Energy Strategy Scotland s Energy Efficiency Programme (SEEP) Consultation Questions

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1 Energy Strategy Scotland s Energy Efficiency Programme (SEEP) Consultation Questions Brief Introduction to The is a unique alliance of 12 Scottish universities providing world-class capability and resources in energy RD&D that supports the Scottish Government in achieving its goals in the energy sector. coordinates leading energy research around key themes of international relevance, developing a research case that is internationally competitive. It creates value for the Scottish economy by acting as a shop window for external organisations and industry, promoting and disseminating s mission to translate excellent research into economic impact. Through the Energy Industry Doctorate Programme, supports the energy sector with the skills it needs to maximise industrial growth opportunities. 2. Situation Report 1. Thinking about current Government schemes and the delivery landscape, we would welcome stakeholders views on: what currently works well, including aspects of existing schemes that should be retained? what are the main delivery challenges? In recent years, unsuccessful market pull mechanisms have been put in place by past UK governments. It is important that this is acknowledged and that lessons are learnt from such situations. It should be noted that successes in the last decade have been centred on grants (or supplier obligation assistance) to substantially reduce capital costs of measures, or to radically improve the investment opportunity from a technology (e.g. feed-in-tariffs and solar PV). Paragraph 24 does acknowledge and highlight sector challenges where things haven t worked, such as in the case of the Green Deal scheme. This should not be repeated in the future, and opportunities to learn from such challenges should be taken up. It is encouraging to see social motivation identified within the draft strategy, such as tackling fuel poverty though, again, it should be noted that previous targets for fuel poverty (e.g. 2016) have not been met. It is suggested that if Green Deal -type loans are ever used again, they should be (close to) 0% interest and be a relatively small part of a larger subsidy programme i.e. supplementing grant and supplier obligation schemes, rather than being the main driver of change in itself. Delivery requires a good understanding of what is possible from both decarbonisation of supply and demand reduction in combination, but recognising the synergy between the two. New technologies, and new modes of installation, must be supported by skills, supply-chain and financial incentives for the enduser. Page 1 of 8

2 3. Aims and Objectives of SEEP 2. How can Scotland best meet this vision and underpinning objectives in a way that is both socially and economically sustainable and supports long-term inclusive growth? Regarding the measurement of health and early years improvements, the most effective way to drive such improvements is through implementation of energy efficiency measures. There are a number of additional benefits to improving energy efficiency in housing, not all of which are economic: eg, comfort, wellbeing etc, the importance of which should not be underestimated. For benefits that can be related to economic factors, it is important to note the multi-sector impacts (across different areas of government) that SEEP could stimulate. For example, quantifying the savings to the NHS from the refurbishment of vulnerable homes (fewer winter deaths and illnesses in fuel poor homes) should be a clear, advertised benefit of SEEP. Likewise, expected contribution to the construction and related sectors from meeting the refurbishment targets of SEEP (more jobs, companies to support these changes) should be part of the cost analysis of the introduction of this scheme. 3. We would welcome stakeholders views on how to set appropriate milestones for energy efficiency improvement and heat decarbonisation of buildings to ensure that the level of emissions reduction ambition (i.e. near-zero carbon buildings) is achieved. With reference to paragraph 26, it is unclear what the rationale behind including domestic water heating is. The objectives identified in these bullets do not have realistic timescales, particularly when accounting for the parallel timescales of UK Government (e.g. future plans for the gas grid, which are hugely important for meeting Scotland s 2032 targets, but might not be clear until 2025). Decarbonised grid is a large issue in relation to providing domestic input and needs. This is a whole system issue and it is promising that Scottish Government are using energy system models to represent this (TIMES). There are opportunities for more joined-up thinking across different markets; for example, examine low carbon technology opportunities for projected new buildings and how these can be adapted to stimulate existing housing markets for that technology. Page 2 of 8

