**6. Conclusions**

This study has investigated the impacts of large-scale heat pump uptake in Orkney with circular economy (CE) principles to support the UK's 2050 net zero target. An integrated approach of different methods (LCA, ESOM, BSM) was taken. Firstly, EPC data were

used to analyze the housing stock in terms of the conditions of construction elements (wall, window, roof, floor) by different house archetypes. The requirement of energy efficiency improvement (EEI) for these archetypes was decided. Existing heating technologies and fuel types were investigated to analyze the current situation in Orkney. Then, potential energy, environmental and economic savings under heat pump uptake scenarios were calculated based on the BSM and existing heating types. Financing options for heat pump uptake scenarios were also investigated for consumer engagement. The results are illustrated at both the house archetype level for end-users to provide individual savings and the island level to emphasize cumulative savings.

By taking an integrated approach, results show that the heat pump uptake scenarios could help to reduce energy supply by 82% with ambitious energy efficiency improvements in the CE scenario despite a 19% increase in the number of houses by 2050.

The use-phase-related GHG emissions could be reduced by 98% in the CE scenario with EEI measures taken and 100% heat pump uptake. The life cycle-wide approach includes the emissions coming from the production of energy supply technologies (manufacturing wind turbines, etc.), so reaching the net zero target requires strong commitments in all industries covering the manufacturing of the products, energy production, and consumption.

Total heating costs paid by consumers in Orkney could be reduced by 84% from £23.0 million to £3.7 million in the CE scenario. However, it could only be achieved with 100% heat pump uptake and implementation of EEI measures, which requires a £130 million investment for the entire island to insulate unrefurbished housing stock. New grants and incentives, such as vouchers similar to BUS/HES grants, interest-free loans, and reductions in VAT on equipment and labor costs, should be introduced to cover the cost of energy efficiency improvement measures. Increased levies on fossil fuels and reduced levies on electricity could make the electricity market more competitive against fossil fuels.

CE scenario results show benefits in all energy, environmental, and financial results. Therefore, developing CE standards for the production of heat pumps, including the use of secondary materials, circular material banks, eco-design, and re-usability of all components is crucial. Developing a stock and flows for materials could help to improve material efficiencies and reliance on raw materials. Different heating technologies require similar material demands and waste streams despite technological differences. The boiler industry represents the second largest UK heat pump market after air conditioning manufacturers, so reshaping these production lines could benefit the market knowledge used by the companies. Moreover, a market introduction program should be provided before shifting from one technology to another, so greener production lines achieved through adapting CE principles could help to reduce the negative impacts on the manufacturing phase.

The integrated approach provided flexibility to work on scenario analysis to assess both the demand and supply side of the system with life-cycle-wide thinking. This comprehensive manner is novel and fundamental to creating a holistic approach to reducing GHG emissions to reach the net zero targets while observing other negative consequences and implications, so all aspects of energy, environmental, and financial benefits can finally be achieved. Focusing on the island level, specifically in Orkney, could help to provide sustainable solutions to the economic pressure that islands are facing and to the high level of fuel poverty.

**Author Contributions:** Conceptualization and methodology, S.S. and C.S.; software, S.S. and C.S.; model developments and data collection, S.S. and C.S., scenario analysis, S.S.; writing, review and editing, S.S. and C.S. All authors have read and agreed to the published version of the manuscript.

**Funding:** This research received no external funding.

**Institutional Review Board Statement:** Not applicable.

**Informed Consent Statement:** Not applicable.

**Data Availability Statement:** Publicly available datasets were analysed in this study.

**Conflicts of Interest:** The authors declare no conflict of interest.

## **Abbreviations**

