Electricity generation policy statement 2013

ANNEX A: RESPONSE TO INFORMAL CONSULTATION ON THE POSSIBILITY OF A DISTINCT SCOTTISH EMISSIONS PERFORMANCE STANDARD

Background

1. As part of the draft Electricity Generation Policy Statement, the Scottish Government informally consulted on the possibility of a distinct Scottish Emissions Performance Standard.

2. The UK Government have legislated for an Emissions Performance Standard ( EPS) through the UK Energy Bill ⁷² as part of its plans for Electricity Market Reform ( EMR). The EPS will provide a regulatory backstop on the amount of emissions new fossil fuel power stations can emit. Key elements of the EPS are summarised below.

3. Scottish Ministers have decision making powers relating to applications for large scale thermal power stations under Section 36 of the Electricity Act 1989 and the Scottish Government already has a consenting policy for reducing emissions from thermal generation by imposing conditions for progressively fitting Carbon Capture and Storage ( CCS) to all coal and gas thermal plants, following successful demonstration at commercial scale.

4. In addition, the Scottish Parliament has devolved competence in relation to Environmental Protection and emissions control. Given these devolved powers, it was unclear that the UK EPS would have any additional practical impact in Scotland. However, the EMR proposals have already created significant uncertainty in the market and we recognised that working within the UK-wide framework could be the preferred option. With this in mind, we sought views on the potential application of a separate EPS in Scotland. Views from stakeholders were requested on:

• Whether a Scotland-specific approach should be taken;
• If so, how an Emissions Performance Standard should be designed;
• If an EPS should be introduced for power stations already consented to reduce emissions over their remaining life;
• How an EPS could be enforced under existing or amended legislative provision.

Consultation responses

5. Of those who provided a response to the consultation on the possibility of a Scotland specific EPS, the majority were opposed to the idea on the basis that, within a GB electricity market, regulatory certainty is a key factor for investor confidence and a Scottish specific EPS is unnecessary and could create market distortions. Respondents who were in favour of a Scottish specific EPS raised concerns largely related to meeting emissions reduction targets.

Scottish Government position

6. As part of the wider- EMR package (detailed in the previous chapter) we have agreed with the UK Government to the UK-wide application of the EPS on the basis that a consistent regulatory approach is important for investor certainty and will be created by providing a clear and stable framework through the uniform application of the EPS.

7. Scottish Ministers have a statutory consultation role on the application of the emissions duty which will ensure that any specific Scottish issues can be taken into account as part of the developing regime which will work across Scotland.

8. Scottish Ministers will be required to make arrangements for monitoring and enforcement of the EPS. The Scottish Environment Protection Agency ( SEPA) will administer the monitoring and enforcement regime for Scotland.

9. We recognise that the EPS on its own will not deliver the Scottish Government's 2030 decarbonisation target and should be seen in the context of wider powers including our policy on Carbon capture and Storage and Section 36 planning powers as detailed above.

10. As discussed elsewhere in this document, the delivery of our 100% renewable electricity target together with developments in grid technology and storage and progress in demand reduction and energy efficiency will also play a crucial role In the delivery of our long-term decarbonisation target. Achievement of our 2030 decarbonisation target will also be dependent on a number of other factors, some of which are beyond the control of the Scottish Government including progress in world climate change talks, delivery of ambitious EU 2030 targets for greenhouse gas reduction and a reformed and strengthened ETS.

Key elements of the Emissions Performance Standard

11. An Emissions Performance Standard is one of the mechanisms proposed in Electricity Market Reform with the aim of providing a regulatory backstop on the amount of emissions new fossil fuel power stations can emit. The UK wide EPS has been set at 450g / kWh and will apply to all new fossil fuel plant over 50MWe from 2014.

12. The level of the EPS is set in primary legislation and will be reviewed as part of the overall EMR review - 5 years after the Act has passed. Any future changes to the level of the EPS will not affect plant already consented. This is known as grandfathering and has been set to 2045.

13. Much of the technical detail of the regime will be set out in secondary legislation after consultation.