Scottish energy strategy consultation: the future of energy in Scotland

Chapter 1: A 2050 vision for energy

A strong low carbon economy - sharing the benefits across our communities, reducing social inequalities, and creating a vibrant climate for innovation, investment and high value jobs.

A modern, integrated, clean energy system, delivering reliable energy supplies at an affordable price in a market that treats all consumers fairly.

Introduction

1. Central to the continued inclusive growth of the Scottish economy is the need for secure, reliable and affordable energy supplies. The Scottish Government has consistently made better energy provision a guiding objective.

2. Scotland has long benefited from its substantial energy reserves. As a centre of the industrial revolution, Scotland was at the forefront of the development of the coal industry, and, since the 1970s, we have grown to become an international centre of expertise in oil and gas subsea engineering. Today, we are a knowledge hub for energy exploration and production, for power system engineering and a host of modern, renewable energy technologies and systems - placing Scotland at the forefront of the challenge to decarbonise the global economy.

3. This draft Scottish Energy Strategy seeks to build on these strengths. It explores the choices we face about Scotland's future energy system, against the requirements of:

• the continued, sustainable and inclusive growth of Scotland's economy;
• secure, reliable supplies of energy when they are required;
• achieving better outcomes for consumers of energy with more affordable energy requirements; and
• long-term, sustained decarbonisation - as set out by Scotland's 2050 climate change targets.

4. The draft Energy Strategy is composed as a free-standing companion to the draft Climate Change Plan - designed to provide a long term vision to guide detailed energy policy decisions over the coming decades. The forecasts and targets set out here are consistent with the ambitions laid out by the Climate Change (Scotland) Act 2009. Driven by the same ambition, the publication of the draft Climate Change Plan and this draft Energy Strategy reinforce our position in the vanguard of the international move towards a low carbon future.

5. Together, these statements 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 our communities, reducing social inequalities and creating a vibrant climate for innovation, investment and high value jobs.

6. Scotland's consumers - our households and businesses - must be at the heart of this approach. The energy system envisaged in this strategy will deliver opportunities for suppliers and consumers of energy alike, addressing in particular the damaging impact of poor energy provision for those in fuel poverty.

7. Securing the economic, environmental, social and commercial benefits of this new approach is a shared endeavour. The Scottish Government, in partnership with local government and its enterprise agencies, will work closely with citizen groups, communities, the Scottish company base, academic institutions, regulators and other representative bodies to maximise the opportunities that arise from the evolution of Scotland's energy system.

8. A suite of interlinked priorities and actions are presented for consultation throughout this document, with suggested new or revised energy targets to guide the implementation of the long term vision.

9. There are four separate consultation documents published to accompany this draft Scottish Energy Strategy:

• Onshore Wind Policy Statement;
• Scotland's Energy Efficiency Programme;
• Local Heat & Energy Efficiency Strategies and District Heating; and
• Unconventional Oil and Gas.

10. The Scottish Government's 2050 energy vision is aligned to three themes:

A Whole-System View

11. The Scottish Energy Strategy sets out a whole-system view of energy policy, examining where our energy comes from and how we use it - for power (electricity), heat and transport. This integrated approach recognises the interactions and effects that the elements of the energy system have on each other. A new 2030 'all-energy' target for the equivalent of 50% of Scotland's heat, transport and electricity consumption to be supplied from renewable sources, captures the ambition in this system-wide approach (this is set out in Chapter 3).

12. The 'whole-system' approach is best represented by the introduction of Scotland's Energy Efficiency Programme ( SEEP). SEEP highlights a renewed emphasis on energy efficiency as a strategic priority, designated as National Infrastructure Priority in June 2015; recognising the significant economic benefits of energy efficiency investment and the importance of tackling fuel poverty.

13. SEEP is a long-term (15-20 year) programme designed to improve the energy efficiency of both domestic and non-domestic buildings with the ultimate aim of decarbonising heat supply; making energy more affordable and reducing carbon emissions from the built environment.

14. Improved energy efficiency helps households and businesses to have more control over their fuel bills, which will contribute to tackling fuel poverty through reduced costs and achieve health improvement benefits through people having warmer homes. By reducing the costs of energy to Scottish businesses, we know productivity, and therefore economic competitiveness, is likely to improve. Further, by building a Scottish supply chain to harness investment in energy efficiency measures, we can deliver new growth and jobs to the Scottish economy.

