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

CHAPTER 2: OVERVIEW OF SECTORS FOR ABATEMENT

2.1 Reducing emissions by at least 80% from 1990 levels, over the next 40 years will require a radical change in the way in which society uses its energy and land. Some sectors will find it more difficult to reduce emissions by this extent without unacceptable changes in Scotland's social fabric or significant changes to consumer behaviour; that may mean other sectors will need to go further.

2.2 This chapter sets out the emissions reductions required across all sectors to meet the 34% and 42% targets in 2020 and the four transformational outcomes which need to be substantially delivered by 2030 to put Scotland on the correct pathway to the 2050 target. Underpinning these transformational outcomes is the need to give primacy to cost effective demand reduction and energy efficiency across all sectors.

2.3 The four transformational outcomes which the Scottish Government is working towards are:

• A largely de-carbonised electricity generation sector by 2030, primarily using renewable sources for electricity generation with other electricity generation from fossil fuelled plants utilising carbon capture and storage ⁹
• A largely de-carbonised heat sector by 2050 with significant progress by 2030 through a combination of reduced demand and energy efficiency, together with a massive increase in the use of renewable or low carbon heating
• Almost complete decarbonisation of road transport by 2050 with significant progress by 2030 through wholesale adoption of electric cars and vans, and significant decarbonisation of rail by 2050
• A comprehensive approach to ensure that carbon (including the cost of carbon) is fully factored into strategic and local decisions about rural land use through: appropriate protection for Scotland's carbon rich soils; minimising emissions from agricultural and other land use businesses; encouraging the sequestration of carbon, for example, through woodland planting; and the use of natural resources to generate renewable energy.

Delivery of these transformational outcomes will be considered further in the sectoral chapters on Electricity Demand and Supply; Heat Demand and Supply; Transport; and Rural Land Use.

2.4 Evidence suggests that society can reduce demand and de-carbonise its energy supply, especially in countries like Scotland with rich natural resources and a highly skilled workforce. The challenge is for Scotland to do this and, at the same time, maximise the economic opportunities available in the pursuit of a global, low carbon economy.

2.5 Delivering the Scottish Government's 10 Energy Pledges ¹⁰ will be a key driver in meeting Scotland's 2020 targets and achieving the transformational outcomes in the electricity, heat and transport sectors. The 10 pledges are:

• PLEDGE 1: We will support and accelerate the implementation of renewable energy, through our Renewable Energy Action Plan, in a way which promotes large scale, community based, decentralised and sustainable generation.
• PLEDGE 2: We will aim to build a commercially viable, diverse renewable heat industry in Scotland to deliver benefits to the wider public, through the implementation of our Renewable Heat Action Plan.
• PLEDGE 3: We will work with the oil and gas sector to maintain its competitiveness, facilitate the transfer of skills and knowledge to other sectors and utilise Scottish-based skills in world markets.
• PLEDGE 4: We will enhance our capability to undertake energy and environmental foresight, and develop our preparedness to anticipate and respond to threats and take advantage of opportunities.
• PLEDGE 5: We will support development and implementation of clean fossil fuel technologies in Scotland, through collaboration with academia, industry and other interested parties.
• PLEDGE 6: We will support the development of sub-sea grids, alongside improvements in the onshore grids, and press the UK Government for fairer charging structures.
• PLEDGE 7: We will implement measures to improve Scotland's energy use through the Energy Efficiency Action Plan, which is a key part of the Scottish Government's Climate Change Bill.
• PLEDGE 8: We will develop and deliver more sustainable transport to improve efficiency and reduce transport emissions in the longer term.
• PLEDGE 9: We will promote the development, uptake and use of electric and other low carbon vehicles, in addition to using improvements in vehicle engineering which are already available.
• PLEDGE 10: We will work to develop international partnerships through the Saltire Prize and the Scottish European Green Energy Centre to make Scotland a leader in the development and deployment of green energy.

Figure 1: Scottish Net Greenhouse Gas Emissions, 1990, 2006, and 2020 and 2050 Targets ^{1, 2}

1 Traded sector here does not include estimates of 2007 and 2008 additions to coverage.

2 Domestic and international aviation emissions are computed without an adjustment for radiative forcing - this is in line with the 2006 IPCC Guidelines for National Greenhouse Gas Inventories.

