New Build Heat Standard 2024: business and regulatory impact assessment

Footnotes

1. The baseline period is 1990 for carbon dioxide, methane, and nitrous oxide, and 1995 for hydrofluorocarbons, perfluorocarbons, sulphur hexafluoride, and nitrogen trifluoride.

2. Heat in Buildings Strategy - achieving net zero emissions in Scotland's buildings - gov.scot (www.gov.scot)

3. Scottish Greenhouse Gas Statistics 2020 - gov.scot (www.gov.scot). Calculated as the sum of Services and Residential Climate Change Plan (CCP) accounting categories for 2020.

4. The remaining 0.9 MtCO2e comprises emissions from a variety of sources, some of the most significant being metered dose inhalers, air-conditioning, and refrigeration.

5. Scottish Emission Targets & Progress in reducing emissions in Scotland – 2022 Report to Parliament - Climate Change Committee (theccc.org.uk)

6. Housing to 2040 - gov.scot (www.gov.scot)

7. Tackling fuel poverty in Scotland: a strategic approach - gov.scot (www.gov.scot)

8. Building standards - gov.scot (www.gov.scot)

9. Heat and buildings strategy - GOV.UK (www.gov.uk)

10. statistics.gov.scot : Domestic Energy Performance Certificates - Dataset to Q4 2022. Accessed 10/02/2023.

11. Scottish house condition survey: 2019 key findings - gov.scot (www.gov.scot) [Table 5].

12. Heat in Buildings Strategy - achieving net zero emissions in Scotland's buildings - gov.scot (www.gov.scot) [Chapter 8].

13. Scottish Government and Scottish Green Party - Shared Policy Programme - gov.scot (www.gov.scot)

14. The costs and benefits of tighter standards for new buildings (Currie & Brown and AECOM) - Climate Change Committee (theccc.org.uk)

15. statistics.gov.scot : Domestic Energy Performance Certificates - Dataset to Q4 2022

16. Housing statistics - gov.scot (www.gov.scot)

17. The share of new-build domestic properties built with ZDEH technologies has risen from a low of 9% in 2014 to 21% in 2022.

18. statistics.gov.scot : Domestic Energy Performance Certificates - Dataset to Q4 2022

19. Climate change - public engagement: survey results 2022 - gov.scot (www.gov.scot)

20. A gas boiler emits more annual CO2 than seven transatlantic flights | Nesta

21. The Green Book: appraisal and evaluation in central government - GOV.UK (www.gov.uk)

22. The Economics of the Climate - American Economic Association (aeaweb.org)

23. What Do We Learn from the Weather? The New Climate-Economy Literature - American Economic Association (aeaweb.org)

24. The Economics of Climate Change: The Stern Review - Grantham Research Institute on climate change and the environment (lse.ac.uk)

25. Climate Change 2022: Impacts, Adaptation and Vulnerability | Climate Change 2022: Impacts, Adaptation and Vulnerability (ipcc.ch)

26. Assessing the Economic Impacts of Environmental Policies: Evidence from a Decade of OECD Research | en | OECD

27. The Environment and Directed Technical Change - American Economic Association (aeaweb.org)

28. The reference to "2025" was directed at the UK Government. UK housing: Fit for the future? - Climate Change Committee (theccc.org.uk)

29. National Performance Framework | National Performance Framework

30. (i) Energy from renewable sources.

31. (i) International exporting; (ii) Carbon footprint; (iii) Greenhouse gas emissions; (iv) Spend on research and development; (v) Entrepreneurial activity.

32. (i) Scotland's reputation.

