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

Part 2: Coordinated Approach

2.1. Whole System Energy Approach

2.1.1 Scotland’s energy system is central to our economy and society. We believe that everyone in Scotland has the right to an affordable, secure and increasingly low carbon supply of energy. The way energy is produced, transported and used will change dramatically along the pathway to net zero, and in ways that are difficult to predict.

2.1.2 Much of Scotland’s electricity generation has been successfully decarbonised over the past decade, with renewable generation in 2019 accounting for the equivalent of more than 90% of our electricity demand. We will need to replicate this success over the coming decades as we decarbonise buildings, transport and industry. We will need to learn from the past, and ensure that we capture the opportunities for a just transition, including high quality green jobs, thriving businesses and supply chains and positioning Scotland to attract private investment into the transition. Navigating this transition successfully will depend on the development of a coordinated approach across the whole energy system to complement our focus on reducing emissions within each sector.

2.1.3 We will need to focus on harnessing Scotland’s potential, making the most of our vast wind and marine resources, our substantial potential for carbon capture and storage, and our expertise and experience in driving forward innovation. This will mean aligning policy across government in a way that makes the most of these strengths and captures growing market opportunities. We must also bring different sectors of our energy system closer together, and ensure that the ways in which we plan and deliver change take fully into account the impacts that decisions in one sector can have on decarbonisation in others. For example, today’s electricity sector is almost wholly independent of the supply of energy to the transport sector, while gas networks deliver the vast majority of energy for heat to the domestic, industry and services sectors. A net zero energy system will see much greater interaction between each of these sectors, driven by the electrification of heat and transport, and the growing opportunities provided by hydrogen.

2.1.4 Different low and zero carbon solutions will be appropriate in different sectors and for different communities. Take-up of these solutions will depend in part on technology development, market and consumer preference, as well as on decisions taken by government. We need to see adoption of electricity-based solutions, for example in heat and transport, taking advantage of the large potential for growth of onshore and offshore wind capacity in Scotland. We also need to repurpose parts of the gas network to deliver hydrogen, retaining some of the flexibility afforded by gas. Large-scale green hydrogen production may also be important in balancing generation and demand, providing flexibility that helps integrate the expected large increases in variable renewable generation into our energy systems. Policies and market mechanisms will have to be developed and aligned in ways that reflect this system need.

2.1.5 These pathways are not mutually exclusive: when we talk about taking a whole systems approach, we mean that we need to understand and make decisions based on where and when each solution, or combination of these, is most appropriate. A systems approach is also central to delivering a just transition, which takes into the account the different impacts that these decisions will have on individuals, places and sectors, and factors this into policy making. For example, we need to consider the impact that decisions on how we decarbonise domestic heating will have on those in fuel poverty and the delivery of our target of eradicating fuel poverty, as far as is reasonably possible, by 2040.

2.1.6 What we are doing: In 2017 we published Scotland’s first Energy Strategy in alignment with the 2018 Plan. This championed a whole system view of energy as one of its three core principles, along with an ‘inclusive energy transition’ and ‘a smarter local energy model’. We will update our energy strategy in 2021 to lay out a coordinated vision for the whole energy system. This will be based on our best understanding of the technologies and options available today, and focused on delivering our economy-wide emissions reduction targets, as well as just transition and wellbeing economy outcomes. The different energy system pathways we can take to net zero mean that we need to develop greater certainty about the options that exist and how to deliver them. We will therefore develop a set of whole system scenarios for Scotland during 2021 which will explore the timelines and interdependencies in each of these options.

2.1.7 The following subsections explore some aspects of the energy transition in further detail.

Hydrogen

2.1.8 A combination of improving energy efficiency and greater electrification based on zero-carbon electricity can make a significant contribution to the decarbonisation of Scotland’s whole energy system. However, energy efficiency and electrification alone is unlikely to be enough.

2.1.9 Producing hydrogen in zero-carbon and low-carbon ways, and showing that it can be used to meet challenging energy demands (e.g. for heat, transport and industry), will be part of the next stage of Scotland’s energy transition.

