Climate Change Plan: third report on proposals and policies 2018-2032 (RPP3)

Executive Summary

Introduction

Climate change is one of the greatest global threats we face. Scotland must play its part to achieve the ambitions set out in the Paris Agreement, which mandates concerted, global action to deal with the threat.

The path towards a low carbon future will require great effort across all parts of our society and economy, but it also presents tremendous opportunities. The Scottish Government believes that the transition to a low carbon society is an essential investment for the future welfare of the people of Scotland, our economy, environment, and for those generations yet to be born. We see Scotland as a responsible global citizen with a moral obligation to contribute to the challenge and influence others to do the same. We lead by example with our ambitious statutory targets, strong progress to date and commitment to maintaining this position by bringing forward new legislation to implement the Paris Agreement.

Statutory duty

Section 35 of the Climate Change (Scotland) Act 2009 requires Scottish Ministers to lay a report in Parliament setting out their proposals and policies for meeting annual emissions reduction targets. This Climate Change Plan (the Plan) is the Scottish Government's third report on proposals and policies for meeting its climate change targets. It sets out how Scotland can deliver its target of 66% emissions reductions, relative to the baseline, for the period 2018–2032.

The Plan was laid in draft in the Scottish Parliament on 20 January 2017 and was subject to a 60-day period for scrutiny by four parliamentary committees. This final Plan incorporates Ministers' changes to the draft Plan following Parliamentary consideration and reflects feedback from the Committee on Climate Change ( CCC) and a wide range of other stakeholders. This final Plan was laid in Parliament on 28 February 2018.

The Plan comprises three parts: Part One sets out the context for the Scottish Government's climate change proposals and policies. It shows the emissions reductions pathway to 2032 and the crucial roles that will be played by local authorities and the wider public sector (and the planning system), communities and individuals; we describe the wider impacts of our climate change policies along with the behaviour changes in behaviour required to reach our decarbonisation goals.

Part One also addresses the impacts on the economy of both action and inaction. We discuss how certain sections of the economy are likely to be affected, consider the threats and opportunities arising from climate change and make clear in this chapter that Scotland offers long-term stability to businesses and investors.

Finally, Part One describes the Scottish Government's international ambitions and activities, along with an assessment of the importance of international cooperation on climate change, not least with the rest of the European Union ( EU); cooperation which is threatened by the UK Government's plans for leaving the EU.

The Scottish Government's statutory duties are covered in Part Two (Statutory duties, methodologies and monitoring), alongside our annual emissions targets to 2032. This includes details of the TIMES model, which we have used to generate the pathway to 2032 and the emissions envelopes for each sector of the economy. The TIMES model is a powerful tool for identifying a least-cost pathway, containing a suggested mix of technologies, fuels and other carbon reduction measures for achieving our climate change targets. This has helped us to define policy outcomes in each sector in terms of real life, tangible changes in technologies, fuels and other measures, allowing us to visualise the low carbon economy of the future.

Part Two also includes details of the monitoring framework and indicators that will enable us to measure progress against the policies set out in the Plan.

Part Three of the Plan provides detailed information on the emissions envelopes and emissions reduction trajectories for each sector. Each chapter sets out the proposals and policies for sectors, alongside the indicators that will allow us to measure progress and adjust policies to keep us on track. The sector chapters of Part Two are, in order: Electricity; Buildings (combining the Services and Residential chapters of the draft Plan); Transport; Industry; Waste; Land Use, Land Use Change and Forestry ( LULUCF); and Agriculture.

Scotland's progress to date

Scotland is leading the way in the transition to a low carbon society. Latest data on Scotland's performance from the 2015 Greenhouse Gas Inventory show that Scotland's actual emissions, including international aviation and shipping – unadjusted for the European Union Emissions Trading System ( EU ETS) – fell by 3% between 2014 and 2015, and were 38% below 1990 emissions, compared with a reduction of 35% for the UK as a whole ^[1] .

