Heat in buildings - Scotland's National Public Energy Agency call for evidence: analysis of responses

Dedicated Agency

Strategic Purpose, Remit and Objectives

16. The Call for Evidence noted that it is expected that the dedicated Agency will take ownership of an agreed national delivery plan for how the heat decarbonisation transition will be implemented in Scotland. In order to carry out this role, a strategic framework for the new Agency will need to be developed across a number of areas, including:

• Leading on public communication and advice provision to raise awareness.
• Bringing together delivery of heat decarbonisation and energy efficiency capital investment and advice programmes for small-scale domestic and non-domestic customers.
• Accelerating the pipeline of investable large-scale heat decarbonisation and energy efficiency retrofit projects, through the provision of a package of financial and non-financial support.
• Coordinating national, regional and local government delivery.
• Acting as a centre of expertise.

17. The Call for Evidence also noted that, subject to proposed energy efficiency and zero emissions heat regulations as set out in the Heat in Buildings Strategy, there is an opportunity for the dedicated Agency as part of its overarching strategic framework to consider its role in terms of supporting delivery of a number of initiatives or in leading and coordinating delivery of initiatives.

18. The first question asked,

Q1: 'What is needed to achieve the transformational change that is necessary for heat decarbonisation in Scotland?

19. A total of 50 respondents made comments at the first question. A number of key themes emerged from the answers as delineated below. A small number of respondents backed up their answers by referring to research, described in Annex 2.

20. The highest numbers of respondents – a majority – described a need to increase the engagement and awareness of consumers and the public about heat decarbonisation. Specific measures advocated were clear communication for building owners about requirements needed and support available, advice provision, information about heat networks, and embedding quality assurance and consumer protection measures. A supply chain organisation suggested learning from Covid communication campaigns. Small numbers of respondents wished to see communities bedded into the heat decarbonisation concept in order to get buy-in.

21. A robust policy framework and strategic direction was recommended by some respondents. Support was suggested for, and delivery of actions to flow from, the Heat in Buildings Strategy (HiBS) and the Local Heat and Energy Efficiency Strategy (LHEES), with calls for the connection of inter-related policy targets and policy actions. More generally, collaborative working and coordination so as not to duplicate work was urged, due to perceptions of a cluttered landscape of public sector agencies and programmes working in similar areas. Specifics mentioned in this regard included between the Scottish Government and industry, working with supply chains, integration with other agendas such as health protection infrastructure planning, and with the UK government in areas which are reserved to UK policy.

22. Skills training (in terms of upskilling or reskilling) should be a focus according to similar numbers of respondents, in order have the size of workforce perceived to be needed in order to realise the necessary changes. Education pathways were suggested including Passivhaus certifications for constructors and for the civil service to have an appropriate technical qualification. A supply chain organisation noted the following:

"CITB's report Building Skills for Net Zero outlines that in order to meet Net Zero targets, an estimated 22,500 people in Scotland, through re-training and new roles, will need to be trained in energy efficiency by 2028. That represents an increase of around 9% of the current size of the workforce, based on current technologies and ways of working. This can be either through new recruitment from outside the sector or through retraining and productivity gains. There are specific, specialist roles where the shortages are most significant. For example, an additional 4,605 construction project managers will be required by 2028, as well as 1,507 construction trades supervisors, and 1,936 building envelope specialists. In addition to these roles, there is a need for training in the skills required to maintain traditional buildings. 95% of surveyed contractors in Scotland do not hold formal qualifications relating to work on traditional buildings. Only 2% of contractors surveyed in Scotland had undertaken energy efficiency retrofit work on traditional buildings."

23. Clarity of financial support was a focus for some respondents, both in terms of funding sources and for over a period of time. A small number of Heat & Energy Efficiency – Delivery Landscape respondents pointed out that an estimated £33 billion of investment would be needed to decarbonise all the heat in Scotland's buildings, as is set out in the Scottish Government's Heat in Buildings Strategy. Suggestions for financial support to install renewable energy measures for homeowners and consumers included: grant funding for poor or vulnerable householders, tax breaks, or low or no interest financing. Funding for fabric measures was also perceived as a necessity.

24. Similar numbers of respondents desired a Just Transition to net zero, with the aim of eliminating or alleviating fuel poverty.

25. Supporting supply chains was perceived as a priority for some, with suggestions for ensuring sufficient demand and a sufficient manufacturing base.

26. The need for planning guidance, policy and building regulations regarding heat decarbonisation to be made mandatory was advocated by some respondents; for instance, by mandating heat pumps or solar panel installation on all new builds and removing red tape perceived as undermining efforts to decarbonise.

27. A major role for Local Authorities was noted (a point made by several local authorities amongst others); this was seen as important for local support and for public understanding, but that they would need funding to fulfil their remits, noting that LHEES's have to be in place by the end of 2023.

28. Some respondents also envisaged a role for district heating and local heat networks.

29. In addition, a few respondents each recommended the following steps to help achieve heat decarbonisation in Scotland:

• Clarity regarding practical support (e.g. incentives).
• A balance between grassroots and top-down action (e.g. local help as well as national guidance).
• Addressing the poor maintenance levels of Scottish properties, with comments that a major new build or maintenance programme is needed as a prerequisite before energy efficiency and renewable energy measures can be undertaken.
• Enhancing contributions from various specified forms of renewable technology (e.g. solar / PV, hydrogen, wind farms, battery storage and smart meters), albeit that a smaller number of respondents desired a focus on scaling up existing programmes.

