Reducing greenhouse gas emissions - proposals and policies: report

Policies and Proposals

In preparing this report, we have considered the full range of policy announcements made since the update to our 2018 Climate Change Plan was completed and worked with analysts to assess the potential of these in terms of delivering additional abatement of 2.7 MtCO2e in response to the missed 2019 target.

A significant number of announcements and policy commitments have been made since the updated Plan was completed. This includes a number of individual announcements to take forward Manifesto commitments, as well as in our most recent Programme for Government^[2] and in the cooperation agreement between the Scottish Government and the Scottish Green party^[3]. The policies and proposals that we have included in this report do not tell the full story – this report focuses on a selection of commitments that will deliver the additional emissions reduction required to make up for the missed 2019 target. We have reviewed the expected impact of these policies and proposals, and are confident that they will deliver emissions reduction beyond the abatement required.

In summary, these commitments and policies represent the next step change in our transformational journey to reaching net zero emissions in Scotland. Although each policy is at a different stage of development, and some will be subject to further development and consultation, our assessment is that this package of policies and proposals will go beyond the additional abatement required over the period to 2032. This assessment is underpinned by anticipated changes to the Emissions Trading Scheme; the pathway set out by the Climate Change Committee indicates that this scheme will deliver emissions reduction significantly exceeding the 2.7 MtCO2e required in this report.

Targeted Transport Investment

There have been potentially encouraging shifts in the way people have travelled during the COVID-19 pandemic, such as a reduction in commuter journeys due to home working, and an increase in cycling during lockdown. However, the pandemic has also caused the use of public transport to fall dramatically. The Scottish Government has committed significant additional funding to support the continuation of public transport services throughout the COVID-19 pandemic and we are continuing to work with operators to understand the ongoing impacts and potential support required going forward.

To help sustain the positive behaviour changes arising from the pandemic, we have committed to ensuring that at least £320 million or 10% of all the transport capital budget is spent on supporting walking, cycling and wheeling, by 2024-25, as confirmed in the 2021-2022 Programme for Government. This commitment is supported by the independent research, ‘Decarbonising the Scottish Transport Sector’ ^[4] which sets out the scale of the challenge and is clear that achieving net zero will involve major behaviour change regarding modes of journeys and demand reduction, along with pushing technological innovation. Scottish Ministers have been clear that we cannot afford to shy away from these challenges if we are to respond effectively to the climate emergency and cut transport emissions.

Free bus travel

Building upon our commitment in the updated Climate Change Plan, we are going further by extending nationwide free bus travel to all young people resident in Scotland under 22 years old from 31 January 2022. As outlined in the 2021-2022 Programme for Government, this will benefit around 930,000 young people and seeks to encourage young people in Scotland to use low-emission and lower carbon public transport with a view to embedding these travel choices from a young age. This behavioural shift, in turn, looks to help tackle the climate emergency and to improve air quality in towns and cities by reducing the number of car journeys, for example on the school run, made by young people. The impact of the scheme’s modal shift is uncertain and will be influenced by COVID-19. At this stage, based on experience elsewhere, we are estimating there will be around 10% more bus journeys made by this age group as a result of the scheme, some of which would previously have been made by car.

Fossil fuels in public transport

Bus is already one of the most climate-friendly transport choices people can make and transitioning buses to zero emissions increases the benefits of bus as a transport choice. We will remove the majority of fossil fuel buses in public transport by 2023, which represents the replacement of some 2,200 vehicles. This is a Manifesto commitment and will drive forward a fully decarbonised future for Scotland’s bus fleet. In 2019, the Bus Decarbonisation Taskforce was established as a short-life group tasked with co-designing a pathway to a fully zero-emission bus fleet. The Taskforce is comprised of senior leaders from the manufacturing, operating, energy and finance sectors to address the barriers to transformative transition of Scotland’s 4,400 buses to zero emissions.

We are investing in bus decarbonisation; during 2020/21 we awarded £50.7 million through the Scottish Ultra-Low Emission Bus Scheme to support 272 new, zero emission buses and associated infrastructure, such as the Caledonian bus depot electrification, where zero emission bus services and COP26 shuttles will operate from. We are committed to investing in zero emission buses beyond COP26 with £120 million to build on this progress over the coming 5 years. On 15 July, the Minister for Transport announced the first phase of the Scottish Zero Emission Bus Challenge Fund, worth £50 million. The Challenge Fund is designed to encourage the market to bring forward new and innovative ways to finance the transformative transition to zero-emission bus fleets. We call on the UK Government to match Scotland’s level of ambition for decarbonising the bus sector.

On rail, as previously outlined in our updated Climate Change Plan, the Scottish Government has already committed to decarbonise the Scottish Passenger rail network by 2035 with a rolling programme of electrification and investment in alternative rail traction, such as hydrogen and battery trains. Advance works are being undertaken for electrifying the line to Barrhead and East Kilbride and the 2021/22 Programme for Government provides a commitment to the decarbonisation of the Borders and Fife Circle lines in the next three years.

