Green Heat Finance Taskforce reports: Scottish Government response

4. Scottish Government Response to Taskforce Conclusions

The independent Green Heat Finance Taskforce was established in February 2022 following a commitment in Scotland’s Heat in Buildings Strategy. Recognising that the clean heat transition could not be funded by the Scottish Government alone, the Taskforce was given a remit to explore and identify innovative financing mechanisms to maximise investment, including finding new products and financing/delivery mechanisms to help people and organisations make their properties warmer, greener and more efficient.

The Taskforce’s objectives included:

• build on existing evidence to set out the alternative sources of funding and financing for heat decarbonisation;
• explore new and value-for-money innovative financing mechanisms;
• act as a catalyst for long-term relationships and partnering across organisations;
• support the alignment of heat decarbonisation with the needs and investment activity across the energy system, considering returns and wider benefits.

The Taskforce produced two reports. Its Part 1 report in November 2023 provided an overview of the existing green home finance market and barriers to its development, focusing on products, issues and solutions that could help with financing the installation of clean heat and energy efficiency measures at an individual property level. Its Part 2 report was published in April 2025 and focused on financing clean heat and energy efficiency measures across collective groups of properties through approaches covering place-based, social housing and heat network projects.

The Scottish Government welcomes and agrees with the overall conclusions reached by the Taskforce across its two reports. The Part 1 report highlighted that low consumer demand, rather than the potential availability of financing, as being the key barrier constraining development of the clean heat market. The Taskforce expressed confidence that the supply of finance would increase to match increases in consumer demand and emphasised the need for longer-term policy clarity to provide property owners, installers and lenders with confidence to invest in the clean heat transition.

As set out below, the Scottish Government has already taken action to deliver against and / or progress a number of the recommendations from the Part 1 report. This includes activity to raise awareness of the existing green home finance products amongst professional advisers who engage directly with consumers, as well as completing an initial assessment of how the market for a new financing product – Property Linked Finance – might be developed in Scotland.

Importantly, we have also recently published a draft CCP setting out how the Scottish Government will reduce emissions to reach net zero by 2045. The Plan confirms that the Scottish Government is setting a target to decarbonise heating systems by 2045, so far as reasonably practicable. This target is being established to provide longer-term clarity about heating requirements in Scotland, while giving property owners time to plan, adapt and adjust. Additionally, a draft Buildings (Heating and Energy Performance) and Heat Networks (Scotland) Bill has now been published. The Scottish Government intends to bring forward the legislation as early as possible in the next parliamentary session, subject to the outcome of the 2026 election and clarity on the UK Government position. Publication of the Bill provides clarity to households and investors on future plans for legislation. 

As highlighted by the Taskforce, finance is only one of many inter-connected factors that will drive the clean heat transition, albeit an important one. They also noted the need for longer-term policy clarity and stability across a range of areas that influence the clean heat transition. The Scottish Government agrees with this analysis and is taking strategic action to create the solid foundations necessary to enable buildings to fully contribute to the emissions reduction pathways set out in the draft CCP. This includes steps to bring into force the new Energy Performance (EPC) rating system from autumn 2026, to address long-standing criticisms that EPC ratings are not aligned with net zero. This will help to create the foundations for the scaling-up of clean heat installation rates in coming years.

The Taskforce’s Part 2 report highlighted that there is a shortage of an investment-ready project pipeline, and that there are limited financing models within clean heat that have tried and tested mechanisms to generate sustainable returns for third party lenders which are sufficient to attract the initial upfront investment. It also discussed the challenges of aggregating demand from individual projects into programmes of activity in order to create the scale required to attract larger investors. The report put forward the case for specialist support units to help local authorities and social landlords fully develop clean heat and energy efficiency projects, as well as to help with combining projects into a coherent programme and assist in attracting private investment that could be blended with public sector funding.

The importance of developing properly costed, shaped and prioritised project pipelines was also amongst the recommendations made by the Net Zero Investor Panel. The Scottish Government is taking action to support the attraction of investment to wider net zero projects, for example, through the launch of the InvestScotland portal in November this year in response to an Investor Panel recommendation. Clean heat projects fit within this broader net zero investment structure and will be able to tap into the networks it fosters, with opportunities around heat network investment for the most commercially developed and tested strand of our Heat in Buildings programme.

