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

Statutory Duties and Methodologies

Setting the targets

The Climate Change (Scotland) Act 2009 ('the Act') sets targets to reduce Scotland's emissions of the basket of seven Kyoto Protocol greenhouse gases by at least 42% by 2020 and 80% by 2050, compared to the 1990-1995 baseline. The Act also requires that the Scottish Ministers set, by Order, annual emissions reduction targets for each year in the period 2010-2050, consistent with achieving the long-term targets. These annual targets are set in batches at least 12 years in advance.

Before setting a batch of annual targets, Scottish Ministers must request advice from the Committee on Climate Change ( CCC). The CCC is an independent expert body established by the UK Climate Change Act 2008 to provide climate change advice to the UK Government and devolved administrations.

Following advice from the CCC in March 2016 and then again in July 2016, the Scottish Parliament passed legislation setting the third batch of annual targets in October 2016, for the years 2028 to 2032. The targets set an emissions reduction pathway to 2032 and in doing so establish a 2032 target that represents a 66% reduction below 1990 levels ^[39] .

The basket of Kyoto Protocol greenhouse gases comprises carbon dioxide ( CO ₂), methane ( CH ₄) and nitrous oxide ( N ₂O), for which the baseline is 1990; and hydrofluorocarbons ( HFCs), perfluorocarbons ( PFCs), sulphur hexafluoride ( SF ₆) and nitrogen triflouride ( NF ₃), for which the baseline is 1995 ^[40] .

Table 1: Annual targets 2010-2032

The table below sets out the annual Greenhouse Gas emissions targets set by the Scottish Parliament, in accordance with the Climate Change (Scotland) Act 2009. Prior to setting these targets, the Committee on Climate Change ( CCC) provided advice to the Scottish Ministers on the appropriate levels of these targets.

	Annual target ( tCO 2e)	% reduction year-on-year	% reduction from baseline
2010	53,652,000		-30%
2011	53,404,000	-0.46%	-31%
2012	53,226,000	-0.33%	-31%
2013	47,976,000	-9.86%	-38%
2014	46,958,000	-2.12%	-39%
2015	45,928,000	-2.19%	-40%
2016	44,933,000	-2.17%	-42%
2017	43,946,000	-2.20%	-43%
2018	42,966,000	-2.23%	-44%
2019	41,976,000	-2.30%	-46%
2020	40,717,000	-3.00%	-47%
2021	39,495,000	-3.00%	-49%
2022	38,310,000	-3.00%	-50%
2023	37,161,000	-3.00%	-52%
2024	35,787,000	-3.70%	-54%
2025	34,117,000	-4.67%	-56%
2026	32,446,000	-4.90%	-58%
2027	30,777,000	-5.14%	-60%
2028	29,854,000	-3.00%	-61%
2029	28,958,000	-3.00%	-62%
2030	28,089,000	-3.00%	-64%
2031	27,247,000	-3.00%	-65%
2032	26,429,000	-3.00%	-66%

The percentage reductions against baseline levels are shown on the basis of the most recent (2015) Scottish Greenhouse Gas Inventory. Revisions to the Inventory (which have occurred every year for which Official Statistics are available) have the effect of changing the percentage reduction from baseline figures, as the annual targets remain fixed but the baseline level of emissions is revised.

The large drop in 2013 reflects Phase III of the EU ETS coming into effect.

The Act requires that, as soon as reasonably practicable after setting a batch of annual targets, Ministers publish a report setting out proposals and policies for meeting those targets. This Climate Change Plan is the third report on proposals and policies and lays out how Scotland can deliver annual targets for reductions in emissions from 2018-2032.

Compensating for excess emissions

Based on the 2015 Scottish Greenhouse Gas Inventory ^[41] , there is a cumulative emissions shortfall of 17.9 MtCO ₂e across the annual targets for 2010-2015. In accordance with Section 36 of the Act, this Climate Change Plan includes proposals and policies to compensate, in future years, for this shortfall. The pathway includes an additional 17.9 MtCO ₂e of abatement, over and above what is required to meet the statutory annual targets out to 2032.

Accounting for emissions

All the emissions reduction targets set out in the Act are based on the Net Scottish Emissions Account ( NSEA). The NSEA is defined in the Act as the amount of net Scottish emissions of greenhouse gases, reduced or increased by the amount of carbon units credited to or debited from it. The proposals and policies laid out in this Climate Change Plan are designed to reduce the level of the NSEA.

Net Scottish emissions cover all emissions from sources within Scotland plus domestic and international aviation and shipping, reduced by any greenhouse gases removed from the atmosphere by Scottish sinks, such as woodland.

Carbon units can be credited to or debited from the NSEA through the operation of the EU Emissions Trading System ( EU ETS), or credited to it by the purchase of international carbon units by Scottish Ministers.

How we account for the traded sector (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). Participating organisations trade emissions allowances within a decreasing overall cap. This provides an incentive for participants to find the most cost-effective way to reduce emissions. By 2020, the volume of emissions permitted within the system at EU level, will be 21% lower than in 2005 ^[42] .

For accounting purposes under the Act, emissions are split into 'traded sector' emissions covered by the EU ETS and 'non-traded sector' emissions that do not fall under the EU ETS. The approach to accounting for traded sector emissions is defined under the Act's Carbon Accounting Regulations and explained in Scottish Greenhouse Gas Emissions 2015 ^[43] , published in 2017.

