Hansard

I am delighted to open the debate on the bill and that we have reached this point in the process. I thank the Economy, Energy and Fair Work Committee for its careful scrutiny of the bill and I welcome its recommendation to approve the general principles of the bill. I am also grateful to the organisations and individuals who have given evidence, the convener and members of the Delegated Powers and Law Reform Committee, and the heat networks regulations working group, which was a strong source of support to us in preparing the bill.

Before I talk about the bill itself, it would be beneficial if I were to briefly set out what a heat network is, how it differs from the heating systems that we are more familiar with in Scotland and the benefits that it can bring. Put simply, a heat network is a distribution system of insulated pipes that carry hot water or steam from a central source and deliver it to homes and businesses. Heat networks are best deployed in denser, more built-up areas where there is more concentrated demand for heat, but they can also work well in rural contexts. The technology is well known across Europe, predominantly—but not exclusively—in large cities such as Copenhagen, where it supplies heat to 98 per cent of buildings.

Heat networks are generally more efficient than individual gas boilers and, in the right circumstances, can deliver fuel savings, helping to lower bills and tackle fuel poverty. The heat can come from a wide range of renewable and low-carbon sources, including large-scale heat pumps in our rivers or even waste heat recovered from industrial processes such as whisky distillation. There are also health and safety benefits, as there is no need for any combustion to take place inside the building, thereby avoiding fire and carbon monoxide poisoning risks.

As heat networks are long-lived assets, they can create long-term local jobs in maintenance and administration. When deployed in suitable areas, heat networks have many benefits, the most important of which might be their capacity to remove the emissions that are caused by heating our buildings, and to reduce bills and so help to tackle fuel poverty. The Committee on Climate Change, along with other key actors in the sector, has advised us that there is real scope for making greater use of renewable and low-carbon heat networks.

Given the opportunity that the technology presents, the overall aim of the bill is to accelerate development of heat networks in Scotland and so drive down emissions and tackle fuel poverty. The bill seeks to do that by creating a new licensing regime to ensure that operators are solvent, fit and proper, while also driving up standards across the sector. The bill introduces new processes for consenting, zoning and permitting to ensure that new networks are developed where they will have the most benefit; that they are tailored to the needs of an area; and that they can provide greater certainty to developers and investors to attract investment. We are levelling the playing field with other utilities by creating new rights for heat network developers and operators, which will help to reduce the costs and risks associated with construction. Finally, the bill puts in place arrangements to protect network users by enabling a transfer of operational rights to occur to ensure continued supply.

The bill and its provisions have been developed following extensive consultation with stakeholders and communities, including our island communities, and are based on advice and recommendations from an expert working group of stakeholders. The Economy, Energy and Fair Work Committee has made helpful recommendations throughout its report and I have responded to the committee in what I trust is an equally helpful manner.

The bill is lengthy and complex, so I will concentrate on covering four important areas that are addressed in the committee’s stage 1 report: consumer protection, fuel poverty, community engagement and the division of responsibilities between local and national Government.

I will also listen carefully to the points made by members in the debate today on all areas of the bill. If the bill progresses to stage 2, I will write to members of all parties so that I can hear the views of Parliament in further detail. As I have said from the outset, I want the process to be collaborative so that we produce a piece of legislation of which we can all be proud. I am confident that we can and will do that.

The committee has highlighted the challenges relating to consumer protection, which, as members are aware, is not currently within the competence of the Scottish Parliament. I very much welcome the committee’s scrutiny of the issue, and I reassure members that we will not enable the mass deployment of such schemes without commensurate protection for homes and businesses.

Earlier this year, the United Kingdom Government signalled its intention to legislate in order to introduce a set of consumer standards for the sector, which will apply across Great Britain. That is very welcome. I continue to work closely with my UK counterparts to ensure that the proposals are fit for Scotland.

I have written to Kwasi Kwarteng MP, who is Minister of State for Business, Energy and Clean Growth, to seek new powers for the Scottish ministers to determine which body oversees the consumer standards in Scotland. That would ensure that that body, whether it is the Office of Gas and Electricity Markets or another organisation, is one and the same as the licensing authority that is created by the bill. In that way, we will achieve coherent regulation in Scotland while harmonising standards for businesses and consumers across the borders.