While heat networks currently supply only 1.5% of heat in Scotland, they are used extensively across Europe, and a range of analyses have estimated that up to approximately 20% of heat demand from buildings could be met by district and communal heating in time. However, it takes several years to design, build and then connect users to a heat network, meaning it is vital that we take early steps to prioritise heat network development as part of maximising the environmental and economic opportunities of the clean heat transition within Scotland.

That is why, as part of a sequenced programme of work to create an attractive environment for future heat network investment, the Scottish Government has signalled, in the recently published draft Buildings (Heating and Energy Performance) and Heat Networks (Scotland) Bill, its intention to potentially require large, non-domestic premises to move away from fossil fuel heating systems when they have the opportunity to connect to a heat network. We are also planning to introduce powers to create a new licensing system which could provide new rights and powers, such as access to the roads, which will reduce heat network construction and maintenance times and associated costs. These new provisions, as set out in the draft Bill, will ensure a proportionate regulatory system for heat networks in Scotland, and will work alongside the wider UK-regime of authorisations that will be introduced in January 2026.

The Scottish Government cannot, however, take forward everything at once, and in considering the recommendations from the Taskforce we have had to prioritise our initial phases of activity around work which is best led by the Scottish Government, which fits with sequencing required in wider policy development, and which is realistic within current budgetary circumstances. Some issues covered in Taskforce recommendations – such as creating new place-based delivery structures, including provision of a support unit and considering the scope to utilise taxation to incentivise clean heat installations – will take longer to develop and deliver. These will therefore be for the next Scottish administration, after the Scottish Parliament elections in 2026, to make decisions around.

The Scottish Government agrees with the Taskforce’s view that “no one organisation or stakeholder grouping can create a thriving market for clean heat and energy efficiency.” A partnership approach will be required across Scottish and UK governments, as well as with industry including lenders, local authorities, third sector organisations and the public. The Scottish Government is prioritising action in the areas it can have the greatest impact at this stage, and it will continue to engage with others constructively to create the conditions, and to build the momentum required to achieve our target of decarbonising heat by 2045, so far as reasonably practicable.

We look to others to engage constructively in this endeavour too, and will use this response as a basis for further exploring future financing challenges and opportunities as the clean heat transition scales-up. While collective effort across stakeholder groups will be required, it is worth highlighting again that some critical levers which can drive the transition are reserved to the UK Government. In particular, taking action to rebalance the relative prices of gas and electricity through reform of the electricity market would significantly reduce the running costs of clean heat systems and therefore could substantially boost consumer demand, helping address the key barrier highlighted in the Taskforce’s Part 1 report.

Decarbonising heat in Scotland is a 20-year journey and will require input and action from many organisations and individuals. This response sits alongside our draft CCP in helping to chart out that journey. A key step over the next year will be further engagement and exploration of how best to collectively foster and grow the clean heat market in Scotland, as well as to maximise the associated economic, jobs and health benefits right across the country. Publication of a finalised CCP before next year’s Scottish Parliament elections and then a new Heat in Buildings Strategy and Delivery Plan by the end of 2026 will be stages on this journey in which we can further reflect on progress and clearly set out the next steps in transforming the way we heat our homes and buildings, including the range of financing solutions which can support that.

Our response to each of the Taskforce’s recommendations is set out below.

4.1 Part 1 Report

Recommendation 1: Scottish Government, from early 2024, should work with the Green Finance Institute, Scottish Financial Enterprise and others to expand current market engagement with brokers, finance providers, distributors and quantity surveyors to generate greater public awareness of financing products like green mortgages and encourage their expansion.