33. (i) High growth businesses; (ii) Innovative businesses

34. Scotland's National Strategy for Economic Transformation - gov.scot (www.gov.scot)

35. New Build Heat Standard - scoping consultation: analysis - gov.scot (www.gov.scot)

36. New build heat standard consultation: part II - Scottish Government - Citizen Space

37. New Build Heat Standard Consultation: Part II Analysis - Scottish Government

38. Energy Company Obligation (ECO) | Ofgem

39. New Build Heat Standard Consultation: Part II Analysis - Scottish Government

40. "Do you agree with the approach set out in 2.1 to regulate direct emissions heating (DEH) systems in new buildings?" The referenced Section 2.1 can be found in the full public consultation paper: New build heat standard consultation: part II - Scottish Government - Citizen Space

41. "Do you agree with the approach to conversion as set out in section 2.3?" Source: ibid.

42. Heat in Buildings strategy - quality assurance: policy statement - gov.scot (www.gov.scot)

43. 6.8 Written information - Building standards technical handbook 2022: domestic - gov.scot (www.gov.scot)

44. UK House Price Index: reports 2021 - GOV.UK (www.gov.uk)

45. Depending on the characteristics of the household, the relevant "heating regime" is defined within Section 3 of the Fuel Poverty (Targets, Definition and Strategy) (Scotland) Act 2019 and The Fuel Poverty (Enhanced Heating) (Scotland) Regulations 2020. A household's heating regime requires that the household be heated to a requisite temperature for a requisite number of hours.

46. How fuel poverty is measured in the UK - Office for National Statistics (ons.gov.uk)

47. Tackling fuel poverty in Scotland: a strategic approach - gov.scot (www.gov.scot)

48. New Build Heat Standard: Fairer Scotland Duty Assessment (FSDA) - Scottish Government

49. Lived experience of fuel poverty: research - gov.scot (www.gov.scot)

50. Unlocking the Benefits of Heat Pumps: The Role of Electricity and Gas Prices | UKERC | The UK Energy Research Centre

51. Green Book supplementary guidance: valuation of energy use and greenhouse gas emissions for appraisal - GOV.UK (www.gov.uk)

52. Green Book supplementary guidance: valuation of energy use and greenhouse gas emissions for appraisal - GOV.UK (www.gov.uk)

53. Ibid.

54. Note that we have set to one side the issue of gas standing charges. Were the ratio to sit slightly above 1, we may expect savings on energy bills if the gas standing charge could be avoided by the household using the electric heat pump.

55. Using unit prices of electricity and gas in Southern Scotland of, respectively, 31.34 and 9.78 p/kWh in current (nominal) prices, as well as respective prices in Northern Scotland of 31.01 and 9.78 p/kWh. Assume a gas boiler efficiency of 89.5%. Source: Energy Price Guarantee - GOV.UK (www.gov.uk)

56. Spring Budget 2023 - GOV.UK (www.gov.uk)

57. Cornwall Insight release price cap predictions for July and October 2023 - Cornwall Insight (cornwall-insight.com)

58. Green Book supplementary guidance: valuation of energy use and greenhouse gas emissions for appraisal - GOV.UK (www.gov.uk)

59. Information on the difference between retail energy prices and LRVCs is provided in supplementary guidance accompanying the Green Book. In brief, LRVCs strip the fixed costs, carbon costs, and taxes embedded in retail prices out, and should be used in social appraisal. Green Book supplementary guidance: valuation of energy use and greenhouse gas emissions for appraisal - GOV.UK (www.gov.uk)

60. "We know that, in the long run, green products are more efficient and cheaper. However, current distortions in electricity and gas prices do not always make this the case. We want to make it easier for consumers to make the switch to green products by rebalancing prices between electricity and gas to remove these distortions. We accept the Skidmore Review recommendation that Government should commit to outlining a clear approach to gas vs. electricity 'rebalancing' by the end of 2023/4 and should make significant progress affecting relative prices by the end of 2024. Rebalancing will generate the clear short-term price signal necessary to shift both households and businesses to lower-carbon, more energy efficient technologies like heat pumps." Powering up Britain - GOV.UK (www.gov.uk)

61. The electricity-to-gas price ratio explained | Nesta

62. Review of gas and electricity levies and their impact on low-carbon heating uptake (climatexchange.org.uk)

63. The costs and benefits of tighter standards for new buildings (Currie & Brown and AECOM) - Climate Change Committee (theccc.org.uk)

