Climate Change Plan: monitoring report 2019

Industry

Greenhouse gas emissions from the industry sector have already been reduced by 46% (1990 to 2017). 

The Plan sets out the following three policy outcomes for the sector:

1. By 2032, industrial and commercial energy productivity to improve by at least 30% from 2015 levels, through a combination of fuel diversification, energy efficiency improvements and heat recovery.

2. By 2032, industrial and commercial emissions intensity will fall by at least 30%, from 2015 levels, through a combination of fuel diversification, energy efficiency improvements and heat recovery.

3. Technologies critical to further industrial emissions reduction (such as carbon capture and storage, carbon capture and utilisation, and production and injection of hydrogen into the gas grid) are demonstrated at commercial scale by 2030. 

In May 2019, the UK Committee on Climate Change recognised that government has a role to play in incentivising investment in energy efficiency and productivity whilst maintaining international competitiveness. Scottish Energy Intensive Industries (EII) face distinct challenges to decarbonise.

In order to create the conditions to secure investment that would aid emissions reductions whilst growing carbon-intensive EII - and potentially attract new, advanced manufacturing industries of the future – the Scottish Government is augmenting existing analysis.

The Scottish Government has been emphasising the focus on measures of energy productivity and emissions intensity in all programmes of advice and support for the decarbonisation of the industrial sector. This is because these measures can demonstrate the policy aims of achieving higher levels of output per unit of energy input (GVA/GWh), and/ or the release of fewer greenhouse gas emissions for each unit of output (CO₂ per unit of GVA).

Output Indicator For Policy Outcome 1: 

Industrial and commercial energy productivity to improve by at least 30% by 2032.

Year	2020	2025	2032
Change in Energy productivity from 2015	10%	20%	30%

Most Recent Data: £0.63 million GVA per GWh energy productivity in 2017. 

Baseline Data: £0.67 million GVA per GWh energy productivity in 2015.

Change: 6.0% decrease in industrial energy productivity from the 2015 baseline.

Data Source(s): BEIS sub-national consumption^[1]; BEIS Energy Balance DUKES^[2]; Scottish Government Quarterly National Accounts Scotland^[3].

On Track: Too early to make assessment – estimates of industrial energy productivity is only currently available from 2015, so only three years of data are available.  This is inconclusive to provide a wider trend.

Commentary: 

• BEIS  recently changed their methodology from 2016 onwards, therefore it is not possible to create a comparable time series before this point. There is, however, an estimated baseline figure for 2015 that can be used in the meantime.
• In 2017, energy productivity decreased by 6.0% from the 2015 figure.  Even though industrial GVA increased by 1.3% between 2015 and 2017, this does not compensate for a 7.8% increase in consumption in the same period, hence the negative trend.

Industry Figure 1: Percentage Change in Energy Productivity from 2015

Output Indicator For Policy Outcome 2: 

Industrial and commercial emissions intensity to fall by at least 30% by 2032.

Year	2020	2025	2032
Change in emissions intensity from 2015	-10%	-20%	-30%

Most Recent Data: 457 tCO₂e per £1 million GVA, in 2017.

Baseline Data: 442 tCO₂e per £1 million GVA, in 2015.

Change: 3.3% increase in energy intensity from 2015 to 2017.

Data Source(s): Scottish Government Energy Statistics Database^[4].

On Track: Too early to make assessment – estimates of industrial emissions intensity is only currently available from 2015, so only three years of data are available.  This is inconclusive to provide a wider trend.  

Commentary: 

• Emissions intensity fell 2% in 2017 from 2016 levels, despite a small increase in total industrial emissions. GVA increased 3%, which was enough to counteract the 1% increase in emissions in 2017.
• In 2016 emissions intensity increased by 5%, due to both a decrease in GVA and an increase in emissions, and so the 2017 figure is still 3% higher than the 2015 figure. It is a move in the right direction, however, as it decreased since the previous year, but it is not back to pre-2016 levels. 

Industry Figure 2: Percentage Change in Emissions Intensity from 2015 to 2017

Please note: these figures have been revised from the previous edition of the monitoring of the monitoring framework.