Scottish Government response: Scottish Government funding enabled this recommendation to be delivered upon in 2024/25 through a number of activities taken forward by the Green Finance Institute. This cumulated in hosting the first Scottish Green Home Finance Summit in March 2025, which brought together leading financial institutions, intermediaries and trade bodies with the aim of sharing knowledge and experience around financing solutions and specific finance products to accelerate Scotland’s heat transition. Accredited Continuous Professional Development training for mortgage advisers on the green home financing products available in Scotland was launched at the Summit, while a number of focused roundtable discussions with different parts of the financing sector were held the next day to delve into key issues raised at the Summit in greater detail.

Additionally, research into consumer attitudes to different green home financing products was undertaken and presented at the Summit. Outputs of the research have now been published^[2] and will help inform both future policy and product development in this space.

While it will be for industry to lead and deliver the next stages of work in raising consumer awareness of existing products, the Scottish Government will continue to work in partnership with lenders and other interested parties to foster a thriving market in the provision of a range of financing solutions that can meet the needs of different households.

Recommendation 2: Scottish Government should begin work, from early 2024, in partnership with the Equity Release Council, to develop an information framework and guidance for Green Retrofit Equity Release products.

Scottish Government response: equity release, sometimes referred to as a Lifetime Mortgage, allows people over the age of 55 to borrow against some of the property wealth they have built up in their home, without having to move, sell their property or make monthly repayments.

All lenders offering equity release products in the UK are regulated by the Financial Conduct Authority (FCA). This ensures that people are able to receive suitable professional advice when considering taking out equity release products and that appropriate protections are in place for consumers.

While the FCA establish the regulatory framework that lenders operate within, the Equity Release Council (ERC) also plays an important role by promoting standards and fostering consistency in approach to advice provision on equity release. The Council develop guidance and enforce codes of conduct amongst its members around the provision of equity release products.

In August 2024, the ERC launched new guidance for its members – Retrofit Lifetime Mortgage Guidance^[3] – designed to support product development and act as a starting point for broader discussion within the industry in response to changing customer demand.

The Scottish Government supports and endorses this guidance, recognising that, as well as defining good practice, it ensures protection for customers and offers support for advisers by outlining what brokers and lenders may need to consider so as to ensure any new products deliver meaningful carbon emission reductions, while being appropriate for individual customers.

As with recommendation 1, it will be for industry to raise awareness of the features and benefits of equity release options amongst advisers and the public.

Recommendation 3: Scottish Government should research co-investment vehicles – blended finance with public and private input – with the support of the Scottish National Investment Bank, Scottish Financial Enterprise and Scottish Futures Trust, to identify by the end of 2024 where and how to test the approach in Scotland.

Scottish Government response: several existing Scottish Government capital funding schemes operate as a form of blended finance. For example, the Social Housing Net Zero Heat Fund provides capital support of up to 50% for energy efficiency and 60% for clean heat projects. Grant applicants must source the remainder of funding from other sources.

Expertise in developing and operating blended finance vehicles sits across a number of public and private sector organisations in Scotland. This includes the Scottish National Investment Bank, which works to catalyse investment in key markets in Scotland, and which has illustrated the role blended finance can play in market creation activity in both the housing and offshore wind sectors. Scottish Futures Trust has also proactively explored this area in detail, including in its March 2025 report on Financing and funding the decarbonisation of Scotland's social housing, a report which expands on some of the considerations discussed by the Taskforce in its Part 2 report around financing clean heat in the social housing sector.

Blended finance structures will play an important role in delivering the clean heat transition at scale and the Scottish Government will continue to work closely with relevant expert organisations as the funding and financing support landscape evolves in line with increases in demand for clean heat.

Development of new blended finance funds will be a complex undertaking involving detailed legal and commercial analysis of options around how best to structure any schemes. Developing and capitalising new blended finance models will therefore be a longer-term activity that will be for the next Scottish administration to make decisions on following the 2026 Scottish Parliament elections.

Recommendation 4: Scottish Government should collaborate with the Green Finance Institute to research the potential for Property Linked Financing in Scotland, with a view to establishing a scalable demonstrator by May 2025.