2.1.10 Hydrogen can be a strong complement to electrification and can provide alternatives to the uses of carbon-based fuels across the energy system, helping to decarbonise high emission sectors such as transport, heat and industry. Hydrogen can provide flexibility to the whole energy system; unlike electricity, it is relatively easy to store, meaning that its production can be decoupled from its use. This means that hydrogen may provide a sustainable replacement for the energy storage that natural gas and petroleum products currently provide, and a way to capture and store renewable energy from when it is available until when it is needed.

• Hydrogen in industry: hydrogen has an important potential role in the reduction of emissions from industrial heat, especially in specialist processes such as those in furnaces and kilns.
• Hydrogen in transport: hydrogen fuel cells could help decarbonise heavy-duty vehicles (e.g. buses, trains and lorries), ferries, aviation and commercial shipping. The Scottish Government has delivered over £15 million of investment in hydrogen bus fleets and hydrogen infrastructure in Aberdeen over the past few years.
• Hydrogen for heat: depending on the future of the gas grid, hydrogen could provide a heating solution for buildings, displacing natural gas. The Scottish Government has provided £6.9 million towards the H100 hydrogen heat network demonstration in Fife.
• Hydrogen in the electricity sector: there are opportunities for hydrogen to replace the role of natural gas in providing back-up electricity generation, as well as playing an important role in energy storage. Large-scale green hydrogen production could also provide an essential balancing and flexibility function, helping to integrate the expected large increases in offshore wind.

2.1.11 The development of a hydrogen economy is a substantial economic opportunity for Scotland. During 2020, we have carried out a hydrogen assessment project to deepen the evidence base in order to inform our policies on hydrogen. From our assessment, it is clear that hydrogen offers energy and emissions reduction opportunities, and can help develop a sustainable economy in Scotland.

2.1.12 The assessment concludes that Scotland has many of the key natural resources and components necessary to grow a strong hydrogen economy, supporting jobs and GVA growth, and developing new industrial opportunities on a significant scale. By acting now, Scotland can position itself to take advantage of growing global hydrogen markets, driving demand for Scottish businesses and jobs, supporting exports and attracting investment. Scottish hydrogen projects are already securing global green investment and supporting local industry growth.

2.1.13 UK policies, business models and market mechanisms will need to be developed to support hydrogen production and the growth of the hydrogen economy. The UK Government’s 10 Point Plan, published in November 2020, set out a target to generate 5 GW of hydrogen production capacity by 2030 for industry, transport, power and homes, with the aim of developing the first town heated entirely by hydrogen by the end of the decade. A full UK Government Hydrogen Strategy is expected in the Spring of 2021.

2.1.14 What we are doing: alongside this Plan update we are publishing a Hydrogen Policy Statement, setting out the strategic priorities of the Scottish Government regarding the various applications of hydrogen in our energy system in the context of the global climate emergency. This will be followed in Spring 2021 with a Hydrogen Action Plan.

Bioenergy

2.1.15 Bioenergy is a flexible renewable energy resource that can be used to meet demand for electricity, heat, or to support industrial decarbonisation. This means that it will play an important role in our transition to net zero. Our policy objective to date has been to promote small-scale combined heat and power. However, bioenergy may also be used in future to produce hydrogen, or combined with carbon capture and storage (CCS) to deliver negative emissions. Deploying bioenergy sensibly and sustainably may therefore be an important part of compensating for any residual emissions as move towards net zero emissions. We explore the role that bioenergy might play in developing negative emissions in Chapter 8 of this Plan update.

2.1.16 Deciding where bioenergy will be most effectively deployed will depend on which sectors will make the best use of the bioenergy feedstocks that we can grow domestically or import. The use of bioenergy resources in the energy system must also be compatible with a sustainable land use policy and our obligations to ensure a sustainable global transition.

2.1.17 Some key levers in the expansion of bioenergy are reserved to the UK Government. We therefore ask that the UK Government signals its intention to put in place market and regulatory frameworks to support the acceleration of negative emissions technologies. This will enable us to make the most appropriate decisions for our overall decarbonisation pathway, including a whole system approach to bioenergy and negative emissions.

