Climate change delivery plan: meeting Scotland's statutory climate change targets

CHAPTER 1: INTRODUCTION CHALLENGES AND OPPORTUNITIES

1.1 Climate change is one of the greatest challenges to life, across the world. It threatens human life through its impacts not just on ambient temperature, but also on the natural resources essential to life including fresh water supplies and our ability to produce food. It also increases the risks from disease, flooding and sea level rise. The world has to address this challenge urgently, and Scotland must be sufficiently enlightened to take a global lead in reducing its emissions.

1.2 Scotland faces other increasing pressures on the environment too, such as constantly rising levels of consumption and ever greater competition for natural resources such as fossil fuels, timber, water and land, all of which are already under pressure. That position cannot continue; as a nation Scotland needs to reduce its environmental impact on both a local and global scale.

1.3 Scotland aims to become a leading nation in developing a sustainable way of life, reducing the impact its people have on the local and global environment. The choices made will be critical to shaping a modern, successful and sustainable Scotland and to maintaining a quality of life which retains and attracts talented people and investment.

1.4 First and foremost, Scotland must play its part in the global effort to reduce greenhouse gas emissions. The Climate Change (Scotland) Bill commits Scotland to reduce its emissions by at least 80% from 1990 levels by 2050; with an interim emissions reduction target of at least 34% by 2020, increasing to 42% if the EU increases its 2020 target to 30% in the event of a global deal on climate change. The Bill is unprecedented in its ambition and will set the framework for future governments in Scotland to achieve ambitious targets that will challenge all parts of society. The Scottish Government's Purpose ¹ also has sustainability at its core. Its Sustainability Purpose Targets are: to reduce emissions over the period to 2011; and to reduce emissions by 80 percent by 2050.

1.5 This document sets out the Scottish Government's Delivery Plan, identifying the high level measures to meet the interim statutory targets for 2020 and the work to be done over the next decade to prepare for the more radical changes needed by 2030 if the emissions reduction target for 2050 is to be achieved.

1.6 The drive to reduce the impact of climate change will have other positive advantages for Scotland. It will create economic opportunities in renewable energies, from world-leading technology export and manufacturing opportunities in marine energy and deep-water offshore wind-power, to rural jobs in biomass and renewable heat. With a quarter of Europe's tidal and offshore wind resource, coupled with high skills levels and innovative businesses, Scotland has the potential to become the green energy capital of Europe, and a world leader in offshore renewable energy technology and carbon capture and storage. Improving efficiency in business use of energy, water and other natural resources can also reduce costs and promote the competitiveness Scotland needs, to be a successful nation in the 21st century.

1.7 Legislation alone won't deliver the targets. It needs to be translated into real changes in everyday actions: by businesses; the public sector; voluntary and community groups; and individuals. Better public understanding is essential if people are to be motivated to act. The Scottish Government, its agencies and its non-government partners will need to work together to explain what's needed and to incentivise action. Alongside that, action is needed to reduce the emissions from transport, housing, business, land management and other sources. The whole nation must become better informed consumers. The public sector is a substantial purchaser in its own right and can encourage the development of greener goods and services. It can demonstrate its commitment by ensuring that the whole of the public sector in Scotland pays full and appropriate regard to the environmental consequences of the goods and services it buys and provides. Scotland's schools, colleges and universities must also work alongside the business sector to increase public awareness and to research and develop innovative solutions and technologies.