15. SEEP is currently in the design phase and is discussed in more detail in the accompanying consultation document. This initial consultation will inform the final design of the Programme.

16. While SEEP is a cornerstone of the Scottish Government's 'whole-system' approach to energy policy, in all areas of our energy system, a suite of new policies and programmes will be required. In particular, as more of our heat and transport needs are met by electrically-powered technologies (such as heat pumps and electric cars), we must plan for the new skills and new investment required to meet the extra demands on the electricity grid and energy networks.

A Stable, Managed Energy Transition

17. Scotland is leading by example in tackling climate change. Our overall approach to energy is determined by the need to further decarbonise the whole energy system, in line with emissions reduction targets set out in the current Climate Change (Scotland) Act 2009, which requires an 80% reduction in harmful greenhouse gas emissions across our entire economy and society between 1990 and 2050.

Strengthened ambition of the Scottish Government to tackle climate change

The Scottish Government is committed to achieving the climate change targets set by the 2009 Climate Change (Scotland) Act - some of the most stretching ambitions in the world.

The 2016 Programme for Government commits the Scottish Government to a new Climate Change Bill, in response to the increase in global ambition in the UN Paris Agreement and including a new and more testing 2020 emissions reduction target.

18. Through strong leadership in the transition to a low carbon economy, the Scottish Government's approach to energy can help deliver a range of priorities set by Scotland's Economic Strategy ^[1] and our National Performance Framework ^[2] .

19. World class energy provision - and the continued growth of the energy sector itself - will be a vital contributor to efforts to boost our economy while working in harmony with the natural environment, and tackle inequalities in Scotland - enhancing our quality of life for decades to come. This complements our leadership in the transition to a more circular economy, taking a smarter approach to the way we use and manage material resources.

20. Key factors underpinning a stable, managed transition are:

• a strong oil and gas sector that supplies a skilled workforce, investment, research and development, and critical infrastructure to facilitate the transition to a largely decarbonised energy system;
• a balanced energy supply mix, with Carbon Capture and Storage ( CCS) facilities supporting the cost-effective decarbonisation of heat, power and industry;
• a vibrant investment climate for low carbon energy production, with increased network interconnection and energy storage, along with new, thermal electricity generation;
• support for innovation and research and development in new technologies, shared ownership and business models, delivering better outcomes for energy consumers and the economy; and
• support for Scottish business to compete globally, growing their share of international markets and boosting export growth.

A Smarter Model Of Local Energy Provision

21. In recent years, Scotland has moved progressively away from traditional models of centralised energy provision and passive consumption. Scottish companies and communities have pioneered the development of innovative local energy systems. In particular, the desire for renewable generation in areas of constrained electricity grid, thereby limiting export potential, has driven remarkable innovation in technology, systems, business and engineering models for local provision.

22. Scotland's communities and island populations are increasingly playing an active and important part in the delivery of innovative, low carbon, local smart energy systems in partnership with local government and a range of private and public sector bodies.

23. With the creation of local solutions to meet local needs - so-called decentralised or distributed energy systems - there is the potential to create vibrant local energy economies. Heat, electricity and storage technologies combined with demand management and energy efficiency measures on an area-by-area basis, could realise substantial local economic, environmental and social benefits.

24. The Scottish Government has committed long-term funding to develop local energy systems, through a number of initiatives, such as:

• the Low Carbon Infrastructure Transition Programme ( LCITP);
• Home Energy Efficiency Programme - Area Based Schemes;
• the Scotland Heat Map;
• the District Heating Loan Fund;
• the Renewable Energy Investment Fund ( REIF);
• the Community and Renewable Energy Scheme ( CARES); and
• schemes delivered under CARES such as the Local Energy Challenge Fund and the Infrastructure and Innovation Fund.

25. Through the implementation of the Scottish Energy Strategy, the Scottish Government reiterates its commitment to supporting the development of local energy economies as part of a varied and proportionate response to the challenges brought by the transformation of Scotland's energy system.

Navigating The Scottish Energy Strategy

26. This consultation document presents the key components of a 2050 Scottish Energy Strategy. Throughout the document, there are questions, seeking views on the vision and its optimal delivery.