Europe 2020: Scotland's National Reform Programme 2018

Chapter 8: Climate Change And Energy

Scotland’s Economic Strategy emphasises the importance of ensuring that Scotland protects and nurtures its natural resources and explores the opportunities offered by the transition to a more resource efficient, lower carbon economy.

This chapter sets out the activities being undertaken across Scotland in support of the transition to a low carbon, resource-efficient economy and the EU’s flagship initiative, “Resource Efficient Europe”.

Europe 2020 headline targets:

• Reducing greenhouse gas emissions by 20% compared to 1990 levels (or by 30% if conditions are right).
• Increasing the share of renewable energy sources in final energy consumption to 20%.
• A 20% increase in energy efficiency.

Current Scottish Performance

The Scottish Government has established a range of targets which are focused on driving Scotland’s transition to a low carbon economy. Scotland’s current performance against these targets is presented in Table 6.

Table 6: Current Scottish Performance Against Transition to a Low Carbon Economy Indicators

Indicator	Target	Current Level	Change Over Year	Reference Period
Greenhouse Gas Emissions [28]	Reduce emissions by at least 42% by 2020 and at least 80% by 2050, compared to a 1990 base year	45.21.0% reduction from 1990 to 2016, after taking account of trading in the EU Emissions Trading System ( EU ETS)	2.5% increase in emissions, after taking account of trading in the EU Emissions Trading System ( EU ETS)	2016
Indigenous Renewable Energy Sources	Generate the equivalent of 100% of gross electricity consumption from renewable sources by 2020	68.1%	14.1% pts increase	2017
Heat Demand	11% of Scotland’s heat demand from renewables by 2020	4.8%	0.6% pts decrease	2016
Energy Efficiency	Reduce final energy end-use consumption by 12% by 2020 (against a 2005-2007 baseline)	15.4% lower than baseline	0.3% pts decrease in consumption	2015

Scotland is on track to achieve its interim 2020 target to reduce greenhouse gas emissions by 42%; Scotland has now exceeded its interim target to produce 50% of its gross electricity consumption from renewable sources; final energy end-use consumption continues to decrease having already met the 2020 reduction target; and the share of Scotland’s heat demand from renewables decreased in 2016.

Climate Change

In February 2018, the Scottish Government published its Climate Change Plan ^[29] for meeting greenhouse gas emission reduction targets out to 2032. In December 2017, it also published a full statement of its ambitious long-term vision of energy supply and use in Scotland, aligned with greenhouse gas emissions reduction, in the Energy Strategy ^[30] .

Both the Climate Change Plan and Energy Strategy are rooted in the ambition and vision of Scotland’s Economic Strategy, and are designed to boost productivity and secure competitive advantage, protect and preserve Scotland’s environment and deliver inclusive growth. The approach set out in these documents contains transformational outcomes in transport, heat, electricity generation, and energy efficiency along with increased natural carbon sinks and more efficient agricultural practices. They will shape action to deliver a modern, integrated, clean energy system, delivering reliable energy supplies at an affordable price, in a market that treats all consumers fairly; and a strong, low carbon economy – sharing the benefits across communities, reducing social inequalities and creating a vibrant climate for innovation, investment and high value jobs.

The Climate Change Plan is our third Report on Policies and Proposals, mandated by the Climate Change (Scotland) Act 2009. It sets out the actions the Government will take over the period 2018-2032, to reduce emissions by 66% from baseline levels. The Plan includes policies and proposals across all sectors including:

• A 28% reduction in emissions from the electricity sector over the lifetime of the plan with Scotland’s electricity system to be largely decarbonised by 2032.
• A 33% reduction in emissions from the building sector over the lifetime of the Plan emissions, including a 23% fall in residential emissions and a 53% fall in non-domestic emissions.
• Low carbon heat targets of 35% for the domestic sector, and 70% for the non-domestic.
• A 37% reduction in emissions from the transport sector over the lifetime of the plan with proposals around promoting the use of ultra-low emissions vehicles and phasing out the need for new petrol and diesel cars and vans by 2032 and increasing investment in walking and cycling from £40 million to £80 million.
• A 21% reduction in emissions from the industry sector over the lifetime of the plan, supported by proposals to increase industrial and commercial energy productivity, reduce industrial and commercial emissions intensity and support for new technologies.
• A 52% reduction from the waste sector over the lifetime of the plan, with commitments to reduce waste arising by 15%, recycle 70% of our waste, reduce the amount landfilled to 5% and reduce food waste by 33%.
• Working with farmers, crofters and land managers to maximise efficiency and lower the emissions intensity of Scottish produce, to reduce emissions from the agriculture sector by 9% over the lifetime of the plan.

The Energy Strategy is the first publication of its kind and is intended to guide the decisions that the Scottish Government, working with partner organisations, will make over the coming decades. It describes the ways in which we will strengthen the development of local energy, protect and empower consumers, and support Scotland’s climate change ambitions while tackling poor energy provision.