1.8 This Delivery Plan doesn't come from a standing start. The Scottish Government is already acting to tackle climate change. For example:

• The Climate Change (Scotland) Bill will place Scotland's commitment to reduce its emissions levels on a statutory footing
• Policy options and public spending decisions are already contributing to reducing emissions and to the action needed to help mitigate climate change
• Funding farmers and others to reduce climate change emissions from land management practices and to manage Scotland's rural environment more effectively
• The Scottish Government and its enterprise agencies are working closely with the Crown Estate on its leasing round for wave and tidal power in the Pentland Firth strategic area. This initiative, and others like it, is aimed at developing hundreds of megawatts in Scottish waters by 2020, helping to make Scotland the world leader in wave and tidal power.
• The Scottish Government has tripled the previous level of funding for community renewables and microgeneration
• Pursuing a zero waste policy that will reduce greenhouse gas emissions, especially of methane (a potent greenhouse gas)
• The Climate Challenge Fund is inspiring community-based action in all parts of Scotland to tackle climate change; making over £25 million available directly to communities to pursue their own ideas
• The Scottish Government will shortly publish a guide to improve sustainable procurement, for example urging all public bodies in Scotland to specify fresh, locally available, seasonal produce
• Investments in Smarter Measures and public transport, in partnership with local authorities, are addressing transport emissions and encouraging more walking and cycling.

1.9 But Scotland now needs a better co-ordinated approach, a national Delivery Plan showing all the actions that can be delivered over the next decade and beyond, to achieve the targets Parliament will lay down for Scotland in the Climate Change (Scotland) Bill.

The Climate Change (Scotland) Bill

1.10 The Climate Change (Scotland) Bill, introduced into the Scottish Parliament in December 2008, requires Scotland's greenhouse gas emissions, including its share of those from international aviation and shipping, to be at least 80% lower in 2050 compared with 1990 levels. An interim target will require emissions to be at least 34% below 1990 levels by 2020; and 42% by 2020 if the EU decides to increase its 2020 emission reduction target to 30% below 1990 levels, following a global deal on climate change.

1.11 The Bill also requires the Scottish Government to act:

• to reduce greenhouse gas emissions year on year, every year from 2010 to 2050
• to increase the rate of reduction from 2020 onwards to at least 3% per year
• to specify more detailed annual targets in 2010, for each year to 2022.

Delivery Plan

1.12 Greenhouse gas emissions arise from almost every activity we undertake. The main source is the use of fossil fuels to generate electricity, heat buildings and provide transport. Other significant sources of emissions are the result of chemical or biological processes, for example in the production of cement; emissions associated with the growing of crops and the rearing of livestock; decomposition of waste; and from soil processes.

1.13 Reducing emissions requires one or more of the following abatement options:

• Reduce energy use through both decreasing demand and increasing the efficiency with which energy is used
• Reduce the use of fossil fuels and produce more low carbon energy
• Reduce consumption, particularly of products which emit greenhouse gases as part of their: manufacture,
  e.g. cement; production, e.g. meat; or decomposition,
  e.g. waste
• Sequester carbon geologically and in soils and vegetation, e.g. trees.

1.14 This Delivery Plan identifies:

• The key sectors for abatement
• The high level measures required in each sector to deliver the interim, 2020 targets in both a 34% and 42% Scottish target
• The four transformational outcomes required by 2030 to put Scotland on the right track to meet its 2050 target
• Milestones and actions; and barriers and risks around implementation
• Where the policy levers sit, e.g. at EU, UK or Scottish Government levels.

1.15 The Delivery Plan is structured as follows:

• Chapter 2 provides an overview of the key sectors for abatement, highlighting the importance of the "traded sector" and the sectoral contributions required from key areas within the non-traded sector to meet the 34% and 42% targets in 2020. A table summarising the key measures, milestones and actions across all the sectors is produced at the end of this chapter
• Chapters 3-7 cover each of the main sectors in more detail:
• Electricity Demand and Supply
• Heat Demand and Supply (including small scale electricity generation)
• Transport
• Rural Land Use (agriculture, forestry and other land management)
• Waste.

The key messages for each sector are set out at the beginning of each chapter. A summary of the high level measures required to deliver the 34% and 42% interim targets and the relevant transformational outcomes are produced at the end of each chapter.

• A final, Next Steps chapter sets out what the Scottish Government will do over the next 12 months, at the end of which, as required by the Climate Change (Scotland) Bill, the Government will produce a Report on Proposals and Policies, setting out in more detail the measures to be delivered to meet Scotland's annual emissions reduction targets up to 2022.