30. Small numbers of respondents desired the following:

• A focus on rural or older properties, where different solutions for heat decarbonisation may be required.
• Electrification to take place as far as possible (e.g. ensuring the necessary electrical energy infrastructure is in place together with adequate grid capacity).
• Addressing tax imbalances (e.g. between gas and electricity, with an energy organisation urging business rates exemptions to allow district heating, self-produced solar and battery storage to be classified as a utility (as with CHP)).
• More data; data needs were identified around existing heat sources, to underpin the Heat Networks Act, to create a Scottish Heat Map, and regarding retrofit, reporting arrangements and assessment of current building conditions.

31. Finally, some respondents reiterated aims to ensure buildings are transitioned to zero emissions heat systems (e.g. by means of heat pumps) and decarbonise the heat in Scotland's buildings; and similar numbers made positive comments about the need for an overseeing public energy agency to lead or coordinate the changes needed, with small numbers advocating that the body needs to have sufficient powers and / or be independent.

32. Question 2 of the Call for Evidence then asked,

Q2: 'How can the new dedicated Agency best support this change programme?'

33. A total of 49 respondents made comments at this question. A number of key themes again emerged which were largely similar to those espoused at question 1; a very small number of respondents noted extra evidence and research to back up their answer, which is included in Annex 2.

34. The most quoted theme (by nearly half of respondents to the question) was for the Agency to provide overarching support, collaboration and coordination of public agencies, programmes and funds established to help with net zero. Joining up public policy, finance, governance and avoiding duplication (e.g. by supporting the National Heat Decarbonisation Delivery (or Implementation) Programme, integrating the Consumer Duty, and avoiding clashes with planning and housing regulations) were seen as priorities. Similarly, some respondents wished the agency to act as a hub or core focal point for industry collaboration. Collaboration at national and international levels was also suggested.

35. Some respondents wanted the agency to support local authorities: firstly in delivering their LHEES's by helping facilitate processes or by funding provision, and secondly by providing other support to them in terms of funding, upskilling staff and regarding planning permissions.

36. Public communication and advice provision to raise awareness was also mentioned frequently, with multi-channel campaigns and a national communications strategy recommended. More hands-on support for communities and consumers was mentioned by similar numbers of respondents, for example by helping house owners with the application process for funding their changes, or by helping to find relevant traders. Provision of support at a local level was also recommended, for example by investing in local advice services or support for local partnership campaigns.

37. Some respondents advocated that the Agency provides support for small and medium sized enterprises, particularly specialist providers and those involved in the supply chain, by identifying clear pipelines of work and engaging with the Heat in Buildings Supply Chain Delivery Plan. Slightly smaller numbers of respondents thought the Agency should provide expertise, guidance, advice and support for stakeholders in general without being specific, or be instrumental in spreading good practices and ideas.

38. Help with various aspects of funding was a desire of some respondents; specific areas were suggested including finding innovative solutions to access investment, private sector investment maximisation, instigating capital funding programmes, liaising with funding agencies and investors, allocating grant funding or acting as a vehicle for 'off-balance sheet' lending.

39. Support with implementation was also advocated by some respondents (particularly energy organisations) to ensure energy infrastructure (e.g. grid capacity) is delivered at scale and at pace. A couple of energy and housing respondents wished the Agency to "accelerate the pipeline of investable large-scale heat decarbonisation and energy efficiency retrofit projects, particularly in social housing" (See Annex 2). A role coordinating existing or future delivery plans was also mooted by some; however, a consumer advocacy body was opposed to the agency providing direct delivery as this was regarded as already successfully local authority-led.

40. Similar numbers of respondents would like the Agency to provide oversight and leadership; various roles in this area were pinpointed including providing governance and / or oversight of the HiBS, for delivery of heat decarbonisation targets, for energy efficiency, retrofitting and fuel poverty programmes and for specified physical improvement programmes such as Warmer Homes Scotland or the Energy Company Obligation. A few respondents referred to the Agency playing a role in policy and strategy development without elaborating further.

41. Support for specified measures for heat decarbonisation were advocated; district heating, heat networks, heat pump manufacture, mine-water geothermal and molten salt nuclear reactors were vouched for in this respect.

42. Operating under Just Transition principles was regarded as important by some respondents, for instance by tackling properties in fuel poverty or by engaging 'hard to reach' parts of society.

43. The following other roles for the change programme were suggested for the Agency, each by small numbers of respondents:

• Regulatory control (e.g. over management of heat network systems, oversight of compliance / enforcement / monitoring / reviewing / reporting / standards).
• Research development and data provision.
• Consumer protection (e.g. regarding fuel costs, and housing maintenance and repairs).
• Training (e.g. for local authority decision-makers in renewable energy, to help fill training gaps generally, or acting as a central base for access to training materials).

44. Finally, there were a very small number of concerns about the Agency getting sufficient funding and resources to provide effective support, about a lack of detail in the consultation, and about Energy Performance Certificates (EPCs) being unfit for purpose.

45. The next question asked:

Q3: 'What are the opportunities and challenges for delivery presented by this agenda, and how might these best be overcome through the Agency?

46. A total of 49 respondents commented on the opportunities and challenges for delivery presented by the agenda; more comments were received about the challenges (albeit with many suggestions for overcoming these) than about the opportunities. A few respondents gave extra evidence and case studies to back up their answers; these are listed in Annex 2.

47. The most frequently mentioned opportunity was to create a one stop shop for advice and knowledge; various types were specified including information on finance, providing a forum for sharing best practices, working with local authorities on LHEES, planning for implementation, removing duplication of effort, programme management, and coordinating action over key objectives. Taking a whole system view was also discussed.

48. Other opportunities that were each pinpointed by a few respondents are listed below:

• Creating green jobs, for instance in the supply chain and material manufacturing.
• Helping to meet Net Zero targets / climate change mitigation.
• Just Transition benefits (e.g. reduction of fuel poverty).
• Other positive economic impacts (urban regeneration, Community Wealth Building Principles, etc.).
• Improvements to health and wellbeing.
• The following table lists the most mentioned challenges and possible solutions to overcome them as each described by significant numbers of respondents.