64. statistics.gov.scot : Domestic Energy Performance Certificates - Dataset to Q4 2022

65. Housing statistics - gov.scot (www.gov.scot)

66. Task Force on Climate-Related Financial Disclosures | TCFD) (fsb-tcfd.org)

67. Improving home energy performance through lenders - GOV.UK (www.gov.uk)

68. EEMI – Funding the hope for a better … (energyefficientmortgages.eu)

69. Future regulatory regime for Environmental, Social, and Governance (ESG) ratings providers - GOV.UK (www.gov.uk)

70. Property market report 2021-22 - Registers of Scotland (ros.gov.uk)

71. Covers commercial sales and leases, as well as sales of titles classed as forestry, agriculture, or land.

72. Communications with Gas Safe Register [e-mail]. Received 24 October 2022.

73. Clean heat and energy efficiency workforce assessment (climatexchange.org.uk)

74. Towards an Industry for Green Heat: heat in buildings supply chains delivery plan - gov.scot (www.gov.scot)

75. How to scale a highly skilled heat pump industry | Nesta

76. Ibid.

77. UK SIC 2007 - Office for National Statistics (ons.gov.uk)

78. Business Register and Employment Survey : open access - Nomis - Official Census and Labour Market Statistics (nomisweb.co.uk). Accessed 10/01/2023.

79. Earnings and hours worked, UK region by industry by two-digit SIC: ASHE Table 5 - Office for National Statistics (ons.gov.uk) [Table 5.7a]

80. Business Register and Employment Survey : open access - Nomis - Official Census and Labour Market Statistics (nomisweb.co.uk). Accessed 10/01/2023.

81. Earnings and hours worked, region by occupation by four-digit SOC: ASHE Table 15 - Office for National Statistics (ons.gov.uk) [Table 15 (4).7]

82. Earnings and hours worked, region by occupation by two-digit SOC: ASHE Table 3 - Office for National Statistics (ons.gov.uk) [Table 3.7a]

83. The Green Book and accompanying guidance and documents - GOV.UK (www.gov.uk)

84. We say "some" as it is only those new-builds warranted between 2024 and 2045 that were built with a gas boiler and which have not swapped out their gas boilers for a ZDEH system by the time 2045 materialises that would be affected by the all-tenure zero emissions heat standard.

85. "This would be subject to technological developments and decisions by the UK Government in reserved areas, […] with all buildings needing to meet this standard no later than 2045." (page 95)

86. Green Book supplementary guidance: valuation of energy use and greenhouse gas emissions for appraisal - GOV.UK (www.gov.uk)

87. Cost of installing heating measures in domestic properties - GOV.UK (www.gov.uk)

88. Evidence update of low carbon heating and cooling in non-domestic buildings - GOV.UK (www.gov.uk)

89. The scope for cost reductions in a mass market for low carbon heating technologies - GOV.UK (www.gov.uk)

90. Sixth Carbon Budget - Climate Change Committee (theccc.org.uk)

91. Analysis of alternative UK heat decarbonisation pathways (Imperial) - Climate Change Committee (theccc.org.uk)

92. Due to a paucity of information on costs in the non-domestic sector, such nuances in capex and repex are not adopted when evaluating the impact on non-domestic buildings.

93. Connections documents and charges | SGN Your gas. Our network.

94. Green Book supplementary guidance: valuation of energy use and greenhouse gas emissions for appraisal - GOV.UK (www.gov.uk)

95. Fossil fuel price assumptions: 2019 - GOV.UK (www.gov.uk)

96. Valuation of greenhouse gas emissions: for policy appraisal and evaluation - GOV.UK (www.gov.uk)

97. Improving emissions assessment of Scottish Government spending decisions and the Scottish Budget (climatexchange.org.uk)