Scottish Government response: Property Linked Finance (PLF) is an innovative financing mechanism which is not currently available in Scotland, but which has been utilised in other countries, including USA and Australia, to help fund property upgrades. PLF enables lending to be tied to a property rather than an individual, allowing the costs of an upgrade to be spread over a longer timeframe and ensuring the owner benefiting from the improvements is the individual making the repayments. This can help overcome a barrier to action, where a property owner decides not to invest in a particular measure because they plan to sell the property before they would have recovered sufficient benefit to offset the initial upfront costs they have had to pay. It therefore offers potential as a helpful option as part of an overall suite of financing options that enables individual owners to access the solution which is right for them. PLF could apply to either commercial or residential property owners.

During 2024-25 the Scottish Government funded the Green Finance Institute (GFI) to undertake an assessment of potential routes to development and testing of the mechanism in Scotland. Alongside an assessment of technical and legal options for creating a market in PLF, GFI also commissioned consumer attitude research to gain an understanding of different consumers’ interest levels in utilising PLF, were it to be made available. Outputs of both the options assessment^[4] and consumer attitude studies have now been published and indicate that around 60% of surveyed consumers and businesses would be interested in using PLF, with the total potential market value in excess of £8 billion in Scotland.

The Scottish Government will use outputs from this initial work as the basis for follow-on engagement with a wider range of interested stakeholders across the finance, property, legal and retrofit sectors. This will initially focus on the potential to develop PLF lending for commercial properties. We will also engage with the UK Government to explore any opportunities to work together around PLF, recognising that different enabling mechanisms would be needed in Scotland compared to England on account of differences in Scots and English law.

Recommendation 5: Scottish Government should review and publish, by the end of 2024, the potential of incentivising domestic property owners to increase levels of retrofit works through fiscal and taxation policy.

Scottish Government response: the Scottish Government is already publicly committed to undertaking reviews of Land and Buildings Transaction Tax and the Council Tax regimes. A wider range of factors needs to be taken into account as part of these reviews, and how the Scottish Government might utilise fiscal levers to incentivise clean heat and energy efficiency installation cannot be considered until these reviews have concluded. It will therefore be for the next Scottish administration to make any decisions how fiscal and taxation policy might apply to incentivising clean heat.

Some taxation powers which might influence individual decisions around clean heat installations remain reserved to the UK Government. For example, reducing or removing VAT on installation of clean heat and energy efficiency measures could reduce the overall upfront costs faced by households, although this would come at cost in terms of the revenue collected by UK Government from VAT. This would also have implications for Scottish Government budgets as Scotland's Block Grant is reflective of the VAT raised. The treatment of VAT in clean heat installations is an issue we will engage further with the UK Government on.

Recommendation 6: Scottish Government should review and publish, by the end of 2024, analysis of how non-domestic rates reliefs can better support and encourage investment in energy efficiency and ZDEH.

Scottish Government response: the Scottish Government provides a generous and comprehensive non-domestic rates relief package for renewable energy producers, including policies aimed at incentivising investment in low carbon technologies, such as heat networks and renewable electricity generation. Renewables relief alone is forecast to save ratepayers £11 million in 2025-26.

The New Deal for Business, launched in 2023, established a mechanism for constructive joint working between the Scottish Government and business, and led to creation of a Sub-Group on Non-Domestic Rates (NDR) to advise on further enhancements to the NDR system. As part of its work the Sub-Group set up a Task Team which considered where and how the NDR system might be utilised to support Scotland’s just transition to Net Zero, including consideration of how NDR might support improvements to clean heat (zero-direct emissions heating) and energy efficiency improvements.

Members of the Task Team highlighted that many businesses already invest in energy efficiency and noted the often substantial planning and capital investment required to do so, particularly in certain properties such as listed buildings. There was support for a reduction in the regulatory burden in order to allow businesses to invest and grow. There was also support for polices to help businesses reduce their energy costs and invest in energy efficiency and renewable energy sources. This included reliefs for investment in energy efficiency, although no specific non-domestic rates measures or additional funding to support building improvements were proposed, for example, through Business Energy Scotland grants.

Decisions on non-domestic rates, including rates and reliefs, are considered as part of the annual Scottish Budget setting process and in line with other government priorities. This will continue to be the case going forward.