Challenges	Solutions
Roles of Local Authorities / Scottish Government / Agency: who has the power? Who is in charge of delivery? / perceived vagueness in proposals (E.g. for LHEES, should it be local authorities?, clear collaboration needed on hydrogen given use in other industries)	Clarity of direction / delineate responsibilities / support regarding local authorities / funding / cohesive approach
Public understanding (e.g. amongst owners / landlords) remains low regarding choices	Raising awareness – public awareness / info campaigns / targets / incentives / regulations / information provision on advantages
Getting public on board with agenda / behavioural change, improving uptake of energy solutions, etc.,	Emphasise problems caused by climate change; cheap clean energy solutions / other benefits
Small business / supply chain capacity	Support or advice about training / business development / shared expertise / produce Supply Chain Delivery Plan from Heat in Buildings Strategy
High costs of measures (e.g. leading to increased rents) / funding requirements	Alleviating costs / make the transition affordable (e.g. via onsite generation or fuel poverty programmes)

49. Smaller numbers of respondents listed many other challenges and possible solutions as summarised in the table below:

Challenges	Solutions
Scattered non-strategically focused activity	Involve other agencies early / learn from other countries / spread good practices
Installation (lack of skilled workforce)	Agency involvement in company / skills development / training / grant funding / accreditations
Retrofit of work done inappropriately / quality assurance	Compliance schemes (e.g. PAS 2035, Data compilation, evaluations, case studies – possible central hub for shared learning)
Challenging timescales / late stage of agency coming into being	Agency having sufficient powers, organisation & independence to deliver plans
Risks of new technologies (e.g. poor performance / performance gaps)	Data compilation, evaluations, case studies – central hub for shared learning. Advice on energy management and monitoring
Capacity of existing energy infrastructure	Buy in and support from distribution and transmission companies, DNOs
Challenges for householders / working with owner / occupiers	Support / advice (e.g. build on Home Energy Scotland)
Rising / affordability of fuel costs / energy prices	(None suggested)
Limited (supply chain of) materials	Local / regional manufacturing of low carbon materials, supply chain development
Lack of collaboration across government and other regional agencies	Involve all: e.g. Public Health Scotland, NHS Trusts, SEPA, Universities/schools, planning authorities, industry players
Traditional / historic buildings / non-urban / listed properties	Recognition of need to take different approaches & solutions to retrofitting
Adaptation to climate change impacts	Identify solutions / build resilience
EPC	Improve methodology (e.g. for some building types such as timber framed)
Energy policy aspects reserved to UK government	Robust system of interactions between agency and e.g. OFGEM, National Grid

50. Question 4 then went onto ask:

Q4: 'Based on the proposed purpose, remit and objectives of the dedicated Agency, do you have any evidence, or insights based on experience, that demonstrate the need and potential added value of a new public body of this nature in the heat decarbonisation delivery landscape?

51. A total of 32 respondents answered this question; some general comments were received – delineated below - but most gave detailed evidence or insights; these can be found in Annex 2.

52. A few respondents chose to reiterate views that a main purpose of the Agency should be to provide a hub for support, guidance and expertise for consumers and industry. Small numbers of respondents urged the agency to have the following functions:

• Standardisation at central government level (e.g. being in charge of an overarching implementation plan, to avoid local authorities having to develop their own methods for delivery or to provide a national context for LHEES)
• Having oversight to generate maximum impact (e.g. for delivery of the Heat in Buildings Strategy, of national monitoring and regulation, or of a role for overseeing local authority responsibility for encouraging compliance).
• Communication provision.
• Providing support at a local level.
• Acting as a data hub.
• Commissioning delivery of activities.

53. A very small number of respondents thought it was too early to assess the need for or functions of the agency beyond interim arrangements; and a local authority suggested there was no requirement for the agency and that it was better if projects were to be carried out locally, led by local authorities.

54. The final question in this part of the Call for Evidence then asked:

Q5: 'Are you aware of any case studies – UK or international – or research that can help inform design of a new public sector delivery body to ensure it is able to deliver effective outcomes, and to be consumer focused across its operations? What do you think are some of the key factors that need to be built into the strategic framework - and corporate design – of the new body to best enable this?

55. 35 respondents answered this question; nearly half of these detailed a variety of relevant case studies or research and these are included in Annex 2. As a general theme respondents thought it was very important to investigate previous work and experience – particularly internationally – to help inform the design of the new agency, particularly in countries where strategies are at a more advanced stage of development.

56. Amongst various strategies, respondents repeatedly picked out those of the Danish Energy Agency in particular as being worthy of investigation. Other agencies were mentioned in very small numbers including the Sustainable Energy Authority of Ireland, The French Agency for Ecological Transition, the European Federation of Agencies and Regions for Energy and Environment and the Swedish Energy Agency.

57. Denmark, Norway, Australia, New Zealand and the USA were countries mentioned by very small numbers of respondents in the context of case studies.

58. A small number of respondents, including two enterprise agencies, noted that enterprise agencies have experience in establishing or operating semi-independent delivery bodies and that their role should be taken into account.

59. Amongst key factors perceived as needing to be built into the strategic framework and design of the new body, the dominant theme amongst respondents was a reiteration that consumer engagement and empowerment should be important. Specific areas cited included prioritising input from those with lived experience of energy inefficient buildings or fuel poverty, and providing support and financing (e.g. Home Energy Scotland loans).