The strategy’s vision for 2050 is built around six priorities:

• Promote consumer engagement and protect consumers from excessive costs.
• Champion Scotland’s renewable energy potential, creating new jobs and supply chain opportunities.
• Improve the energy efficiency of Scotland’s homes, buildings, industrial processes and manufacturing.
• Continue to support investment and innovation across our oil and gas sector, including exploration, innovation, subsea engineering, decommissioning and carbon capture and storage.
• Ensure homes and businesses can continue to depend on secure, resilient and flexible energy supplies.
• Empower communities by supporting innovative local energy systems and networks.

The Strategy establishes two new 2030 targets for energy in Scotland:

1) to deliver the equivalent of 50% of all energy consumed in Scotland from renewables; and

2) a 30% improvement in our energy ‘productivity’.

The Scottish Energy Strategy includes a range of actions that will create opportunities for both suppliers and consumers of energy. These include a £20 million Energy Investment Fund, which will build on the success of the Renewable Energy Investment Fund, and a £60 million Low Carbon Innovation Fund, to provide dedicated support for renewable and low carbon infrastructure over and above wider interventions to support innovation across the economy.

The Scottish Government introduced a new Climate Change Bill on 23 May 2018 that responds to the UNFCCC Paris Agreement with new, evidence-based, statutory emission reduction targets. The proposals include increasing the ambition of our statutory targets (including a 2050 target to reduce net greenhouse gas emissions by 90% from 1990 levels); requiring Ministers to regularly seek advice on the earliest achievable year to reach net-zero emissions; removing the adjustment for the EU- ETS so that targets are based on emissions in Scotland; and retaining the rigorous statutory framework, which includes annual targets and annual progress reports. The Bill is expected to complete Parliamentary passage in 2019.

On the global climate action agenda, Scotland continues to engage with external partners to share expertise and lessons from domestic action in support of the Paris Agreement. This is underpinned by direct backing for inclusion and capacity building amongst developing countries, in addition to the programmes run under Scotland’s Climate Justice Fund. Technology and policy initiatives are also areas of cooperation with global partners through Scotland’s membership of the Under 2 Coalition and The Climate Group’s States and Regions Alliance. The period between 2018 and 2020 is an important phase for the Paris Agreement, and the Scottish Government will continue to be active at the UNFCCC level alongside the UK, as well as regional, city and community level as part of the combined global effort to tackle climate change.

Opportunities From A Low Carbon Economy

The transition to a low carbon economy, as part of the drive to tackle climate change, has the potential to bring new economic, environmental and social opportunities to individuals, business and communities across Scotland.

Scotland is already capturing the economic benefits associated with this energy transition. Scotland is an internationally renowned centre for energy innovation and expertise with Scottish renewable energy businesses now working in more than 40 countries around the world. In 2015, low carbon industries and their supply chains in Scotland generated over £10.5 billion and supported 58,500 jobs.

As well as reducing emissions, increasing our energy supply from renewable and low carbon sources presents an opportunity to build upon Scotland’s proud legacy of community energy projects. Community ownership of renewable schemes is delivering valuable local revenues to support a wide range of local needs. With a shift towards smarter, more local approaches to energy, the opportunity also exists to develop new local energy economies. This broadening in our approach to energy provision can help tackle some of Scotland’s most pressing issues from security of supply, to demand reduction, making energy supplies more affordable to households and business and to stimulate regeneration and local economic renewal.

Maximising The Social And Economic Opportunities Of Energy And Resource Efficiency

Scottish Ministers have designated improving the energy efficiency of all of Scotland’s buildings a National Infrastructure Priority. Scotland’s Energy Efficiency Programme, a key part of Scotland’s Energy Strategy, is the culmination of this thinking and delivers across two key policy areas of Government: fuel poverty and climate change. It has two main objectives: to remove energy efficiency as a driver for fuel poverty and reduce greenhouse gas emissions through more energy efficient buildings and decarbonising our heat supply in our homes and buildings.

By 2040, our homes and buildings will be warmer, greener and more comfortable, as well as reducing our impact on the environment. The Programme is supporting our ambitious targets to reduce greenhouse gases; we will see emissions reductions in the residential and services sectors of 23% and 59% respectively by 2032 on 2015 levels. Our Climate Change Plan sets out the policies and proposals that will keep Scotland on course to achieve the 2050 target of cutting greenhouse gas emissions by 80%. To achieve this, emissions from all buildings in Scotland will need to be near zero carbon by 2050. We will achieve this in a way that is socially and economically sustainable.

By making these improvements to our homes, business premises and public buildings we can use less energy. This will help to tackle fuel poverty, help businesses to be more competitive and release savings in the public sector for front line services. To achieve this we will put in place a framework of standards and regulations to make investing in energy efficiency the norm. We will continue to provide support to households suffering from fuel poverty, and will also seek to leverage further private investment into improving energy efficiency to support the development of loan schemes to enable households and businesses who can afford to pay, to spread the upfront costs of investing in energy efficiency.

