Climate change monitoring report 2023

Climate Change Plan Monitoring Report 2023: Industry

Part A - Overview of sector

The 2020 annual emissions envelope published in the 2018 CCPu for this sector was for 11.5 MtCO₂e, whereas the outturn emission statistics for this year (published in June 2022) show a position of 10.1 MtCO₂e^[24]. On the basis of comparing these figures, the sector was within its envelope in 2020.

The CCPu sets out the following two policy outcomes for the sector, the indicators for which are summarised below:

Scotland’s industrial sector will be on a managed pathway to decarbonisation, whilst remaining highly competitive and on a sustainable growth trajectory.	On Track	Off Track	Too Early to Say
Industrial energy productivity (£GVAm per GWh)		X
Industrial emissions intensity (tCO2e per £GVAm)		X

Technologies critical to further industrial emissions reduction (such as carbon capture and storage and production and injection of hydrogen into the gas grid) are operating at commercial scale by 2030.
% of Scottish gas demand accounted for by biomethane and hydrogen blended into the gas network			X

Just transition and cross economy impacts

We wish to understand and report on the broader just transition and cross-economy impacts of our emissions-reduction activities in addition to these sector specific policy outcomes and indicators. To do this, in this report we use data from the Office of National Statistics (ONS): Low Carbon Renewable Energy Economy (LCREE) publication. The LCREE data presented in this report is based on survey data of businesses which perform economic activities that deliver goods and services that are likely to help generate lower emissions of greenhouse gases, for example low carbon electricity, low emission vehicles and low carbon services.

The LCREE indicator is narrowly defined and, while useful within its limited scope, does not give us the full picture of the impacts on workforce, employers and communities and progress towards a just transition.

Over the next few years we will work to develop a more meaningful set of success outcomes and indicators aimed at tracking the impacts of our policies on a just transition to net zero.

Sector commentary on progress

There has been a considerable decline in Scotland’s industrial emissions since 1990, falling by 50% (10.2 MtCO₂e) between 1990 and 2020. Research estimates^[25] that emissions from Scotland’s large industrial sites could feasibly reduce by 80% or more by 2045, while maintaining output.

At present, around 30% of total Scottish GHG emissions are generated by a diverse range of industrial sub-sectors, predominantly manufacturing, as well as mining and construction. Our CCPu estimates that by 2032 industrial emissions need to decrease by 43% on 2018 levels to meet Scotland’s Climate Change targets, whilst ensuring Scottish industry remains globally sustainable and competitive.

However, due to the significant disruption across the Scottish economy, and therefore to GVA, during the COVID-19 pandemic, indicators are unlikely to be back on track unless the indicator is updated.

The balance of reserved and devolved responsibilities for industrial decarbonisation means that progress is often dependent on UK Government and/or international policy and markets. For example, UK Government decision-making on where to focus its support to develop carbon capture and storage (CCS) infrastructure, and the lack of clarity this is delivering for Scottish projects, is beginning to negatively impact on investor confidence for Scottish decarbonisation projects, putting jobs at risk and compromising Scotland’s ability to meet our net zero commitments. The UK Government recently announced its intention to provide further details on Track 2 of the Cluster Sequencing Programme in Spring 2023. It is vitally important that this announcement sets out a clear and accelerated timeframe for Track 2, to give Scottish industry the certainty needed to progress CCS deployment in Scotland at pace.

There remains a significant risk of carbon leakage: if the Scottish industrial sector were to have a less supportive policy environment for decarbonisation than their competitors in the rest of the UK, Europe and beyond, they could be faced with higher costs as a result of carbon pricing mechanisms which could push production, and therefore jobs, overseas.

Significant parts of the industrial sector are subject to the UK Emissions Trading Scheme (ETS), which remains the key carbon pricing tool across the UK. The UK ETS is managed by the ETS Authority, comprising of the UK Government and three Devolved Administrations. The Authority consulted last year on strengthening the ETS (including by aligning it with net zero objectives) and will respond to that consultation later this year.

Developments in monitoring arrangements since last report

There have been no changes to the methodology since the last report. However, we are continuing to look at ways to improve our monitoring arrangements for forthcoming reports.

