Energy Efficient Scotland: strategic environmental assessment

5 The Approach to the Assessment

5.1 Common Themes and combined assessment

5.1.1 The potential to combine the assessments of the proposals was discussed in the Scoping Report submitted to the SEA Gateway on 6 ^th February 2018. The setting of a long term standard, the review of Energy Efficiency Standard for Social Housing ( EESSH), and options to create a statutory framework for Local Heat & Energy Efficiency Strategies ( LHEES) and framework for District Heating regulation ( DHR) all fall under Section 5(4) of the 2005 Act and could have significant environmental effects.

5.1.2 The Scoping Report set out initial information on the likelihood of significant effects arising from the various proposals and the proposed evidence base to inform the assessment. It also confirmed that all environmental topic areas would be scoped into the assessment ^[23] . The report also set out a proposed methodology for undertaking a combined assessment of the proposals as described above.

5.1.3 The development of the Long Term Standards, EESSH, and the LHEES and DHR proposals will be closely linked under the Programme umbrella, and is likely to be an iterative process. As such, a flexible approach to the SEA will be required to ensure that the assessment of both contribute to their development, whilst ensuring compliance with the 2005 Act.

5.1.4 Early engagement with Scottish Government teams, and key delivery partners has taken place. Further work to develop the content of the Routemap, mentioned above, has clarified the links under the Programme, of all aspects of the wider proposals and it is clear that there are common themes throughout, for example common environmental baseline information and consideration of the potential environmental impacts associated with energy efficiency measures.

5.1.5 We have also received and taken into account, the responses from the consultation authorities to the Scoping Report, and included additional information to that set out in the Scoping Report as a result.

5.1.6 We have taken every opportunity to combine the assessment process where possible to produce this joint Environmental Report for these proposals, all of which reflects the Programme being a single programme comprising a number of strands. We have however been cognisant of the need to ensure that SEA of these programmes of work is undertaken in accordance with the requirements of the 2005 Act.

5.1.7 The following sections clarify the common areas which have allowed for a combined assessment process. We have used a narrative format, accompanied by tables and figures to help illustrate key findings where appropriate. Key questions have also been developed to help to frame the assessment discussion of key environmental issues that have been identified.

5.2 The Long Term Standard and EESSH

5.2.1 The Vision of Energy Efficient Scotland is that by 2040, our homes and buildings are warmer, greener and more efficient. This vision forms the foundation of all work carried out under the Programme banner. This reduction in energy use and carbon, the affordability of that energy and its green credentials is therefore common throughout the three proposals.

5.2.2 Work to achieve this vision therefore contains common elements which apply to all buildings across Scotland, and therefore all sectors, which can most simply be divided by domestic and non-domestic use, and further into sub categories of Owner Occupier ( OO), Private Rented Sector ( PRS), Social Housing ( SH), Small and Medium businesses ( SME), other businesses (other non-dom) and the publicly owned commercial stock (non-dom public). In the longer term, the Programme will also consider the broader topic of energy supply to all sectors, but this is a longer term aspiration and not, therefore, part of this assessment.

5.2.3 Specific to individual buildings, work is already underway on the development of a Long Term Standard, with a consultation on standards for private rented housing taking place in 2017 and a review of EESSH nearing completion. Consultation is now launched to expand the use of long term and minimum standards to all buildings and the setting of such standards across all building stock clarifying the scale of work, the speed of change, the long term goal and any interim measures to phase implementation. The Energy Efficiency Standard for Social Housing ( EESSH) was introduced in 2014 requiring social landlords to meet energy efficiency standards by 2020 (effectively EPC Band D or C depending on building type and fuel supply). A review of EESSH was undertaken in 2017/18 as part of the current proposals under the Programme, it considered EESSH milestones post 2020 and a vision for social housing to be carbon neutral by 2040. In common the setting of standards allows common assessments irrespective of sector.

5.2.4 Work to produce a long term standard for all building stock is based on two key themes. The first, in no particular order, is the introduction of a phased standard for all domestic properties which meets the end target in a way which does not create bottlenecks in the supply chain, and does not result in excessive need for compliance arrangements. The second is the development and implementation of a common standard to be used for all non-domestic properties. Both have the Programme end target at their heart.