Recommendation 7: Scottish Government should seek to mitigate the split incentive issue by researching and piloting, by early 2025, the potential for green rental agreements, to encourage retrofitting in rented properties.

Scottish Government response: Green Rental Agreements (GRAs) were a financial product considered as part of the consumer attitudes research carried out in relation to recommendation 1 above, the outputs of which have now been published^[5]. This indicated strong interest in GRAs, with around two thirds of landlords and tenants expressing an appetite for their use.

However, the deployment of GRAs at scale would need to align with the legislative regime governing private tenancies in Scotland and take account of any changes resulting from the Housing (Scotland) Act 2025, which received Royal Assent last month. This would include in relation to the implementation of rent control for private rented tenancies. How GRAs could interact with Minimum Energy Efficiency Standards (MEES) within the Private Rented Sector would also need to be considered. As these foundations around tenancy law and energy efficiency requirements need to be in place first, the testing of any GRA measures at scale will be something for the next Scottish administration to consider.

The Scottish Government will continue to monitor developments in the market closely.

Recommendation 8: Scottish Government should immediately engage the UK Government and regulators to drive action on ZDEH and energy efficiency deployment, and support coordination of activities between parties.

Scottish Government response: we regularly engage with the UK Government on a range of policies and regulations that support the transition to clean heat. Recent discussions have taken place on the Warm Homes Plan and Warm Homes Discount, and we continue to call on the UK Government to take the necessary action to address energy costs to make clean heat more attractive and affordable.

Key levers that influence the pace of the clean heat transition relate to reserved powers and the Scottish Government urges the UK Government to act on these. Critical amongst these is the importance of rebalancing relative gas and electricity prices to make the financial case for installing clean heat more compelling. Action in this area can significantly boost demand for clean heat installations.

Financial regulation is also an important enabler of the clean heat market and operates at a UK-wide level. For example, requirements on capital ratios for lenders determine how much funding lenders must retain relative to their loan book and can have a significant impact on the level and nature of lending offered.

This importance of cross-government engagement is also picked-up under our response to Recommendation 4 of the Part 2 report.

Recommendation 9: Scottish Government should, by mid-2024, map current heat in building data gaps and establish a framework to promote open data sharing to address these.

Scottish Government response: in October 2025 the Scottish Government published our Heat in Buildings Annual progress report, the third annual progress report we have published to report on our Heat in Buildings Monitoring and Evaluation (M&E) Framework. The 2025 progress report sets out where we have taken action to address known data gaps. For example, with the Energy Saving Trust we developed new metrics on the number of non-domestic properties recently installing heat pumps. Data gaps remain particularly for heat networks, non-domestic properties, and jobs. However, we provide the best available data and will continue to evolve the Framework by incorporating further data in future reporting as it becomes available.

Our 2023 Heat in Buildings M&E Framework described data sources for tracking progress in delivering our Heat in Buildings Strategy, as well as data gaps which exist around areas like non-domestic properties. Annual Progress Reports (last published in October 2025) also outline progress with filling data gaps.

Each progress report is able to draw on improved data which utilises outputs of commissioned research related to particular parts of our Heat in Buildings programme. Much of this research is conducted through ClimateXChange (CXC) Scotland’s centre for expertise in climate change, which has been funded by the Scottish Government since 2011. All research carried out through the centre is published, with 11 clean heat related projects completed since 2024 and more underway.

The Annual progress reports compile the relevant data referenced by the Taskforce in its Part 1 report, and acknowledge the data gaps, with details on how we will approach improvements over time.

Furthermore, in response to regular requests for data around our Heat in Buildings schemes, we have published data related to scheme performance in financial year 2023-24, and will publish the same information for financial year 2024-25. Making this data available helps increase transparency around scheme performance and enables trends in processing times to be tracked.

4.2 Part 2 Report

Recommendation 1: Accelerate and coordinate the testing of a place-based demonstrator approach across Scotland:

a.) This innovation process and delivery plan should clearly articulate the design of a coordinated Place-Based Demonstrator Programme.

b.) Develop a fully operational Programme Development Unit that shall have the capability to deliver this Place-Based Programme by helping provide multi-disciplinary technical assistance and nurturing feasible funding streams for place-based projects.

c.) Integrate and leverage heat network and social housing projects.