Part B - Progress to Policy Outcome Indicators

Policy Outcome: Cross-sectoral social and economic

Indicator: FTE employment in Low Carbon Renewable Energy Economy Indicator

On-Track Assessment (Milestones/Targets): Year-to-year change

Most Recent Data: 2021

Data Source(s): Office of National Statistics: Low Carbon Renewable Energy Economy (LCREE), Time spent of Green Tasks

Assessment: Too Early to Say

Commentary:

In 2021, the Scottish low carbon renewable energy (LCREE) sectors were estimated to provide 28,300 jobs, the highest in the published data.

• The estimates of LCREE are based on a relative small sample of businesses and hence are subject to a wide confidence interval. Scottish LCREE employment in 2021 is substantially higher than previous years but the difference Is not statistically higher than 2020.

• LCREE only shows employment in roles in Industries directly involved in the transition to Net Zero.
• The ONS also released experimental statistics on a wider perspective of
• green activity in the economy with their time spent on green tasks release.
• These stats reflect green activities in both LCREE and non-LCREE sectors. The 2023 publication has not yet been published.
• Last year’s publication showed that in 2019 Scotland achieved an all-time high of hours spent on green tasks and proportion of workers doing green tasks, including workers who spend more than 20% of their time on green tasks.
• The proportion of workers doing green tasks in Scotland was 36% in 2019, up from 23.8% in 2004. Workers who have spent more than 20% of their time doing green tasks was 14%, up from 9% in 2004.
• The proportion of overall hours spend doing green tasks in Scotland was 7%, up from 4.9% in 2004.

Policy Outcome: 1

Indicator: Industrial energy productivity (£GVAm per GWh)

On-track Assessment (Milestones/Targets): [Increase 30% by 2032]^[26]

Most recent data: 2020

Data source(s): DESNZ sub-national energy consumption statistics, DESNZ Energy Consumption in the UK statistics, Scottish Government Quarterly National Accounts Sectoral breakdown – unpublished..

Assessment: Off track – however, it should be noted that there is a high level of uncertainty with this assessment rating. The most recent data for 2020 will reflect the significant disruption to GVA across the Scottish economy during the COVID-19. pandemic. In addition, fundamental decisions on the Scottish CCUS Cluster status and UK ETS could have a material impact on the assessment of this indicator.

Commentary:

• Industrial GVA comprises the manufacturing, construction and mining sectors.
• Industrial energy productivity in Scotland (the GVA obtained through each GWh of energy used in the industrial sector) grew steadily, by over 50%, from 2005-2015, followed by a 7.3% decline over the next two years, and an uptick of 11.1% over 2018-19 before declining 15.3% in 2020.
• Compared to the 2015 baseline year industrial energy productivity has fallen by 12.7%, this is compared to a 3% increase on the baseline in 2019. This is driven by the 15% fall in industrial GVA between 2019 and 2020, which will reflect the significant disruption to the Scottish economy during the COVID-19 pandemic. The period 2015 to 2019 saw an increase of 3% in industrial energy productivity.
• Industrial GVA fell by 7.5% over the period 2005 to 2020, however this is impacted by the 15.0% fall in GVA between 2019-2020. The period 2005 to 2019 saw industrial GVA increase 8.9%.
• Industrial energy consumption fell by 29.6% over the period 2005 to 2020, with a small increase in 2019-20 of 0.3%.
• Improvements on this indicator are likely to be stepped, or lumpy, rather than gradual year-year changes, as success depends on substantial process changes at a small number of large sites. We’ll continue to review the suitability of the indicators used to reflect success in the sector and refine these as needed

Policy Outcome: 1

Indicator: Industrial emissions intensity (tCO₂e per £GVAm)

On-track Assessment (Milestones/Targets): [Reduce 30% by 2032]^[27]

Most recent data: 2020

Data source(s): Scottish Government Greenhouse Gas Emissions publication, Scottish Government Quarterly National Accounts Sectoral breakdown - unpublished

Assessment: Off track – however, it should be noted that there is a high level of uncertainty with this assessment rating. The most recent data for 2020 will reflect the significant disruption to GVA across the Scottish economy during the COVID-19. pandemic. In addition, fundamental decisions on the Scottish CCUS Cluster status and UK ETS could have a material impact on the assessment of this indicator.

