Heat decarbonisation in Scotland and the UK: ambition and divergence
Author: Niall Kerr
Government plans to phase-out fossil fuel heating and phase-in low carbon heating systems like heat pumps, present a fascinating case study of the current state of devolved governance in Scotland. Heat policy is notionally devolved but many of the potentially critical areas in which the Scottish Government (SG) could act to decarbonise heat are not e.g. regulation of electricity and gas networks and energy taxation [1]. While Scotland has decarbonised faster than many other nations [1, p.34], reductions have come almost entirely from the move to renewable electricity supply with very little change in the reliance on fossil fuel heating (as is the case in the rest of the UK).
The UK and Scottish Governments were some of the first in the world to set net zero target dates, with the 2045 date in Scotland ahead of the 2050 date set for the rest of the UK (rUK). Scotland also has higher ambition for 2030 with a commitment to reduce by 75% compared to the UK’s 68%. All these targets, in Scotland and in the UK, are statutory (legally binding). The 2045 ambition in Scotland was informed by Committee on Climate Change (CCC) advice that Scotland was in a better position to decarbonise with greater renewable energy resources and more opportunity for carbon sequestration [3]. The 2030 target, however, was even more ambitious than the CCC advised, with even their most ambitious scenario not achieving this level of reduction [4]. The Committee have suggested that this ambition may not be feasible ‘without implications for cost and/or required changes in behaviour’ (see pg. 29-30 [2]).
The recommendations from the CCC also came with the caveat that decarbonisation in Scotland was contingent on UK ambition, and that ‘Scotland cannot deliver net-zero emissions by 2045 through devolved policy alone’ [3]. In the recent Scottish Heat in Buildings Strategy, the Scottish Government frequently endorse this view, and call on UK Government (UKG) to accelerate decision making on many of the thornier questions in heat decarbonisation policy e.g. the role of hydrogen for home heating [5].
The 2030 economy-wide target for Scotland of 75% has been translated into a plan to reduce emissions from buildings by at least 68% by 2030 [1]. This a jump from the pre net-zero commitment of 35% reduction by 2032 and probably the most ambitious target for 2030 in Europe [6]. The UK Government’s recent Heat and Buildings Strategy, applies to the slightly less ambitious but still very challenging target of 68% economy wide reduction by 2030, with the UK Strategy not translating this into a specific target for buildings.
There have been developments in Scottish heat decarbonisation policy that have placed the country ahead of the rUK, for example, with much greater levels of energy efficiency funding, plans for Local Heat and Energy Efficiency Strategies (LHEES) and a regulatory framework for heat networks [6]. In line with their earlier ambitions, Scottish heat policy targets tend to occur slightly ahead of those in the UK; 2033 for all properties to be EPC C (2035 rUK), 2024 for new builds to be zero carbon (2025 rUK). The regulatory framework for heat networks was delivered in Scotland in 2021 and the UK Government is now looking to do something similar ‘as soon as possible’ [7]. A potentially critical aspect of heat network regulation, mandating properties to use new networks, is, however, thought to be out with the devolved powers of the SG, with uncertainty over the scope of devolved powers an increasingly important feature of Scottish heat governance [8,9].
An example, of this uncertainty can be seen with commitments to phase-out dates for fossil fuel heating. To achieve the 2030 target in Scotland, the intention is for the vast majority of off-gas homes and about half of on-gas homes to convert to zero emissions heating. In accordance with the speed of change, commitments have been made to phase-out ‘the need to install’ new or replacement fossil fuel boilers in off gas properties from 2025, and in on-gas areas from 2030. The recognition that oil heating should no longer be installed after 2025 is slightly ahead of the UK Government’s proposal that this should happen by 2026 (although this proposal is only at a consultation stage)[10]. The intention to phase out the need for gas heating by 2030 is however, significantly ahead of the UK commitment of 2035. The language (‘phase out the need for’) also belies the uncertainty in SG as to whether a ban on heating technologies is within their devolved powers. The commitment borrows the language used in SG policy on vehicle phase-out [11]. In transport, it is more clearly understood that SG does not have the powers to ban the purchase of petrol and diesel vehicles. Also, conveniently, here UKG is now moving in step with Scottish commitments (although they have not always done so). Can SG use building regulations to ban boilers earlier than the rest of the UK, would this face legal challenge from the industry? Will an early ban allow the low carbon heat industry to develop more rapidly in Scotland and would this deliver any significant economic benefits….? These are some of the questions concerning heat policy makers in SG at the moment, with work ongoing alongside the UKG to determine the best way forward [1, p.103].
There are some differences in attitudes to costs in the UK and Scottish Strategies, with the UK trying to wish away the idea that there will be a cost and hoping that the price of heat pumps can be driven down by 50% by 2025 and to parity with gas boilers by 2030 [7]. The Scottish Government are more forthcoming about the costs, producing a £33 billion estimate for the changes necessary to meet the 2045 target[1], although the arguably over-optimistic messaging on costs from UKG is still received by audiences North and South of the border. While SG are more upfront about the costs the inclusion of an overall estimate alongside a pledge for £1.8 billion of public funding in this parliamentary term (2021-26), portrays a clear funding gap. If public funding was to continue at this level it would mean £8.6 billion between now and 2045. Privately leveraged funding would therefore need to be about 4 times that of public funding, which is high, but not quite unprecedented in European terms [11, p.2].