60. Small numbers of respondents identified the following other key factors perceived as needing to be built into the new agency:

• Supply chain development work, with a focus on skills, training and expertise; it was however noted that the Energy Saving Trust and Scottish Enterprise are progressing work in the area.
• The technical expertise and scientific knowledge of agency staff.
• The priorities and scope of the new body.
• Resourcing and financing of the new body.
• Openness, accountability and honesty.
• How to treat different types of building (e.g. in rural vs. urban areas)
• Understanding of the wider environment, including fuel poverty, fuel price rises and building regulations.
• The interface with energy networks and the retail/supply side for energy.

Delivery Functions

61. The Call for Evidence noted that, at a minimum, the new dedicated Agency will have a key set of responsibilities that have informed development of the remit as set out in the paper. At an operational level, the responsibilities or functions may translate into practical actions that include the introduction of an overarching Heat Decarbonisation Implementation Plan for Scotland, providing the Agency a mechanism through which to guide and steer various interventions and support programmes in collaboration with partners and in line with shared goals. It will be important for there to be an appropriate balance between what the Agency will take on direct control and deliver responsibility for, versus what the Agency will steer strategically while working with others to implement on the ground. This will involve collaboration and co-production with stakeholders and existing delivery partners.

62. Some additional potential functions could also include:

• Operate a national level data hub.
• Co-ordinate supply chain development and expansion.
• Oversight of quality assurance standards.
• (subject to further investigation and consideration) Taking on some regulatory functions such as monitoring and compliance of the proposed energy efficiency and zero emissions heat regulations as set out in the Heat in Buildings Strategy.

63. The next question asked:

Q6: What tools and support will the dedicated Agency need in order to effectively establish leadership and coordination of heat decarbonisation in Scotland?'

64. A total of 34 respondents commented in response to this question, and a number of key themes emerged. The key theme was based on the need to engage and work with stakeholders and to consider how to bring this about. For example, an organisation in the consumer advocacy and advice sector noted a need to have an understanding and connections with organisations involved in the provision of energy in order to coordinate heat decarbonisation.

65. A wide range of different stakeholders were noted, including local authorities, industry, distribution network operators (DNOs), consumer advocates and the public sector. This partnership working was seen to be important for a number of reasons, which included:

• The provision of strategic direction at a local level.
• The scope to access funding and unlock funding schemes.
• To provide a coordinating role to engage with areas of building stock over which local authorities have little, or no, control.
• To provide a programme management approach to coordinate the different work-streams and activities which are envisaged for the Agency.
• To engage with stakeholders so as to understand the challenges faced.
• To help local authorities to deliver the key aims and objectives around LHEES.

66. A very small number of respondents noted provisos to this approach, including that the Agency will need the full support of partners across government, industry and the wider supply chain to effectively establish leadership and the delivery of heat decarbonisation; as well as building staff across the sector and utilising sector-specific stakeholders who can provide the necessary expertise.

67. Another key theme, cited by nearly half of respondents was in relation to resources that are needed. These fell broadly into two categories – people and funding.

68. In relation to staffing, it was noted that there is a need to develop technical capacity and ensure there are the necessary numbers of experts who understand the different approaches that can be adopted, and who have the relevant knowledge and expertise. There will be a need to develop and share best practice as well as supporting the delivery of policy and programmes. It was also suggested that as well as having the necessary expertise, staff will need to understand any constraints that can impact on the functioning of other organisations. An organisation in the 'other' sector noted a concern that there may be insufficiently skilled and expert staff available to lead on, and deliver, the work of the Agency and noted that many companies across sectors are currently facing recruitment issues.

69. Comments on funding noted the need for this to be long term in nature. As one respondent in the Heat & Energy Efficiency – Delivery Landscape noted, "needs to be secure and predictable and delivered in a way which allows for independence in decision making." There were also a very small number of comments on the need to streamline existing funding and routes to that funding.

70. The issue of leadership was cited by some respondents, both externally to the Agency as well as within the Agency. A few respondents referred to the need for commitment from senior politicians to influence sensible institutional governance and offer access to senior Scottish Government officials, ministers and local authorities; as well as having sufficient powers to deliver on the plan and a clear remit and access to policy levers. In reference to governance, there were a small number of calls for the Agency to be set up as a statutory authority. This was perceived to be more effective in overseeing strategy and regulatory interventions and for the Agency to achieve maximum impact in terms of oversight within the sector. One organisation noted the need for the Agency to have sufficient autonomy so as to allow for independence in decision making. A very small number of respondents also noted the need for independence and flexibility in decision making.

71. There were also a few comments on the need for good and effective leadership within the Agency, with a clear delineation of roles and responsibilities, as well as being knowledgeable to ensure the Agency is perceived to be a credible organisation.

72. Sitting alongside the issue of governance, a few respondents noted the need for a credible scheme for monitoring and evaluating the Agency, with suggestions for clear reporting requirements that would allow for Scottish Government and public oversight, as well as for planning, the setting of targets and quality assurance.

73. The need for effective and clear communication channels was highlighted by a small number of respondents, in order to help build trust and credibility for the Agency.

74. The need for, and collection of, data was highlighted by a small number of respondents as being of importance, with a need to identify what data is currently available and to create a map and plan to ensure there is robust data to enable the Agency to develop its plans. There was reference to the need for a regularly updated Heat Map illustrating the conditions to allow developers to consider what opportunities exist. One organisation noted the need for the Agency to be "evidence-led if it is to develop credibility".

75. Allied to this latter point, a small number of respondents noted the need for IT support. There was a suggestion for the provision of a dedicated hub for advice; procurement support; knowledge on and access to funding and grants; guidance and legal advice; and reference to interactive maps showing the characteristics of Scottish neighbourhoods and the potential for different heat decarbonisation approaches they could offer.