Safer speed limit

As set out in the 2021-22 Programme for Government, we will ensure all appropriate roads in built-up areas have a safer speed limit of 20 mph by 2025. A 20 mph speed limit has the potential to encourage modal shift from cars to walking and cycling due to improved road safety. Smoother, more consistent driving speeds may also lead to decreased air and noise pollution and lower vehicle emissions. In 2021-2022 we will develop a national strategy for 20 mph zones and limits in Scotland, as recommended in the second Strategic Transport Projects Review (STPR2) Phase 1, to support a range of policies that assist those Government national outcomes and indicators relevant to this area. Related policy benefits include better road safety and health outcomes, promotion of active travel, climate change mitigation and place-making. We will research 20 mph policies and strategies to identify common features; we will take cognisance of the lessons learned from the 2019 Restricted Roads (20 mph Speed Limit) (Scotland) Bill; and we will consider a range of policy options for the strategy. These options could include legislative changes, updated guidance or specific funding for 20 mph. This will include forming a task group to plan the most effective route for implementation.

Road infrastructure

During this Parliament, new roads projects will only be taken forward where they reduce the maintenance backlog, address road safety concerns or adapt the network to deal with the impacts of climate change or benefit communities such as by bypassing settlements. We will no longer build road infrastructure to cater for forecast unconstrained increases in traffic volumes but instead we will focus our investment in managing and maintaining the existing road trunk network as signalled in the Infrastructure Investment Plan.

The National Transport Strategy’s strategic aim of reducing travel by unsustainable modes will guide our policy action. We know that in the face of the climate emergency we need to shift away from spending money on new road projects that encourage more people to drive, and instead focus our money and effort on sustaining the positive behaviour change arising from the COVID-19 pandemic through investment in public transport and active travel. We have already provided £39 million through the Spaces for People initiative to support local authorities to deliver temporary walking and cycling routes and enable social distancing during the crisis and the updated Climate Change Plan includes a £50 million funding pledge for Active Freeways.

As such the Sustainable Investment Hierarchy contained in the second National Transport Strategy (NTS2) (published in February 2020), underpins the appraisal work currently being undertaken on the STPR2. We will use the outcomes of the STPR2 to direct future transport infrastructure investment.

On electric vehicle infrastructure, we have already invested over £45 million to develop the ChargePlace Scotland network of EV charging. This now has over 1800 charge points and we are continuing to work with local authorities this year to develop and expand the network through the Local Authority Installation Programme.

Decarbonising public sector buildings

We will develop and agree through consultation a series of phased targets for the decarbonisation of public sector buildings, starting in 2024, with more challenging buildings such as hospitals being decarbonised by 2038, and for all publicly-owned buildings to meet zero emission heating requirements with a backstop of 2038. This approach will accelerate the decarbonisation of public sector buildings over the period to 2032. This will consolidate our ambition and set a very clear route-map for the decarbonisation of heating in the public sector estate.

Home and building upgrades

All home and building upgrades, at the point of sale, change of tenancy, and refurbishment, will be required to meet at least EPC C standards or equivalent from 2025 onwards. As a backstop, all homes will need to be upgraded by 2033. This extends our commitment as set out in the updated Climate Change Plan, bringing forward by two years our ambitions on energy efficiency upgrades to Scotland’s homes.

We will undertake consultation in 2022 to ensure a fair approach and avoid unintended consequences, and we will provide support through additional grants and an advisory service.

We have also immediately ended public subsidies for oil and LPG boilers, effective from Monday 6 September 2021. This sends a clear signal that there is no future for high carbon heating as we transition to net zero, and supports our move to take a zero emissions heating first approach in our support schemes. This includes our flagship Warmer Homes Scotland programme. Households eligible for assistance under Warmer Homes Scotland will be offered zero emissions alternatives, where these are technically appropriate for the property, alongside a package of fabric measures to increase the energy efficiency of the home and make it easier to heat. Grant levels within the scheme have already been increased to encourage the installation of air source heat pumps and external wall insulation together to cover the cost of these high cost measures and these will be recommended where suitable for the property.

We are making record levels of investment in our programmes which continue to target support at those in fuel poverty (£50 million in Warmer Homes Scotland and £64 million in Area-Based Schemes in 2022-23) and we remain committed to supporting those in fuel poverty through the heat transition. We also continue to fund Home Energy Scotland to provide free and impartial advice on how to reduce bills and make homes warmer and cheaper to heat, and have committed to provide additional support for rural and islands homes which require bespoke and targeted advice.

Supporting the food and drink sector to reduce emissions

We will undertake scoping work this year on a single marketing brand for all Scottish food and drink produce, ‘Sustainably Scottish’, which would be available to all Scottish-based producers, manufacturers and suppliers who can satisfy stringent criteria on provenance and low carbon operations. This will incentivise additional investment in low carbon operations, build on consumer demand for sustainable products, and allow the many Scottish businesses with a strong story to tell about sustainability to capitalise on that demand.