2.6 The statutory planning system also has an important role in climate change mitigation through its influence over the location and scale of new development. Development plans, which are prepared by local authorities and the national park authorities, indicate where development should happen and where it should not and provide the basis for decisions about individual applications for planning permission.

Scotland's emissions

2.7 Figure 1 shows Scotland's emissions from 1990 to 2006, the most recent year for which information is available.
The reduction in net emissions reflects the outcome of competing actions: the reduction in carbon dioxide emissions from the closure of the Ravenscraig steelworks; from the increased sequestration from forests planted in previous decades; and from more energy efficient households has been largely offset by rising emissions from road transport and power generation activities.

2.8 Methane emissions have reduced substantially, because of better management of landfill emissions and reduced livestock numbers. Nitrous oxide emissions have fallen sharply because of the relocation of Scotland's only nitric acid plant in the 1990s to Dublin and, as a result of changing agricultural practices. Overall, Scotland's greenhouse gas emissions have reduced by 18% between 1990 and 2006 (including international aviation and shipping, and after adjustment for the EU Emissions Trading Scheme (see below)).

2.9 The remainder of this chapter describes the importance of the traded and non-traded sectors and sets out the emissions reductions required from the key sectors to meet Scotland's 2020 targets.

The traded and non-traded sectors

2.10 Scotland's major power stations and energy intensive industrial installations, covering around 40% of Scotland's greenhouse gas emissions, fall within the scope of the EU Emissions Trading Scheme, the world's primary carbon trading market, and often described as the "traded sector".

2.11 The non-traded sector consists of all the other sectors: heating domestic and non-domestic buildings; transport excluding aviation; rural land use including agriculture, forestry and other land use; and waste. Emissions in the key parts of the non-traded sector for 2006 are set out in Figure 2.

Figure 2: Non-Traded Scottish Greenhouse Gas Emissions by Sector, 2006

2.12 Emissions from the traded sector in Scotland, including aviation, which will be included in the EU Emissions Trading Scheme from 2012, equate to approximately 29 MtCO ₂, which includes about 19 MtCO ₂ from the production of the public supply of electricity.

2.13 The EU Emissions Trading Scheme is expected to deliver about two thirds of all emissions reductions in Europe to 2020. The emissions reduction trajectory for the traded sector is set at EU level. This carbon market is designed to uncover emissions reductions where they can be achieved at least cost. In this Plan, we apply the trajectory estimated by the Department of Energy and Climate Change for Scotland, although the portion of emissions that will be assigned to Scotland's emissions account is yet to be agreed formally.
The EU Emissions Trading Scheme has developed in three phases: Phase 1 from 2005-2007; Phase 2 from 2008-2012; and Phase 3 from 2013-2020. The reduction in allocated emissions to Scotland over these three phases, from 2005 to 2020, is set out in Figure 3, and takes the form of roughly constant emissions to 2012 followed by annual reductions of around 2% from 2013 to 2020. Figure 4 shows the difference between actual (end of year) Scottish emissions and allocated emissions in the traded sector between 2005 and 2007.

2.14 Accounting for emissions reductions in the traded sector is more complicated than simply examining the end of year emissions themselves. The crucial point about the EU Emissions Trading Scheme is that emissions are allowed to go up or down in Scotland as long as overall emissions in the EU scheme are capped and reducing. To account for this situation, emissions are allocated to countries through their industry allowance allocations or through the allocation of auctioning rights. This means that the net Scottish emissions account will show the emissions plus/minus carbon units from the traded sector on a fixed downward trajectory to 2020, regardless of end-of-year emissions.

2.15 The impact of the traded sector in contributing to the delivery of Scotland's 2020 targets and transformational outcomes is considered in more detail in Chapter 3: Electricity Demand and Supply.

Figure 3: Scotland's Traded Sector Allocation, 2005 to 2020 ¹¹

Figure 4: Scottish Traded Sector Actual Emissions and Allocation, 2005 to 2007

2.16 A key forthcoming policy lever which operates across both the traded and non-traded sector is the Carbon Reduction Commitment. The Carbon Reduction Commitment is a mandatory emissions trading scheme being implemented jointly by the UK Government and Devolved Administrations.
It begins in April 2010 and will regulate emissions from large, non-energy-intensive commercial and public sector organisations which are not already covered by the EU Emissions Trading Scheme or Climate Change Agreements. These include supermarkets, hotel chains, banks, local authorities and government departments. The Carbon Reduction Commitment is designed to generate a shift in awareness of energy use in large organisations and to drive changes in behaviour and infrastructure. After a three year introductory phase, an annually-decreasing emissions cap will be set, the level of which will be decided following advice from the Committee on Climate Change.