76. Other issues raised by very small numbers of respondents included the need for the Agency to have:

• A capacity to lever private sector participation into energy efficiency and heat decarbonisation.
• An ability to influence energy goods and services providers, including utilities and other service companies.
• An ability to facilitate the role of energy regulators in scaling up energy efficiency and heat decarbonisation.

77. Question 7 then went on to ask,

Q7: 'Do you have any evidence, or further insights regarding the potential added value that the functions set out can deliver within the heat decarbonisation landscape? This may include both examples of where these types of functions have, or have not been conferred on a national body as part of leading a programme of delivery and change, and the resulting implications (positive or negative)'

78. A total of 14 respondents, across most sub-groups, commented in response to this question, although two organisations in the 'other' sub-group noted that this was a difficult question to answer given that the functions and nature of the Agency still need to be defined and detailed. Another organisation in the community development sub-group noted the need for a plan to demonstrate what functions would be carried out at local and national levels. One organisation in the Heat & Energy Efficiency – Delivery Landscape commented that most of the envisaged functions of the Agency seem to be capable of addressing most issues to achieve transformational change in heat decarbonisation but noted the need to ensure the Agency would deliver additional value beyond the envisaged functions and what they will address.

79. To an extent, points raised at this question echoed those seen at earlier questions, and included the need for:

• Provision of support to supply chains.
• Support for upskilling and ensuring a workforce that has the necessary skills and expertise, although one respondent cautioned that the Agency should not deplete scarce skills and local resources.
• Clear communication to consumers regarding the costs of district heating networks.
• A strategic funding mechanism across all key thematic priority areas for a net zero transition.
• To ensure consistency and minimise risk of duplication across the sector; and sharing of good practice.
• A single data hub offering access to data, which would help to develop and share good practice and demonstrate continuous improvement.
• A streamlined procurement process.
• Planning and distribution of district heating systems.
• A clear duty and set of principles to enshrine a balanced social, economic and environmental approach so as to help reduce inequalities and fuel poverty.

80. Only a small number of respondents provided any examples to illustrate the potential added value that the functions set out can deliver within the heat decarbonisation landscape. These included China, the Danish Energy Agency, the Sustainable Energy Authority of Ireland, ADEME (the French Agency for Ecological Transition), FEDARENE (the Federation of Agencies and Regions for Energy and Environment). References were also made to an Existing Homes Alliance report and the evaluations of LHEES phases 1, 2 and 3 pilots. More detail on these can be accessed in Annex 2.

81. Question 8 then asked,

Q8: Do you have any evidence, or case studies that demonstrate the effectiveness or not of new regulatory standards being enforced at a national versus local level? This may include international comparisons.'

82. A total of 22 respondents, across most sub-groups, opted to answer this question. Some provided general comments, while others provided some examples of evidence or case studies that demonstrated the effectiveness or not of new regulatory standards being enforced at a national versus local level.

83. A few respondents noted their support for new regulatory standards being enforced at a national level, with reference to the need for consistency. For example, a respondent in the housing sector noted that a national approach would reduce the possibility of inconsistency across local authorities in terms of the enforcement and interpretation of regulations; and an energy organisation felt that regulatory standards would be best set at a national level for consistency. A trade union commented on a need for a consistent approach to national regulation around Fair Work and sectoral collective bargaining on terms and conditions.

84. A housing organisation noted their support for a national energy agency playing a role in regulatory compliance, although they felt this would need to be distinct from its wider role of promoting zero carbon heat and energy efficiency measures. A local authority noted the need for national regulatory standards to drive change in the private sector, supply chain and in the development of developing a skilled workforce. Another local authority noted that there will need to be more by way of financial resources and support to allow local authorities to take on new regulatory functions.

85. Support for new regulatory standards being enforced at a local level came from a very small number of respondents, with one respondent in the Heat & Energy Efficiency – Delivery Landscape sub-group noting this would be consistent with current regulatory arrangements for the consenting of new developments or works to existing buildings requiring building warrants. Another respondent in the consumer advocacy and advice sub-group commented that regulations and standards would have more of an affinity with local authorities than a national energy agency, although they noted that the agency would need to provide adequate staffing, funding and support.

86. A small number of respondents noted the need for an approach combining national regulations but with delivery and provision at a local level. For example, having national standards that are enforced at a local level where there is an understanding of local issues. Once again, the need for adequate resourcing at a local level was highlighted, for example, to ensure that local monitoring and enforcement arrangements were effective.

87. Other general comments made by respondents included:

• The need to consider overlap between the regulatory role proposed for the Agency, the introduction of a new housing standard for all tenures and proposals for changes to housing regulation, including a regulator for private rented housing.
• Delivery and enforcement will need to have clear separation and management in order to be robust and accountable.
• The Agency should be directly accountable to the Scottish Government but independent of the sector it is regulating.
• There will need to be a universal drive to change consumer attitudes and behaviour and to support them in implementing the necessary changes to meet net zero targets and heat decarbonisation.
• There is a need to consider whether an agency model works where Scottish Ministers hold final responsibility with the actual enforcement devolved to the local authority and to reskilled and properly equipped building control officers.
• Regulatory responsibility should be informed by the need for regulation, the intended outcomes, strategic responsibility and regime design.

88. A number of specific case studies or evidence demonstrating the effectiveness (or not) of new regulatory standards being enforced at a national versus local level were provided. These included reference to nuclear power station approval in Canada, the Danish Heat Supply Act and a joint project between Vattenfall and Midlothian Council. More detail is provided in Annex 2.

89. Two respondents referred to the EHA report due to be published in Spring 2022 as useful reading; and an individual recommended accessing SEAI | Fiscal Interventions to Change Energy Behaviour.