1.16 In drawing up a Delivery Plan for emissions reduction, it's important to be clear about:

• Who controls the policy levers, including the distinction between the traded and non-traded sectors
• How emissions (and reductions) are measured for the purpose of the Climate Change (Scotland) Bill and the Delivery Plan
• The information used in the analysis for the Delivery Plan
• How costs, benefits and cost effectiveness are considered in the Delivery Plan.

Who controls the policy levers?

1.17 Scotland cannot deliver its challenging targets by acting alone. Scotland is supported, and constrained, by levels of ambition and policy levers held at UK and EU levels. For example:

• The emissions reduction targets for the EU Emissions Trading Scheme, the largest carbon trading scheme in the world (see Chapter 2), are set at EU level
• The main responsibilities for energy policy and regulation are reserved to Westminster but the UK Government relies in turn on decisions that Scotland takes in permitting new sources of electricity generation
• Vehicle Excise Duty, Fuel Duty, driving licensing and speed limits on motorways are all reserved to Westminster but powers around pricing, Smarter Measures and transport infrastructure are generally devolved
• Agriculture and forestry policy and delivery are both devolved but work within an EU framework
• Landfill Tax is a reserved matter.

1.18 The UN Framework Convention on Climate Change ( UNFCCC) is the basis on which international agreement on climate change is negotiated. The meeting in Copenhagen in December 2009 aims to deliver a successor to the UNFCCC Kyoto Protocol. A new international agreement would help Scotland make deep emissions reductions. The European Union has committed to increasing its 2020 emissions reduction target from 20% to 30% (from 1990 levels) in the event of a new global deal being reached. This would ensure that EU policy levers deliver deeper emissions reductions, making radical changes more attainable in Scotland. It would also reduce some of the economic challenges of an uneven playing field that may arise if Scotland aims far beyond the actions of its neighbours in the EU.

How emissions are measured

1.19 The most accurate way of measuring Scotland's carbon footprint would be to look at the emissions associated with its consumption of goods and services. As a country that exports goods and services, such as electricity and food and drink, but imports many manufactured goods, Scotland's emissions profile using a consumption measurement would be rather different from an approach based on current production-based measurements. But while a consumption-based approach to measurement might be preferable, data are not yet sufficiently available or robust to use the consumption-based approach consistently. Thus, greenhouse gas emissions targets in Scottish, UK, EU and other international legislation are based on the emissions that arise from the production of goods and services within a country.

1.20 The Government is, however, committed to monitoring Scotland's progress on a consumption basis as well. This is reflected in the Climate Change (Scotland) Bill and the National Outcomes and Indicators supporting the delivery of the Government's Purpose. The Bill requires the Government to report on Scottish consumption of goods and services each year.

1.21 The National Performance Framework sets a National Outcome to reduce the local and global environmental impact of Scotland's consumption and production with a National Indicator to reduce Scotland's overall ecological footprint. This footprint gives an overall measure of the global impact of our everyday choices and offers an estimate of the land and sea area needed to provide all the energy, water, transport, food and materials that Scotland consumes. Part of this work will produce a measure of Scotland's carbon footprint.

1.22 Scotland's greenhouse gas emissions inventory (the Inventory) ² details annual emissions from all emission producing activities in Scotland, using widely applicable standards. It is published approximately five months after the UK's national inventory.
It provides the basis for the net Scottish emissions account.

1.23 The net Scottish emissions account lies at the heart of the Climate Change (Scotland) Bill. Achievement of the emissions targets set by the Bill will be measured against the level of this net account rather than against Scotland's actual emissions. The net Scottish emissions account has two main features:

• Net Scottish emissions, which are the emissions of greenhouse gases attributable to Scotland, as reduced by any "removals" of those gases by sinks such as forestry; and
• The net effect of any carbon units bought to offset any emissions or sold to emitters outside Scotland.