2.1.18 What we are doing: We are publishing a Bioenergy Update in early 2021 and will set up a Bioenergy Expert Working Group to inform a more detailed Bioenergy Action Plan by 2023 which will urgently tackle these challenging questions as we begin the next stage of decarbonisation in Scotland.

Negative Emissions Technologies (NETs)

2.1.19 Negative Emissions Technologies (NETs) will play an important part in the pathway to net zero, compensating for the residual emissions in hard-to-decarbonise sectors, such as agriculture and international aviation.

2.1.20 There are a range of different NETs pathways, which combine bioenergy, electricity generation, fuel and hydrogen production and industrial processes. We describe and explore these options in Chapter 8 in Part 3 of this Plan update.

Energy innovation

2.1.21 Many of the technology solutions required to support the energy system transition to net zero are relatively mature and competitive. However, the global tightening of emissions standards introduces a new set of opportunities, and space to further develop competitive advantage for Scottish business.

2.1.22 The Committee on Climate Change (CCC) has highlighted the importance of innovation in delivering our statutory targets. The Scottish Government recognises the important role that Scotland’s world-leading innovators can play in decarbonising our energy system as well as delivering economic benefit as part of a just transition to net zero. Our recent inward investment plan^[22] identified energy transition and transport decarbonisation as two areas of strength in Scotland, including the strength of our innovation base in attracting investment. The skills and expertise in our offshore energy industry is an asset which we are harnessing towards innovating solutions for the energy transition.

2.1.23 What we are doing: We have a strong track record of support for innovative low carbon technologies. Our consistent support for the marine energy sector has maintained Scotland’s world leading position in the development of technologies such as wave and tidal energy. We have invested nearly £50 million since 2014 through our internationally recognised Wave Energy Scotland programme and in 2019 we awarded £5 million to Scottish tidal energy projects through the Saltire Tidal Energy Challenge Fund.

2.1.24 In 2020, we announced eight winners of our ‘Floating Wind Technology Acceleration Competition’. The eight technologies will receive a share of £1 million from the Scottish Government to address key industry challenge areas in the deployment of innovative floating offshore wind technology.

2.1.25 We work closely with the Energy Technology Partnership (ETP), an alliance of Scotland’s world-class academic institutions. Our support of the ETP includes funding for the Knowledge Exchange Network, and the Energy Industry Doctorate Programme, which supports PhD projects tackling innovation challenges across the energy sector.

2.1.26 To date we have made over £85 million of commercial investments in the energy sector through our Energy Investment Fund. This has supported innovative technology companies to develop ideas and deliver projects, alongside support for community energy projects.

2.1.27 As outlined in the Electricity and Buildings chapters in Part 3 of this Plan update, we are developing a new framework of support for energy innovation. To underpin this, we will launch a call for evidence in early 2021 seeking views on how best to maximise Scotland’s world-leading research talent and facilities for energy innovation. We will publish details of our new support framework in 2021, setting out details of the funding and support available.

2.2. Land Use, Nature Based Solutions and the link to Biodiversity

2.2.1 Our land is, in many ways, the cornerstone of our society and economy and the Scottish Government is committed to ensuring that it is used sustainably and that its benefits are shared more equitably. Not only is our land the bedrock of Scotland’s natural capital, but it provides us with food, timber, renewable energy, bioenergy (see above), climate adaptation (such as nature-based solution to flooding), transport links and our settlements. Our land is also deeply linked to individual/community health and wellbeing; it forms our iconic landscapes, enjoyed for recreational activities, our cultural heritage and our economic prosperity; and it provides us with a range of further benefits, from clean air and drinking water to flood management, tourism and successful pollinator populations.