90. The final question in this section then asked:

Q9: Are you aware of any existing, or previous, public bodies that exercise both an advisory and regulatory role within the same organisation – and how this dual remit has been translated at an operational level to avoid any risks relating to conflicts of interest, governance and lines of accountability? This may include examples from the international landscape, and / or UK context.'

91. A total of 21 respondents opted to respond to this question. A small number made general comments about the role of the Agency. A respondent in the Heat & Energy Efficiency – Delivery Landscape sub-group commented that there is potential for conflicts of interest to arise where organisations have both regulatory and advisory remits. With this in mind, a respondent in the supply chain sub-group noted the need to consider accountability and transparency if there are overlapping regulatory and advisory roles. A respondent in the consumer advocacy and advice sub-group noted that while the proposed Agency should play an important role in supporting the enforcement of regulations, it should not be responsible for enforcing them.

92. Conversely, a respondent within the supply chain sub-group felt that the Agency should be more than an advisory body; and a respondent in the 'other' sub-group commented that there can be a regulatory role for strategic planning and implementation of the Heat Supply Act and an advisory role for skills development and development of the workforce.

93. A number of examples were provided of existing or previous public bodies that exercise both an advisory and a regulatory role within the same organisation. These are provided in Annex 2. The most frequently mentioned organisations included SEPA, NatureScot and the Scottish water industry, all of which have advisory and regulatory functions and balance statutory powers for regulatory compliance alongside a consumer advocacy role.

94. There were also single mentions for the CAA, the Oil and Gas Authority, Scottish Fire & Rescue Service, Ofgem, Ofcom, the FCA, Scottish Information Commissioner, Historic Environment Scotland, the Hungarian Energy & Public Utility Authority, various local authority services and Zero Waste Scotland.

Institutional Form and Governance

95. The Call for Evidence noted that a key consideration in designing the future dedicated Agency is the level of independence from Scottish Government – and lines of accountability, or governance – it should, or will need to have in order to carry out its responsibilities effectively within the broader landscape. The Scottish Government is considering establishing the Agency on a statutory basis to ensure it is invested with the necessary authority to fulfil its remit. The Scottish Government believes the proposed Heat in Buildings Bill would provide a suitable legislative vehicle to achieve this, and aligns with the timescale for the dedicated Agency becoming a physical body by September 2025. No decision had yet been made regarding the statutory versus non-statutory route, and views were welcomed through the consultation.

96. The next question asked:

Q10: 'Are you aware of any case studies, or recent research that considers the opportunities and challenges of establishing a public sector body that is tasked with programme delivery functions on a statutory footing?'

97. A total of 18 respondents, across most sub-groups, opted to answer this question. A few made general comments, while the majority provided examples of case studies or research – See Annex 2 for details.

98. A small number of respondents reiterated that the Agency should be independent and have a statutory footing, while a trade union noted that publicly owned bodies in other countries (e.g. France, Scandinavia) play a key role in energy generation.

99. The next question asked:

Q11: 'In terms of potentially establishing the dedicated Agency on a statutory footing as part of future proofing it to be able to take on any new functions or responsibilities as heat decarbonisation delivery progresses over the coming decades, are there any other considerations related to this that you think we need to be aware of any why? This may include, for example: upcoming evidence and research, other strategic policy development and targets, wider industry and sector led developments in the heat and energy efficiency landscape or related delivery areas.

100. A total of 26 respondents made comments about future proofing the agency to take on any potentially new responsibilities. More generally expressed considerations are given below but many respondents gave examples of policy development and targets, and especially wider industry and sector-led developments; these are detailed in Annex 2.

101. The largest numbers of respondents made suggestions as to how the Agency could act and these included the following:

• As a national standards agency around emerging low carbon heating solutions.
• Coordinating with agencies across the UK due to industry supply chains being UK-wide.
• Coordinating public investment / delivery in financing decarbonisation.
• Acting as a single point for monitoring, reporting and communicating regarding consumer advice and protection (though it was noted the latter responsibility is reserved to the UK government).
• Coordinating key priorities and outcomes arising from energy policy (e.g. tariff data for regulated heat networks, PV or heat pump cost changes with deployment rate, including a technical steering group for guidance and clarity on technology solutions for zero carbon homes).

102. A few respondents wished consideration to be given as to how the proposed regulatory function of the Agency would work alongside other organisations, some of which also have regulatory functions. Risks concerning possible conflicting outcomes between bodies and duplication of their work were raised. Other organisations and sectors mentioned by respondents in this context included:

• The Scottish Housing Regulator and the proposed regulator for the Private Rented Sector.
• The Scottish Government's Building Standards Division.
• Home Energy Scotland.
• Energy Action Scotland.
• The new Consumer Scotland body.
• Citizens Advice Scotland.
• Trading Standards Scotland.
• Environmental Standards Scotland.
• The Future System Operator.
• OFGEM.
• The Home improvement sector.

103. Very small numbers of respondents noted that future proofing needs to be done through appropriate drafting of the governing legislation or through another founding document or constitution, with primary legislation able to enshrine flexibility, either in the statutory description of the Agency's functions, or by providing Scottish Ministers with powers to alter or expand its remit in the future (which would typically require secondary legislation). Other more general remarks were made about the Agency itself needing to be effectively monitored, and queries as to the role of boards and oversight control.

Strategic Partnerships and Wider Stakeholder Relations

104. The Call for Evidence noted that the Agency will need to garner respect and recognition of its position and authority among stakeholders if it is to be able to perform its strategic leadership and coordination roles effectively. A wide range of stakeholders will need to understand what role the Agency will play to support them in responding to the heat decarbonisation transition. The Scottish Government is keen that the Agency creates a strong sense of co-ownership of the agenda and collaboration in its implementation. The Agency will need to have a full understanding of the capacity and capabilities of the delivery landscape, so as to target support and draw on a wider pool of existing expertise, resources, connections and experience. Question 12 asked:

Q12: 'Who will the Agency need to work closely with in order to best facilitate delivery of the transformational change required, and how do you think this should work in practice?