Implementation Indicator For Policy Outcomes 1, 2 And 3: 

The installed capacity of renewable heat receiving payment under the non-domestic RHI increases.

Most Recent Data: 985 MW of installed capacity receiving payment under the non-domestic RHI between November 2011 and August 2019.

Baseline Data: 250 MW of installed capacity receiving payment under the non-domestic RHI in between November 2011 and February 2015.

Change: There was an additional 735 MW of installed capacity of renewable heat receiving payment under the non-domestic RHI between February 2015 and August 2019.

Data Source(s): BEIS RHI stats^[5].

Commentary: 

Capacity of accredited non-domestic RHI installations have steadily increased from February 2015. Capacity has almost quadrupled from this period to August 2019. There are 3,753 accredited full applications by August 2019. 

Implementation Indicator For Policy Outcomes 1, 2 And 3: 

Improve the evidence base of the industrial sector in Scotland through initiatives under the Manufacturing Action Plan and SEEP (Scotland’s Energy Efficiency Programme, now Energy Efficient Scotland).

Most Recent Information: The Scottish Government continues to work alongside industry representatives and agencies including the Scottish Environmental Protection Agency, Resource Efficient Scotland and Zero Waste Scotland to improve the evidence base of the Scottish Industrial Sector.

Information Source(s): 

• SEPA Scottish Pollutant Release Inventory^[6];
• European Environment Agency Database on emissions and energy use for Large Combustion Plants^[7].

Commentary: 

The Scottish Government is supplementing existing analysis of the sector, and looking ahead to identify data or evidence gaps in order to bring more certainty to scenarios of how the sector can be expected to decarbonise, whilst remaining internationally competitive.

In response to stakeholder engagement and to enable more advantageous project positioning for funding or financing support opportunities, the Scottish Government proposes to co-ordinate knowledge of project opportunities across EII in Scotland.

We continue to lead an industrial decarbonisation agency group that informs the direction of continuing programmes of support on industrial decarbonisation. Overcoming barriers to the release or sharing of data, that could be beneficial in targeting support programmes are considered within this group.

Implementation Indicator For Policy Outcomes 1, 2 And 3: 

Continued annual monitoring of energy productivity and emissions intensity.

Most Recent Information: As above.

Information Source(s): As above.

Commentary: 

The annual monitoring commitment of this implementation indicator is covered in the reporting for the output indicators for policy outcomes 1 and 2.

Implementation Indicator For Policy Outcomes 1, 2 And 3: 

The Scottish Government funded elements of the ACORN CCS Project feasibility study are completed by November 2018.

Most Recent Information: The Scottish Government provided £275k for the ACORN Project as part of match funding through the Projects of Common Interest instrument called the Connecting Europe Facility. 

Information Source(s): Project promoters - Pale Blue Energy Ltd^[8].

Commentary: 

• Carbon Capture Utilisation and Storage (CCUS) is an industrial scale decarbonisation system which has the potential to make a big impact on achieving Scotland’s emissions targets. The Intergovernmental Panel on Climate Change and the International Energy Agency have both said that developing CCS technology will be critical to keeping global temperature increases to 2 degrees Celsius or less. The advice from the Committee on Climate Change describes CCUS as a “necessity, not an option” to achieve net zero emissions.
• Scotland’s key CCUS resource is our vast potential for CO₂ storage in the North Sea. Scotland is the most cost-effective place to begin CCUS in the UK, with existing oil and gas infrastructure available to repurpose for CO₂ transport and storage.
• The Scottish Government has been consistent in our strong commitment to the development and implementation of CCUS technologies, as indicated by our providing funding to the Acorn CCS Project, and to Scottish Carbon Capture and Storage. The development of CCS could offer a range of transition opportunities for Scottish oil and gas firms and domestic supply chain companies.
• Scottish Government is working closely with the UK Government to develop the deployment pathway for CCUS. The UK Government are currently developing their policy on CCUS – interest in CCUS is growing in UK and is increasingly linked to hydrogen production. Scottish Government is closely involved in the progress of UK policy on CCUS.