The way in which carbon units may be credited to or debited from the net Scottish emissions account will be detailed in statutory regulations. However, the underlying principle in the Bill is that Scottish Ministers should be able to take account of the annual balance of carbon units used.

The information used in the analysis for the Delivery Plan

1.24 This Delivery Plan is informed by the best available evidence, drawing on the expert analysis of the UK Committee on Climate Change coupled with Scottish Government internal analysis.

1.25 Key information resources for this analysis are:

• Scotland's greenhouse gas emissions Inventory
• Technical models that estimate marginal costs and abatement of emission-reducing activities
• Energy and land use system models, which consider future supply and demand scenarios and their associated emissions/sequestration
• Expert assessment of the practical constraints to reducing emissions.

1.26 The Committee on Climate Change ³ has advised the UK Government to commit to reducing greenhouse gas emissions by 34% by 2020 relative to 1990 levels, and by 42% once a global deal to reduce emissions is achieved. The Committee also identified indicative potential to reduce emissions in Scotland to contribute to the delivery of a UK 34% target.

1.27 The process of analysis for the Delivery Plan has thrown up the relative paucity of data and effective carbon assessment for certain policy areas at sub- UK level. A great deal of work is underway across the Scottish Government and by the Committee on Climate Change to remedy these weaknesses including work on carbon assessment. Given the imperative of early progress, action has to be taken now based on best available information, recognising that the Plan will need to be revised in time.

1.28 Taking the emissions inventory for agricultural land use as an example, at present it meets international standards for reporting emissions, but it is not fit for the purpose of capturing year-on-year changes in land use management policies and practice. This issue is being addressed at present at both UK and Scottish levels, but will not be solved in the short term.

1.29 Governments worldwide have a poor record of predicting the emission outcomes of their policies and programmes with accuracy. In part, this reflects the difficulty of predicting wider economic indicators, as well as problems of forecasting future energy prices. Governments use energy and land use models to project emissions from human activities into the future. UK models typically project out to 2020. The Scottish Government recently published its energy projections to 2020 ⁴. While these are useful as a guide to future emissions and abatement potential from different sectors, the projections are dependent on a series of assumptions, such as future levels of economic or population growth or average household warmth. Beyond 2020, the uncertainties within the assumptions make projecting emissions particularly difficult.

1.30 To deliver deep cuts in emissions, it is important to see beyond one particular year's emissions figures, which might be influenced by a range of random events, and focus on the underlying structural causes of emissions. For this plan, therefore, the key focus is on the necessary measures, milestones and actions, along with the barriers and risks around implementation, as they are seen today. This Plan and the more detailed, statutory Report on Proposals and Policies to be published in 2010 will be revised and refined over time as further evidence and advice becomes available.

Economic costs, benefits, and cost-effectiveness

1.31 According to Sir Nicholas Stern's Review ⁵, the costs of stabilising greenhouse gas concentrations in the atmosphere at or below 550ppm CO₂e, to avoid an increase in global temperature of 2-3°C (less than the temperature increase of 5% from unabated climate change) are 1% (+/-3%) of global GDP⁶. Failure to take action would, in his view, lead to climate change impacts that would reduce global GDP by between 5% and 20%.

1.32 The economic costs of transformational change to Scotland's economy and society to meet our climate change targets are not high relative to total economic output over the next 40 years.

1.33 The overall cost estimate is the aggregation of a range of costs and benefits, as well as distributional impacts across society. There will be a substantial financial cost for both the public and private sectors through the cost of carbon being incorporated into the price of goods and services and the cost of investing in new low carbon infrastructure. Many of such activities, particularly efficiency projects, are "net positive", meaning that, though they might require an upfront investment, the activity eventually both reduces emissions and saves money.

1.34 The Delivery Plan does not set out in detail how particular measures will be delivered or resourced. This will be done in the more detailed, statutory Report on Proposals and Policies to be published by the Scottish Government in summer 2010, which will set out how the annual emissions reduction targets to 2022 will be delivered. Work on costs will clearly also feature in the continuing work on the carbon assessment of the Scottish Government budget for 2010-11.

