Energy Efficiency Standard for Social Housing post-2020 (EESSH2): consultation

Part Two: Proposed Standard

EESSH2: Proposed Trajectory

2018	2020	2025	2032	2040
Landlords collect data on air quality (measuring CO2, temperature and humidity)	Social housing to meet EESSH 2020 milestone (subject to temporary exemptions)	Review progress towards EESSH2 2032 milestone.	Maximise attainment of EPC Band B for social housing	Poor energy efficiency removed as a driver for fuel poverty
Landlords collect EPC data on environmental impact of energy efficiency measures		Consider introduction of additional requirements around air quality and environmental impact.		All social housing is carbon neutral, as far as reasonably practical
		No social housing to be below EPC Band D (subject to temporary exemptions)
		As far as possible, all hard-to-treat properties in rural and off-gas areas meet the 2020 milestone

 

Overview of the proposals for EESSH2

26. The current milestone for EESSH 2020 is to meet a minimum standard for energy efficiency for all social homes. This minimum standard is set as specific SAP ratings based on house and fuel types^[10]. We are proposing future activity for EESSH2, as follows:

• a challenging and aspirational target to maximise the number of social rented homes meeting an EPC B by 2032;
• the EESSH2 milestone to include air quality and environmental impact requirements (from 2025);
• a floor of EPC D as the minimum energy efficiency standard for a house to be let, subject to limited temporary exemptions. We are also seeking views on when this minimum standard should come into force;
• a vision for 2040 for social housing's contribution to realising our fuel poverty, energy efficiency and climate change ambitions; and
• we intend to carry out another review of EESSH in 2025 to assess progress and confirm any additional requirements of the 2032 milestone or 2040 vision.

2032 Milestone

27. Households that are living in, or vulnerable to, fuel poverty spend a larger proportion of their income on fuel bills. Improving energy efficiency is one of the most sustainable ways to lift households out of fuel poverty. It saves money on fuel bills year-after-year as well as helping to protect against future changes in fuel prices.

28. Social landlords, tenants, energy suppliers and the Scottish Government should act together to maximise the attainment of EPC B for social housing by 2032 (the standard is set out in Table 3 overleaf). This aligns with wider targets for Energy Efficient Scotland, climate change emissions reductions and domestic heat. Compared with our proposals in the Energy Efficient Scotland consultation for the owner occupied sector and the PRS, this milestone supports social housing improving energy efficiency faster than the other domestic sectors.

29. We recognise the challenges in meeting this standard for all property and fuel types, and so are proposing a lower target of EPC C reflecting the difficulties of improving detached houses and houses reliant on some fuel types (e.g. oil, LPG, solid fuel). However, on the basis of current stock estimates these properties account for only 6% of social housing.

30. It is intended that the new milestone will be simple to communicate and understand, and marks a major step change towards removing poor energy efficiency as a driver for fuel poverty in social housing. The milestone will also be challenging to meet; achieving it will depend on funding streams to support the necessary works and there will also be a practical limit to how much improvement is possible in some cases.

Table 3: EESSH targets for 2032 (by fuel and dwelling type)

EE Rating	EPC Band
Dwelling type	Gas	Electric	Biomass	Other fuels
Flats	B	B	B	C
Four-in-a-block	B	B	B	C
Houses (other than detached)	B	B	B	C
Detached	C	C	C	C

31. This longer-term approach to 2032 allows for alignment with social landlords' longer-term business planning cycles, however, meeting the 2032 target cannot be the sole responsibility of social landlords. Realising this aspiration for the sector will also require action from government, tenants, and energy suppliers e.g. through joined-up government policy on void periods and new-build properties; alignment with health outcomes; and working with tenants to make best use of improvements and encourage take-up.

32. The EESSH 2020 milestone is based on the principle that all stock can be brought up to standard, subject to a small proportion of exemptions. The new 2032 milestone indicates a shift in the framing of the standard to a milestone which maximises attainment rather than 100% compliance. This will require a new approach which recognises that for certain landlords less than full attainment for all stock of the new milestone will not be failure, provided all reasonable efforts have been undertaken to improve the energy efficiency of their stock. In maximising attainment of the new standard, comparisons across peer groups of similar stock types will be helpful in providing rationale for performance, and encouraging sharing best practice.

