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Decarbonising heat is both necessary and an opportunity for Scotland

In a new insight report, ‘Scotland’s transition to net zero heat’, the Scottish National Investment Bank explores some of the issues and opportunities in decarbonising the nation’s heat sources, and sets out the role it can play in the transition.  You can read the full report here, with an overview of the key themes below.

Moving to net zero heat for our domestic and commercial buildings is one of the most important and challenging issues in the transition towards a green economy.

The statistics bear out the scale of change required: of Scotland’s circa 2.5 million homes, over 2 million use mains gas as their primary heating fuel.  Poor energy efficiency in many of Scotland’s buildings is contributing to wasteful use of energy for heat; it is also contributing to poor health that too often hits those least able to pay for the necessary improvements to their homes.

The Scottish Government estimates that £33 billion is required by 2045 to transition Scotland’s heating away from carbon-intensive fuels and low efficiency; that sum requires private sector investment and financing structures to enter the market to aid the transition.

Given this, financing the transition is clearly one of the primary challenges to address. That’s true both in terms of individual homeowners who require policy makers to provide strong incentives and funding support to move away from fossil fuel heating, and in terms of commercial enterprises looking to build new heat networks.

Today, the lack of certainty in the market is contributing to slow take-up in decarbonised heat sources; this must be tackled through direct intervention – be that policy, regulatory, or most likely both.

Wherever it can, the Bank will work with policy makers, businesses, the finance sector, researchers, and others working on net zero heat to develop the understanding of how our collective impact can be maximised.   The heat transition will need planning and collaboration across sectors to create viable approaches, so that successful solutions can be scaled and replicated across the country.

It is important to remember that the move to net zero heat is a sizeable opportunity for Scotland if market creation gives rise to the birth and growth of successful Scottish businesses.

There will be a need for the development, manufacture, and installation of decarbonising technologies, which brings with it economic opportunity.  The transition will also support the building of skills and expertise needed for decarbonisation propositions that are deemed investable, which means a workforce with future-ready, high-demand skills.

Net zero heat goes hand-in-hand with energy efficiency and the concept of a fair transition.  With around a quarter of households in Scotland living in fuel poverty and many households with low EPC ratings, it is critical that legislation is in place to improve the fabric of our buildings as we decarbonise how we heat them

The Scottish National Investment Bank sees net zero heat as one of the top problems that needs to be solved.  It is one that calls for an intensified effort in building the widescale collaboration needed to develop the investible solutions and markets that will speed up the rate of transition.

You can read the full report here

About The Scottish National Investment Bank

The Bank was launched in November 2020 to be a development investment bank for Scotland, delivering patient, mission impact investment to the Scottish economy.

The Bank will provide patient (long term) capital to businesses and projects throughout Scotland to support the development of a fairer, more sustainable economy.

The Bank has an ambition to not only invest its allocated public capital, but to encourage additional private capital to invest alongside it, to support the delivery of the missions.