Carbon Pricing

1.35 To influence behaviour and investment decisions, investors and consumers must believe that a significant carbon price will be a factor into the future. This is particularly important to ensure appropriate investments in long-lived capital stock such as power stations, buildings and industrial plant. The price of carbon is largely outside Scottish influence.

Technology Policy

1.36 The development and deployment of a wide range of low-carbon technologies is essential in achieving the deep cuts in emissions that are needed. While the private sector will be the driver of change, closer collaboration between government and industry will help overcome risk and stimulate the development of a broad portfolio of low carbon technologies and reduce costs.

Behaviour Change

1.37 Even where measures to reduce emissions are cost-effective, there may be barriers preventing action. These can include a lack of reliable information, transaction costs, and behavioural and organisational inertia. Regulatory measures can play a powerful role in cutting through these barriers, and by providing clarity and certainty. Minimum standards can be a cost-effective way to improve performance, particularly where price signals may be too muted to have a significant impact. Information policies, including labelling and the sharing of best practice, can help consumers and businesses make sound decisions, and stimulate competitive markets for low-carbon goods and services. Financing measures can also help overcome upfront investment cost constraints when delivering energy efficiency improvements in particular.

1.38 The Scottish Government published the Scottish Environmental Attitudes and Behaviours Survey ⁷ in March 2009, and its findings will be crucial to work going forward on behavioural change. This major survey of 3,000 adults found that:

• People were more likely to see the environment as a global problem than as an important issue facing Scotland
• When questioned further, most acknowledged climate change was an urgent problem, but around a third did not believe their own behaviour contributed to climate change; and
• When asked what they could do to reduce climate change, most described relatively 'easy' actions such as recycling as opposed to actions which demand more of a sacrifice.

1.39 The survey suggests that public attitudes need to be improved, and there is clearly work for the Scottish Government to do on this. However, attitude change is not sufficient, it is behavioural change which is key. Across all groups surveyed, including the greenest groups, participation in some forms of green behaviour were very low: for example, 44% of those who live a mile from work and own a car drive there. This suggests that in order to foster real improvements efforts must be focussed on understanding and enabling behaviour change.

1.40 On the benefits side, those nations leading such investment to shift the world to a low carbon economy might, Stern suggested, benefit from a share of a global market for low carbon technologies worth at least $500 billion per annum by 2050.

1.41 With the right policy environment and appropriately targeted incentives and investment by the public and private sector Scotland's business sectors can benefit from an early move to a low carbon world by:

• Taking opportunities to strengthen the Scottish supply chain for low carbon investments, especially in renewable and low carbon energy and distributed energy systems
• Improved productivity and competitiveness through energy efficiency products and distributed energy services to communities and businesses
• Technology developments created by strong Scottish research and development work that can help build strong world-leading energy businesses that develop both domestic and export markets
• An improved skills base to deliver the exponential change in output from the non-fossil fuel energy sector that will be required to place energy at the centre of Scotland's future prosperity
• Cost savings through energy efficiency improvements that free up resources and increase demand for goods and services.

National Conversation

1.42Choosing Scotland's Future inspired a National Conversation on the type of government which best equips Scotland for the future. The ultimate aim of the National Conversation ⁸ is to allow the people of Scotland to make an informed decision about their future in a referendum on independence in 2010.

1.43 The current economic crisis has clearly demonstrated many weaknesses in the existing constitutional system. Scotland has very limited scope to adjust taxation or increase expenditure to provide a fiscal stimulus. The Scottish Government cannot borrow money to fund public works, or make changes to benefits, pensions or tax credits to meet Scottish needs. Instead, Scotland is dependent on the decisions made by the United Kingdom Government at Westminster.

1.44 Choices are also limited on issues such as climate change, investment in renewable energy, and in how Scotland's voice is heard in Europe and internationally. The issues which may impact on the Scottish Government's ability to meet its statutory climate change targets are considered below in each of the sectoral chapters of the Delivery Plan.