33. The percentage of housing across the sector which meets this standard will be a measure of progress against the standard, with the SHR continuing to monitor performance.

Question 1: What are your views on the proposed target to maximise the proportion of social housing meeting EPC B by 2032?

Question 2: What are your views on the proposal for a lower target of EPC C for detached houses and houses reliant on specific fuel types (e.g. oil, LPG and solid fuel)?

2025 Review and Additional Factors in the
2032 Milestone

34. There remains uncertainty about the development of the energy supply over the next five years. A review of the new EESSH2 standard is proposed for 2025 (or earlier, subject to UK Government announcements on hydrogen and the re-provisioning of the gas network) to:

• assess progress towards meeting the new standard;
• consider the 2032 milestone in the context of technological developments; and
• consider additional requirements of the 2032 milestone regarding air quality and strengthening the condition currently in EESSH 2020 on environmental impact (that no energy efficiency measure should result in a detriment to the environmental impact of a property).

35. Hard-to-treat properties in rural and off-gas areas present specific challenges for landlords. Some of these fall into categories for a temporary exemption from the EESSH 2020 milestone. In the period up to 2025, landlords should focus on bringing hard-to-treat properties in these areas up to the 2020 milestone. Some gas-fuelled houses also currently fail EESSH 2020. These should not be neglected, but landlords should avoid large scale investment in gas-grid improvements until the future situation on re-provisioning is clearer.

36. From 2025, it is proposed that any new energy efficiency measures should be installed on the principle of no detriment to air quality and, where necessary, additional measures should include provision for improving ventilation (including the installation of mechanical ventilation where required), and that provision should be included for the monitoring of the performance of proposed measures^[11].

37. It is proposed that the Scottish Government and social landlords work together at the earliest opportunity to collect and analyse data on air quality, to identify where air quality issues arise and how they can be mitigated. Tenants have a responsibility for making proper use of their homes, but landlords will be expected to engage with them to provide clear advice and examples of good practice and involve them in the development of projects.

38. Similarly, from 2025 it is proposed that any new energy efficiency measures should be installed on the principle of no detriment to the modelled environmental impact of a building. This principle is already a condition of EESSH 2020, however, it is proposed that this is strengthened with landlords asked to collect data on the modelled environmental impact of measures installed to improve energy efficiency. This will include any EPCs produced before and after installation and data from other SAP assessments carried out by landlords. This requirement would be supported by an improved reporting mechanism, with the period to 2025 used for monitoring and analysis purposes.

39. Further requirements proposed for the 2032 milestone include:

• that the new standard is to allow for small variations i.e. ±1 SAP point in measuring progress, to recognise potential inconsistencies in reporting;
• the installation of measures must allow sufficient time for engagement with tenants to ensure best use is made of measures;
• landlords must factor in the maintenance of measures and allow for deterioration over time; and
• local authorities must support the EESSH2 milestone as part of their local authority energy efficiency strategy. This will include appropriate use of district heating schemes.

Question 3: What are your views on the proposed content of the review:

(a) to assess progress towards meeting the new standard?

(b) to consider the 2032 milestone in the context of technological developments?

(c) to consider any additional requirements of the 2032 milestone regarding air quality and environmental impact?

Question 4: In terms of the timing of the review, what are your views on:

(a) the proposal to review the new standard in 2025?

(b) the proposal to review the standard earlier if UKG has made announcements on hydrogen and the re-provisioning of the gas network?

Question 5: Do you have any other comments on the further requirements proposed for the EESSH 2032 target?

Minimum Standard

40. The EESSH 2020 milestone sets a minimum standard of at least EPC D and the majority of social housing will meet this. However, some homes which rely on oil-fuelled heating, and some exempt properties, will be below this minimum. It is projected that 0.5% social housing stock will fall below EPC D after EESSH1 in 2020 (c3,000 homes).

41. The EESSH2 milestone is an aspirational target and may not be achievable for all stock (e.g. it may be more challenging for landlords with harder to treat traditional properties, or tenement stock where remaining energy efficiency improvements may be more limited). A minimum standard is therefore proposed that no social housing can be let if their energy efficiency performance is below EPC D (there may be situations where temporary exemptions would continue to apply – see from paragraph 43).