UK Government have presented some intriguing proposals for low carbon heat market development that would oblige existing boiler manufacturers or energy retailers to install low carbon heat. They intend for these plans to be UK-wide as it is important that ‘different rules do not apply to sales of heating appliances in different parts of the UK to ensure the policy is effective’ [12, p.14-15]. If designed well and effective, the scale of a UK-wide approach could help to drive low carbon heat uptake and cost reduction in Scotland in the way that other UK-wide policies e.g. Contracts for Difference, have done for other energy technologies. In other aspects of market policy, Scottish Government have decided to diverge from UK-wide policy. They have opted-out of the UK-wide purchase subsidy (Boiler Upgrade Scheme) believing that a scheme specifically designed for Scotland (Home Energy Scotland) will be more effective.
Finally, the Scottish Parliamentary election of May 2021 and the resultant SNP – Green Party collation / cooperation agreement has also added to the intrigue of policy development. Both Ministerial positions taken by the Green Party relate to heat decarbonisation (with one titled Minister for Zero Carbon Buildings). Due to the already high level of ambition, it is hard to imagine that the arrival of the Green’s in government will result in more radical heat decarbonisation policies. The transition to net zero is, however, very likely to endure a lot of negative attention at various points – where does the funding come from, are the chosen technologies the right ones – and the Greens have been positioned in the firing line for this. The more challenging aspects of the transition will inevitably be associated with the ‘green shirts of the boiler police’, highlighting the importance of social consultation, openness and engagement throughout the process.
Overall, the greater ambition in Scotland is accompanied by some ‘actual policies’ to help speed up the move to zero carbon heat. Ultimately, however, SG are trying to be the most ambitious country in Europe on heat decarbonisation with one hand tied behind their back. The divergence in ambition from the rUK is acting to highlight the entanglement of responsibilities in the current devolved governance arrangement of Scotland. How the process evolves in the coming decades will be a complex and compelling case study of multi-level devolved governance.
References
[1] Scottish Government, Heat in buildings strategy - achieving net zero emissions., 2021. https://www.gov.scot/publications/heat-buildings-strategy-achieving-net-zero-emissions-scotlands-buildings-consultation/pages/7/.
[2] CCC, Reducing emissions in Scotland: 2020 Progress Report to Parliament, Committee on Climate Change, UK, 2020. https://www.theccc.org.uk/publication/reducing-emissions-in-scotland-2020-progress-report-to-parliament/.
[3] CCC, Net Zero. The UK’s contribution to stopping global warming, Committee on Climate Change, London, 2019. https://www.theccc.org.uk/publication/net-zero-the-uks-contribution-to-stopping-global-warming/.
[4] Lord Deben, Letter to the Scottish Government’s Cabinet Secretary for Environment, Climate Change and Land Reform. Implications of new Scottish emissions scenarios, (2020). https://www.theccc.org.uk/wp-content/uploads/2020/12/Lord-Deben-CCC-Letter-to-ECCLR-CabSec.pdf.
[5] N. Kerr, M. Winskel, Energy technology phase-out: Using international analogues to inform ‘net zero’ heat decarbonisation policy, ClimateXChange, Edinburgh, 2021. https://www.climatexchange.org.uk/research/projects/energy-technology-phase-out-using-international-analogues-to-inform-net-zero-heat-decarbonisation-policy/.
[6] N. Kerr, M. Winskel, Review of heat decarbonisation policies in Europe., ClimateXChange, Edinburgh, 2021. https://www.climatexchange.org.uk/media/4625/cxc-a-review-of-heat-decarbonisation-policies-in-europe-feb-2021.pdf.
[7] UK Government, Heat and Buildings Strategy, 2021. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1026507/heat-buildings-strategy.pdf.
[8] A. Reid, Heat Networks (Scotland) Bill (republished). Spice Briefing, Scottish Parliament Information Centre (SPICe), Edinburgh., 2020. https://www.parliament.scot/parliamentarybusiness/CurrentCommittees/114885.aspx.
[9] Scottish Renewables, Supporting & De-risking Investment in District Heat Networks Proposals for Scottish Government, (2019) 1–30. https://www.scottishrenewables.com/assets/000/000/448/sr_supporting__de-risking_investment_in_district_heat_networks_v4_original.pdf?1579640079.
[10] BEIS, Impact Assessment: Phasing out the installation of fossil fuel heating in homes off the gas grid, Department for Business Energy & Industrial Strategy, 2021. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1026377/domestic-offgg-ia.pdf.
[11] Scottish Government, Securing a green recovery on a path to net zero: climate change plan 2018–2032 - update, 2020. https://www.gov.scot/publications/securing-green-recovery-path-net-zero-update-climate-change-plan-20182032/.
[12] N. Kerr, M. Winskel, Private household investment in home energy retrofit – reviewing the evidence and designing effective public policy, ClimateXChange, Edinburgh, 2018. https://www.climatexchange.org.uk/media/3146/cxc-epe-evidence-review-full-report.pdf.
[13] BEIS, A market-based mechanism for low-carbon heat Consultation, Department for Business Energy & Industrial Strategy, 2021. https://www.gov.uk/government/consultations/market-based-mechanism-for-low-carbon-heat.
[1] A high electrification pathway.
This blog originally appeared on UKERC’s blog