Commentary:

• Industrial emissions intensity in Scotland (the volume of emissions produced through each £1m of GVA in the industrial sector) fell by 40.3% 2005- 2015, rose 10.5% to 2017, decreased 9.5% to 2019, then increased by 12.9% in 2020.
• Improvements on this indicator are likely to be stepped, or lumpy, rather than gradual year-year changes, as success depends on substantial process changes at a small number of large sites.
• Compared to the 2015 baseline year industrial emissions intensity has increased by 12.9%. This is driven by the 15% fall in industrial GVA between 2019 and 2020, which will reflect the significant disruption to the Scottish economy during the COVID-19 pandemic. The period 2015 to 2019 saw industrial emissions intensity remain flat, after a 9.1% fall between 2015 to 2018.
• Total industrial emissions fell by 38% between 2005 and 2020, this is reassuring given 2017-2018 saw a rise in industrial emissions before they fell by 11.9% between 2018 and 2020.
• We’ll continue to review the suitability of the indicators used to reflect success in the sector and refine these as needed.

Policy Outcome: 2

Indicator: % of Scottish gas demand accounted for by biomethane and hydrogen blended into the gas network.

On-track Assessment (Milestones/Targets): Based on trend

Most recent data: 2022

Data source(s): Scottish Gas Network and Department for Energy Security and Net Zero (DESNZ) Sub-national gas consumption statistics

Assessment: Too early to say

Commentary:

• In 2021 1.7% of Scottish gas demand was accounted for by biomethane blended into the gas grid up from 0.3% in 2015.
• Although moderate, this growth in biomethane levels has contributed to a lower emissions intensity of the gas grid.
• The most recent data shows that there was 126 GWh of biomethane injected into the SGN in 2015 and 802 GWh in 2021, a 536% increase

Part C - Information on implementation of individual policies

Outcome 1: Scotland’s Industrial sector will be on a managed pathway to decarbonisation, whilst remaining highly competitive and on a sustainable growth trajectory.

Policy

Emissions Trading

Scheme (ETS): following EU Exit we will work with UK Government and other devolved administrations on maintaining carbon pricing that is at least as ambitious as the EU ETS. The Scottish Government’s preference is to establish a UK ETS will have an interim cap 5% tighter than the EU ETS, and will be reviewed for consistency with Net Zero in 2021.

Date announced

June 2020

Progress on implementation since time of last report / CCPu

The UK ETS, established jointly by Scottish Ministers with the UK Government and the other devolved administrations, became operational on 1 January 2021. It currently mirrors the EU ETS to provide a smooth transition for the new market, but with clear commitment to review it for consistency with net zero.

During Spring 2022 the UK ETS Authority – formed of the four governments – consulted on a set of proposals to increase the climate ambitions of the ETS. The main proposals of the consultation included aligning the scheme cap (total number of allowances for auctioning) to net zero commitments and reviewing the industry cap (the proportion of allowances given for free to industries at risk of carbon leakage). The consultation also included initial proposals for expanding the scope of the ETS within the existing and to new sectors.

Timeframe and expected next steps

The ETS Authority is working to publish a government response (GR) to the ETS consultation later this year. The Authority will deliver legislative changes across the four parliaments shortly after the GR is published, aiming for the net zero cap trajectory to be in force by January 2024.

Policy

Deliver an Energy Transition Fund (ETF) to provide support for a sustainable, secure and inclusive energy transition in the North East.

Date announced

June 2020

Progress on implementation since time of last report / CCPu

Funding has been expanded to £75m.

4 projects currently in delivery

• The Global Underwater Hub(£6.5m)
• The Energy Transition Zone based in Aberdeen (£26.3m)
• Aberdeen Hydrogen Hub (£15.05m)
• Net Zero Transition Technology Project led by NZTC’s Net Zero Solution Centre (£16.7m)

Have any implementation indicators / milestones been set for this policy? If so, most recent data for progress against these.

