Energy Efficiency Action Plan: formal review and annual report

3. The Energy Efficiency Target

• Overall Progress to 2020 Target

The Scottish Government set an energy efficiency target to reduce total final energy consumption by 12% by 2020 , set against a three year average baseline over the period 2005 to 2007. This established a minimum level of collective ambition for all sectors.

The target was set to be consistent with, and support the Scottish Government's wider climate change ambition and range of actions being taken to meet our ambitious Climate Change Target of a 42% emissions reduction across Scotland by 2020 contributed to by all sectors. Other related energy targets are:

• Electricity: annual renewable electricity generation to be the equivalent of 100% of gross annual electricity consumption by 2020.
• Transport: 10% share of biofuels in transport petrol and diesel consumption by 2020.
• Heat: 11% of heat demand from renewable sources by 2020.

Section 60 of the Climate Change (Scotland) Act 2009 required that we set annual energy efficiency targets. Due to uncertainty around both future economic conditions and the rate of installation and uptake of key energy efficiency measures, the most appropriate approach to set energy efficiency targets that achieve a path towards the desired 2020 consumption levels was to set annual maximum consumption levels.

The data for 2010, published on 20 December 2012, showed a slight increase in consumption compared to 2009 due in part to the economic recovery from the previous year and a particularly cold winter. Consumption in 2010 was 1.2% higher than in 2009 but still 6.2% lower than the 2005-2007 baseline against which the 12% energy efficiency target is measured. Recognising the importance of economic cycles and weather patterns to energy consumption levels, the energy efficiency target was defined to allow for fluctuations within the longer term trend. The 6.2% fall from the baseline remains well within the annual maximum associated with the target for 2010.

It is not possible to separately identify the impact of the recession from wider energy efficiency measures at this stage. However, some increase in energy consumption was anticipated by way of correction following the economic downturn in 2009. These figures support that expectation and are consistent with trends observed in other economic/environmental indicators and we remain confident that we can meet the energy reduction targets as the economy recovers and grows, in particular with a focus on the transition to and investment in low carbon economy, a strategic priority within the Scottish Government's Economic Strategy.

• Energy Trends

Chart 2 shows final energy consumption by year indicating the make up by sector. Chart 3 shows the year on year changes in final energy consumption across the Industrial & Commercial, Domestic and Transport sectors. The data for 2010 shows that since 2009 energy consumption in the Industrial & Commercial sector has increased by 4.1%, largely driven by an increase in gas consumption. Energy use has remained relatively constant in the domestic sector and fallen by over 2% in transport, reflecting a reduction in energy used for road transport.

However, since 2005-2007, the base line year for the EEAP, there has been an overall reduction in energy consumption. Energy consumption in the domestic sector has fallen at a faster rate than the other consuming sectors, 9.1% from the baseline, largely as a result of lower gas use. Energy use in the Industrial & Commercial sector has fallen 5.2%, again in the most part due to lower gas use, and transport has reduced by 4.2%.

Chart 2: Final Energy Consumption by Sector:

Chart 3: Year on year changes in final energy consumption across the Industrial & Commercial, Domestic and Transport sectors.

Chart 4 shows the proportion of final energy consumption by fuel type, aggregated for the domestic, industrial & commercial and transport sectors. Petroleum products and gas account for over 80% of the final energy used in Scotland. Coal and Manufactured Fuels combined account for 2% of final energy use.

Chart 5 shows the change in final energy consumption by fuel type between the baseline years (2005-2007) and 2010. There has been a reduction in energy use by all fuel types from the baseline, with the largest percentage reduction in the use of manufactured fuels, reducing by 15.9%. Gas use has reduced by 11.0% over the same period, electricity use has fallen by 6.5%, coal reduced by 4.1% and Petroleum Products reduced by 1.8%.

Chart 4: Proportion of final energy consumption by fuel type, aggregated for the domestic, industrial & commercial and transport sectors.

Chart 5: Change in final energy consumption by fuel type between the baseline years (2005-2007) and 2010.

The overall 6.2% reduction, notwithstanding the increase in consumption in 2010, indicates that Scotland is on track to achieve the 12% reduction target in 2020. No analysis provides clarification as to which of the 3 factors (increased energy measures, higher energy prices or the economic downturn) have been most influential in achieving this change. However, it is clear that the economic downturn has influenced the reduction to a large extent and we remain committed to ensuring that energy efficiency remains a priority as the economy recovers. And further, that changing behaviours to encourage sustainable lifestyles, together with technological advances, will be critical to achieving our targets.

• EU and UK Energy Efficiency Targets

1. The EU energy efficiency target is to reduce primary energy consumption by 20% against a projected 2020 business as usual baseline.
2. The UK's indicative target is to reduce final energy consumption by 18% (equivalent to reducing primary energy consumption by 20% ) against a projected 2020 business as usual baseline. ^[10]
3. Scotland established an energy efficiency target in the Energy Efficiency Action Plan to reduce final energy consumption by 12% against a 2005-2007 baseline.

It is worth setting out why Scotland has a different target. The two targets are calculated using different methodologies. The indicative European Union target to reduce energy consumption by 20% by 2020, is calculated using primary energy consumption against a projected 2020 business as usual baseline. This business as usual baseline assumes that primary energy consumption will increase out to 2020.

The Scottish target is calculated on final energy consumption reducing in absolute terms on a flat trajectory out to 2020. Applying the EU methodology to Scottish figures suggests that by meeting the Scottish target we will meet the indicative EU target of 20%.

Energy Efficiency Priorities Moving forward to 2020 and 2030

Scottish Government remains committed to achieving our 2020 energy efficiency targets, and maximising the significant contribution energy efficiency will make to achieving our emissions reduction targets to 2027 and beyond; and will continue to work closely with key stakeholders.

We are currently working to finalise the Second Report on Proposals and Policies after publishing the draft earlier this year and we will publish it soon. This details the actions for meeting the greenhouse gas emission targets to 2027.

The European Commission have issued a Green Paper on the 2030 Framework for Energy and Climate Policies. The Green Paper acknowledges that a balanced package of targets and policies will be required, and suggests a 40% emissions reduction target, and a 30% share of renewables by 2030, alongside energy efficiency improvements and modernisation of the energy system.

The Scottish Government agrees that energy efficiency measures must be seen in the context of 2030 emissions targets and is actively engaging with our EU counterparts to make the case for an ambitious climate and energy policy, in line with our domestic and international objectives to reduce carbon emissions and develop renewable energy technologies for the future.

Any increase in EU ambition beyond the current 20% by 2020 energy efficiency target is unlikely to exceed Scotland's ambitions but could help incentivise the sort of measures that would make Scotland's targets more readily achievable.