Energy Strategy and Just Transition Plan: response letter

To: Professor Russel Griggs OBE

From: Gillian Martin, Cabinet Secretary for Net Zero and Energy

Thank you for your letter of 12 June 2024 setting out advice from the Regulatory Review Group (RRG) on the Energy Strategy and Just Transition Plan (ESJTP).

I greatly appreciate the time taken by you and members of the RRG to scrutinise the ESJTP and meet with officials to discuss its potential impact. As you have stated, the energy transition represents a huge economic opportunity for Scotland, with the potential to provide tens of thousands of good, sustainable, green jobs right across the country. It is therefore imperative that we seize this opportunity and deliver it in a way which brings benefits for Scotland’s people, workers, communities and economy.

I am grateful for the recommendations that you have provided and wish to address these below.

1 - I recognise the need to be clear on the unintended consequences that small businesses may face and will publish a Business and Regulatory Impact Assessment alongside the ESJTP. The BRIA highlights that taking a co-ordinated and strategic approach to delivering the transition, through the implementation of the ESJTP, can help ensure the full benefits of a just transition are realised.

Whilst some, high level costs and benefits, are available, the BRIA has highlighted that there is a lack of available, and quantifiable, evidence to give a granular breakdown of potential costs and benefits in relation to specific groups, such as SMEs. The evidence base underpinning the ESJTP will therefore continue to be developed as the ESJTP is implemented and component policies are further developed.
 
2 - I agree that alignment of policies should be considered and prioritised to ensure compatibility and avoid confusion. The BRIA therefore highlights the commitment in the ESJTP to coordinate delivery. This includes a continued effort to identify opportunities for alignment with UK Government and regulators, where it supports Scottish policy objectives. Our approach is designed to minimise market distortion and additional administrative costs and avoid confusion for businesses operating across the GB-wide marketplace.

I welcome your encouragement to take an agile approach to delivery of the ESJTP . It is vital that the ESJTP provides the necessary vision, ambitions and supportive policies to allow business to invest, and we must also ensure that the Scottish Government is responsive to new evidence and advancements. Our commitment to continued stakeholder engagement on the delivery of a critical path and risk analysis is designed to support this approach.

3 - Linked to this, as the ESJTP moves into the implementation phase, there will be a continued focus on working in alignment with the New Deal for Business approach, including consideration of the cumulative impact on business. No new regulations are proposed in the ESJTP and many policies will not have a direct impact on business, as much energy policy is reserved to UK Government. However, I acknowledge the importance of keeping this under review as new regulations, policies and actions are developed in support of the strategic framework provided by the ESJTP. Any regulation taken forward at a UK level will follow its own requirements in relation to impact assessments and the Scottish Government will seek to ensure our interests, and those of Scottish businesses, are represented.

4 - The energy transition will affect everyone in Scotland and the ESJTP recognises that we must involve people in decisions about the transformation of our energy system - a core pillar of the just transition approach. Extensive stakeholder engagement has taken place throughout the development of the ESJTP and this engagement must continue as we deliver it. I agree that clear communication and accessibility will increase public support. The ESJTP will be published in various formats, including Easy Read, BSL and Gaelic.

5 - Our Public Engagement Strategy sets out our vision: for all of Scotland to understand the challenges we face and embrace their role in our transition to a net zero and climate ready Scotland. Our people-centred approach to climate change policy, moves from encouraging incremental changes in attitudes and behaviours, to supporting a society-wide transformation.

6 - We recognise that businesses have an important role to play in helping Scotland to achieve its climate targets and that SMEs need support on their journey to becoming net zero. Our enterprise agencies, Scottish Enterprise, South of Scotland Enterprise and Highlands and Islands Enterprise, all offer a range of self-guided and facilitated support to businesses to help them on their journey to net zero. There is additional support available through other organisations, such as Zero Waste Scotland. Businesses can search for and access support via the Find Business Support website (https://findbusinesssupport.gov.scot/).

My officials would welcome the opportunity to work closely with the RRG following publication of the ESJTP and to engage further with you in delivery and implementation and to minimise any risks, particularly as any regulatory reforms resulting from the ESJTP emerge.

Thank you again for your valuable advice on the ESJTP.

Yours sincerely,

Gillian Martin