Monitoring and evaluation development underway – approval to proceed issued by steering group on March 9^th 2023.

Timeframe and expected next steps

Completion of Monitoring and evaluation approach Q1 23/24.

All 4 projects in delivery and working to agreed timescales for milestone completion. Fund currently runs until end 24/25 financial year.

Policy

Establish and deliver a Scottish Industrial Energy Transformation Fund (SIETF) – to support the decarbonisation of industrial manufacturing through a green economic recovery.

Date announced

June 2020

Progress on implementation since time of last report / CCPu

Through the £34 million Scottish Industrial Energy Transformation Fund (SIETF) which co-invests with a diverse range of Scottish manufacturers to reduce energy costs and emissions through increased energy efficiency and deep decarbonisation

Our SIETF programme continues to receive significant applications from a wide range of industrial manufacturing sectors across the country. By enhancing energy efficiency it cuts energy costs, in particular for Scotland’s diverse food and drink sector.

Up to 2022, over 20 projects have been offered grants totalling £12m with many more to be offered during 2023

Have any implementation indicators / milestones been set for this policy? If so, most recent data for progress against these.

The 2022 Programme for Government committed us to continue SIETF which leverages over £100m of total investment to directly reduce emissions from industrial processes.

Industries in scope currently emit around 8.3 MtCO₂e. The fund in its current form should cut emissions by c.0.15 MtCO₂e.

Estimates of annual cumulative carbon savings resultant from co-investment from SIETF will be annually reviewed. However actual savings are unlikely to evidence until 2024 after significant energy efficiency or decarbonisation deployments are operational.

Timeframe and expected next steps

During 2023 a review of the programme will consider number and value of projects supported, projected emissions and energy productivity savings, and consider impacts against policy objectives.

Policy

Making Scotland’s Future: multi-faceted programme will boost manufacturing productivity, innovation, and competitiveness, supporting manufacturing businesses to make the transition to net zero and realise the opportunities of a low carbon economy

Date announced

December 2020

Have any implementation indicators / milestones been set for this policy? If so, most recent data for progress against these.

No. MSF is more about the collective, collaborative approach to supporting manufacturing that has been adopted across partners. Indicators and milestones will vary for individual projects/work packages in each workstream.

Timeframe and expected next steps

Currently refreshing the programme. Expect to complete by end-April.

Policy

Low Carbon Manufacturing Challenge Fund: to support innovation in low carbon technology, products and processes. Will be delivered as a R&D scheme with focus on implementing product circularity through design, reducing product/process waste and reducing emissions through product lifecycle

Date announced

2020-2021 PfG

Have any implementation indicators / milestones been set for this policy? If so, most recent data for progress against these.

For projects of over 0.5 million the gross impacts of the project are estimated, in particular Gross Value Added (GVA) and employment. Additionality adjustments are then made to drive the net impacts of each intervention. Impact ratio (net GVA per £1 of support) cost per job created or safeguarded.

Timeframe and expected next steps

Fund delivery is over CSR period so will continue delivery. Additional announcements likely. Pipeline of projects exceeds budget so are exploring scope for additional funding through consolidated budget exercise.

The Renewable Heat Incentive (RHI) is a GB wide scheme created by the UK Government (with the agreement of the Scottish Government).

Scottish Industrial Decarbonisation Partnership (SIDP): Scottish Government convened cross-sector energy-intensive industrial (EII) stakeholder forum with representatives from manufacturing sites. Initial objectives: bring together other initiatives; build a shared narrative between government/industry on decarbonisation’ and disseminate best practice.

August 2020

CCPu 2020

1,126.9 MW^[28] of accredited capacity under the non-domestic RHI (NDRHI) between November 2011 and December 2022.

1,770 GWh of heat had been paid for between April 2014 and end December 2022 under the domestic RHI scheme in Scotland.

The NECCUS network and the Grangemouth Future Industry Board (GFIB) continue to capture industry and wider views and commission vital evidence, thus many of the proposed SIDP functions are carried out by others partnerships or groups.

Scotland consistently attracted more than its pro-rata share under both the NDRHI and DRHI, with around 19% of non-domestic and 18% domestic accredited installations being in Scotland.

