Green Heat Finance Taskforce reports: Scottish Government response
The Scottish Government’s formal response to the independent Green Heat Finance Taskforce, which produced two reports examining innovative financing mechanisms to maximise investment in energy efficiency and clean heat.
2. Strategic Context
The Scottish Government is committed to tackling the twin challenges of fuel poverty and emissions reductions. Maximising the economic opportunities linked to this transition is also important. Installing clean heating systems and retrofitting energy efficiency measures, such as wall and loft insulation, are vital as emissions from buildings currently account for 15% of Scotland’s greenhouse gas emissions[1]. Improved energy efficiency can also reduce the amount of energy required to maintain comfortable temperatures, and is the main lever available to the Scottish Government to combat fuel poverty.
Reducing carbon emissions and ending fuel poverty are generational challenges requiring ongoing action over the next 20 years. This is recognised in our recently published draft Climate Change Plan (CCP) which recognises that the Scottish Government must find the right balance to both reach net zero by 2045 and reduce fuel poverty.
No single organisation or grouping can deliver the scale of transformation required on their own. Success in meeting these generational challenges will need innovative thinking, decisive action, and a strong sense of collective endeavour. As summarised in the Taskforce’s Part 2 report, it is only by everyone playing their part that we will build the momentum to realise the transformational change needed.
As an example of the interconnectedness of multiple factors, financing the clean heat transition will require regulatory and policy clarity from Scottish and UK governments, along with continued funding support. Action from the UK Government to rebalance gas and electricity prices will be key and can super-charge consumer demand. Rising demand will encourage lenders to develop and offer new funding products to individuals, as well as improve the business case and potential returns for collective retrofit projects. These in turn will make clean heat and energy efficiency a more attractive investment proposition for larger scale financers.
Local authorities, social landlords and other community groups will have a critical role in planning and delivering collective retrofit projects, with both individual and collective projects creating business growth and employment opportunities across Scotland. Coordinating and sequencing actions across these parties will be important and is something which this response to the Green Heat Finance Taskforce (GHFT) starts to address.
The draft CCP includes a commitment to produce a new Heat in Buildings Strategy and Delivery Plan by the end of next year. That Delivery Plan will be developed in partnership with industry, local authorities, community organisations, and consumers. It will further explore the practical next steps that can be taken to foster the financing solutions discussed by the GHFT.
It will also build on the current support landscape, including the more than £1.67 billion allocated to Heat in Buildings schemes during the current Parliamentary session, as well as the initial regulatory building blocks already put in place, including the 2024 New Build Heat Standard (NBHS) which ensures that new homes and buildings have climate-friendly heating systems.