In May 2018, we published the Programme Route Map and two consultations. The Route Map sets out the journey our homes, businesses and public buildings will take to become more energy efficient. It will also guide the decisions that we will be making, with our partners, over the next 20 years. The Route Map has been developed after a series of consultations and stakeholder events that have shaped the decisions we have taken. The Route Map proposes:

• A long term residential standard of at least Energy Performance Certificate ( EPC) Energy Efficiency rating band C to be met by 2040 at the latest.
• Higher targets for fuel poor homes.
• Benchmarking for non-domestic buildings.
• To maximise the number of homes in the social rented sector attaining EPC Energy Efficiency rating band B by 2032.
• A longer term vision for the social rented sector by 2040, whereby poor energy efficiency has been removed as a driver for fuel poverty and all social housing is carbon-neutral as far as is reasonably practical.

We are now consulting on these proposals.

Energy Efficiency has been a long term priority for the Scottish Government and the Programme will build on the good progress already made. The standard assessment procedures for EPCs continues to show improvement in the energy efficiency profile of housing. The share of the most energy efficient dwellings (rated C or better) increased from 24% in 2010 to 43% in 2016. In the same period, the proportion of properties in the lowest EPC bands (E, F or G) has almost halved, reducing from 27% to 14%.

By the end of 2021, the Scottish Government will have committed over £1 billion since 2009 on tackling fuel poverty and improving energy efficiency. This funding will be used to build on the over 1 million measures delivered through a range of UK and Scottish programmes to 1 million households since 2008.

Low Carbon Infrastructure Transition Programme (Lcitp)

The Low Carbon Infrastructure Transition Programme ( LCITP) has committed European funds to projects up until 2021. The projects being funded support important economic, employment and social priorities. Until it is clear how negotiations with the EU are to progress, these important projects should continue.

LCITP is a collaborative partnership led by the Scottish Government, working with Scottish Enterprise, Highlands and Islands Enterprise, Scottish Futures Trust and Resource Efficient Scotland.

LCITP supports the acceleration of low carbon infrastructure projects across the public, private and community sectors to develop investment grade business cases to help projects secure public and private capital finance. The programme aims to stimulate commercial interest and investment and maximise Scotland’s vast potential in the low carbon sector whilst contributing to the positive progress of the Scottish Government in reducing Scotland’s greenhouse gas emissions.

Since 2015, LCITP has supported the co-development of over 30 feasibility and development proposals for low carbon projects. LCITP has also run a number of open funding invitations, including the Transformational Low Carbon Demonstrator Funding Invitation launched on 10 July 2016. This was designed to encourage innovation of both design and business models, along with aggregation at scale and acceleration of large scale transformational low carbon infrastructure projects in Scotland. and offered over £40 million of funding to 13 demonstration projects that are due to commission by the end of 2018. This funding has been matched by equivalent investment.

LCITP launched the Standalone Low Carbon Energy Demonstrator Solutions Call in March 2016. This invitation has been designed to support and accelerate the development and delivery of innovative, local low carbon energy opportunities across Scotland. The LCITP Innovative Local Energy Solutions Funding Invitation has provided £2.6 million funding to 12 low carbon projects in rural and off gas grid areas.

Of this £550,000 was awarded to ten projects to develop investment grade business cases and £1.95 million capital support has been offered to 2 innovative demonstrative projects.

In January 2018, the Low Carbon Innovation Funding Invitation was launched. It has been designed to accelerate the delivery of large scale innovative low carbon infrastructure projects that support the ambitions set out within the Scottish Energy Strategy published in late 2017. The deadline for initial applications was the 30 April 2018.

Brexit: What’s at stake for Climate Change and Energy? The EU’s climate and energy objectives are increasingly important in UK and Scottish efforts to address the energy and climate goals of ensuring secure, affordable and decarbonised energy supplies while also ensuring that those energy supplies continue to drive competitiveness and economic growth. In addition the EU has led international efforts to secure a global, legally-binding agreement to address climate change, and was instrumental in two decades’ worth of complex negotiations with other major economies such as the US, China and India, to deliver the landmark Paris Agreement in 2015. Leaving the EU could mean:

Not benefitting from an integrated energy market – the UK’s exit from the EU threatens the opportunity for Scottish consumers, to benefit from the development of an integrated energy market in the EU through a reduction in the cost of energy bills. EU policies such as the Clean Energy Package rationalise reserves and procurement activities, incentivising investment and the common management of cross-border energy infrastructure. This energy market is also of particular importance for the Scottish renewables sector.

The loss of leadership and undermining of collective efforts to tackle climate change - Climate policy has domestic, regional and global implications and connections and the EU’s legislative reach, market influence and climate diplomacy are extensive. Through the UK’s membership, Scotland has benefitted from being a direct part of the EU’s considerable diplomatic clout in the climate negotiations, projecting our domestic climate leadership internationally through collective effort with our EU partners. Scotland has developed a world leading expertise in environmental management and regulation that is very much valued across Europe. Leaving the EU would reduce our ability to bring our experience to the table and have a positive influence on future environmental policies, which would affect not only Scotland but the EU as a whole.