Too early to set indicators or milestones

The NDRHI closed as scheduled on 31 March 2021, though qualified extensions for both Tariff Guarantee and non-Tariff Guarantee applications were implemented prior to its closure. These extensions were due to end on 31 March 2023.

The Domestic Renewable Heat Incentive (DRHI) formally closed on 31 March 2022, and was replaced by the Boiler Upgrade Scheme. The Scottish Government opted out of the Boiler Upgrade Scheme in favour of boosting our existing programmes.

The proposal’s purpose mission and governance, in relation to other partnerships in this policy space, will be kept under review as industrial decarbonisation policy needs develop during 2023.

The Renewable Heat Incentive (RHI) is a GB wide scheme created by the UK Government (with the agreement of the Scottish Government).

Deliver a Net Zero Transition Managers Programme to embed Managers in organisations tasked with identifying, quantifying and recommending decarbonisation opportunities for the business.

August 2020

CCPu 2020

1,126.9 MW^[28] of accredited capacity under the non-domestic RHI (NDRHI) between November 2011 and December 2022.

1,770 GWh of heat had been paid for between April 2014 and end December 2022 under the domestic RHI scheme in Scotland.

Pilot project underway with partners from Scotland’s food and drink sector

Scotland consistently attracted more than its pro-rata share under both the NDRHI and DRHI, with around 19% of non-domestic and 18% domestic accredited installations being in Scotland.

N/A

The NDRHI closed as scheduled on 31 March 2021, though qualified extensions for both Tariff Guarantee and non-Tariff Guarantee applications were implemented prior to its closure. These extensions were due to end on 31 March 2023.

The Domestic Renewable Heat Incentive (DRHI) formally closed on 31 March 2022, and was replaced by the Boiler Upgrade Scheme. The Scottish Government opted out of the Boiler Upgrade Scheme in favour of boosting our existing programmes.

Support to sector-specific pilot during 2022/23 will inform analysis to tackle the skills and capacity challenges to deliver industrial decarbonisation.

The Renewable Heat Incentive (RHI) is a GB wide scheme created by the UK Government (with the agreement of the Scottish Government).

Establish a Grangemouth Future Industry Board (GFIB) – forum to coordinate public sector initiatives on growing economic activity at the Grangemouth industrial cluster, whilst supporting its transition to our lowcarbon future.

August 2020

2020-2021 PfG

1,126.9 MW^[28] of accredited capacity under the non-domestic RHI (NDRHI) between November 2011 and December 2022.

1,770 GWh of heat had been paid for between April 2014 and end December 2022 under the domestic RHI scheme in Scotland.

Have since committed to the development of a Just Transition Plan for the Grangemouth industrial cluster (2022 PfG), which will outline a co-developed vision for the future of the site, and actions/policy developments to help achieve it.

The Board delivered its workstream priorities during 2022 and agreed that these workstreams should be repurposed to have a greater emphasis on net zero delivery.

Scotland consistently attracted more than its pro-rata share under both the NDRHI and DRHI, with around 19% of non-domestic and 18% domestic accredited installations being in Scotland.

No, but as part of the JTP monitoring framework, indicators for progress will be developed.

The NDRHI closed as scheduled on 31 March 2021, though qualified extensions for both Tariff Guarantee and non-Tariff Guarantee applications were implemented prior to its closure. These extensions were due to end on 31 March 2023.

The Domestic Renewable Heat Incentive (DRHI) formally closed on 31 March 2022, and was replaced by the Boiler Upgrade Scheme. The Scottish Government opted out of the Boiler Upgrade Scheme in favour of boosting our existing programmes.

In 2023 GFIB will engage the active participation of industry and elicit business-focussed contributions on strategic issues facing the Grangemouth cluster.

JTP to be published April 2024.

The Renewable Heat Incentive (RHI) is a GB wide scheme created by the UK Government (with the agreement of the Scottish Government).

Develop policy on providing market-benefit for Scottish industries that invest to decarbonise production.

August 2020

CCPu 2020

1,126.9 MW^[28] of accredited capacity under the non-domestic RHI (NDRHI) between November 2011 and December 2022.