42. We are proposing that this minimum standard would apply from April 2025, which is the same timeframe by when privately rented properties will be required to have EPC D, as confirmed in the Energy Efficient Scotland Route Map. It is proposed that social housing that cannot be brought up to EPC D by April 2025, and is not subject to temporary exemptions, should not be let to social tenants.

Question 6: What are your views on the proposed minimum standard that no social housing should have an energy efficiency rating of less than EPC D?

Question 7: It is proposed that this minimum standard of EPC D applies to social housing from April 2025, in line with the standard for the private rented sector. What are your views on this timescale for social housing?

Exemptions

43. The EESSH guidance recognises obstacles to bringing some properties up to the 2020 standard^[12]. While landlords should try to ensure that all properties meet this standard, there may be technical difficulties, lack of consent, or barriers of costs and funding. In prescribed circumstances, landlords can report temporary exemptions for properties that cannot be brought up to the 2020 standard.

44. The estimates of costs and attainment rates set out in the next part of this consultation show that there are constraints on the ability of landlords to bring all properties up to the new standard for 2032. It may be possible to achieve the standard with future technological developments. However, we consider it appropriate to frame the standard in terms of maximising attainment rather than achieving the standard for all properties in the sector, though the percentage of properties meeting the standard will be monitored to demonstrate progress. Leading from this, we also consider that framing the target in these terms means that a procedure for exemptions is not required. However, landlords would need to provide a short narrative explanation of their performance in their annual returns to the SHR.

45. We recognise that temporary exemptions will still be required for some properties that cannot meet the 2025 minimum standard of EPC D (e.g. where tenants refuse permissions for work to be undertaken). However, other exemptions that are currently recognised (e.g. technical, excessive cost, unable to secure funding) will no longer apply to new social lets from 2025 (see Table 4 below). This addresses the situation of tenants living in properties subject to long-term exemptions, and which may no longer be considered as of a suitable standard of social housing accommodation.

Table 4: EESSH Exemptions

	Current Exemptions for EESSH	Will exemption apply to minimum standard from 2025?
A	Technical	NO
B	Social	YES
C	Excessive Cost	NO
D	New Technology	YES
E	Legal	YES
F	Disposal	YES
G	Long-term Void	YES
H	Unable to Secure Funding	NO

Question 8: What are your views on the proposal that landlords would need to provide a short narrative explanation of their performance in their annual returns to the SHR?

Question 9: What are your views on the proposal that limited exemptions should apply to the 2025 minimum standard for new lets?

Use of New Technology

46. Landlords have risen to the challenge of EESSH1, with innovative approaches to new technologies already being adopted ^[13]. In maximising attainment of EESSH2 post-2020, investment in new technology that delivers improvements in energy efficiency, even if those measures are not fully recognised by SAP methodology, is to be encouraged.

47. The current EESSH Guidance for Social Landlords addresses this point. If landlords are satisfied that an innovation provides tangible benefits for energy efficiency and is in the best interests of tenants, they can consider a measure which, on paper, does not meet the relevant EESSH rating. Landlords must be satisfied that they have robust evidence to support this decision^[14].

48. This approach is proposed to continue through EESSH2. Additionally, as with other energy efficiency measures, it is proposed that when implementing any new or innovative approaches, effective monitoring and evaluation is crucial in assessing/measuring the effectiveness of an intervention. To ensure a robust evidence base is developed, such assessment must be standardised and independently analysed where possible.

49. Tenants should be involved and empowered as part of this monitoring process e.g. tenant control systems and smart connected thermostats can be adopted to improve outcomes and messaging. Consistent messaging to tenants on the efficient and effective running of their homes is vital, and landlords should ensure that all tenants are furnished with the information they need particular to their property.

Question 10: What are your views about the proposed approach to recognising new technology in EESSH2?

2040 Vision

50. By 2040 poor energy efficiency should be removed as a driver for fuel poverty in social housing and as far as reasonably practical all social housing should be carbon neutral. This vision should reduce fuel costs for tenants and maximise the energy efficiency potential of the social housing stock.

51. This approach supports the vision set out in our Energy Efficient Scotland Route Map that by 2040, our homes and buildings are warmer, greener and more efficient, and will also contribute to emissions reduction targets.

Question 11: Do you have any comments on the EESSH 2040 Vision for (a) poor energy efficiency to be removed as a driver for fuel poverty and for (b) social housing to be carbon neutral?