Future emissions reduction in the traded sector

The EU ETS continues to be the primary driver of emissions reductions in the traded sector in Scotland. We rely on it to drive emissions reduction from around 79 installations in Scotland (accounting for around 35% of our territorial emissions), by promoting decarbonisation in the power sector, creating price signals for long term investment, ensuring a level playing field for industry through access to an EU-wide carbon market, and by providing protection for industry against competitors outside the EU who don’t bear carbon costs (carbon leakage) through free allocation of allowances.

At the time of publication, negotiations on reforms for Phase IV (2021-2032) have just concluded with the overarching principle of delivering at least a 40% reduction on 2005 EU emission levels by 2030 ^[44] .

How TIMES deals with the EU ETS

In the years to 2020 an ETS cap is imposed on the traded sector in Scotland that has been calculated using the same methodology that is employed in the Scottish Government's Greenhouse Gas Statistics. Our whole systems energy model TIMES searches for the least-cost way to meet the overarching climate change targets, as well as the EU ETS cap. In the years after 2020 our modelling includes actual emissions from the traded sector as Scotland's notional share of the EU ETS phase IV cap is yet to be determined. The EU ETS is, however, expected to continue to contribute to Scotland's emission reductions post-2020. This approach is consistent with that taken in RPP2.

The impact of the UK's exit from the European Union on the role of emissions trading is not factored into the Plan, since the UK Government has not yet (at the time of publication) taken a position on the UK's future relationship with the EU ETS, nor commenced specific negotiations on this issue. The EU ETS remains a fundamental part of UK and Scottish climate change legislation, and, as the UK Government prepares to leave the EU, the Scottish Government will continue to press for clarity on emissions trading for Scottish industry.

The domestic effort target

The Act places a duty on Scottish Ministers to ensure that reductions in net Scottish emissions of greenhouse gases account for at least 80% of the reduction in the NSEA in any target year. Carbon units surrendered by participants in the EU ETS are counted as part of domestic effort for the purpose of this target, in line with international practice.

The Climate Change (Limit on Use of Carbon Units) (Scotland) Order 2016 ^[45] means that international carbon units purchased by Scottish Ministers cannot be used to help meet targets over the period 2018-2022. In line with previous commitments, we have no proposals or policies to purchase such carbon units across the remainder of the period of this Climate Change Plan, although this does remain an option for potential future consideration. Our focus is on measures that seek to reduce our emissions at source and for the long term. We intend, therefore, that the proposals and policies will be consistent with meeting the domestic effort target in each target year without any purchase of carbon units.

Revisions to the baseline

The Scottish Greenhouse Gas Inventory provides the source of data from which the Official Statistics on Scottish emissions are compiled. The inventory is the key tool for understanding the origin and magnitudes of emissions. The Inventory is compiled in line with international guidance on national inventory reporting from the Intergovernmental Panel on Climate Change ( IPCC).

The Inventory is updated every year to reflect technical improvements in the underpinning science, data and modelling. These updates result in successive revisions to the entire time-series of Scottish emissions for all years back to 1990 and the baseline period.

At the time the Act was passed, the most up-to-date inventory covered the years from 1990-2008. This is the inventory upon which the long-term targets in the Act and the first two batches of fixed annual targets covering 2010-2027 were set. Subsequent revisions to this inventory, resulting from improved science and international reporting requirements, have shown that Scotland has historically been emitting lower amounts of greenhouse gas than was understood to be the case at the time.

Consumption emissions

Consumption-based emissions are all emissions attributable to the goods and services we consume in Scotland (as opposed to the domestic emissions on which our targets are based). The Act requires that Scottish Ministers report, in so far as is reasonably practicable, the emissions of greenhouse gases (whether in Scotland or elsewhere) which are produced by, or otherwise associated with, the consumption of goods and services in Scotland. These reports on consumption emissions must be laid before the Scottish Parliament in respect of each year in the period 2010-2050, and can be accessed on the Scottish Government's website ^[46] .

The wider public sector – mandatory reporting

The Climate Change (Scotland) Act 2009 places duties on public bodies relating to climate change. Further to the Act, in 2015 the Scottish Government introduced an Order ^[47] requiring all 180 Public Bodies who appear on the Major Player ^[48] list to report annually to Scottish Ministers on their compliance with the climate change duties. The first mandatory reports were submitted on 30 November 2016. Annual reporting supports compliance with the public bodies' duties and consolidates climate change information from the public sector.

The Public Bodies Climate Change Duties Reporting mechanism provides a basis for tracking public sector action on climate change, improving data consistency and driving continuous improvement. Reports and analysis are publicly available, increasing accountability and transparency, and making it easier for the public and other parties to understand an organisation's climate performance. This in turn is helping improve leadership and engagement, while raising awareness of the impact of climate change with senior management, ensuring climate change objectives are integrated in corporate business plans and action embedded across all departments.

The reporting framework also assists better decision making and strategic planning and helps identify opportunities for financial efficiencies and cost savings. We will establish a baseline from the 2016 reporting data to identify future trends in performance.

The Scottish Government funds the Sustainable Scotland Network ( SSN) to provide operational support for this reporting process as well as other climate change activities. SSN acts as a single point of contact for all public bodies on reporting, providing training and support to bodies completing their reports, coordinating returns and analysing the data.