The latest UK Government data shows that the equivalent of 54% of Scotland's gross electricity consumption came from renewable sources in 2016, compared to 12.2% in 2000, ensuring that we are well on the way to achieving our targets of generating 100% of our electricity demand from renewables by 2020 and 50% of all energy for Scotland's heat, transport and electricity consumption from renewables by 2030. Our path towards a more circular economy is well underway as a result of more efficient reuse and recycling of waste materials and the fall in emissions from landfill – the waste sector saw a 75% emissions reduction between 1990 and 2015. Scotland's manufacturing and industry sector saw emissions fall by 49% between 1990 and 2015.

We have made significant progress in increasing the energy efficiency of our residential buildings – up to 2015 we have seen a 24% decrease in emissions from 1990, although there has also been a 14% rise in emissions from non-residential buildings. Scotland has already created one of the most comprehensive electric vehicle charging networks in Europe, and we will build on the good progress to date as technological improvements come online and our plans for electric vehicles take effect. Through sustained efficiency improvements in farming and better fertiliser management, we have reduced emissions in the agriculture sector by 3.8 MTCO ₂e (25.8%) between 1990-2015 (the definition of the sector used by TIMES shows the decline between 1990 and 2015 levels to be 14% ^[2] ). The LULUCF sector was a net carbon source in 1990, but the 2015 Greenhouse Gas Inventory shows that LULUCF is now a net carbon sink. Our policies to increase forestry cover, restore peatland and increase carbon sequestered in harvested wood products will ensure that this continues until at least 2032.

Our collaborative approach

Passed unanimously by the Scottish Parliament in 2009, Scotland's climate change legislation anticipated that reducing greenhouse gas emissions would be required across all major sectors of the economy and society. The Cabinet Sub-Committee on Climate Change, chaired by the Cabinet Secretary for the Environment, Climate Change and Land Reform, has overseen the development of this Climate Change Plan, ensuring a cross-government approach. Scottish Ministers have worked collaboratively to develop proposals and policies for emissions reductions across sectors in ways that maximise opportunities and minimise costs. However, the Scottish Government cannot, and should not, attempt to deliver this Climate Change Plan on its own. Local government, other public bodies, the private sector, the third sector, communities, households and individuals all have important roles to play.

Our public sector will increasingly demonstrate how its own operations are driving down emissions, in part through the Public Bodies Climate Change Duties. The public sector will play a critical role in the delivery of this Plan, and the Scottish Government will continue to work with local government and wider public sector organisations to empower them to continue to make a valued contribution to the delivery of the proposals and policies in this Plan.

The role of communities in both urban and rural Scotland will be crucial in delivering Scotland's emission reduction targets, and access to resources is an important enabler of local action. Through the CCF, the Scottish Government supports communities in locally-run projects that aim to reduce emissions, improve local communities and help adapt to the impacts of climate change. Since the launch of the CCF in 2008, the Scottish Government has awarded £85.8 million to 986 communities and 2018 will see the award of the 1000 ^th CCF project. Although the main aim of the Fund is reducing emissions and adapting to a changing climate, climate change projects at community level have additional social and economic benefits, such as increased community cohesion and job opportunities.

Scotland's private sector will meet the challenges of decarbonisation, as the benefits of investing in energy efficiency measures and meeting the demands of climate-aware consumers and supply chains become increasingly apparent. The Scottish Government will continue to work closely with businesses to provide an economic environment that encourages and supports them in their efforts to decarbonise.

The third sector also has a central role to play in the transition to a low carbon economy. Third sector organisations can weave environmental issues into their overall purpose, promoting action in response to climate change to a wide audience. This sector also has the capability to encourage the behaviour change necessary in transitioning to a low carbon society and influence public engagement.

The transition to a low carbon Scotland will require all of us to take action: changing the ways we get around; the ways we insulate and heat our homes; and the ways we purchase products and services to support the circular economy. Delivering these changes in our individual behaviours will require cultural shifts and major infrastructural and technological advances over the coming years and we will continue to encourage public discussion about climate change and support people to take low carbon actions in their everyday lives.