2.17 Other key policy levers which straddle the traded and non-traded sectors, although with greater emphasis on reducing heat demand, are the suite of UK supplier obligations which aim to mobilise and support a radical shift in our use of energy in our homes. The Carbon Emissions Reduction Target is a statutory obligation on energy suppliers to achieve carbon targets by encouraging households to take up energy efficiency and low carbon measures. The UK Government's proposed Community Energy Saving Programme would place an obligation on energy suppliers and electricity generators to meet a carbon reduction target by offering energy efficiency measures to domestic consumers using a 'whole house approach'. Although the Carbon Emissions Reduction Target (and the Community Energy Saving Programme) is reserved, it impacts on and interacts with devolved policies such as Scottish Government fuel poverty, climate change, renewables and energy efficiency initiatives.

Meeting Scotland's 2020 targets

2.18 The Committee on Climate Change's First Report ¹² laid out measures for meeting a 34% UK target in the absence of a new global agreement, and additional measures for meeting a 42% target without purchasing extra carbon credits. The 34% measures selected were those with a marginal abatement cost of less than the forecast price of carbon in 2020, £40/tCO ₂e,
or those with a higher cost that were considered important stepping stones on the way to 2050. The additional measures for 42% were further feasible, but more radical, options.

2.19 To achieve Scotland's interim targets in 2020, significant cuts in emissions are required in both the traded and non-traded sectors. On the basis of advice from the Committee on Climate Change and internal analysis within the Scottish Government, the relative effort required by each of these sectors is likely to be as set out in Figure 5 and Figure 6.

2.20 The Emissions Trading Scheme ensures that the anticipated emissions reductions are achieved from the traded sector to 2020. In the event of a global deal, the EU will set the Emissions Trading Scheme on a steeper trajectory, thereby providing additional support for Scotland's 42% interim target. The carbon savings from the traded sector for the 34% and 42% targets are set out in Figure 5 and Figure 6. Under agreements at EU level, half of the additional emissions reductions to meet the 42% target must come from abatement measures within the EU traded sector. The option is available for the other half to come from the purchase of international carbon units by participating installations in the EU Emissions Trading Scheme.

Figure 5: Contributions from the Traded ¹³ and Non-Traded Sectors to Meet the 34% Target in 2020

Figure 6: Contributions from the Traded ¹³ and Non-Traded Sectors to Meet the 42% Target in 2020

2.21 Significant, and proportionately higher, reductions will also have to be made in the non-traded sector. To meet the different targets the non-traded sector needs to deliver an annual reduction in 2020 (against 2006 levels) of:

• About 6 MtCO ₂e for the 34% target; and
• About 8 MtCO ₂e for the 42% target.

2.22 Table 1 shows the key sectors for abatement to 2020 and the emissions reductions necessary. The analysis supporting this Plan suggests that meeting the statutory 2020 target will depend on all potential cost-effective emissions reductions being delivered in full.

Summary of milestones and actions to 2020, 2030 and 2050

2.23 Table 2 outlines the key milestones and actions, across all sectors, associated with the delivery of the 2020 targets and the transformational outcomes to meet the ultimate goal of reducing emissions by at least 80% by 2050. The following chapters consider each of the key sectors: Electricity Demand and Supply; Heat Demand and Supply; Transport; Rural Land Use; and Waste, in more detail.

