Scotland's drive to decarbonise home heating will achieve little while China keeps burning so much coal – John McLellan

Householders face a hefty bill if they are required to insulate their homes and switch from gas to an eco-friendly heating system

A businessman friend collared me over the weekend about an offer he had been made by an environmental consultancy he couldn’t possibly refuse; for a modest fee he could further reduce his company’s greenhouse gas emissions and do his bit to tackle global warming.

Not unreasonably, he bemoaned the reality that no matter how much he spent, it would make no difference as long as China was burning coal like there was no tomorrow, and indeed China’s 1.1 million megawatts of operational coal-fired power capacity (and rising) is 53 per cent of the world’s total, according to the Global Energy Monitor.

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With two new plants opening a week last year, the obvious question about President Xi’s pledge to reduce coal consumption in 2026-30 is from what level? And as long as China is producing 30 per cent of total global greenhouse gas emissions, Green consultants can make money. There is no shortage of organisations in the market to provide “green solutions” for climate change challenges, such as the Green Finance Institute, Europe’s Climate-KIC (Knowledge and Innovation Community), the UK Green Building Council, and the Scottish Renewables trade association. Other new institutions, like the Scottish National Investment Bank, have a “Just Transition to Net Zero” as a founding principle.

Those five organisations are not just linked by a mutual interest in green energy, but are all represented on the Scottish Government’s Green Heat Finance Taskforce which has just published a series of recommendations which it hopes will accelerate the decarbonisation of domestic energy use which, with 80 per cent of Scottish homes connected to the gas mains, is no small matter.

The 105-page report is upfront about the scale of the task, with the total cost of the transition to net zero by 2045 likely to be £33 billion, compared to the £1.8bn the Scottish Government is committed to spending by 2026. The Scottish Government doesn’t have the money, so the paper lays out the options.

Most of it concentrates on “Green financial products”, which look like ordinary loans with Green stuck in the name, and no matter how much financial experts deliberate over the detail, if householders are required to insulate their homes and turn off the gas, they will have to pay for it sooner or later. No matter the “product” – equity release, on-bill repayment, property-linked finance, “green” mortgages, or whatever – it’s a cost which could be avoided unless otherwise compelled.

It’s therefore not surprising that weekend publicity focused on a few lines in a panel on “fiscal mechanisms” referring to “the use of taxation to incentivise desired behaviours” and suggestions the government could “penalise those who do not adhere to the encouraged behaviour” and use the proceeds to “subsidise retrofit programmes”.

Governments national and local are very keen on behaviour change, which usually doesn’t involve asking people nicely, and although yesterday officials were equally keen to emphasise the small space the taskforce devoted to penalties could be seen as a reflection of their priorities – and admittedly the section does recognise investment could be encouraged “by providing monetary benefits to undertake works” – it’s there, nonetheless.

It could equally be argued the relatively brief mention – punitive taxation does not specifically feature in the section requesting a report on the use of tax incentives by the end of 2024 – was deliberately down-playing what will clearly be the most contentious part of any programme to persuade householders to go full green. But if the report’s starting point is a shortfall of well over £30bn – £17.6bn of which is the estimated cost of upgrading owner-occupied homes – there’s very little chance of the Scottish Government trousering much by way of “monetary benefits”.

It does, however, spell out the potential routes for incentives, which would be to alter council tax for non-compliant homes – higher rates for non-compliance as cash-strapped councils won’t willingly give away rebates – or by ramping up the already uncompetitive Land and Buildings Transactions Tax (LBTT).

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At least the taskforce is honest enough to recognise “consumers dislike new taxes and often do not believe that they will be ‘revenue neutral’,” because they rarely, if ever, are. And although stating the obvious, they also acknowledge that “penalties may not support alleviation of fuel poverty”. As Edinburgh Council is about to sign a deal with a subsidiary of Sweden’s state-owned energy company Vattenfall to extract warmth from the sewage system for district heating at New Granton, the phrase “No shit, Sherlock” springs to mind.

If the taskforce can’t be accused of ignoring the downsides – it recognises 1.2 million domestic properties do not meet the required Energy Performance Certificate “C standard” – it gives relatively little attention to the issues facing the hundreds of thousands of people living in pre-war, solid-wall tenements which might never be suitable for cost-effective conversion and whose occupants could never afford the price if they were. The report cites two fictitious households in 1930s semis, but not in pre-1919 flats, a quarter of Glasgow’s housing stock, and it’s surprising the experiment to retro-fit a Victorian block of eight one-bedroom flats in Glasgow’s Queen’s Park, which cost well over £1m and has been mentioned in this column before, does not feature.

Underpinning the whole approach is it’s non-negotiable that something must be done, and must be done to all properties, whether practical or not. There is no sign of accepting that, for all their impact on global temperatures, it would be better to keep some properties as they are. There is a difference between obliging builders to ensure all new homes are energy efficient to the latest standards and punishing thousands of people for living in an old, inefficient flat. Which comes back to the point about China. If the taskforce thinks President Xi will be shamed into action by an upgrade programme in Leith, they need to watch more news.



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