105. A total of 42 respondents, across all sub-groups, made comments at this question; and a wide range of organisation types were mentioned by respondents.

106. There were a few general comments on the need for collaboration and coordination across sectors, working in partnership and the need for a wide range of stakeholders to facilitate the delivery of the required transformational change. There were a very small number of suggestions of the need for work with existing structures and / or delivery partners given that the delivery of decarbonisation is underway in many areas.

107. Over half the respondents referred to local authorities specifically as an organisation type the Agency will need to work closely with in order to best facilitate the delivery of transformational change required. Some respondents noted the key role of local authorities as housing providers who will be involved in the installation of new systems, the development and implementation of LHEES as well as noting the potential for local authority energy services companies to carry out large scale retrofit, which would help to achieve economies of scale.

108. There were some references to working with various directorates across the Scottish Government to inform and advise on policy development and report on outcomes. At a wider level, there were also some references to working with the UK Government so as to make the most of synergies with UK policy, programmes and funding arrangements, and avoid potential conflicts or confusion; and other devolved governments so as to standardise approaches such as Each Home Counts PAS and TrustMark frameworks. There was some reference to regulators such as Ofgem, or the CCC and enterprise agencies. Some respondents also cited the involvement of public bodies and the public sector, referring to organisations such as Zero Waste Scotland, Scottish Futures Trust, Historic Scotland, the NHS and partner organisations such as the Energy Saving Trust, Home Energy Scotland or Changeworks who manage delivery programmes on behalf of the Scottish Government. There were also a small number of references to the Scottish National Investment Bank ('the Bank') who could direct the choice of projects to be funded.

109. The industry itself was seen to be important, with references to network operators, energy companies, the supply chain and developers as well as any other organisations with an interest in energy supply. The involvement of these organisations was perceived to be a way by which energy network capacity can be ensured and does not limit the supply of new homes or prevent the retrofit of existing buildings. There were some references to trade associations and trade bodies.

110. Over half the respondents referred to housing associations, social housing landlords and private landlords. Alongside this, there were a few references to community groups or residents associations and the wider general public and consumers.

111. There were some references to the third sector and consumer advocacy groups such as Consumer Scotland, or Citizen Advice Scotland who are in a position to help households to deliver the required changes for 2045.

112. Smaller numbers of respondents also cited:

• Financial institutions.
• Academic institutions, colleges / training providers, for example, in relation to development of skills and expertise within the supply chain.
• Trade unions.
• Data providers as data will be needed to inform decision making.

113. A few respondents outlined ways in which the Agency could collaborate or work with partners. These included:

• Playing a supporting role in delivery of sustainability initiatives envisaged by the draft National Planning Framework (NPF4) and other key initiatives that local authorities are responsible for
• Playing a supporting role in the delivery, coordination and facilitation of delivery through local agencies and public bodies.
• Adopting an open and transparent approach to stakeholder engagement as well as being open and transparent with its policy priorities.
• Supporting stakeholders in developing long term delivery approaches for the development of heat networks across new build and retrofit domestic and non-domestic pipelines.
• Providing a mechanism to integrate heat decarbonisation planning and policy with Distribution Network Operators (DNO) short-term energy planning to identify opportunities and barriers.
• Development of a communications strategy for stakeholders.
• Helping with the development of national and local areas of activities, with national activities based on general guidance, promotion and liaison across organisations; and a local focus on assistance and delivery to local authorities, RSLs (Registered Social Landlords), small scale businesses, landlords and the public.

114. A very small number of respondents noted the need to build in sufficient flexibility to enable the Agency to grow its scope over time.

115. Question 13 then asked:

Q13: 'Are you aware of any case studies that demonstrate (in)effective partnership working by a public body to coordinate a broader delivery landscape to achieve a shared goal? What lessons can be taken from these examples?

116. A total of 22 respondents opted to provide general comments or cited case studies that demonstrated (in)effective partnership working by a public body to coordinate a broader delivery landscape to achieve a shared goal.

117. A small number of respondents offered general comments rather than providing examples. These included the view that a well constituted public body can successfully coordinate a broader delivery landscape to achieve a shared goal (supply chain respondent); and a local authority noted that councils play a central role in coordinating and leading local partnerships and are best able to do this when fully empowered to collaborate and take decisions at a local level. Another organisation noted that for the long-term success of the National Public Energy Agency, it will need to have a clear remit, minimal administrative burdens and costs, and an efficient delivery mechanism to fulfil its goals.

118. A number of examples that demonstrate effective partnership working were noted by some respondents, albeit each example was only mentioned by a single respondent. These included local authority work with Home Energy Scotland, Citizens Advice Scotland (CAS) and other local services and partners, area-based schemes such as LHEES and Scottish Government investment in collaboration such as the Scottish Cities Alliance. A full listing of the examples provided can be found in Annex 2.

119. Fewer ineffective examples were provided by respondents; these included the management of the Capacity Market, the Green Homes Grant Voucher Scheme (GHGVS) and the current rollout of interlinked smoke and heat alarms across Scotland.

120. Question 14 went onto ask:

Q14: 'What role do you see your organisation playing in relation to the Agency once established?

121. Over half (38) of the respondents made comments in response to this question, with most of these identifying some form of collaborative role.