2.2.2 We have a finite amount of land, and are making increasing demands upon it. We need to find the optimal balance between these sometimes competing demands, in particular to find more space for trees, peatland and nature to thrive, if we are to deliver not only our emissions reduction targets but also our wider national priorities for the environment and land use. We need to maintain rural populations, support thriving rural economies and jobs and produce food on suitable land; if we do this by creating more localised and regionalised supply chains and lower food miles, we will be helping to meet the challenge of reducing emissions and producing food more sustainably. Our upcoming third Land Use Strategy will set out how the various aspects of land use and actions of the Scottish Government come together to deliver on our overarching sustainable land use vision. We need to take people with us as our land use changes and we will initiate a conversation with communities, particularly those likely to be most impacted, to ensure people understand what we are doing and why.

2.2.3 The Committee on Climate Change suggest that around a fifth of agricultural land in Scotland will be required to change use^[23], which may include not farming on peatland or using farmland to plant trees. We must do this in a way that does not lead to ‘offshoring’; for example reducing domestic food production could lead to increased imports if domestic consumption (what and how much we eat) and our exports stay the same. Again, ensuring a just transition in this context will be critical to developing a strategic plan that captures future opportunities whilst safeguarding livelihoods and rural economies. Nature-based solutions to climate change, such as high nature value farming, offer a sustainable means of producing the products we all depend on such as food and timber.

2.2.4 There is a wealth of evidence both on a global and a local scale that we are now in the midst of a global crisis in terms of biodiversity loss. Biodiversity loss reduces the complexity and resilience of ecosystems, weakening their ability to provide the benefits to people which we rely on and ultimately risking collapse. Our actions to restore biodiversity are intrinsically linked to many of the policies within this Plan update, and our Biodiversity Strategy.

2.2.5 Climate change is one of the main drivers of biodiversity loss, and nature-based solutions can also protect, sustainably manage, and help restore ecosystems. These solutions have the potential to enable climate change mitigation, resilience, adaptation and positive social change, providing benefits for both people and biodiversity.

2.2.6 What we are doing: The Scottish Government is committed to deploying nature-based solutions at scale and in a sustainable and managed way; our work to date on peatland restoration and woodland creation (outlined in Part 3, Chapter 6 of this Plan update) is a prime example. Increased peatland restoration and woodland creation has been recommended by the CCC, and, when accounting for local ecological and social sensitivities, can bring benefits for carbon sequestration, biodiversity and natural flood risk management and job creation. Nature-based solutions will form a key part of our overall coordinated approach, which aims to bring together climate change, biodiversity, infrastructure, planning, land use, marine and economic strategies.

2.2.7 We are also exploring and developing innovative approaches to financing nature based solutions including increasing the levels of private investment in these areas. This could include a greater use of carbon markets to support projects such as woodland creation and peatland restoration, but might also include a greater emphasis on payments for the benefits or services our environment provides to the economy (such as flood prevention and urban cooling services) which can be brought forward to finance capital investment in nature-based solutions.

2.3. Circular Economy

2.3.1 While Scotland’s statutory emissions reduction targets are based on emissions from sources located here in Scotland, our wider carbon footprint associated with the goods and services we import is also very important. Consumption of products and materials accounts for an estimated 74% of Scotland’s carbon footprint^[24]. The move towards a circular economy is a crucial part of tackling this, with some studies estimating that circular actions could eradicate up to almost a fifth of Scotland’s carbon footprint by 2050. One simple way to express the concept of a circular economy is that: it is designed to reduce the demand for raw material in products; it encourages reuse and repair of products; and it promotes the manufacture and design of products and materials to last as long as possible. This is relevant across all sectors of the Climate Change Plan update and in wider public procurement.

2.3.2 What we are doing: Actions we’re taking include encouraging more sustainable consumer purchasing, implementing a deposit return scheme and improving local authority recycling collection infrastructure. More details are included in Chapter 5 of this Plan update.

Food and climate change

The Scottish Government has a long standing commitment to the concept and reality of achieving our vision of Scotland as a Good Food Nation where:

• it is the norm for Scots to take a keen interest in their food, knowing what constitutes good food, valuing it and seeking it out whenever they can;
• people who serve and sell food, from schools to hospitals, retailers, cafes and restaurants are committed to serving and selling good food;
• everyone in Scotland has ready access to the healthy, nutritious food they need;
• dietary-related diseases are in decline, as is the environmental impact of our food consumption; and
• Scottish producers ensure that what they produce is increasingly healthy and environmentally sound.