1,770 GWh of heat had been paid for between April 2014 and end December 2022 under the domestic RHI scheme in Scotland.

In June 2022, UK Government published a summary of responses from their Call for Evidence ‘Towards a market for low emissions industrial products’, but we await consultation on measures such as product standards and a carbon border adjustment mechanism which require UK action.

Scotland consistently attracted more than its pro-rata share under both the NDRHI and DRHI, with around 19% of non-domestic and 18% domestic accredited installations being in Scotland.

Sector or product specific measurement and benchmarking is noted in 2021 Scottish Government research: Improving the market benefits for lower-carbon industrial production in Scotland (climatexchange.org.uk)

The NDRHI closed as scheduled on 31 March 2021, though qualified extensions for both Tariff Guarantee and non-Tariff Guarantee applications were implemented prior to its closure. These extensions were due to end on 31 March 2023.

The Domestic Renewable Heat Incentive (DRHI) formally closed on 31 March 2022, and was replaced by the Boiler Upgrade Scheme. The Scottish Government opted out of the Boiler Upgrade Scheme in favour of boosting our existing programmes.

N/A

The Renewable Heat Incentive (RHI) is a GB wide scheme created by the UK Government (with the agreement of the Scottish Government).

Green Jobs Fund, to help businesses create new, green jobs, working with enterprise agencies to fund businesses that provide sustainable or low carbon products and services to help them develop, grow and create jobs. Further funding will help to ensure that businesses and supply chains across Scotland can capitalise on our investment in low carbon infrastructure such as the decarbonisation of heating and green transport.

August 2020

2020-2021 PfG

1,126.9 MW^[28] of accredited capacity under the non-domestic RHI (NDRHI) between November 2011 and December 2022.

1,770 GWh of heat had been paid for between April 2014 and end December 2022 under the domestic RHI scheme in Scotland.

We will not have updated figures for the Green Jobs Fund till Q2.

SG and the three Enterprise Agencies are still in ongoing contractual negotiations with companies who will be awarded funding for 2022/2023, therefore we will not have confirmed figures until the new financial year.

Latest figures to be quoted are: Between the Enterprise Agencies and Scottish Ministers, 57 projects have been supported with grant funding of £16.8m through the Green Jobs Fund. Figures provided by the recipients of these awards estimated this fund will support up to 3,886 jobs over the life of the individual projects.

Scotland consistently attracted more than its pro-rata share under both the NDRHI and DRHI, with around 19% of non-domestic and 18% domestic accredited installations being in Scotland.

ONS are expected to release their “Green jobs update, current and upcoming work: March 2023” on the 13^th March.

The Green Jobs Fund is a five year capital fund of up to £100m. £50m baselined to the Enterprise Agencies and up to £50m allocated to Scottish Ministers.

NB With Confidence:

As a result of budget cuts post spending review etc please ensure you include the words up to £100m when referencing the Green Jobs Fund to ensure accurate representation of the fact that this fund is no longer guaranteed to be £100m.

The NDRHI closed as scheduled on 31 March 2021, though qualified extensions for both Tariff Guarantee and non-Tariff Guarantee applications were implemented prior to its closure. These extensions were due to end on 31 March 2023.

The Domestic Renewable Heat Incentive (DRHI) formally closed on 31 March 2022, and was replaced by the Boiler Upgrade Scheme. The Scottish Government opted out of the Boiler Upgrade Scheme in favour of boosting our existing programmes.

Green Jobs Fund is expected to have awarded up to £100m by 2026 to support businesses and their supply chains to help them better transition to a low carbon economy and create new green jobs.

The Renewable Heat Incentive (RHI) is a GB wide scheme created by the UK Government (with the agreement of the Scottish Government).

Seizing the economic opportunity, we will work across government, enterprise agencies and the innovation system to identify strengths that can be built on as part of the decarbonisation journey, for example on The Clyde Mission and continued support for the Michelin Scotland Innovation Parc (MSIP).

August 2020

CCPu 2020

1,126.9 MW^[28] of accredited capacity under the non-domestic RHI (NDRHI) between November 2011 and December 2022.