98. "Discounting is based on the concept of time preference, which is that generally people prefer value now rather than later. … In government appraisal costs and benefits are discounted using the social time preference rate" Source: The Green Book and accompanying guidance and documents - GOV.UK (www.gov.uk)

99. Chief Medical Officer's annual report 2022: air pollution - GOV.UK (www.gov.uk)

100. Evidence update of low carbon heating and cooling in non-domestic buildings - GOV.UK (www.gov.uk)

101. Earnings and hours worked, region by occupation by two-digit SOC: ASHE Table 3 - Office for National Statistics (ons.gov.uk) [Table 3.5a; Scotland, Business, media, and public service professionals; median hourly pay of £21.48]

102. annual population survey - Nomis - Official Census and Labour Market Statistics (nomisweb.co.uk). Accessed 09/02/2023

103. "more than" used to account for new builds constructed between the time of the Scottish House Condition Survey (2019) and 1 April 2024.

104. Scottish house condition survey: 2019 key findings - gov.scot (www.gov.scot) [Table 5]

105. Energy Saving Trust (2022). Non-Domestic Analytics v1.1 [dataset]. Unpublished.

106. Forthcoming via ClimateXChange

107. Examples of flexibility services include demand-side response, energy storage systems, time-of-use tariffs, hybrid heat pumps, and smart electric vehicle charging schemes.

108. Referred to as Steady Progression (SP) in the report.

109. As is noted above in Error! Reference source not found.2, employment in HVAC manufacturing sectors in Scotland is relatively limited.

110. "Union-wide greenhouse gas emissions and removals regulated in Union law shall be balanced within the Union at the latest by 2050, thus reducing emissions to net zero by that date, and the Union shall aim to achieve negative emissions thereafter." Source: Article 2(1) of Regulation (EU) 2021/1119 of the European Parliament and of the Council.

111. Directive 2010/31/EU of the European Parliament and of the Council of 19 May 2010 on the energy performance of buildings (recast) (legislation.gov.uk)

112. COM/2021/802 final

113. Please see notes accompanying Table 3. Broadly speaking, they cover the HVAC sector, both
manufacturing and installation services.

114. How to scale a highly skilled heat pump industry | Nesta

115. "The business ecosystem in Scotland lacks a critical mass of large scale-ups." (Scotland's Productivity Challenge: Exploring the issues - The Productivity Institute); "high concentration of small, lower-productivity firms" (Productivity Research Launch: Wealth of the Nation — David Hume Institute)

116. UK Business Counts - enterprises by industry and employment size band - Nomis - Official Census and Labour Market Statistics (nomisweb.co.uk). Accessed 24/03/2023

117. Green Heat Innovation Support Programme - Scottish Enterprise (scottish-enterprise.com)

118. Future Homes Hub Delivery Plan and Roadmap

119. Protecting Scotland's Future: the Government's Programme for Scotland 2019-2020 - gov.scot (www.gov.scot)

120. Building (Scotland) Act 2003 (legislation.gov.uk)

121. How to reduce the cost of heat pumps | Nesta

122. Heat in buildings strategy: business and regulatory impact assessment - gov.scot (www.gov.scot)

123. Heating and cooling installer study - GOV.UK (www.gov.uk)

124. Installer Survey | Vaillant

125. Heat in buildings strategy: business and regulatory impact assessment - gov.scot (www.gov.scot)

126. Towards an Industry for Green Heat: heat in buildings supply chains delivery plan - gov.scot (www.gov.scot)

127. Heat in Buildings strategy - quality assurance: policy statement - gov.scot (www.gov.scot)

128. Protecting Scotland's Future: the Government's Programme for Scotland 2019-2020 - gov.scot (www.gov.scot)

129. Protecting Scotland, Renewing Scotland: The Government's Programme for Scotland 2020-2021 - gov.scot (www.gov.scot)

130. Such an accounting basis sees emissions arising from natural gas combustion in buildings for non-industrial purposes allocated to the sectors Residential and Services, and emissions from electricity use attributed to the Electricity Generation sector. This differs from the abatement estimates provided in Table 4 which are net abatement (accounting for the rise in emissions from electricity generation).