3 The draft strategy continues to refer to a reduction in energy demand in relation to fuel poverty, infrastructure requirements etc. However, the 2032 target of 6% demand reduction for residential properties is somewhat disappointing. If this has been generated from the TIMES model (due to decarbonisation of supply being cost-optimal compared to high capital cost demand reduction) then it is a concern. Such models are likely not to choose high cost demand reduction due to the unattractive financial landscape of those technologies (which, if supported by policy, could change). Furthermore, these low-resolution energy system models will not account for the unintended consequences of not focussing on demand (e.g. difficult of meeting new peaks and characteristics of domestic demand profiles with electrification of heat and transport) and government should take care approaching demand in this way. It is suggested that more bottom-up approaches (as used with, e.g., EESSH and previous demand reduction targets) should be used to provide a greater focus on, and more challenging targets for, demand reduction, albeit in a future with equally challenging supply-side decarbonisation targets. Milestones should then be constructed for the roll out of different stages of this demand reduction strategy (completing the previous successes of supplier obligation schemes, targeting vulnerable homes, timelines for social and private sectors, higher capital cost measures etc) 4. Scenarios 4.1 The role of regulation, standards and financial incentives 4. How might regulation and standards be used most effectively across the different sectors and when should they be applied across the lifetime of the programme? There should be local building standards which meet the needs of differing regional housing types eg, housing can be significantly different in Edinburgh to that in Orkney and they should not necessarily be meeting the same standards. Ideally localised building regulations should be implemented with alternative paths to compliance. Buildings should be judged on performance, not their design model. The current system is a break on innovation, and the draft strategy must explore different systems which allow the sector to explore innovation options that are effective. With the expected growth in availability of empirical data, there should be a long-term plan to exploit this in terms of how we carry out compliance and assessment (NB see Australian NABERS scheme) Page 3 of 8

4 5. What should be the trigger points for buildings to meet standards? Should this differ between domestic and non-domestic buildings, and if so, how? There are a number of points at which housing standards could be implemented, such as the point of sale, however, it should be recognised that there may be affordability issues for a significant amount of people. These costs will need to be met through alternative means, and the overall implications of this should be addressed. There are potentially a number of alternative options and mechanisms, such as tax levy, council tax etc. The trigger points must be supported by appropriate funding schemes, ensuring that building owners are being asked to carry out things that are achievable and affordable. The current proposed framework for bringing private rented accommodation up to E and D rating has some promise, with sensible use of exemptions. Government should, however, take care when using the SAP/RdSAP/SBEM models to trigger mandatory action using such models, with known limitations, to guide improvements is quite different to their use for compulsory action. 6. What do you think are the benefits of using financial and fiscal incentives to support energy efficiency in domestic and non-domestic buildings? Please give examples, from Scotland or elsewhere, of where incentives have been used in this way to good effect. As above 7. What is the best approach to assessing energy efficiency and heat decarbonisation improvements to buildings? How could existing approaches best be used or improved and at what level and scale (e.g. unit, building or area) should assessment be carried out? Improved information on end use data will provide a sense of who should be targeted, a data set should be developed which can be manipulated and utilised effectively. Smart meters could be used to collect user information in order to inform the energy supplier/etc. Data sets must be standardised in order to be robust and reliable ie the same surveys must be carried out on a regular basis, and in the same way, to monitor results. 4.2 The appropriate levels and sources of funding 8. How should the installation of energy efficiency improvements and lower carbon heat supply through SEEP be funded? In particular, where should the balance lie between grant funding and loans for homeowners, landlords and businesses? See question 1 Page 4 of 8