Understanding how and why people behave the way they do is crucial to designing interventions that encourage the uptake of low carbon initiatives. People's choices and behaviours are influenced in various ways – within the values and attitudes that we hold, the habits we have learned, the people around us, and the tools and infrastructure available to us in our day-to-day lives. To support development and the implementation of proposals and policies in this Climate Change Plan, we have used the ISM approach. This method helped us to understand the Individual, Social and the Material drivers that shape people's behaviours. Where suitable, we have used behaviour change as an enabler in delivery of policy outcomes in this Plan.

The Scottish economy

The Scottish Government's purpose ^[3] is to create a more successful country, with opportunities for all of Scotland to flourish, through increasing sustainable economic growth. Scotland's Economic Strategy is the strategic plan for current and future Scottish Government policy. It sets out an overarching framework for how we aim to achieve a more productive, cohesive and fairer Scotland: prioritising boosting investment and innovation; supporting inclusive growth; and maintaining our focus on increasing internationalisation.

Sustainable and inclusive business growth is at the core of Scotland's Economic Strategy. Successful implementation of this Plan and the transition to a low carbon economy depends on promoting and empowering changes over time in every business across Scotland. We aim to provide the leadership that will give businesses confidence to invest and grow and to make the most of the opportunities offered by decarbonisation. Businesses that can demonstrate to consumers that they follow a low carbon route will secure a competitive advantage over those that do not and will save costs through efficiencies along the way.

Our vision for a low carbon and more sustainable future in Scotland builds on the benefits that this transition will realise for businesses, households, communities and individuals. A low carbon economy, which sustainably utilises natural resources to increase the wellbeing of people while protecting the environment, is a resilient economy better adapted to handle a changing climate and any disruption in global markets. The Scottish Government's plans for decarbonisation of our economy, as set out in this Plan, will strengthen Scotland's position as an international destination for investment and innovation. We will work to deliver an inclusive, socially just transition, based on equal opportunity, a fair and inclusive jobs market, regional cohesion and safe and secure communities.

Scotland has enviable natural resources, such as water, wind and the sea, and over the last decade we have made significant progress in sustainably harnessing benefits from those natural resources. Along with enduring government, ministerial and political support towards transition to a low carbon economy and an increasing proportion of Scottish adults (just over half) agreeing that climate change is an immediate and urgent problem, businesses can have confidence that investing in renewables and other low carbon technologies is a wise long-term strategy.

By setting a pathway towards decarbonisation now, we are placing our economy at the forefront of the low carbon future that the world economy needs. The solutions Scottish businesses develop to address these challenges will have export potential. Scotland's Energy Efficiency Programme, for example, in addition to saving consumers money on fuel bills, will support thousands of jobs, creating a substantial domestic market and supply chain for energy efficient and renewable heat services and technologies and related expertise which can transfer to international markets.

Scotland has a well-established oil and gas sector and a proud engineering heritage which will help our transition to a low carbon, sustainable economy. Supporting continued investment in oil and gas exploration and production and in renewable and low carbon solutions will provide Scotland with the energy system we need for the 21 ^st century. Scotland's rich energy history and expertise will support greater internationalisation by strengthening our renewable supply chains and research dissemination. All of these factors will work towards our overarching aim of producing sustainable, inclusive growth.

International

Promoting Scotland as a world leader on climate change and engaging with the international community on climate related issues are key aspects of our external outreach activity. The Scottish Government has established a strong presence within the global climate action debate, built up over many years through continued ministerial attendance at annual United Nations Framework Convention on Climate Change ( UNFCCC) Conferences of the Parties ( COPs) and through active participation in international climate programmes.

At the heart of this international activity is our determination for Scotland to move towards early, ambitious and binding commitments to reduce our emissions, reinforced with forward-looking policies to make the transition to a genuine low carbon economy. Our leadership is setting an example to other governments in concrete action to minimise global temperature rises.

The Scottish Government supports the Paris Agreement, which sets the standard for the international response to climate change. Scotland contributes to international action in a number of ways: our domestic emissions reductions form the basis of our direct contribution; our work with international partners is building and maintaining momentum around global climate action; and our innovative Climate Justice Fund supports some of the poorest and most vulnerable communities in Africa.

