No Home Left behind – equitable and sustainable heating for all in Scotland

Blog 25 March, 2024

Authors:

Eve Lucas and Paulina Gonzalez-Martinez

Around one third of Scottish households now live in fuel poverty, according to the latest estimates. The Scottish Government has set targets for 2030 to reduce fuel poverty to 15%, and to reach 75% of Scotland’s net zero target. Though there is no question that Scotland must decarbonise its heating systems to meet the net zero target, it is equally vital to ensure that this transition does not come with a higher cost for those who can least afford it.

The Centre for Energy Policy (CEP) and the UKRI-funded Energy Demand Research Centre  (EDRC) brought together representatives from the Scottish Government, Scottish Power, and Energy Action Scotland to discuss what a just transition may look like in Scotland. Chaired by Satwat Rehman, Chief Executive of One Parent Families and Co-Chair of the Just Transition Commission, the event drew on research from the CEP and EDRC’s Equity Theme which looks at how we can achieve net zero whilst ensuring a fair and sustainable transition.

 

A people-centred approach

A more people-centred approach could help lower income households by considering their energy needs and usage during every step of the transition to net zero. Fuel poverty is defined as spending 10% or more of net income on energy. Lower income households disproportionately spend a larger percentage of their income on heating their homes. They are both more likely to need to keep a warmer home to support those who are disabled or in poor health and less likely to live in well-insulated homes. They may also have additional energy costs such as powering medical equipment.

Lower income households are also less able to adapt to a changing policy and industry landscape, for example when it comes to varying Government schemes for energy bill assistance. The idea of reintroducing social tariffs (replaced by the Warm Homes Discount in 2011) was floated as a more equitable solution to this problem.

Standing charges also affect lower income households adversely. CEP’s Christian Calvillo highlighted that in the last Ofgem price cap review, despite unit prices decreasing, the standing charge went up for everyone, which could unfairly affect those in fuel poverty.  A people-centred approach would take into account the different relationships that people have with energy and their ability to access funded energy-saving measures. It would limit ‘one-size-fits-all’ solutions that can bring unintended negative impacts, like adopting a more expensive energy source.

 

Increasing public engagement with heat decarbonisation measures

The panellists also agreed that rebalancing the costs of electricity and gas would be key to ensuring a fairer transition and encouraging the uptake of new heating technologies, such as heat pumps. Despite heat pumps being more efficient than gas boilers, for many people, getting a heat pump could mean paying more overall due to the price of electricity. Introducing a ‘green ratio’ could help mitigate this issue.

Previous CEP research has also shown that one of the barriers to the heat pump rollout is high manufacturing and installation costs, which can be alleviated with grants and interest-free loans. We have also found that net decreases in energy demand will drive corresponding reductions in energy prices.

Of course, households need support to navigate this transition. One of the recurring points made throughout the discussion was that people need reliable and trustworthy advice sources.  But who does the public trust? Frazer Scott, of Energy Action Scotland, suggested that guidance should be given from sources that people already trust, such as Citizens Advice and charities, rather than creating new pathways to information. CEP’s Hannah Corbett emphasised that when engaging with the public, we must understand their different starting points and lived realities.

 

Coordination, action and commitment

Trust is also a critical issue, in relation to the workforce needed to fit and service new heating technologies such as heat pumps. Many people are keen to pursue low carbon technologies for their homes but find themselves unable to find the skilled tradespeople needed to carry out the work, or unsure of how and where to source and access the broader support and information they require.

Both the panel and audience noted that there is a perceived lack of an over-arching plan which could offer much needed certainty. Without this certainty, households cannot easily make the switch. For example, if someone living in a tenement property wished to replace their current boiler, should they install a heat pump with the possibility that it might be undermined by a future plan for district heating systems from their local council? Accordingly, stronger coordination between local and national governments would alleviate uncertainties over future policy.

The lack of a clear action plan also leaves industry in the lurch, as trainees and businesses are hesitant to invest in training for new greener industries when there is no guarantee of long-term pay-off. More firm commitment would enable households and industry to make the switch.

The consensus from all panellists was that significant action and coordination are urgently needed, and that we must not let ‘perfect be the enemy of good’. Chair Satwat Rehman reminded everyone attending the event ‘that it will take everyone working together because 2045 is not the end, it’s just the beginning’.