On 20 August the Scottish Government launched ‘Local Food for everyone: a discussion’, a consultation on the Scottish Government’s draft local food strategy, which seeks feedback and suggestions on ways to encourage more locally-based production to reduce the distance food travels, promote circular supply chains and enable more people to grow their own food. The consultation runs for 14 weeks and closes on 26 November, and is being accompanied by workshops across Scotland. Part of the consultation focuses on vertical farming, an innovative indoor farming technology, and we are gathering evidence on how vertical farming could contribute to the low-carbon production of more Scottish food.

The Food Processing Marketing & Cooperation Grant Scheme (FPMC), which opened for applications on 4th August 2021 with a budget of £7.3 million, requires businesses applying for funding to set out how their proposed project will contribute to Scotland’s achievement of net zero emissions by 2045. This could be through a number of actions such as using renewable sources of energy, use of more efficient machinery, reducing waste and packing or reducing haulage miles through local sourcing. In addition all applicants are also asked to create and complete a Greener Business Plan setting out how their business as a whole will reduce emissions.

This will build on work to date such as the pilot Sustainable Agricultural Capital Grants Scheme which offered £17 million funding to over 3,700 farmers and crofters for low emissions farming equipment to support them in the delivery of direct and indirect greenhouse gas (GHG) reductions.

Supporting businesses to transition to net zero

Ambitious, forward-looking business action will be essential to meeting Scotland’s emissions reduction targets in a way that is just and fair. Scotland’s emissions have more than halved since 1990 while our economy has continued to prosper - a testament to the strength of our businesses, our skilled workforce and our globally desired technologies and solutions.

In light of our emissions reduction targets, Government has a moral obligation to ensure our investments align with our climate ambitions. Utilising climate conditionality for our investments will be key as conditionality also incentivises innovation and rewards first movers. It is important that any changes to our approach to funding are made through partnership with business and with cognisance of the time and support some businesses will require to adapt. To implement these changes in any other manner would be directly at odds with our commitment to a just transition.

We will therefore consult on, as a means of accessing public money, requiring:

• For large businesses: annual public disclosure of how climate change will affect their business, consistent with the recommendations of the Task Force on Climate-Related Financial Disclosures.
• For large businesses: the role of Just Transition Plans.
• For businesses receiving grant or loan / equity funding of over £500 thousand and for major contracts: a commitment to reduce scope 1 and 2 greenhouse gas emissions at a level consistent with Scotland’s 2045 net zero target, including requiring that a published carbon management plan for achieving such targets is made available on the company's website and submitted to the public body providing the funding.

We will work with business to produce guidance on how they can use the Just Transition Planning Framework most effectively, considering the barriers and opportunities that are unique to the wider private sector, and to support compliance with any changes resulting from this consultation process. In line with our Just Transition Planning Framework we will ensure that our guidance is built upon existing work and experience, in particular the plans, charters and commitments of key Scottish industries.

We will also take forward plans to further develop a green port model which meets the specific needs of Scotland’s economy, while protecting workers rights and supporting our transition to a net zero economy.

Emissions Trading Scheme

The UK Emissions Trading Scheme (UK ETS) is currently the key carbon pricing tool available to us, with the Scottish Government jointly responsible for the scheme alongside the UK Government, Welsh Government and Northern Ireland Executive. The scheme generates a carbon price for the sectors covered by the scheme, incentivising decarbonisation. The scheme currently covers energy intensive industries, fossil fuel power generation, domestic flights and flights from the UK to the European Economic Area (EEA).

The UK ETS was established in 2021 to replace participation in the EU ETS. It was established with an interim emissions cap 5% lower than the EU ETS cap it replaced. Since that time, the Scottish Government, along with the other governments responsible for the scheme, have sought the advice of the Climate Change Committee (CCC) on the appropriate level to set the UK ETS cap, in order to deliver on economy-wide emissions reduction targets set under both devolved and UK statutory climate legislation. The CCC has now published that advice, and the four governments will shortly jointly consult on tightening the UK ETS cap. The UK ETS will form a major ongoing component of our approach to reducing emissions, and we expect developments in this area to be further reflected in the next Climate Change Plan.

Our collective commitment to consulting in the coming months on developing the UK ETS extends further, to also reviewing our programme of free allocations to ensure that they are appropriately protecting against carbon leakage in light of our climate change commitments, and considering expanding the scheme to other sources of significant emissions.

Through our joint responsibility for this UK-wide scheme, it is our ambition that the development of the scheme supports our just transition, addresses fuel poverty and our climate change objectives, and that the proceeds of the scheme are channelled back into supporting businesses and consumers to switch to net zero alternatives. We will also continue to press the UK Government, who hold the relevant power, to start negotiations immediately on the linking of the UK ETS with the EU ETS, to protect against carbon leakage. In the meantime, it remains our intention that the UK ETS at least matches the environmental, economic and social ambitions of the EU’s scheme. The ETS proposals have been included in this catch up report but the overall emissions savings are likely to be substantial and will also be considered for inclusion in future plans.