The current pledge under the Paris Agreement to limit the global average temperature rise to less than 2° Celsius requires governments around the world to take action to decarbonise their economies. In 2015, Scotland had reduced its emissions by 41%, including international aviation and shipping, compared to 1990 levels, on an adjusted basis to account for Scotland's participation in the EU ETS. On an unadjusted basis, that is, based on actual emissions and removals in Scotland, Scotland had reduced its emissions in 2015 by 38%, from 1990 levels, including international aviation and shipping. We are on track to meet our 42% emissions reduction target by 2020. In the EU-15, only Sweden and Finland have done better in reducing emissions over this period. These represent a direct contribution to EU emissions reduction targets for 2020, and we expect to continue helping the EU meet its targets – if the UK continues to participate in EU climate change frameworks after leaving the EU.

Until it is clear what the UK's exit from the EU means for climate frameworks, we expect Scotland to continue to participate in the EU ETS. The EU ETS is a 'cap and trade' system, aimed at mitigating climate change by limiting greenhouse gas emissions from power and heat generation, energy-intensive industry sectors and commercial aviation. Participants include more than 11,000 heavy energy-using installations in power generation, the manufacturing industry and airlines across 31 countries in the European Economic Area ( EEA). As the number of emission allowances decreases over time, prompting industries to adopt low carbon technologies, the EU ETS will be the primary driver of emissions reductions in the traded sector in Scotland. We rely on it to drive emissions reduction from dozens of installations in Scotland, accounting for around 35% of our territorial emissions. We will continue to press the UK Government for clarity on its plans for emissions trading as it prepares to leave the EU.

The Scottish Government is proud of our work to champion climate justice and we hope the Paris Agreement will drive global action to avoid the worst impacts of climate change falling on the poorest and most vulnerable people across the world. Climate justice is a key issue for human rights and the UN's Sustainable Development Goals ^[4] . Over £6 million from Scotland's innovative Climate Justice Fund has already supported 11 projects in some of Africa's most vulnerable communities, and in 2016 the First Minister pledged a further £15 million over five years to support developing countries in the Global South.

Cooperation with other nations is critical to delivering global climate ambitions. This is evident now more than ever, particularly at sub-national level as the importance of devolved governments, states, regions, cities and wider society has become widely accepted. A critical focus of our international action is through Scotland's membership of the Under2 Coalition – a group of 205 jurisdictions from 43 countries across six continents representing 1.3 billion people and almost 40% of the global economy, committed to climate leadership.

Scotland has signed a cooperation agreement with California to support the Coalition with the intention of sharing expertise on offshore wind and delivering a major summit in 2018. Scotland's Cities Alliance has also agreed to support Scotland's membership of the Coalition. Alongside this action, Scotland has been an active member of The Climate Group States and Regions Alliance for over a decade, and is supporting their Futures Fund to help developing countries participate in the network.

Vision by sector

By 2032, Scotland's electricity system will supply a growing share of Scotland's energy needs and by 2030, 50% of all Scotland's energy needs will come from renewables. Emissions from the electricity sector are expected to fall by 28% over the period covered by this Plan. Electricity will be increasingly important as a power source for heat and in transport to charge Scotland's growing fleet of ultra-low emission vehicles ( ULEVs). Innovative energy systems will improve efficiencies and deliver secure, clean and affordable electricity. Smart domestic energy applications and systems will allow consumers to increase control over their energy use and avoid excessive costs. Scottish communities will be empowered by growing development of innovative and integrated local energy systems. The transformation of our electricity system will attract investment and stimulate the growth of highly skilled employment, benefiting people in both rural and urban areas of Scotland. Harnessing electricity from land, seas, lochs, rivers and the sun will increase Scotland's resilience against future changes in global energy markets.

Scotland's first Energy Strategy

Our new Energy Strategy, The future of energy in Scotland, published in December 2017, sets out the Scottish Government's long-term vision for the future energy system in Scotland.

The first publication of its kind, the Strategy is intended to guide the decisions that the Scottish Government, working with partner organisations, will make over the coming decades.