Scottish Government response: our draft CCP set out our commitment to produce a new Heat in Buildings Strategy and Delivery Plan by the end of 2026, establishing a clear and credible pathway to decarbonising heat. This will include outlining the steps and timeframes associated with evolving our approach to place-based clean heat delivery.

As acknowledged in the Taskforce report, Scotland already has place-based clean heat and energy efficiency support through our Area Based Schemes (ABS) which are delivered through Local Authorities and have invested over £675 million to help over 125,000 households tackle fuel poverty since 2013. Building on this, Local Heat and Energy Efficiency Strategies (LHEES) will provide a solid foundation for further development of place-based clean heat delivery approaches. All 32 local authorities in Scotland have now published LHEES, providing evidence of what interventions are needed to decarbonise Scotland’s buildings and where these buildings are located.

The Scottish Government agrees with the overall principle outlined by the Taskforce in discussing how to foster a pipeline of place-based projects with associated funding and financing routes to delivery. However, we believe the complexity and practicalities involved means that the establishment of such a structure is only realistic in the medium-term. Considerable work is required to fully explore and assess potential approaches to establishing a project support unit, as well as to create place-based blended finance structures that combine both public and private financing provision across a multi-year cycle. This would all need to be developed in partnership with CoSLA and local authorities.

The interaction between any new place-based support structures and our existing delivery schemes would also need careful management to ensure they act to stimulate rather than constrain project development by creating certainty and avoiding confusion amongst local authorities and others coordinating place-based project delivery.

We therefore consider that progressing actions in relation to the heat network and social housing recommendations (discussed below) are essential precursors to the development of wider place-based mechanisms related to this recommendation. The Scottish Government will, though, continue to monitor developments with testing new place-based clean heat delivery models and work with CoSLA and other key stakeholders to explore how to most effectively evolve place-based delivery, building on existing place-based delivery initiatives, as part of our new HiBs Strategy and Delivery plan development.

Recommendation 2: Accelerate the development of heat networks:

a.) Establish a forum bringing together industry, cooperatives and the wider public sector, to address heat network policy gaps at pace.

b.) In collaboration across layers of government, alongside regulators and others, agree and articulate simplified heat network delivery pathways.

c.) Provide financial and advisory support certainty for heat networks to 2030 by committing to multi-year funding for project development and delivery.

Scottish Government response: heat networks can provide a significant contribution to the decarbonisation of heat in Scotland, in particular providing solutions for large non-domestic properties as well as for other buildings including blocks of flats.

The Scottish Government are taking forward plans to boost heat network development by proposing requiring large, non-domestic premises to move away from fossil fuel heating systems when they have the opportunity to connect to a heat network. These requirements will be introduced subject to the introduction of the Buildings (Heating and Energy Performance) and Heat Networks (Scotland) Bill in the next session of the Scottish Parliament, and its subsequent passage. The Bill will introduce powers to create a new voluntary licensing system for heat network operators across Scotland which, if an application is approved, will provide new rights and powers like access to the roads, which will reduce the time and cost associated with constructing and maintaining heat network projects. This voluntary licensing system is one of the steps we are taking to simplify the regulatory landscape for heat network developers in Scotland, recognising that the Heat Networks (Scotland) Act 2021 has been partly superseded by GB-wide regulation.

This forms part of a sequenced programme of work designed to foster the development of heat networks by providing operators with the confidence to invest as part of an overall supportive environment for clean heat technologies. In the shorter-term the Scottish Government will also continue to examine different delivery pathways to identify an evidence-led way forward on the most promising routes to delivering heat networks in Scotland. This work will inform our next Heat Network Delivery Plan review, which will be published before the end of the current Scottish Parliamentary session.

Additionally, and recognising the importance of providing clarity on longer-term support for heat networks, the Scottish Government recently announced that the Scottish Heat Network Fund will remain open to new applications until March 2030. Alongside this, Scotland’s Heat Network Support Unit continues to provide grant funding and expert advice throughout the pre-capital stages of project development.

