The Scottish National Investment Bank (SNIB) has called on the Scottish Government to prioritise revisions to building regulations with the aim of avoiding “costly” retrofitting.
A new report from the development bank, focused on how the nation can reach net zero by 2045, points out that £33bn is required by 2045 to transition Scotland’s heating away from “carbon-intensive fuels and low efficiency”.
It estimates that £5bn alone is required to replace the existing fossil fuel heating systems in homes on a like-for-like basis.
SNIB stated that private sector investment and financing structures are therefore required for it to enter the market and aid the transition.
The report also argued that following its detailed analysis of the Scottish Government Environmental Performance Certificates (EPCs), the government must make recommendations to homeowners to focus on net zero and low carbon solutions, especially where individuals can seek practical support.
It made a number of recommendations for addressing the challenge around energy efficiency and skills, suggesting that the government needs to identify homes with the “lowest energy efficiency and greatest potential to reduce emissions through insulation improvements”.
SNIB found that addressing poor energy efficiency can reduce the cost in heating and help those struggling from fuel poverty, which currently affects around a quarter of Scottish households.
More than 70% of households in Scotland have EPC ratings of D or C, with 15% having E, F or G ratings.
The report stated that head networks, which draw on a communal heat source to provide reliable and cheaper warmth to people’s homes, have the potential to deliver multiple benefits across poverty reduction, health and wellbeing – as well as reductions in emissions.
SNIB's recent investment in PfP Capital, to build mid-market rental homes to energy efficiency standards, is one of the ways it is working with social housing providers to let more people access better quality homes.
The report also suggested that the Scottish Government build on its current policy with The Heat Networks (Scotland) Act to help households transition, as “there remains a need to go further in building this out to give confidence in the commerciality of the sector”.
The SNIB said that the government could pilot a means-tested scheme to target individuals, with tailored financial and practical support where it is most needed.
Analysis of the EPCs revealed that the homes with lowest efficiency ratings would benefit most financially from investing in improvements to insulation, which would help bring down emissions, while wider action is taken to decarbonise heat in the nation’s buildings.
The report concluded that a plan was required to address the “shortage in skills” for areas around retrofitting, which will create a new employment opportunity, as well as preventing the lack of skills currently “blocking” the transition.
Another section added that the SNIB plans to work with the financial services sector to create financial instruments for net zero heat - and it is exploring the potential to partner with mortgage lenders to help homeowners fund decarbonisation and insulation of their property.
“There is the potential to develop new and innovative financial instruments in conjunction with mortgage providers, to pilot schemes that help homeowners to cover the upfront costs required for changes to their property,” the report read.
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