131. Figures do not exactly sum to total CCP abatement due to rounding.

132. Green Book supplementary guidance: valuation of energy use and greenhouse gas emissions for appraisal - GOV.UK (www.gov.uk)

133. A positive number indicates a net cost per tonne of CO2e, whilst a negative number indicates a net benefit per tonne of CO2e.

134. If the cost-effectiveness indicator is lower than the cost comparator, then the emissions are – on average – being abated in a cost-effective manner. Otherwise, the emissions are not being abated cost-effectively.

135. Housing statistics quarterly update: new housebuilding and affordable housing supply - gov.scot (www.gov.scot) [long series]

136. Building regulations - new domestic buildings - modelling of proposed energy improvements: research report - gov.scot (www.gov.scot) [Table 1.11j]

137. Housing statistics quarterly update: new housebuilding and affordable housing supply - gov.scot (www.gov.scot) [long series]. Accessed 10/11/2022

138. Housing statistics: Conversions and demolitions - gov.scot (www.gov.scot) [tsScotSummary]. Accessed 10/11/2022

139. statistics.gov.scot : Domestic Energy Performance Certificates - Dataset to Q4 2022. Accessed 08/11/2022

140. Energy consumption in new domestic buildings 2015 to 2017 (England and Wales) - GOV.UK (www.gov.uk)

141. For reference, the average gas consumption per square-metre (sqm) for band A properties using gas was 93 kWh/sqm. For band B, this was 95 kWh/sqm, and for band C it was 114 kWh/sqm.

142. Building standards technical handbook June 2023: domestic - gov.scot (www.gov.scot) [Table 6.1]

143. Sixth Carbon Budget - Climate Change Committee (theccc.org.uk)

144. The costs and benefits of tighter standards for new buildings (Currie & Brown and AECOM) - Climate Change Committee (theccc.org.uk)

145. Market-based mechanism for low carbon heat - GOV.UK (www.gov.uk)

146. Building standards technical handbook June 2023: domestic - gov.scot (www.gov.scot) [Table 6.1]

147. Sixth Carbon Budget - Climate Change Committee (theccc.org.uk) [Table M3.1]

148. The scope for cost reductions in a mass market for low carbon heating technologies - GOV.UK (www.gov.uk)

149. Ibid.

150. Consumer price inflation time series - Office for National Statistics [dataset]

151. Cost of installing heating measures in domestic properties - GOV.UK (www.gov.uk)

152. The scope for cost reductions in a mass market for low carbon heating technologies - GOV.UK (www.gov.uk)

153. The scope for cost reductions in a mass market for low carbon heating technologies - GOV.UK (www.gov.uk)

154. Local forecasts of a global transition: net zero in 2050 - Regen [Figure 75]

155. Non-domestic National Energy Efficiency Data Framework (ND-NEED), 2022 - GOV.UK (www.gov.uk). Accessed 23/12/2022

156. Sixth Carbon Budget - Climate Change Committee (theccc.org.uk) [Table B3.3]

157. Evidence update of low carbon heating and cooling in non-domestic buildings - GOV.UK (www.gov.uk)

158. Ibid.

159. Analysis of alternative UK heat decarbonisation pathways (Imperial) - Climate Change Committee (theccc.org.uk)

160. The scope for cost reductions in a mass market for low carbon heating technologies - GOV.UK (www.gov.uk)

161. Consumer price inflation time series - Office for National Statistics [dataset]

162. "Cooling has historically been dominated by the non-domestic sector … There is uncertainty over the number of cooling systems sold into the new build [non-domestic] sector but research for this project suggests this is in the range of 50% - 80% of overall sales." Source: Cooling in the UK - GOV.UK (www.gov.uk)

163. Green Book supplementary guidance: valuation of energy use and greenhouse gas emissions for appraisal - GOV.UK (www.gov.uk)