Securing a green recovery on a path to net zero: climate change plan 2018–2032 - update

Annex C: Derivation of Sector Emissions Envelopes

A key element of this Climate Change Plan update is the presentation of emissions envelopes for each sector over the period 2020 to 2032. These envelopes have been developed through an iterative process which combines evidence, analytical modelling and the application of judgement in the face of considerable uncertainty.

TIMES modelling

As with the previous Climate Change Plan, the TIMES model was used to provide the initial basis for the development of the sector emissions envelopes^[160].

The model was updated in 2019 to a 2015 base year and the key assumptions were reviewed and aligned with the latest evidence. In particular, the current modelling makes use of the most recently published Scottish greenhouse gas inventory data and best current expectations for known upcoming technical changes to the UK inventory in relation to the implementation of new/updated IPCC guidelines on the inclusion of emissions from peatlands, and revisions to the global warming potentials of some greenhouse gases. Decisions on the exact nature of these technical revisions remain to be made by the UK Government and these aspects of the evidence base will need to be kept under review for the next full Climate Change Plan.

An initial TIMES model run, using this updated evidence base and taking into account constraints around technical feasibility, was undertaken to demonstrate the potential distribution of emissions-reduction effort across sectors. After reviewing initial model results, Scottish Government sector analysts advised on further technical refinements to the model, based on sector modelling, latest externally-commissioned research and expert judgement. This, alongside a quality assurance process by TIMES analysts, as well as an Assurance Group chaired by the Chief Economist, resulted in a revised model run and set of sector envelopes.

Uncertainty

The TIMES modelling provides an integrated and consistent approach, but significant uncertainty is present across all sectors and all key domains (cost; technology availability; emissions factors; energy demand) and this uncertainty increases over time (but is not accounted for in the modelling). As with all modelling, the Assurance Group advised that the limitations of the model should be set out and that the results from the model should be deployed alongside other evidence.

Final Envelopes

Building on the initial rounds of TIMES modelling, a further scenario was introduced to provide evidence on the potential implications of allowing the industrial sector higher emissions than in the previous run described above, to help protect against carbon leakage^[161]. The emissions envelope for the industrial sector was constrained in the TIMES model to the current European Union Emissions Trading System (EU ETS) cap to 2020 and then to the assumed rate of a projected EU/UK cap to 2025 (effectively the current EU ETS Cap less 5%). Post-2025, the industrial sector envelope followed a linear path to a 90% reduction in 2050, based on the CCC’s advice for that specific sector in a UK-wide net zero scenario^[162].

The envelopes produced by the TIMES model for this scenario resulted in total emissions which exceeded the statutory targets during the period of the Plan (ie the TIMES model was unable to identify a set of sector pathways consistent with the statutory targets).

In order to ensure the envelopes met the cross-economy statutory targets, a further decision was taken to allocate the necessary additional emissions-reduction effort, outwith the TIMES framework, across the sectors on a pro-rata basis. Two exceptions were made to this:

• no additional emissions were allocated to the Industry sector, consistent with the approach to avoid carbon leakage; and
• the emissions envelope of the Agriculture sector was constrained to the level of the ‘core technical’ TIMES run and the additional annual quantity of emissions reductions which would have been allocated pro rata to the Agriculture sector were instead assigned to Land Use, Land Use Change and Forestry (LULUCF).

A final series of ‘off-model’ adjustments were made in order to ensure that the resultant annual emissions envelopes were consistent with expectations around deliverability and did not result in any increase in a particular sectors’ emissions following a period of decarbonisation. These adjustments acted to:

1. delay the roll-out of carbon capture and storage process as far as possible; and

2. ensure that no sector shows a temporary increase in emissions.

The resulting set of envelopes are below.

As mentioned in Part 3, Negative Emissions Technologies (NETs) are being presented separately for this Plan update only. The final set of envelopes below removes NETs from Industry and Electricity envelopes and creates a NETs envelope.