1,770 GWh of heat had been paid for between April 2014 and end December 2022 under the domestic RHI scheme in Scotland.

MSIP has established 14 tenants and 135 jobs since its formation.

In August 2022 the MSIP Skills Academy was formally opened by Ms Slater to provide training and learning in support of the emerging needs of sustainable mobility and renewable energy industries. It will accept its first intake of students in Spring 2023.

MSIP is an exemplar of industrial transformation and is a key reference point for the Net Zero Industrial Clusters Exchange (NICE) launched by SG and Michelin at COP26, bringing together a range of European partners to share practical knowledge between private companies, public authorities and other stakeholders in supporting the drive for industrial transformation undertaking decarbonisation towards net zero.

The NDRHI closed as scheduled on 31 March 2021, though qualified extensions for both Tariff Guarantee and non-Tariff Guarantee applications were implemented prior to its closure. These extensions were due to end on 31 March 2023.

The Domestic Renewable Heat Incentive (DRHI) formally closed on 31 March 2022, and was replaced by the Boiler Upgrade Scheme. The Scottish Government opted out of the Boiler Upgrade Scheme in favour of boosting our existing programmes.

In support of Innovation, MSIP will open in 2023 its Innovation Labs and Innovation Hub. The Labs will provide businesses with flexible space for product development and prototyping while the MSIP will open in 2023 its Innovation Labs (March) and Innovation Hub (October). The Labs will provide businesses with flexible space for product development and prototyping while the Hub will provide a focal point for collaboration, demonstration and business support.

Outcome 2: Technologies critical to further industrial emissions reduction (such as carbon capture and storage and production and injection of hydrogen into the gas grid) are operating at commercial scale by 2030.

Policy

ACORN CCS Project: support the delivery of the CCS and Hydrogen capability at St. Fergus Gas Processing complex by 2025.

Date announced

CCP 2018

Progress on implementation since time of last report / CCPu

In October 2021, UK Government failed to award the Scottish Cluster (led by the Acorn Project at St Fergus) Track 1 status in their CCUS cluster sequencing process. The Scottish Cluster was instead given “reserve status”.

In response, SG called on UK Government to reverse its decision and grant the Scottish Cluster Track-1 status, and also provide urgent clarity on the timelines for Track 2.

SG notes the UK Government’s intention to provide further details on Track 2 in Spring 2023 and has make UK Government aware it is vitally important that this announcement sets out a clear and accelerated timeframe for Track 2, to give Scottish industry the certainty needed to progress CCUS deployment in Scotland.

SG have continued to advocate for the Sottish Cluster in their engagement, and have offered £80 million from the Emerging Energy Technologies Fund to accelerate its deployment.

Due to delays with UK Government announcing the Scottish Cluster, SG have re-profiled their offer of financial support into subsequent years.

Have any implementation indicators / milestones been set for this policy? If so, most recent data for progress against these.

There are no specific indicators in the CCPU. However, it does note that “…Acorn CCS is anticipated to be operational by 2024 and is well placed to attract support from the UK Government’s £1 billion CCUS Infrastructure Fund” (3.4.35). UK Government’s failure to award the Scottish Cluster Track 1 status has delayed Acorn CCS’ ability to become operational.

Timeframe and expected next steps

SG will continue to engage with UK Government on how the Scottish Cluster’s planning and development can best be supported. Further clarity from UK Government on the Track-2 cluster sequencing process (anticipated in Spring 2023) will impact timeframes and next steps.

Policy

Establish and deliver a Carbon Capture and Utilisation (CCU) Challenge Fund.

Date announced

2020-2021 PfG

Progress on implementation since time of last report / CCPu

Fund launched in April 2022 and remains open for applications.

Have any implementation indicators / milestones been set for this policy? If so, most recent data for progress against these.

There are no specific indicators in the CCPu.

Timeframe and expected next steps

The Fund launched in April 2022 and is currently open for applications.

Policy

Emerging Energy Technologies Fund – to support the development of Hydrogen, CCUS and Negative emissions technologies.

