Europe 2020: Scotland's National Reform Programme 2019

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, reflecting 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	Reduce emissions by at least 42% by 2020 and at least 80% by 2050, compared to a 1990/1995 baseline period (1,2)	45.2% reduction from the 1990/1995 baseline period 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	70.1%	15.7% pts increase	2017
Heat Demand	11% of Scotland's heat demand from renewables by 2020	5.9% (provisional)	1.2% pts increase	2017
Energy Efficiency	Reduce final energy end-use consumption by 12% by 2020 (against a 2005-2007 baseline)	13.9% lower than baseline (provisional)	1.1% pts increase in consumption	2017

1. The baseline period is 1990 for Carbon Dioxide, Methane and Nitrous Oxide, other greenhouse gases use a 1995 base year.
2. The Scottish Government introduced a new Climate Change Bill in May 2018, with more ambitious targets based on actual Scottish emissions (see below).

Climate Change

The Scottish Government is committed to achieving net-zero emissions of all greenhouse gases as soon as possible. With emissions already reduced by 49% from the 1990 baseline, Scotland's low carbon transition is well underway.

In May 2018, the Scottish Government introduced a Climate Change Bill that responds to the United Nations Framework Convention on Climate Change (UNFCCC) Paris Agreement with new, evidence‑based, statutory emission reduction targets. The Bill includes the most stretching statutory targets of any country in the world for 2020, 2030 and 2040. The Bill targets will also mean that Scotland reaches net-zero emissions of carbon dioxide, known as carbon neutrality, by 2050. The Bill builds upon and retains the rigorous statutory framework of the current Climate Change (Scotland) Act 2009, which includes annual emissions reduction targets and independent reports on progress.

The targets in the Climate Change Bill follow independent, expert advice from the UK Committee on Climate Change on a high ambition Scottish response to the Paris Agreement. The Scottish Government has committed to setting a statutory target date for net-zero emissions of all greenhouse gases as soon as this can be done credibly and responsibly. In light of the Intergovernmental Panel on Climate Change's 2018 Special Report on global warming of 1.5 degrees, we have joined the UK and Welsh Governments in commissioning further advice on targets from the UK Committee on Climate Change. This advice is expected to inform the completion of the parliamentary passage of the Bill during 2019.

Scotland's high ambition on tackling climate change is matched by a stretching and credible package of on-the-ground measures to reduce our emissions.

In February 2018, the Scottish Government published its Climate Change Plan^[6] for meeting current statutory greenhouse gas emissions 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^[7].

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.

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 and in December 2018 announced funding to support the Marrakesh Partnership for Global Climate Action. 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. A new partnership with Solar Impulse's 1000 Solutions initiative will also enable Scotland to spearhead clean and profitable technology to protect the environment. 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. March 2019 will also see over 200 of the world's leading climate scientists arrive in Edinburgh for the Intergovernmental Panel on Climate Change's Lead Authors meeting on mitigation.

To ensure communities, economy and natural environment are resilient to the changing climate, the Scottish Government will publish a new five-year Scottish Climate Change Adaptation Programme (SCCAP) in 2019. This will build on the progress made in the first five-year SCCAP, published in 2014, and work already happening nationally and locally like Climate Ready Clyde, Edinburgh Adapts and Aberdeen Adapts, as well as complement our new actions as a hydro nation. An independent assessment of the first SCCAP, published in September 2016, found that Scotland had made a positive start in taking steps to prepare for climate change.

Opportunities From A Low Carbon Economy

The transition to a carbon-neutral economy will 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 2017, low carbon industries and their supply chains in Scotland generated over £11.1 billion and supported 46,500 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 its current greenhouse gas emissions reduction targets. 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 nondomestic 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 carbonneutral 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. Under SAP 2009, the share of the most energy efficient dwellings (rated C or better) increased from 24% in 2010 to 46% in 2017. In the same period, the proportion of properties in the lowest EPC bands (E, F or G) has more than halved, reducing from 27% to 13%.

By the end of 2021, the Scottish Government will have allocated over £1 billion since 2009 through energy efficiency programmes to make homes warmer and cheaper to heat. 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.

Just Transition Commission

The Just Transition Commission started work on 31 January 2019. It is tasked with providing practical advice on how Scotland can maximise the social and economic opportunities associated with Scotland's move towards carbon-neutrality, whilst identifying and mitigating risks. The independent Commission will report to Scottish Ministers within two years.

The Commission is chaired by Professor Jim Skea, an expert in energy systems and technological innovation. Professor Skea was co-chair of a working group of the Intergovernmental Panel on Climate Change and was the Scottish Champion on the UK Committee on Climate Change until the end of last year. The group has two trade union representatives, two environmental group representatives and representatives from business, industry, academia, farming and the third sector. Collectively, the Commission has expertise on labour markets and skills, social inclusion and regional cohesion, as well as climate change.

The Commission will work openly and transparently, and engage meaningfully with workers, communities, NGOs, business and industry leaders and other relevant bodies across Scotland. It will actively seek and consider the views of young people.

Low Carbon Infrastructure Transition Programme (LCITP)

The Low Carbon Infrastructure Transition Programme (LCITP) has committed European funds to projects up until September 2021. Launched in 2015, 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. This intervention, which is co-funded by the European Regional Development Fund, focuses on supporting the acceleration of low carbon energy 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 thirty proof of concept and development proposals for low carbon projects. LCITP has also run a number of open funding invitations, including the Transformational Low Carbon Demonstrator Invitation and the Innovative Local Energy Systems Invitation and has offered over £40 million of capital funding to fourteen low carbon projects. This funding has been matched by equivalent investment from both the public and private sector. Supported projects include the Glenrothes Energy Network in Fife, Scotland's first battery storage linked to tidal project in Shetland and an energy system project providing 24 hour power to Fair Isle for the first time.

LCITP launched the £60 million Low Carbon Innovation Funding Invitation in January 2018 offering support for projects in three priority areas - integrated energy systems, low carbon heat and ultra-low emission vehicle infrastructure. Four projects have been offered capital support of £12.7 million in total. Fourteen projects have received offers of development support totalling £770,000 to compile investment grade business proposals, these development projects will be considered for LCITP capital support, subject to a viable business case, in summer 2019.

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.
• Influence - 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.