5.2.5 We have considered domestic and non-domestic sectors separately within this assessment, since information available for the domestic sector is at a more advanced stage. The assessment has considered the potential for environmental effects relevant to each sector that may arise from the setting of a standard, and also the impact of the standard to be used, and the speed of change (owner occupier, private rented sector, and social housing, and separately non domestic properties). This has allowed for the potential impacts against each environmental topic area to be considered for each sector and has helped inform proposed policy development which is not the necessarily the same.

5.2.6 Following this sectoral approach to the assessment, an overall assessment has been undertaken to consider the impacts on a broader scale. This second tier of the assessment process has highlighted potential cumulative and in-combination effect.

5.3 LHEES and District Heating regulation

5.3.1 At a strategic level, and to support a coordinated approach to the local planning and delivery of energy efficiency and heat decarbonisation programmes within the Programme, we have consulted upon proposals to create a statutory framework for Local Heat & Energy Efficiency Strategies ( LHEES) which will:

• help to drive the Programme across all local authorities, and will act as the foundation for 20 years of delivery programmes to meet our fuel poverty, energy efficiency and heat decarbonisation ambitions;
• send clear investment signals to develop a strong and sustainable energy efficiency and heat decarbonisation supply chain for Scottish business; and
• enhance Scotland's strategic capacity and expertise in the delivery of energy efficiency and heat decarbonisation.

5.3.2 Similarly, to support appropriately-sited, low carbon, affordable district heating, we are also considering the development of a policy and regulatory system which will see district heating develop in a strategic manner, and provide appropriate conditions on the ground to accelerate delivery of district heating and to grow this market. In order to achieve this we have consulted further on a proposed regulatory framework in which:

• district heating and communal heating providers will serve their customers well;
• district heating and communal heating providers will deliver affordable and low carbon heat;
• there is increased confidence in the investment in new and expanded district heating; and
• wherever possible, Scotland secures the economic opportunity presented by both reducing costs to customers and, infrastructure investment opportunities for the Scottish supply chain.

5.3.3 Therefore we are considering the impact of these proposals on energy use, their local application and options for delivery together..

5.3.4 The assessment has focused on the policy backdrop to LHEES and the work to consider regulation of the district heating sector, and assess the impact of that on the environmental topics. While each LHEES will establish an authority-wide approach to energy efficiency and heat decarbonisation at local level, in line with national frameworks and guidance, the approach taken by each authority to its local delivery programmes will vary according to local geographies and to impacts identified in local socio-economic and environmental assessments of the LHEES.

5.3.5 The cumulative and in-combination impact of the roll-out of this approach across Scotland has also been assessed against the environmental topic areas, and also assessed against the potential impacts caused as a result of the long term standards.

5.4 Consideration of Previous SEA Work

5.4.1 This SEA has reviewed and taken account of previous SEA work associated with work influencing or delivering the Programme. Included are the SEA of EESSH phase 1 undertaken in 2012 ^[24] , and the SEA undertaken in support of the Draft Climate Change Plan: The Draft Third Report on Policies and Proposals 2017-2032 and the Draft Scottish Energy Strategy: The Future of Energy in Scotland published 27 January 2017 ^[25] which supported and assessed the final contents of the published energy strategy, The Future of Energy in Scotland: Scottish energy strategy, published in December 2017.

5.4.2 It is our view that the policy objectives underpinning the work assessed in this SEA are a continuation of those previously outlined in the documents above, and remain relevant to this assessment.

5.5 A Staged Approach to the Assessment

5.5.1 A staged and iterative approach has been used to undertaken the assessment. The assessment involved a three-stage process.

5.5.2 Stage 1 - Assessment tables were developed for each sector ^[26] impacted by the setting and implementation of long term standards which set out the potential for impacts across a range of environmental receptors as affecting each sector ( Appendix C). Tables were also developed for each sector impacted by the proposed establishment of a requirement for Local Heat & Energy Efficiency Strategies and for the creation of a framework for district heating. These also considered the potential impacts across the same environmental receptors against the implantation of the requirement and framework (see Appendix D).

5.5.3 Stage 2 - Drawing on the Stage 1 findings, summary tables show the combined effect of the individual standards, polices and proposals. Findings are displayed for each sector affected.

5.5.4 Stage 3 - The information from the previous two stages was consolidated. This stage provided an overarching and strategic level analysis of the likely significant environmental impacts of the proposal launched at this time and the potential for cumulative and in-combination effects. Information on the management and mitigation of the identified environmental effects, proposals for monitoring, and the conclusions and recommendations of the assessment are also included.