122. A key area identified by over half of these respondents was that of sharing expertise, technical advice or the provision of guidance, for example in sharing network knowledge and experience to help develop plans for heat decarbonisation. Other areas referred to included support for training, helping to standardise approaches to ensure consistency in technical and financial network assessments to ensure there is consistency across professional services and contractors or to develop and establish common procurement processes.

123. The need for data has been highlighted previously by respondents and a few noted they could help in providing data and research to inform policy development.

124. A few respondents referred to a capacity to challenge the Scottish Government and hold Ministers to account as well as monitoring the effectiveness of the virtual Agency to ascertain its success at driving and achieving transformational change.

125. A small number of organisations referred to benefits they could help bring such as offering insights into the problems faced by energy consumers, helping to increase awareness and consensus or providing practical solutions for specific issues such as the challenge of retrofit across Scotland.

126. A small number of trade bodies or associations noted they would be able to help disseminate information to their members, to engage the industry, to support the businesses they represent or to represent their sector in the broader arena, for example, to ensure detailed delivery plans are developed.

127. A very small number of respondents noted the need to ensure there is representation of the views of rural and remote areas; and two trade unions noted they could help with supporting workers' rights, with reference to Fair Work Treatment.

128. A few respondents commented on the Agency, for example, in referring to specific roles that could be undertaken by the Agency. These included:

• A remit for innovation and innovative approaches in working with partners.
• A function to collect and analyse evidence.
• A role in developing resource capacity within the low carbon heat sector.
• To be a leadership and oversight body which commissions organisations to deliver a wide range of programmes for heat decarbonisation and improve energy efficiency.

129. Question 15 then went onto ask:

Q15: 'What role do you see for your organisation during the development process of the Agency, and do you have any examples of the type of collaborative approach to design of a new public body or delivery programme that you would like to see implemented? What lessons can be taken from these?

130. A total of 28 respondents opted to provide comments in response to this question, many of which echoed responses given at the previous question. Once again, some respondents offered their expertise and experience, with some noting that this would help Scotland develop exemplar energy efficiency and heat decarbonisation that would deliver on the Agency remit. A very small number noted that their organisation already contributes to task forces or short life working groups.

131. A few respondents noted their keenness to be involved to help inform future delivery programmes and the overarching Heat in Buildings Decarbonisation Delivery Plan for Scotland; and one local authority noted that further consultation will be required. A small number also commented that they would represent their sector or workers' rights.

132. As at the previous question, a few respondents also noted their capacity to share information, data and research.

133. An organisation in the Heat & Energy Efficiency – Delivery Landscape noted there is a need to ensure that roles, responsibilities and tasks are allocated to the organisations with the most appropriate skills, experience and expertise; or that where additional skills are needed, these can be developed in the most appropriate organisations. An organisation in the energy sector commented that the Agency needs to ascertain where existing expertise is, identify opportunities for collaboration and ensure there is no duplication of effort in the sector.

134. Only a very small number of respondents outlined any positive or negative lessons learnt that could be of use. The Queensferry Crossing Project was seen to be a positive example where the Transport Scotland team for design and construction had high levels of relevant expertise. Conversely, the Northern Ireland Renewable Heat Initiative was seen to offer an example of how not to approach a project. This respondent felt the proposals were not tested against requirements and other proposals, and with no focus on identifying and avoiding, or of mitigating against, any negative unintended consequences.

135. Finally, in this section of the Call for Evidence, question 16 asked:

Q16: 'What types of approaches to civic participation do you think could work most effectively in supporting development of the dedicated Agency, and why? How can these be best implemented to work alongside wider stakeholder engagement? Please provide any examples, or case studies you may have to support your response.

136. 22 respondents made comments at this question. A key focus for respondents was agreement on the need to engage with consumers, either directly or via consumer groups, local communities or consumer advocacy organisations. One local authority noted the need to utilise a range of different approaches in order to achieve civic participation. Another local authority commented on the need for clear national messaging to manage public expectations and offer support, particularly as there is still a need to persuade the public why heat decarbonisation and energy efficiency are of prime importance. It was also felt that there is a need to increase the public's understanding of available technologies.

137. A few respondents noted the importance of involving approaches via trusted agencies, and Finland's heat pump transition was offered as an example of how trusted, local sources of information can be perceived more favourably than centralised messaging. As noted by an organisation in the energy sector and another in the 'other' sector:

"There are already community organisations, community development trusts, community councils and charitable trusts that have been active in the energy efficiency and fuel poverty landscape for some time and are seen as trusted face to face intermediaries. Collaborating with such bodies would provide an effective approach to civic participation and are more likely to work effectively as they are trusted locally. Third sector bodies like Changeworks (see for example their work in West Linton) demonstrate they can act as trusted organisations for larger scale roll-out of energy upgrade work. In the absence of a public energy delivery body, ideally, we need a network of trusted third sector energy bodies across Scotland that can provide the support and information to consumers and businesses 'on the ground'".

138. Various suggestions were offered as to what approaches to civic participation would be most effective, with references to deliberative approaches such as that used in Scotland's Climate Assembly, or to using consultations, town hall events or civic consultation forums which have been used by a number of local authorities and community groups. Other suggestions included linking in with local authority community planning engagement strategies so as to engage directly with communities, involving local energy advice groups, using exemplars from consumers who have already adopted different heating options such as solar panels or engagement via those who will be installing new technologies.

139. One respondent in the Heat & Energy Efficiency – Delivery Landscape referenced recent work undertaken by Ipsos MORI – 'Public Engagement in Infrastructure' – which highlights good practice for designing public engagement for infrastructure along with outlining key principles on how to engage with the public. A local authority provided examples of three pilots they are undertaking to progress net zero communities in Scotland and noted that direct national support for delivery programmes would be of value to the transition at neighbourhood and council level and help drive behaviour change and citizen action.