THERE is ‘substantial’ growth potential for financing climate-friendly heating and energy efficiency improvements in Scotland’s homes, according to a new report.
Focused on helping individual property owners to access the best solutions for their circumstances, the Green Heat Finance Taskforce document makes nine recommendations to boost the range of private finance options in its first report.
The report also reviews barriers to private funding to support climate friendly heating systems, like air source heat pumps, and identifies opportunities to develop new finance products such as green mortgages and equity release mechanisms at scale.
The document concludes that while the market for financing green heating and insulation measures is currently ‘immature’, it is expanding – with green mortgages increasing from four to over 60 products in the past four years – and that there is substantial future growth potential as the demand for clean heating systems increases.
The report calls on the Scottish Government to co-ordinate the development of a ‘menu’ of private financing products to help consumers choose how to finance the up-front costs of installing clean heating systems.
Sara Thiam, taskforce co-chair and chief executive at Prosper (formerly the Scottish Council for Development and Industry, SCDI) said, “A strong economy cannot be separated from social and environmental wellbeing and this report adds to the growing body of evidence about size of the prize – not just for our economy and the planet, but for people’s health and wellbeing – if government and industry work together to find innovative ways to fund and finance the transformation of our homes to make them fit for the future.
“Getting the incentives right for owners to invest in transforming their homes is just one part of the puzzle, but focussing in on this has helped us understand the scale of the transformation required across sectors and industries and the innovative approaches that are being taken.
“Scotland has unique advantages in both financial services and the renewables industry and leveraging these to capture the economic value of the transition to net zero is critical to Scotland’s ability to thrive in a global economy.”
Patrick Harvie, zero carbon buildings minister and taskforce co-chair, added, “I am very grateful for the considerable effort, expertise and insight provided by the taskforce. The report sets out very clearly the steps we need to take – not only as a government but by collaborating with industry and wider society – to improve access to finance and to give people and businesses the confidence and assurance they need to act and make their properties greener and warmer.
“The products identified by the taskforce in this first report are primarily suitable for people who can afford the repayment costs over time. Of course, we know some people may not be able to afford such repayment costs and I therefore anticipate a mix of public and private financing in various combinations will be required as we transition to clean heat at scale.
“I am hugely encouraged that the report recognises the substantial growth potential for green finance products. The report also makes clear that greener homes can play a major role in improving health by making properties warm and dry. We will respond to the recommendations following publication of the taskforce’s second report next year.”
Acknowledging that no single solution will suit everyone and that successfully converting to clean heat at scale will require contributions from various organisations, the report’s recommendations encourage:
- Promoting customer engagement with the market.
- Supporting ongoing development and expansion of green finance products.
- Progressing work on blended finance products (public and private funding).
- Reviewing fiscal levers and taxation policy to identify opportunities to support the transition to clean heating.
- Continuing to engage with the UK Government and Regulators to ensure alignment of approach.