5.6 The Assessment Stages

5.6.1 This stage is written in a narrative format, and includes the consideration of primary and secondary effects. A series of questions were devised to focus on potential environmental effects of the 3 proposals. These questions were used to focus the assessment on the primary environmental issues that were identified as the assessment was undertaken, and covered all environmental topic areas scoped into the assessment. These questions also aided the consideration of potential cumulative and in-combination effects likely to arise from both policies and proposals, and the wider policy context.

Key Questions for the Assessment

1. Will the proposal contribute to meeting Scotland's climate change commitments?

2. Will the proposal contribute to the reduction in carbon generated as a result of energy use?

3. Is the proposal likely to improve air quality and human health?

4. Will the work proposal have implications on infrastructure ?

5. Is the proposal likely to have indirect or secondary environmental effects?

6. Can these potential effects be effectively managed, mitigated or enhanced?

7. Have alternatives to the proposal been considered in this assessment?

5.7 Consideration of Reasonable Alternatives

5.7.1 The 2005 Act requires that the potential for significant environmental effects of reasonable alternatives of a plan, programme or strategy are assessed as part of the SEA process. The following outlines the reasonable alternatives that have been considered both in the 3 proposals.

5.7.2 The development of targets, milestones and policy under the Programme umbrella are all influenced by a huge raft of research and the number of drivers, and the TIMES model has and will continue to play a fundamental role in their development. The TIMES model has, and will continue to be used to consider scenarios to meet climate change targets. The TIMES model has been pivotal in the development of the Energy Strategy and Climate Change Plan and now, this Programme. The continuity provided by this across all documents allows a robust assessment of the impacts of the various scenarios proposed in each. At this stage the end targets are known, and the consideration of reasonable alternatives has therefore focused on what paths exist to reach those targets.

What is the times model?

TIMES is a Whole System Energy Model. These models aim to capture the main characteristics of an energy system and are particularly useful for understanding the strategic choices that are required to decarbonise an economy.

The Scottish TIMES model is a high-level strategic model covering the entire Scottish energy system and containing many thousands of variables covering existing and future technologies and processes.

The model can be used to identify the effectiveness of carbon reduction measures in order to provide a consistent comparison of the costs of action across all sectors.

5.7.3 Through TIMES, options surrounding development in technology will also be considered, including the impact this may have on the speed of change proposed and the potential environmental impacts associated with that has also assessed.

5.7.4 Further, at the heart of the Programme sits a suite of critical success factors which assist in programme development and the direction of travel. The assessment of reasonable alternatives has therefore been undertaken in a way which combines the impact on environmental criteria and programme criteria. This has allowed an initial assessment of the likelihood of success of options based on, not only environmental impacts, but those factors which may make an option unrealistic which viewed from a wider perspective.

Critical success factor	Description
Strategic fit and economic growth	Supports Scottish Government objectives to: meet Climate Change targets promotes and supports growth and development of the Scottish economy in a controlled and sustained manner.
Deliverability and quality	Delivers in a way which: matches the supply chain's ability to deliver the required technologies and works to a set standard and by an appropriately skilled workforce makes an improvement to Scotland's built estate to a defined level of quality, and provides protection for the consumer.
Affordability and Value for money	Allows a range of finance options to be used and has the potential to attract significant levels of private sector capital. Realises value for money for Scottish Government
Fuel Poverty reduction	Promotes achievement of fuel poverty reduction targets through the programme life.
Environmental factor	Description
Biodiversity	Conserve, protect and enhance Scotland's diversity of species, habitats and the natural heritage. Protect and enhance of important habitats and connectivity. Maintain and protect populations of European Protected Species, including their functioning habitat
Soil	Maintain, protect and where possible enhance soil quality, geodiversity and carbon rich soils.
Water	To protect maintain and where possible and enhance the ecological status of the water environment.
Population and Human health	Work to eradicate fuel poverty Work to reduce GHG which are harmful to human health Reduce other environmental impacts which are harmful to human health
Air	Protect and improve, where possible, air quality across Scotland
Climatic Factors	Contribute to formal targets to reduce Green House Gas Emissions across Scotland
Cultural Heritage	To protect and where appropriate enhance the historic, built and cultural heritage.
Material Assets	Promote the sustainable use/reuse of all properties across Scotland to support sustainable development, reduce GHG emissions and make best use of this valuable resource
Landscape	Protect our most scenic areas, reflect the importance of the interaction between people and the land, and aim to enhance areas where landscape qualities have been eroded over time

5.8 Consideration of reasonable alternatives - Long Term Standards – all sectors including EESSH

5.8.1 In the consideration of the setting of any long term standard, applicable to all buildings in Scotland, the findings of the consultation in January 2017 on Scotland's Energy Efficiency Programme, launched in parallel with the Draft Scottish Energy Strategy, supported such an approach, with responders keen that this provide clarity and the direction and speed of travel. Taking this and experience from work already undertaken on social housing, the consideration of alternatives has been undertaken against a set of key delivery options.