Recommendation 3: Accelerate blended finance solutions utilising public and private financing for social housing retrofit:

a.) Set out plans for establishing a Social Housing Project Support Unit.

b.) Conclude and publish work with the Scottish Federation of Housing Associations (SFHA) and others, providing a robust evidence base supporting business case development for retrofitting social housing across Scotland.

Scottish Government response: as a first step, and working closely with SFHA, the Scottish Government is undertaking research through CXC to help social landlords develop the evidence base to support future business cases for clean heat and energy efficiency installation projects. This research will have a focus on helping strengthen consistency in approaches to monitoring and evaluation of projects, including practical data collection guidance. It will contribute to producing a toolkit which is usable by social landlords of all sizes and irrespective of the nature of properties they own. Conclusions of the research will be published in 2026.

The work of Scotland’s Heat Network Support Unit demonstrates the value a support unit can provide during the pre-capital stages of project development. Building on this experience, a project support unit for social housing could help build a pipeline of deliverable clean heat and energy efficiency projects across the sector. This could be particularly beneficial for smaller social landlords with limited internal resources to plan all aspects of a retrofit programme themselves. The creation of a Social Housing project support unit was also a key recommendation from an SFT report on financing retrofit in social housing^[6].

While supportive of the concept of establishing a project support unit for social housing, it will be important that any unit is developed in partnership with the sector to ensure it meets its needs, while still delivering value for money. Options for the services a support unit could offer, how it will operate, and the associated budget requirements, will need to be fully considered. Over the coming year the Scottish Government will engage with the sector on these points, in parallel to ongoing engagement about development of the Social Housing Net Zero Standard. The new Heat in Buildings Strategy and Delivery Plan will set out conclusions from this engagement.

Decisions on the next steps associated with creating a social housing project support unit will be for the next Scottish administration to consider.

Recommendation 4: Scottish and UK Governments to develop a ‘Clean Heat Mission’ approach starting with clear goals and a coordinated delivery plan for the clean heat transition:

a.) Map existing financing and governance structures at different levels of government to support project sponsors and individuals to more easily navigate the system.

b.) Ensure that energy and infrastructure planning takes account of waste heat, including future waste heat from data centres, hydrogen production, and the opportunity for thermal storage.

c.) Consistently evidence and communicate the financial and non-financial benefits of retrofit, clean and affordable power, and clean heat.

d.) Agree a Memorandum of Understanding between the Scottish and UK Governments to align strategies and solidify a partnership approach to optimising delivery of clean heat support in Scotland.

Scottish Government response: the Scottish Government has published a draft CCP setting out a path to achieving our 2045 climate change targets and delivering interim emissions reductions in line with commitments for each five-year carbon budgeting period. This draft Plan includes reiterating the Scottish Government’s commitment to delivering a transformational change in the way we heat buildings in Scotland. It articulates a vision of supporting a range of clean heating technologies based on what is best for a particular home, location or set of circumstances. This will ensure continued action on the Scottish Government’s twin strategic priorities of achieving net zero emissions and eliminating fuel poverty.

The draft CCP will now be subject to public consultation / stakeholder engagement and scrutinised by the Scottish Parliament before a final version is published next year. The draft CCP includes a commitment to produce a new Heat in Buildings Strategy and Delivery Plan by the end of 2026, which will communicate the actions on the part of the Scottish Government and others which will be designed to enable and achieve the decarbonisation of heat.

Development of the new Heat in Buildings Delivery Plan will be informed by feedback from consultation and engagement on the draft CCP. It will also build on the constructive ongoing engagement between the Scottish and UK Government at Ministerial and official levels. This will enable the implications for Scotland of the UK Government’s Warm Homes Plan to be fully taken into account, therefore ensuring action driven by Scottish and UK Governments is complementary and coordinated.

Specific points raised by the Taskforce in relation to this recommendation will be part of the ongoing dialogue between both governments, relevant conclusions of which will be reflected in next year’s Heat in Buildings Delivery Plan.