The Good Food Nation ambitions cut across five key areas of health, social justice, knowledge, environmental sustainability and prosperity, and we are working hard to make a real and positive difference to the lives of the people of Scotland by:

• helping to improve their access to, and understanding of, the benefits of healthy local foods;
• ensuring sustainability of our wonderful food industry;
• ensuring food companies are a thriving feature of the economy and places where people want to work; and
• looking to grow Scotland’s reputation as a Good Food Nation from which other countries can learn.

COVID-19 means some work has been delayed, for example the Good Food Nation Bill will not be introduced in this parliamentary session as planned. However, the statutory provisions that were drafted for the Bill will be used to inform the development of a statement of policy on food, which was announced by the Cabinet Secretary for Rural Economy and Tourism on 18 August 2020.

The statement will incorporate the experience gained in response to the COVID-19 pandemic, ongoing work under the umbrella of the Good Food Nation policy and, more widely, work such as the EU Farm to Fork Strategy and the UK Government’s National Food Strategy. This work will be led by the Ministerial Working Group on Food to ensure that the cross-cutting approach that is needed to take forward key aspects of national policy is in place.

Work is ongoing to achieve other commitments set out in the Programme for Government. This includes working with business, the public and the third sector to develop guidance so that more people are encouraged to eat locally-produced, sustainable and healthy food that supports our aims to tackle climate change, and the development of a Local Food Strategy for Scotland.

Scottish Government also provides support for the Climate Challenge Fund (CCF), allocating over £110 million across all projects in communities across Scotland. Many of these have had a food focus, and in 2019-2020 around a third of projects had food or reducing food waste as their focus. Current CCF projects include Forth Environment Link’s ‘Climate Kitchen Garden’ project and Sustainable Kirriemuir’s ‘Nourish Kirriemuir’.

2.4. Transport Demand

2.4.1 Transport is Scotland’s biggest emitting sector, accounting for 35.6 per cent of emissions in 2018^[25]. It is also a particularly challenging sector to decarbonise, as it is a derived demand: the way people live, work, learn and access goods and services are all key to the need to travel. We are committed to reducing car kilometres by 20% by 2030, but this vision will take a cross-sectoral effort going beyond transport, to reduce people’s need to travel with more local access to goods and services. Likewise, digital connectivity and flexible working approaches will play a key role. The Scottish Government is committed to exploring options around encouraging remote working to reduce kilometres driven as part of commuting, which accounted for 23% of journeys in Scotland in 2019^[26].

2.4.2 What we are doing: Alongside our commitments on broadband, for example through the R100 Programme^[27], the Scottish Government is committed to building on the Place Principle. We will establish a Place-Based Investment Programme to support building sustainable places, local access to goods and services, net zero carbon, and inclusive growth which complements the Localism, Community Wealth Building, Town Centre, Work Local, and 20 minute neighbourhood agendas. Development of the fourth National Planning Framework (NPF4) will also take account of the need to refocus our existing transport policies to specifically draw out how land use planning can build in sustainable travel choices.

2.5. The Planning System and National Planning Framework 4

2.5.1 The National Planning Framework is a long-term plan for Scotland that sets out where development and infrastructure is needed to support sustainable and inclusive growth. We expect to lay a draft of the fourth National Planning Framework (NPF4) in the Scottish Parliament, and for public consultation to be undertaken, from September 2021. We then expect to adopt the finalised NPF4 in 2022.

2.5.2 Planning is a key delivery mechanism for many of the policies within this Climate Change Plan update, across all sectors. By making the right choices about where and what development should take place in the future, planning can help to reduce emissions whilst improving the wellbeing of communities and the quality and resilience of places across Scotland.

