The independent Green Heat Finance Taskforce published part one of its report on 22 November 2023, setting out a suite of options intended to let individual property owners access finance for the upfront costs of replacing polluting heating with clean heat solutions1. The report was published by the Scottish Government and covers grants, self-financing, green loans and mortgages, equity schemes and property linked finance1.
The Taskforce states its purpose in its own words:
"The independent Green Heat Finance Taskforce, has identified a suite of options which will allow individual property owners to access finance to cover the upfront costs for replacing polluting heating with clean heat solutions in the manner best suited to their own individual circumstances."
On grants, the report notes that grants are provided by the Scottish Government to support the implementation of Net Zero measures, and that various grant schemes already operate within the Scottish Government relating to Net Zero measures, including HEEPS ABS and Warmer Homes Scotland1. It records that grants score 3 (very suitable) for the social sector and 3 for owner occupiers on low income, and 1 for small and medium-sized private corporates1. Among the limitations listed are that grants are likely to require a significant increase of current Scottish Government budget levels, and that the leverage effect of public funds is usually less than 10x, with grants often required alongside to achieve Net Zero ambition1.
On loans, the report says loans provide an effective tool for residential Net Zero improvements in the £2,000 to £10,000 range that are too expensive for a cash or credit purchase, but do not warrant taking out a second mortgage1. It also cites the World Energy Agency's 2014 Special Report on World Energy Investment in stating that 60% of all energy efficiency and Net Zero works have been undertaken using self-finance1.
The report sets out figures for the equity route. It gives the average house price in Scotland as £194,000 (2021), estimates the value of equity within the owner-occupier market at around £150 billion, and states that annual house price inflation has ranged from 3-6%, so the cost of Net Zero measures could be recovered by roughly two to three years of house price growth1. It adds that almost 50% of owner occupiers are mortgage free and could potentially look to equity release to raise financing, describing equity release as a way for homeowners, typically those over the age of 55, to release some of the equity tied up in their property without having to sell it or move out1.
The report also covers property linked finance, stating that it can support homeowners to fund up to 100% of the upfront costs of energy efficiency improvements, and cites the PACE model in the United States, which it says has supported over $13 billion of investment into energy efficiency and resiliency measures in domestic and commercial buildings1. On local authority lending, it notes that local authorities need Ministerial permission to on-lend1.
Why it matters for households
The report is a menu of ways a household might cover the upfront cost of home heating work, rather than a scheme a household can apply to today. The options it weighs up include grants, loans and equity release, each with different consequences for a home's finances. A grant reduces the cost of a measure outright; a loan or equity release spreads it over time and leaves a claim on the property or the household's income. The report's own figures show how the routes differ: it puts the typical loan-sized job at £2,000 to £10,000, and notes that self-financing is not possible for the low income sector1. For a household weighing up heating running costs against the cost of the installation itself, the choice of finance affects how quickly any saving is realised, and the report notes that the leverage effect of public funds is usually less than 10x, with grants often needed alongside other finance to reach Net Zero ambition1. The report also flags that government support should not crowd out self-financing, as that may delay private investment while people wait for free grants or low cost finance1.
What happens next
The report is part one. No further publication date, consultation or scheme launch is given in the material published on 22 November 20231.