Journal article
Institutional context and the governance of heat transitions: The cases of the Netherlands and the UK
Feb 2024
Government plans to phase-out fossil fuel heating and phase-in low carbon heating systems like heat pumps, present a fascinating case study of the current state of devolved governance in Scotland. Heat policy is notionally devolved but many of the potentially critical areas in which the Scottish Government could act to decarbonise heat are not e.g. regulation of electricity and gas networks and energy taxation. While Scotland has decarbonised faster than many other nations, reductions have come almost entirely from the move to renewable electricity supply with very little change in the reliance on fossil fuel heating (as is the case in the rest of the UK).
The UK and Scottish Governments were some of the first in the world to set net zero target dates, with the 2045 date in Scotland ahead of the 2050 date set for the rest of the UK. Scotland also has higher ambition for 2030 with a commitment to reduce emissions by 75% compared to the UK’s 68%. All these targets, are legally binding.
The 2045 ambition in Scotland was informed by Climate Change Committee (CCC) advice that Scotland was in a better position to decarbonise with greater renewable energy resources and more opportunity for carbon sequestration. The 2030 target, however, was even more ambitious than the CCC advised, with even their most ambitious scenario not achieving this level of reduction. The Committee have suggested that this ambition may not be feasible ‘without implications for cost and/or required changes in behaviour’.
The recommendations from the CCC also came with the caveat that decarbonisation in Scotland was contingent on UK ambition, and that ‘Scotland cannot deliver net-zero emissions by 2045 through devolved policy alone’. In the recent Scottish Heat in Buildings Strategy, the Scottish Government frequently endorse this view, and call on UK Government to accelerate decision making on many of the thornier questions in heat decarbonisation policy e.g. the role of hydrogen for home heating.
The 2030 economy-wide target for Scotland of 75% has been translated into a plan to reduce emissions from buildings by at least 68% by 2030. This a jump from the pre net zero commitment of 35% reduction by 2032 and probably the most ambitious target for 2030 in Europe. The UK Government’s recent Heat and Buildings Strategy, applies to the slightly less ambitious but still very challenging target of 68% economy wide reduction by 2030, though the UK Strategy does not translate this into a specific target for buildings.
There have been developments in Scottish heat decarbonisation policy that have placed the country ahead of the rest of the UK, with much greater levels of energy efficiency funding, plans for Local Heat and Energy Efficiency Strategies and a regulatory framework for heat networks. In line with their earlier ambitions, Scottish heat policy targets also tend to occur slightly ahead of those in the UK; 2033 for all properties to be EPC C (2035 for the rest of the UK), 2024 for new builds to be zero carbon (2025 for the rest of the UK). The regulatory framework for heat networks was delivered in Scotland in 2021 and the UK Government is now looking to do something similar ‘as soon as possible’. A potentially critical aspect of heat network regulation, mandating existing properties to use new networks, is, however, thought to be out with the devolved powers of the Scottish Government, with uncertainty over the scope of devolved powers an increasingly important feature of Scottish heat governance.
An example of this uncertainty can be seen in the language used for phase-out dates for fossil fuel heating North of the border. Scottish commitments have been made to phase-out ‘the need to install’ new or replacement fossil fuel boilers in off gas properties from 2025, and in on-gas areas from 2030. The recognition that oil heating should no longer be installed after 2025 is slightly ahead of the UK Government’s proposal that this should happen by 2026 (although this proposal is only at a consultation stage). The intention to phase out the need for gas heating by 2030 is however, significantly ahead of the UK commitment of 2035.
The language (‘phase out the need for’) belies the uncertainty in Scottish Government as to whether a ban on heating technologies is within their devolved powers. The commitment borrows the language used in Scottish Government policy on vehicle phase-out. In transport, it is more clearly understood that Scottish Government does not have the powers to ban the purchase of petrol and diesel vehicles. Also, conveniently, here UK Government is now moving in step with Scottish commitments (although they have not always done so). Can the Scottish Government use building regulations to ban boilers earlier than the rest of the UK, or would this face legal challenge from the industry? Will an early ban allow the low carbon heat industry to develop more rapidly in Scotland and would this deliver any significant economic benefits? These are some of the questions concerning heat policy makers in Scottish Government, with work ongoing alongside the UK Government to determine the best way forward.
There are also differences in attitudes to costs in the UK and Scottish Strategies. The UK is trying to wish away the idea that there will be a cost and hoping that the price of heat pumps can be driven down by 50% by 2025 and to parity with gas boilers by 2030. The Scottish Government are more forthcoming about the costs, producing a £33 billion estimate for the changes necessary to meet the 2045 target[1]. While Scottish Government are more upfront about costs, the inclusion of an overall estimate alongside a pledge for £1.8 billion of public funding in this parliamentary term (2021-26), portrays a clear funding gap. If public funding was to continue at this level it would mean £8.6 billion between now and 2045. Privately leveraged funding would therefore need to be about four times that of public funding, which is high, but not quite unprecedented in European terms.
UK Government have presented some intriguing proposals for low carbon heat market development that would oblige existing boiler manufacturers or energy retailers to install low carbon heat. They intend for these plans to be UK-wide as it is important that ‘different rules do not apply to sales of heating appliances in different parts of the UK to ensure the policy is effective’. If designed well, the scale of a UK-wide approach could help to drive low carbon heat uptake and cost reduction in Scotland in the way that other UK-wide policies have done for other energy technologies e.g. Contracts for Difference. In other aspects of market policy, Scottish Government have decided to diverge from UK-wide policy. They have opted-out of the UK-wide purchase subsidy (Boiler Upgrade Scheme) believing that a scheme specifically designed for Scotland (Home Energy Scotland) will be more effective.
Finally, the Scottish Parliamentary election of May 2021 and the resultant SNP – Green Party coalition agreement has also added to the intrigue of policy development. Both Ministerial positions taken by the Green Party relate to heat decarbonisation (with one titled Minister for Zero Carbon Buildings). Due to the already high level of ambition, it is hard to imagine that the arrival of the Green’s in government will result in more radical heat decarbonisation policies.
The transition to net zero is, however, very likely to endure a lot of negative attention at various points – where does the funding come from, are the chosen technologies the right ones – and the Greens have been positioned in the firing line for this. The more challenging aspects of the transition will inevitably be associated with the ‘green shirts of the boiler police’, highlighting the importance of social consultation, openness and engagement throughout the process.
Overall, the greater ambition in Scotland is accompanied by some ‘actual policies’ to help speed up the move to zero carbon heat. Ultimately, however, SG are trying to be the most ambitious country in Europe on heat decarbonisation with one hand tied behind their back. The divergence in ambition from the rest of the UK is acting to highlight the entanglement of responsibilities in the current devolved governance arrangement of Scotland. How the process evolves in the coming decades will be a complex and compelling case study of multi-level devolved governance.
[1] A high electrification pathway.