	Big Bang' Delivery	Phased sectoral delivery	Promote behavioural change	Regulatory requirements	A blend of regulatory, economic and behavioural change initiatives
	Standard set immediately and delivered in a short timescale (next 10 years)	Standard is delivered over a phased timescale out to 2040	Provide information on energy efficiency / use to consumers to promote behavioural change	New regulatory intervention focused on meeting climate change targets	A blend that combines behavioural, economic and regulatory options
Strategic fit and economic growth	√	√	x	x	√√
Deliverability and quality	x	√√	x	√	√√
Affordability and Value for money	x	√√	√√	x	√√
Fuel Poverty reduction	√√	√√	x	x	√√
Biodiversity	x	√	√	√	√
Soil	√	√	√	√	√
Water	√	√	√	√	√
Population and Human health	√√	√	x	√	√√
Air	√√	√	x	√√	√
Climatic Factors	√√	√√	x	√√	√√
Cultural Heritage	x	√	√	√	√
Material Assets	√	√√	√	√	√√
Landscape	√	√	√	√	√
Conclusion	Discount	Proposed way forward	Discount	Discount	Proposed way forward

5.9 Consideration of reasonable alternatives - Local Heat & Energy Efficiency Strategies and a framework for district heating regulation

5.9.1 In the consideration of a national roll out of Local Heat & Energy Efficiency Strategies ( LHEES), under the control of local authorities, recent consultation (during 2017 and 2017-188) has provided direction on the consideration of alternatives. This has also been combined with experience taken from the LHEES pilots which have been undertaken during 2017 and 2018 and which are on-going. Further, recent consultation on the implementation of a regulatory system on district heating during 2017 and 2017-188 has also provided information to allow the consideration of alternatives.

Option – Local Heat and Energy Efficiency Strategies	Non-statutory LHEES	Statutory LHEES	National Programme – no LHEES
	Local authorities are free to develop LHEES as they see fit, following non-statutory guidance issued by Scottish Government, or using existing powers such as for housing and planning.	Local authorities have a statutory duty to develop and deliver an LHEES, as set out in legislation and statutory guidance	Heat and Energy Efficiency Strategy is developed nationally and delivered by the Scottish Government or national delivery mechanisms
Strategic fit and economic growth	x	√	√
Deliverability and quality	√	√√	x
Affordability and Value for money	√	√	√
Fuel Poverty reduction	√	√√	√
Biodiversity	√	√	√
Soil	√	√	√
Water	√	√	√
Population and Human health	√√	√√	√√
Air	√	√	√
Climatic Factors	√√	√√	√√
Cultural Heritage	√	√	√
Material Assets	√	√	√
Landscape	√	√	√
Conclusion	Discount	Proposed way forward	Discount

Option – District Heating Regulation	No regulation	Non-statutory guidance and support	Regulation of District Heating	Incentives - Combined Public & Private sector financing
	Leave the implementation of district heating services to the market supported by research and information.	Provide non-statutory guidance and support to local authorities to encourage development of district heating at local level.	New regulatory intervention focused on meeting climate change targets	Public sector funding used to support local authorities implement LHEES. Public sector financing used to lever in private sector finance to support the growth of DH schemes
Strategic fit and economic growth	√	√	√√	√
Deliverability and quality	x	x	√	√
Affordability and Value for money	x	√	√√	√
Fuel Poverty reduction	x	x	√	x
Biodiversity	√	√	√	√
Soil	√	√	√	√
Water	√	√	√	√
Population and Human health	√	√	√√	√√
Air	√	√	√	√
Climatic Factors	√	√	√√	√
Cultural Heritage	√	√	√	√
Material Assets	√	√	√	√
Landscape	√	√	√	√
Conclusion	Discount	Discount	Proposed way forward	Discount

5.9.2 Final decisions on our preferred approach to LHEES and district heating regulation have not yet been taken, and will form part of the Scottish Government's wider response on potential legislative provision, following the related consultation accompanying the Routemap.