The Strategy's vision for 2050 is built around six priorities:

• Promote consumer engagement and protect consumers from excessive or avoidable costs;
• Improve the energy efficiency of Scotland's homes, buildings, industrial processes and manufacturing;
• 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;
• Champion Scotland's renewable energy potential, creating new jobs and supply chain opportunities; and
• Continue to support investment and innovation across our oil and gas sector, including exploration, innovation, subsea engineering, decommissioning and carbon capture and storage.

The Strategy's proposed 2030 'all-energy' target to supply the equivalent of 50% of the energy for Scotland's heat, transport and electricity consumption from renewable sources captures our ambition to adopt a system-wide approach. Our analysis underpinning the target shows that renewable electricity – which has already outperformed the interim 2015 target of 50% – could rise to over 140% of Scottish electricity consumption by 2030.

Alongside the renewables target, we also announced a commitment to increase the productivity of energy use across the Scottish economy by 30% by 2030. The previous energy efficiency target was to reduce final demand for energy by 12% by 2020 (from a 2005-07 baseline). This target was achieved six years early, and final energy demand in 2015 was 15.4% lower than the baseline.

This 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 energy efficiency of Scotland's residential and non-residential buildings will ensure that we keep our homes, schools and businesses warm while conserving energy. Over the period of the Plan, we expect to see an overall reduction in emissions of 33% from Scotland's buildings. To achieve this, emissions from Scotland's residential and non domestic buildings will need to fall by 23% and 53% respectively. Where technically feasible by 2020, 60% of walls will be insulated and 70% of lofts will have at least 200mm of insulation in the residential sector. By 2032:

• 35% of heat for domestic buildings will be supplied using low carbon technologies ^[5] , where technically feasible, and all buildings – both in the residential and services sectors – will be insulated to the maximum appropriate level;
• 70% of heat and cooling for non-domestic buildings will be supplied using low carbon heat technologies ^[6] ;
• improvements to the building fabric of Scotland's buildings will result in a 15% reduction in residential and 20% in non-residential heat demand.

Increases in the deployment of measures such as cavity wall, floor and loft insulation, secondary glazing, smart meters and programmable thermostats will provide consumers with opportunities for cost savings from reducing heat demand, help to alleviate fuel poverty and make businesses more competitive by releasing savings from fuel bills that can be invested in frontline services. Raising the energy efficiency of Scotland's building stock will help to minimise the impact of any fuel price rises in future.

A growing market and supply chain for energy efficiency services and technologies will stimulate innovation and entrepreneurship, and ensure the people of Scotland live and work in warm buildings in both urban and rural areas.

In the transport sector emissions will be expected to fall by 37% over the period of the Plan. We are phasing out the need to buy petrol and diesel engine cars and vans by 2032, a full eight years ahead of the UK Government. This will be driven by a significant increase in the uptake of ultra-low emission electric and hydrogen vehicles, which may also play a role in management of the wider energy system. Our vision is that by 2050, Scotland will be free from harmful tailpipe emissions from land transport, resulting in a significant reduction in overall transport emissions and we will be enjoying the social, health and economic benefits of noticeably improved air quality. Low emission zones in Scotland's largest cities will limit the access of vehicles that exceed emissions benchmarks, while permitting unrestricted access for low emission cars, vans and buses, as well as smaller goods vehicles relaying goods from consolidation centres. Scotland will be a friendlier and safer place for cyclists and pedestrians. Decarbonisation of the transport system will lead to positive wellbeing outcomes for the people of Scotland as we transition to a cleaner, greener and healthier country.

Emissions from the industrial sector in Scotland will fall by 21% over the lifetime of the Plan, through a combination of fuel diversification, cost saving energy efficiency, heat recovery and participation in the EU ETS. The introduction of innovative technologies will present significant economic opportunities by stimulating investment and increasing productivity to better compete on a global scale. Industrial energy efficiency will enable heat recovery, which could provide businesses with an additional income stream, enhance productivity, increase resilience and reduce risk arising from volatile energy prices. Industrial clustering will help to decrease costs by sharing infrastructure, such as district heating networks, and creating more efficient supply chains. Continuing participation in the EU and UK regulatory frameworks will stimulate decarbonisation and provide certainty for business investment in low carbon technologies. Outcomes are now monitored by measures that embed our support of economic activity within our ambition to decarbonise industrial processes. We will continue to press the UK Government for clarity on its plans for emissions trading as it prepares to leave the EU.

