Energy Strategy and Just Transition Plan (ESJTP): letter to Cabinet Secretary for Net Zero and Energy

To: Màiri McAllan MSP, Cabinet Secretary for Net Zero and Enery
cc/ Deputy First Minister and Cabinet Secretary for Economy and Gaelic
cc/ Minister for Business
cc/ Minister for Climate Action

From: Professor Russel Griggs OBE
Chair, Regulatory Review Group

As Chair of the Regulatory Review Group (RRG), I write to you given that you have portfolio responsibility for the forthcoming Energy Strategy and Just Transition Plan (ESJTP). Given your previous role holding responsibility for Wellbeing Economy and therefore oversight of the RRG, as well as the recent advice we provided regarding the Heat in Buildings Bill, I know you are aware of the RRG’s remit to examine and identify implementation challenges and appropriate mitigations of regulations.

As previously stated, the RRG recognises that successful implementation of this Strategy and other proposals in this space to reach the net zero target, at the scale and in the timescale envisaged, will be particularly complex and challenging.

The RRG’s membership is detailed in the Annex, who identified the Energy Strategy and Just Transition Plan as a scrutiny priority. This note details recommendations on the need to understand any unintended consequences and the importance of policy and regulation alignment.

Energy Strategy and Just Transition Plan (ESJTP)

Along with RRG members, I met with your officials on Thursday 25 April 2024. Your officials provided an insightful presentation on the ESJTP and gave considered and comprehensive responses to our questions.

The ESJTP will affect all of Scotland’s population and while focused on helping Scotland reach its net zero by 2045 target, the ESJTP will have to be well-developed, tested and communicated to ensure the resulting policies can be successfully implemented. There are also clear economic opportunities for the Scottish economy if alignment and support for upskilling is provided.

The challenge with future legislation within energy and transformation is the uncertain landscape, taking an educated view is what is necessary. However, we are aware that as technology advances, the solutions may change and there should be flexibility within legislation to allow for this allowing for, and capable of, accommodating those changes as they unfold.

The RRG presents the following recommendations for consideration:

1. The Business and Regulatory Impact Assessment (BRIA) needs to be clear on the unintended consequences small business may face. It is essential to understand how small business will be affected and what support can be provided to ensure they are not disadvantaged when compared to businesses operating on a larger scale within this sector.
   This energy transition will not only affect businesses who operate within the sector but also those consuming high volumes of energy. Although the impact upon key sectors should be primarily considered, the consequences that arise from regulatory drivers on small businesses who deliver ancillary services to larger firms (cleaning, catering etc.) and might be affected as new policies are pushed down supply chains should also be considered. Therefore, having a detailed understanding of the potential impacts and unintended consequences on business across Scotland should be fully considered and acknowledged within the BRIA.
2. Alignment with UK Government and other policies taken forward within this space should be extensively considered and prioritised. It will be critical to maintain alignment with other policies being taken forward in this space, including the Climate Change Plan, Circular Economy Bill and forthcoming Climate Change Package in development to ensure compatibility. Considering national implications and seeking opportunities to align with the UK Government and their approach will promote consistency and minimise confusion.
   As noted above, many policies are in development that interlink with one another and affect business. With that in mind, the ESJTP should be agile, supporting a futureproofed approach as policies are introduced and technological advancements are made.
3. Cumulative impact on business and regulators should be considered ahead of any policy proposals to deliver the ESJTP being finalised.  There must be support for a successful workforce transition, closing the skills gap for those who work in the sector but also those who regulate it. Extensive planning will be necessary for business and regulators to comply with any regulations that may result to support ESJTP delivery. Promoting a co-ordinated approach to this will create an opportunity for business and regulators, supporting the upskilling of those within this sector, which will ensure a smooth transition from oil and gas and reduce the risk of rogue traders.
4. A clear public communication plan and timeline will be crucial to success. As this will affect individuals across Scotland, clear and consistent messaging will be key for public buy-in. Business and consumers must understand the importance of the transition and provide time to adjust and recognise why these changes are being made.

Appropriate communications should be considered to convey the ESJTP and subsequent regulations that stem from the plan to ensure consumers do not become exacerbated by ‘fuel poverty’ and disconnect. Alignment with communications for policies also supporting the net zero by 2045 target will be key in achieving this.

The ability of the ESJTP and resulting policies supporting its delivery requires a strong understanding of how the Scottish Government and investors can help unlock the opportunities.

Given the ESJTP will affect all individuals in Scotland and regulations may in future stem from the Strategy to deliver its vision, the RRG would welcome further engagement as the Strategy and subsequent policy progresses.

A copy of this letter will be published on the RRG’s webpage.

Energy Strategy and Just Transition Plan (ESJTP): letter to Cabinet Secretary for Net Zero and Energy

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