energy sources and improving energy efficiency can often go way beyond what most homeowners can afford.

Campbell said: “There absolutely needs to be a just transition for housing and the costs of this need to be met for people in fuel poverty so no one is disadvantaged from this transition. We also need to be making sure that there are no parts of Scotland be left behind, because there are huge opportunities and in terms of the health benefits, stability of future energy bills, as well as the comfort of the home.”

This is why, she explained, delivering on the recommendations of the Green Heat Finance Taskforce is just as vital at the legislation. “The Green Heat Finance Taskforce was set up three years ago to explore funding mechanisms and so far we've talked for two years but we've not actually seen any action from the Scottish Government implementing any of the recommendations. We need to encourage government to move quickly to implement some of the recommendations.”

Those include, for example, pilots of property-linked finance for decarbonising whereby the cost of works will be attached to the property rather than individuals. It is about reducing cost barriers for homeowners and businesses, without simply expecting the government to foot the bill.

Campbell continued: “There's no expectation that the Scottish Government or the public purse is going to pay for all of this stuff, that’s neither affordable nor the right thing.

“But what Scottish Government does need to do is create the right conditions for private investors. We know there are private investors, large scale and small scale, who are desperate to invest resources in this because we can see business opportunities, but in order for them to do that, that means that we need to have clarity and standards and expectations.

“And that's why we urgently need a Heat in Buildings Bill that sets clear energy efficiency and heating standards, so industry has a clear pipeline of work and investors see that there's a clear intent for a long-term strategy that they can carry on.”