Date announced

CCPu 2020

Progress on implementation since time of last report / CCPu

First tranche of EETF funding, the £10m Hydrogen Innovation Scheme, launched in 2022. Grant awards expected to be made in Spring 2023.

Second tranche of funding, the £90m Green Hydrogen Fund to follow shortly.

Have any implementation indicators / milestones been set for this policy? If so, most recent data for progress against these.

There are no specific indicators in the CCPu.

Timeframe and expected next steps

Grant awards to be made in March and April 2023 to applicants to the Hydrogen Innovation Scheme. In March and April 2023 to applicants to the Hydrogen Innovation Scheme. In March and April 2023 to applicants to the Hydrogen Innovation Scheme.

Green Hydrogen Fund to launch shortly.

Policy

Carbon Capture Utilisation and Storage (CCUS): work closely with the UK Government to achieve commercial, policy and regulatory frameworks required to support CCUS at scale in the UK.”

Date announced

2020-2021

Progress on implementation since time of last report / CCPu

SG have continued to engage with UK Government on the development of relevant frameworks (e.g., business models) required to support CCUS at scale in the UK.

Have any implementation indicators / milestones been set for this policy? If so, most recent data for progress against these.

There are no specific indicators in the CCPu.

Timeframe and expected next steps

SG is continuing to engage with UK Government on the development of relevant frameworks, including how business models could effectively support the Scottish Cluster to continue its development.

Policy

Forums for CCUS and Blue (low-carbon) Hydrogen: to bring together industry, academics and membership organisations to promote and attract investment in CCUS and Blue Hydrogen.

Date announced

NECCUS 2019

Progress on implementation since time of last report / CCPu

North East Carbon Capture, Utilisation and Storage Alliance (NECCUS) has become established as a major industry led membership forum and the Scottish Government has delivered grant funding to NECCUS between the 2021/22 and 2022/23 financial years.

Have any implementation indicators / milestones been set for this policy? If so, most recent data for progress against these.

Scottish Government has delivered grant funding to NECCUS between the 2021/22 and 2022/23 financial years.

Timeframe and expected next steps

SG is now exploring the potential for further grant funding to support NECCUS in the 2023/24 financial year.

Policy

Evidence for CCUS and Blue Hydrogen: building the evidence base on impact of technology, regulatory and market barriers.

Date announced

2020/21 PfG

Progress on implementation since time of last report / CCPu

Contribution from CCUS:

SG has commissioned a study into the potential for CO₂ shipping in Scotland (ongoing).

SG has commissioned a CCUS regulatory mapping exercise by external legal consultants (ongoing).

SG has commissioned a NETs feasibility study by external consultants (ongoing).

Have any implementation indicators / milestones been set for this policy? If so, most recent data for progress against these.

There are no specific indicators in the CCPu.

Timeframe and expected next steps

The Shipping Study and NETs Feasibility Studies are expected to conclude in Q1/Q2 2023.

Policy

Strategic development of Scotland’s hydrogen economy - This is a cross-portfolio proposal that will impact on the delivery of multiple outcomes.

Date announced

Hydrogen Assessment and Policy Statement 2020, draft Hydrogen Action Plan

Progress on implementation since time of last report / CCPu

The final Hydrogen Action Plan was published in December 2022.

Have any implementation indicators / milestones been set for this policy? If so, most recent data for progress against these.

There are no specific indicators in the CCPu.

Timeframe and expected next steps

The actions set out within the Hydrogen Action Plan cover this Parliamentary term.

Policy

Hydrogen Demonstration: to replicate and scale-up demonstration projects and the evidence base for hydrogen based technologies.

Date announced

Hydrogen Assessment and Policy Statement 2020, draft Hydrogen Action Plan 2021

Progress on implementation since time of last report / CCPu

The £10m EETF Innovation Scheme (HIS), launched in 2022. The HIS is aimed at providing support for the production, storage and integration of renewable hydrogen including feasibility and demonstration projects.

Have any implementation indicators / milestones been set for this policy? If so, most recent data for progress against these.

There are no specific indicators in the CCPu.

Timeframe and expected next steps

HIS Grant awards expected to be made in Spring 2023.