5 9. What is needed to encourage private investment in energy efficiency and heat decarbonisation, including the take-up of loans by a wider range of owners and occupiers? 10. Of the current sources of finance which are currently available for energy efficiency and lower carbon heat supply, which are working well and which are not? Are there successful examples of attracting private sector finance to support energy efficiency improvements that could be explored? Are there any others which should be developed or made available? The majority (three-fifths) of housing in Scotland currently holds an Energy Performance Certificate of D rating and lower, yet this draft strategy does not recognise how to address this issue and improve the efficiency of existing housing. This is a complex system where a number of technologies conflict with each other and are not necessarily compatible. 4.3 The provision of advice, information and consumer protection Advice and information 11. How do we ensure that householders and owners are well advised and supported in making decisions on how to improve the energy efficiency of their building and install lower carbon heat supply through SEEP? Paragraph 30 refers to a commitment to energy efficiency, however, the approach outlined in this draft strategy creates more energy, with little reference to specific efficiency measures and how householders and owners are supported implementing these measures. 12. Are the current mechanisms for providing advice sufficient? What changes, if any, do you think are required? The draft strategy refers to the provision of free and impartial advice, however, the validity of the current advice being provided should be examined. In theory, this is a good approach to take, but only where it is currently being carried out in an efficient and effective manner. Page 5 of 8

6 13. What are the opportunities to link SEEP delivery with other initiatives, including the UK Government s smart meter rollout, so that we maximise the benefits for the people of Scotland? This draft strategy ignores the need for improving the fabric of existing housing stock and the opportunities associated with retrofitting technologies to existing housing. The policy highlights only space and water heating, and does not realistically capture the other relevant and appropriate existing technologies and needs. This is a complex system where a number of technologies conflict with each other and are not necessarily compatible. It is important that this is fully recognised. Consumer protection 14. How can SEEP be designed and promoted to build consumer confidence (as a trusted brand )? What are the risks and opportunities associated with particular approaches? 15. Is there a tried and trusted form of consumer redress that should be adopted or, if not, what should such a mechanism look like? 16. How should SEEP look to integrate the findings of the Each Home Counts Review e.g. could it be used a basis for developing a consumer protection framework for SEEP? 4.4 The establishment and sustainability of local supply chains and trusted delivery agents 17. How can local supply chains be expanded and up-skilled to ensure that maximum economic benefit and job creation is secured across all of Scotland? To sustain the relevant supply chains and delivery agents, the draft strategy must provide a stable framework under which they can operate in for a significant period of time. Page 6 of 8

7 18. How can communities best benefit from the expected job creation? 19. What provision could be made at a national level to ensure companies increase the capacity of the supply chain across all of Scotland to support local delivery of SEEP, particularly in the rural and remote areas? 20. What do companies need to do to increase their skills base to deliver a programme of this nature? 4.5 The nature of programme delivery 21. What roles should national and local bodies play respectively in delivering SEEP and how can national and local schemes best be designed to work together towards meeting the Programme s objectives? The time scales in relation to UK and SG targets don t necessarily match, this should be recognised and adapted. It is unclear what these figures and assumptions are based on. There is risk associated with relying on technologies (such as CCS) which are not necessarily fully commercially developed and market ready. 22. What are your views on the relative benefits of area-based schemes as against those targeted at particular sectors or tenures in delivering SEEP? What other targeting approaches might be effective? 23. How best can we align nationally set standards with local, area-based delivery? 4.6 The balance between local and national responsibilities 24. What should the overall balance be between national and local target setting? Should local authorities set local targets with the flexibility to determine whatever methods they want to meet the Programme vision? Or should there be a greater degree of setting the target(s) and delivery methods by national government? Paragraph 28 refers to an EU target of 30% energy efficiency by This is in in direct conflict with the goals that have been outlined in this draft strategy, in which the importance of energy efficiency and demand reduction have been almost entirely ignored. Page 7 of 8

8 25. What would a good governance structure to oversee any framework of responsibilities between national and local government look like? What examples are you aware of within the UK or elsewhere? 4.7 Monitoring and review 26. What should be included in a monitoring framework to ensure that the Programme is effectively monitored and evaluated? Any other comments? Page 8 of 8