Table 1: Net Emissions in 1990 and 2006, and Necessary Emissions Reductions in 2020, by Sector

	1990 emissions MtCO 2e	2006 emissions MtCO 2e	2020 emissions - 34% Scottish target			2020 emissions - 42% Scottish target
			MtCO 2e	% change against ...		MtCO 2e	% change against ...
				1990	2006		1990	2006
Traded sector allocation 1		22.8	17.5	-	-23%	14.2	-	-38%
Phase 1 traded sector	20.4
Not traded in 2006 but traded in Phase II	2.4
Aviation - domestic and international	1.1	2.0	1.8	+69%	-9%	1.8	+69%	-9%
Other, non-traded 2		3.8	4.3	-	+13%	4.3	-	+13%
Other, before ETS introduced	33.2
Heat	10.2	9.3	5.4	-47%	-42%	5.0	-51%	-46%
Domestic Buildings	7.8	7.3
Non-domestic Buildings	2.4	2.1
Transport	13.7	14.5	11.2	-18%	-23%	10.0	-27%	-32%
Road	9.2	10.5
Rail	0.2	0.3
Off-road	1.6	1.6
Shipping - domestic and international	2.6	2.2
Waste	5.7	2.5	1.6	-73%	-39%	1.5	-73%	-39%
Rural land use (excluding woodland)	14.5	12.7	12.0	-17%	-8%	11.4	-21%	-10%
Agricultural and other land use - net sources 3	16.9	15.7
Agricultural and other land use - net sinks	-2.4	-2.9
Woodland	-8.2	-10.1	-7.4	*	*	-7.7	*	*
TOTAL (after adjustment for EUETS)	70.1	57.6	46.3	-34%	-20%	40.5	-42%	-30%

1 The traded sector expanded its coverage in 2007 and in 2008, and the size of this extra coverage has been estimated and included in the 2006 total.
Coverage will change again in 2013 but these changes have not been considered here.

2 "Other, non-traded" comprises emissions that are currently not included in the EUETS, but do not fit within the categories of "Heat", "Transport", etc.
These are mainly from non-energy-intensive industry and products emitting non-CO2 greenhouse gases.

3 Includes emissions from land converted to settlements, some of which may be in urban areas.

* Percentage has been omitted to avoid confusion when looking at changes in negative numbers.

Table 2: Milestones and Actions to Deliver the Climate Change (Scotland) Bill Targets

Sector		2020	2030	2050
Electricity	Milestone	More than 50% of electricity from renewable sources	De-carbonised electricity generation from renewables and fossil fuel plant with CCS	EU North Sea grid in place
	Actions	Substantial investment in marine and tidal energy and infrastructure; and in grid connections for offshore wind
	Milestone	Fully operational commercial CCS plant	"Smart" grids balance demand
	Actions	Publish CCS route map; win EU/ UKCCS pilot plant project(s); CCS levy to fund commercialisation; demonstration plant by 2015
	Milestone	All homes have "smart" meters
	Actions	UK Government committed to deliver smart meters by 2020
Heat	Milestone	11% of heat from renewable sources	Significant progress towards de-carbonised heat Move towards all off-gas grid properties using low carbon heat - communities have access to mature local biomass market Work towards replacing remaining natural gas grid with biogas and local heat networks	Largely de-carbonised heat supply
	Actions	Renewable Heat Incentive delivers cost-effective low-carbon heat Maximise the use of all biomass resources for heating
	Milestone	All suitable cavity walls and lofts insulated where possible
	Actions	Home Insulation Scheme and Energy Assistance Package drive high take-up of insulation Develop low carbon building standards for 2016/7
	Milestone	Commercial and public sector uses energy efficiently
	Actions	Carbon Reduction Commitment in place from 2010
Transport	Milestone	EU delivers <95g/km target for new cars	Wholesale adoption of electric cars and vans Develop biofuels for use in HGVs, aviation and shipping	Transport largely de-carbonised
	Actions	EU regulations forthcoming for new car and van efficiencies
	Milestone	Battery charging infrastructure network in cities/towns
	Actions	Plan and develop battery charging infrastructure
Rural land use	Milestone	Woodland planting rate raised to 10-15 kha/year; use of existing woodfuel resource maximised	Additional woodfuel capacity from woodland expansion	Forest cover approaching 25% of Scotland
	Actions	Develop new funding models
	Milestone	All cost-effective land management measures have high adoption rates	Emissions taken into account in land use decisions	Emissions minimised and
	Actions	Support, advice and appropriate incentives for land managers		sequestration maximised
Waste	Milestone	Land filling no more than 5% of municipal waste (2025) More waste streams banned from landfill	Further materials banned from landfill	Near zero emissions from landfill
	Actions	Halt growth in municipal waste Monitor progress on anaerobic digestion Further measures to minimise waste, increase re-use and recycling Research project commissioned in 2009 on landfill bans