2.5.3 What we are doing: An NPF4 Position Statement^[28] was published this Autumn, setting out the areas of likely key policy change as a foundation from which the draft NPF4 will be prepared. The Position Statement strongly signals a need to have climate change as a guiding principle for all plans and decisions. It signals key outcomes that planning policy can further support: reducing emissions, building resilient communities and supporting the wellbeing economy. From opportunities around 20 minute neighbourhoods and peatland protection, to emissions efficient design and town centres, our preparation of the next generation of planning policy is a significant opportunity to work across the sectors of this Plan update to help deliver it, rapidly providing a coherent vision for carbon conscious places.^[29]

2.6. Wellbeing and National Outcomes

2.6.1 Scotland’s National Performance Framework (NPF) sets an overall purpose and vision for Scotland: it seeks to create a country that’s success is not judged solely on the performance of our economy or on GDP, but instead on a wider range of measures. The NPF is Scotland’s ‘wellbeing framework’, recognising that Scotland becoming ‘a more successful country with opportunities for all to flourish through increased wellbeing’ requires progress towards all of the National Outcomes, and application of the NPF values. Societal wellbeing will increase when social outcomes, environmental outcomes, economic outcomes and democratic outcomes are all being delivered and are in balance. Wellbeing can be defined as ‘living well’ both as individuals and collectively, as society. We view ‘living well’ in broad terms and see this as encompassing the key areas which form the focus of our National Outcomes.

Our Purpose

To focus on creating a more successful country with opportunities for all of Scotland to flourish through increased wellbeing, and sustainable and inclusive economic growth

Our Values

We are a society which treats all our people with kindness, dignity and compassion, respects the rule of law, and acts in an open and transparent way

National Outcomes

• Children and Young People: We grow up loved, safe and respected so that we realise our full potential
• Communities: We live in communities that are inclusive, empowered, resilient and safe
• Culture: We are creative and our vibrant and diverse cultures are expressed and enjoyed widely
• Economy: We have a globally competitive, entrepreneurial, inclusive and sustainable economy
• Education: We are well educated, skilled and able to contribute to society
• Environment: We value, enjoy, protect and enhance our environment
• Fair Work and Business:We have thriving and innovative businesses, with quality jobs and fair work for everyone
• Health: We are healthy and active
• Human Rights: We respect, protect and fulfil human rights and live free from discrimination
• International: We are open, connected and make a positive contribution internationally
• Poverty: We tackle poverty by sharing opportunities, wealth and power more equally

2.6.2 The NPF helps us understand, publicly and transparently, the progress we are making as a nation towards realising our long-term vision. Its data helps us understand the challenges in achieving our outcomes and to focus policies, services and resources on tackling those challenges. It brings together data and reporting systematically and objectively across a range of economic, social and environmental indicators. It’s clear that policies aimed at tackling climate change can have co-benefits for wellbeing and the delivery of our National Outcomes. The Scottish Government is committed to aligning a green recovery from COVID-19 alongside our transition towards a wellbeing economy. A ‘wellbeing economy’ is one that has social justice and environmental health as the top priority and asks what sort of economic activity is needed to deliver those goals.

2.6.3 Scotland’s new Environment Strategy^[30] creates an overarching framework for our strategies and plans on the environment and climate change. It sets out a 2045 vision for restoring nature and ending Scotland’s contribution to climate change, highlighting the wider benefits this will create for our wellbeing, economy and global citizenship. It maps the significant contribution that our action on climate and the environment will make towards achieving many of the NPF National Outcomes and Scotland’s role in delivering the UN Sustainable Development Goals.

2.6.4 What we are doing: The Scottish Government’s approach to the delivery of a wellbeing economy for Scotland is clearly articulated in our recent Economic Recovery Implementation Plan. In that Plan, we set out commitments to a range of actions that will ensure that our response to the impacts of COVID-19 will help to improve the resilience of our economy, and do so in a way that protects and grows our natural assets. The Plan is underpinned by a focus on equality, in terms of both opportunities and outcomes, and human rights. We continue to develop our understanding of the issues that are central to the delivery of a wellbeing economy through our lead role in the Wellbeing Economy Governments initiative.