In the waste sector emissions are expected to fall by 52% over the lifetime of the Plan. By 2021 the landfilling of biodegradable municipal waste will have been phased out. By 2030 we expect to be meeting the UN Sustainable Development Goal aim to reduce food waste by 50%. In the longer term, we aim to be delivering emissions reductions through a circular economy approach in our business and industry sectors. By 2050, products will be designed for longer lifetimes, second hand goods will be seen as a good value, mainstream option, and major industrial sectors will be optimising the value of used equipment, such as the reuse of elements of energy infrastructure. Emissions from closed landfill sites in Scotland will be captured, where possible, with long-term plans for wider methane utilisation. Through a more circular economy, businesses will increase their productivity, new markets will stimulate the jobs market and Scotland will reduce its reliance on scarce resources. The people of Scotland will benefit from the greater availability of lower cost options; access to second hand or refurbished goods; and will make savings through repairing items rather than replacing them, bringing opportunities for social enterprise.

The Land Use, Land Use Change and Forestry ( LULUCF) sector will increasingly act as a net carbon sink. By 2020, 50,000 hectares of degraded peatland will have been restored, and by 2030 we will have increased this to 250,000 hectares – an improvement of valuable soils in around 20% of Scotland's landmass. By 2050, Scotland's expanded peatlands will be thriving habitats, sustaining a diverse ecosystem.

By 2032, Scotland's woodland cover will increase from around 18% to 21% of the Scottish land area. We will increase our planting rates over time up to 15,000 hectares per year in 2024-2025. We will promote the greater use of Scottish timber in UK construction to around 3 million cubic metres by 2031-2032 from 2.2 million cubic metres today. By 2050, Scotland's woodlands will be delivering a greater level of ecosystem services, such as natural flood management and biodiversity enhancement.

On agriculture our ambition is for Scotland to be among the lowest carbon and most efficient food producers in the world. Scotland will be a world class producer of high quality food: sustainably, profitably and efficiently in environmental and economic terms. Growing numbers of farmers and crofters will adopt low carbon farming practices. Low carbon farming will not only achieve greenhouse gas emissions reductions but will generate improvements in animal health and welfare, provide cleaner water and air, increase the volume of our national carbon sink and give farmers more financial security through increased cost savings. By 2020, we will work with farmers so that they know the pH of the soil on a third of their improved land to help increase the efficient use of nitrogen fertiliser. We will encourage farmers producing a substantial proportion of Scotland's agricultural output to complete a carbon audit, and by 2030 most farmers will know the nutrient value of their improved soil and will be implementing best practice in nutrient management and application. More efficient farming approaches will improve air and water quality and enhance biodiversity, and increased forestry cover will alleviate flooding. Farmers will have the option of reducing costs by adopting renewable energy systems. Agriculture emissions are expected to fall by 9% over the lifetime of the Plan.

By 2050, Scottish farmers will be making full use of technology to apply precision farming techniques across the board, and Scotland's land will be producing sustainable, healthy, nutritious and high quality food while providing a substantial contribution to Scotland's national carbon sink that offsets emissions elsewhere in our economy.

Conclusion

Since the Scottish Parliament unanimously passed the Climate Change (Scotland) Act in 2009, we have made good progress on climate change action, both at home and abroad, and Scotland is now well placed to reap the benefits of being one of the first economies in the Global North to take steps towards transitioning to a low carbon society.

The transformation of the way we generate and use our energy, insulate our buildings, grow our food, treat our waste, use our land and travel will create a healthier, more resourceful and resilient Scotland, able to withstand future changes in climate and fluctuations in global markets. Our decarbonisation pathway towards 2032 will be a challenging one, requiring collective efforts from all sectors of the society, but addressing climate change is both a moral and economic imperative, and the Scottish Government is determined to contribute to the global effort for the benefit of our own citizens, and humanity in general.