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Scottish Parliament hears statement on Energy Efficient Scotland

23 November 2018

On 22 November, the Scottish Parliament heard a statement from The Minister for Energy, Connectivity and the Islands (Paul Wheelhouse) on Energy Efficient Scotland; this included statements on the LHEES and CMA Market Study. He also released the Consultation findings on the LHEES and regulation of district and communal heating.

As part of his statement, he included the consultation analysis reports for an energy efficient Scotland on LHEES

Part of the Minister's statement that relates to Fuel Poverty and Energy Efficiency

Before I go on, I must mention fuel poverty and the important role that energy efficient Scotland will play in addressing it. In June, my colleague Kevin Stewart introduced the Fuel Poverty (Target, Definition and Strategy) (Scotland) Bill, which sets the target that, by 2040, no more than 5 per cent of households will be in fuel poverty.

We are listening. For example, we have introduced new low-carbon heat and enabling measures into the warmer homes Scotland programme. We continue to pilot and discuss greater flexibilities with our rural and islands authorities to strengthen the design and delivery of their area-based schemes.

I am also pleased to inform Parliament that Mr Stewart and I will begin work next year to prepare a suite of legislation to support the delivery of energy efficient Scotland. That will include primary legislation but, given limited parliamentary time and the additional pressures that are being placed on committees by Brexit, we will, where appropriate, also look to use the powers that are already available to the Scottish Government, for example under the Climate Change (Scotland) Act 2009 and the Energy Act 2013.

In the new year, Kevin Stewart will publish draft regulations for minimum energy efficiency standards in the private rented sector and will look to introduce them to Parliament ahead of summer recess, with the aim of having them in force from 1 April 2020.

I confirm that Kevin Stewart will also bring forward proposals later next year that will put more meat on the bones for the owner-occupied sector with regard to the encouragement and mandatory phases that we have set out.

Mr Wheelhouse on the Local Heat and Energy Efficiency Strategies (LHEES):

To provide a strategic approach to energy efficient Scotland, we have proposed that local authorities should produce local heat and energy efficiency strategies, or LHEES for short. They will be the foundation of energy efficient Scotland at a local level, and will identify opportunities for energy efficiency improvements and heat decarbonisation around Scotland.

Having LHEES in place will help to de-risk investment by providing invaluable market information, and will give Scottish businesses the confidence to invest in people, skills and equipment, thereby giving a clear signal of the long-term commitment to energy efficient Scotland.

Due to the comprehensive picture that will be provided by LHEES and their benefits, we believe that it is optimal for delivery against our climate and economic objectives that LHEES are placed on a statutory basis. However, I recognise that there are resource implications for that, and that local authorities would require additional support. That is why Kevin Stewart and I are committed to working with our partners, the Convention of Scottish Local Authorities and local authorities—I will say more about the partnership later—to understand what support they need and enable us to understand the circumstances in which LHEES could be most suitably placed on a statutory footing.

We have already funded 23 local authorities to undertake LHEES pilot projects, and I am committed to supporting the remaining nine local authorities to undertake similar pilots. Alongside the pilots, which are crucial to learning for our future approach, we will shortly establish a working group to produce guidance on the development and implementation of LHEES, with the intention that the group will report in the first quarter of 2019.

I will briefly touch on the supply of low-carbon heat before concluding. Right now, the majority of our heat is supplied using carbon-based fuels and we have a significant challenge ahead if 45 per cent of heat demand is to be supplied by low-carbon fuels by 2032. It is vital that we consider the advice of the Committee on Climate Change and other experts as we respond to that challenge and ensure that the deployment of low-carbon heat is consistent with long-term decarbonisation goals. That is why we are focusing on rolling out low-carbon heat where it makes sense, regardless of long-term decisions.

The Scottish Government currently runs a number of schemes to pilot, test and support low-carbon heat, including the low-carbon transition programme, the district heating loan fund and our home energy Scotland and resource efficient Scotland loan schemes.

To prepare Scotland for life after the UK-wide renewable heat incentive, I confirm that we will shortly start work to strengthen our policy framework for low-carbon heat. That will have a specific focus on off-gas areas and will begin with a call for evidence, to be published in early 2019, which will sit alongside and complement our work to develop a draft bioenergy action plan.

I can confirm that, while further developing our low-carbon heat policy, we intend to prepare legislation to introduce regulation and licensing for the district heating sector, which is a devolved responsibility. That regulation will be commensurate with the scale of this emerging market, and I will shortly commission an advisory group to inform the development of a licensing regime and associated license conditions. Our leadership on this issue has been recognised by stakeholders in Scotland and from further afield, and the Competition and Markets Authority, a respected economic regulator, has agreed with our assessment that the market would benefit from regulation.

We are also investigating the potential for granting permitted development rights and wayleaves, to put district heating developments on a similar footing to other utilities. As part of the consultation in January, we will seek evidence on whether further incentives can be made available to the sector, within the constraints of competition and human rights laws.

Under the current devolution settlement, it is not within our gift to make consumer protection provisions to ensure that customers of heat networks receive the same protections as users of other utilities. However, I am having positive discussions with my counterpart, Claire Perry, the UK Minister of State for Energy and Clean Growth, as we look to agree how the CMA’s recommendations can be implemented as intended, as a coherent package for the benefit of consumers.

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