Towards a robust, resilient wellbeing economy for Scotland: Report on written submissions to the Advisory Group on Economic Recovery

5. Natural Capital – Environment

Natural capital is broadly defined as the world's stock of natural assets, which include geology, soil, air, water and all living things. There is an important distinction between the components of natural capital that are fixed, i.e. non-renewable, and those which, treated with respect, are renewable. For the former, the issues are around how a finite resource is used over time, raising issues of inter-generational equity; and, in the case of fossil fuels, how much should be used, given the externality of climate impacts. For renewables, the questions are around the technology to make best use of the asset (e.g. wave power) and how to avoid overuse or extraction - the "problem of the commons" (e.g. fishing).

Consider accelerating investment in low carbon infrastructure.

Direct wellbeing benefits from moving to a low carbon economy are more likely to be related to health than employment in the short to medium term. These benefits depend in part on how other countries behave but it may nonetheless be useful to invest in the construction of infrastructure, such as energy efficient buildings (particularly social housing which could help to address fuel poverty) and greener energy production.

Extract from Submission from Paul Anand et. al.

5.1 Prioritisation of green investment and climate change policies

The prioritisation of green investments of various forms was probably the single most widely discussed area. As may be expected, a large number of submissions made specific mention of the just transition to net zero. Many also included wider recommendations across other aspects of natural capital. See boxes for four examples of the scale and scope of submissions.

1. Build on success of existing Contracts for Difference scheme with ambitious programme of uncapped future auctions

2. Prioritise climate change mitigation and support the planning process to speed up the Net Zero transition

3. Ensure the right framework is in place to attract the investment in network infrastructure needed to meet Net Zero

4. Unlock additional private investment through a more ambitious approach to the RIIO T2 and ED2 price controls

5. Bring forward the petrol and diesel vehicle phase-out date to 2030

6. Maintain grant funding for EVs and home chargers

7. Support the roll-out of a comprehensive network of public EV chargepoints

8. Speed up action on energy efficiency and bring forward the Future Homes Standard to 2022

9. Increase grant funding for the roll-out of heat pumps and support heat pump-based heat networks

10. A new approach on smart metering to accelerate roll-out

Summary of submission from Scottish Power

Rapid moves to create a more circular economy are necessary in order to reduce our impacts on the environmental/biodiversity crisis as well as to contribute to reducing greenhouse gas emissions, including those of the products we consume, rather than just the emissions we create domestically. The most recent figure from 2016 showed greenhouse gas emissions embedded in imported goods and services from overseas made up 51.1% of Scotland's carbon footprint.

As the global population continues to grow, it has become clear that our current linear economy model, which is heavily extractive and relies on fossil fuels, is not sustainable in the long term. By moving to a circular model, we can make our economy more resilient making us less dependent on virgin material, much of which can come at high financial, environmental, and social cost.

Moving to a more circular economy can also tackle the growing problem of plastic pollution by reducing the damage caused by litter to our immediate environment. By keeping resources in the system, we reduce the impact of consumption on our planet, an important step as global material consumption recently passed 1 billion tonnes for the first time.

Crucially, a more circular economy can create new domestic industries and employment opportunities in reusing and recycling existing materials, while protecting the economy from any future disruptions to the global supply chain.

The Scottish Government was set to bring forward a Circular Economy Bill, which was understandably delayed by the pandemic. This delay in moving to a more circular economy risks losing opportunities for new start-ups or innovation in existing businesses, as well as the job creation, increased resilience, and contribution to our climate targets that a thriving circular economy can create. It's estimated that a circular economy would save Scotland 11 million tonnes of carbon dioxide a year by 2050 - a quarter of the current total.

To avoid moving backwards and missing these opportunities, our economic recovery should include targets for delivering a more circular economy, including targets on our material consumption, our carbon footprint, and a strategy for using biomass sustainably. Any Government investment in infrastructure should be led by investment in repair, repurposing, and recycling facilities - and not to incineration capacity or any other technologies that perpetuate the linear economy.

Submission from Friends of the Earth Scotland

Introduce a ban on burning on peatlands, forcing a change in thinking about upland land use and potentially investment in other uses;

Ban commercial peat extraction for horticulture and ban the sale of peat for horticultural use thus driving development of alternatives.

Investment in the supporting framework as Regional Land Use Partnerships and Frameworks

Meeting Scotland's statutory emissions reduction targets must be central to a green, fair and sustainable economic recovery.

Behavioural changes such as increased local consumption, lower travel rates and working from home should be continued and accelerated by SG

Scotland's economic recovery measures should focus on investments that help put us on a path to net-zero, enhance biodiversity, reduce pollution and address equity issues.

Invest in renewable energy, building fit for the future, Green transport, cycling and walking, waste reduction and circular economy, Peatland and woodland, Transitioning Farming, Protecting marine carbon stores, Invest in climate justice

Direct investment in things like peatland restoration, woodland creation and management and changes in farming practice and funding.

Green conditionality on provision of public money and ensure new housing stock is Green.

Governments should sensibly use a mixture of regulation and incentives to help steer industries in desirable public policy directions. It should most emphatically not be relaxing environmental regulation.

Submission from Stop Climate Chaos Scotland

1. Grow and diversify green finance – The financing need for nature based solutions to the climate emergency and other societal problems is very large, estimated to be in the trillions of dollars. There is a huge amount of innovation worldwide to bring new sources of investment into natural capital and nature-based solutions. Scotland can help accelerate and support these innovative approaches to create new opportunities for private and corporate investment in nature that will help to address the net zero target.

2. Investing in nature based solutions - Investment in nature-based solutions can deliver carbon reductions at a fraction of the cost of engineered solutions, at the same time as enhancing natural assets and delivering a range of ecosystem services . An improved environment can stimulate further investment and increase workforce resilience. Specific opportunities for investing in nature based solutions include:

• Peatland restoration – investments in peatland provide multiple benefits, securing and enhancing critical ecosystem services including carbon storage, water retention and water quality, and supporting biodiversity and wildlife.
• Natural flood risk management provides a key means of building our resilience to climate change. For example, tree planting and riparian management improve water retention and quality, reduce flood risk, improve biodiversity, capture carbon and create attractive environments
• Natural coastal defences are a cost effective way of protecting coastal assets under threat from climate change induced sea level rise, currently protecting assets worth £13 billion.

3. Transforming land use and future rural support - the Committee for Climate Change highlights the need for transformative land use change if Scotland and the UK is to meet its climate change targets. The current CAP (Common Agriculture Policy) is worth around £500m per year. Refocusing this with a stronger emphasis on investing in natural capital to address the twin challenges of biodiversity and climate change will make land based businesses more resilient to economic and environmental challenges.

4. Urban Green Infrastructure targeted at improving disadvantaged areas makes our towns and cities more attractive for people to live and work in, and attracts jobs, businesses and investment. The current ERDF investment in Green Infrastructure of £37m was oversubscribed and there are many opportunities to do more. This would help contribute to inclusive growth and the principles of a Just Transition. Studies show that every £1 invested in GI can generate around £20 of benefits and savings.

5. Sustainable marine management and incentives – the replacement mechanism for the Common Fisheries Policy needs to be refocused on resilience and recovery in the marine environment, and on assisting coastal and marine businesses to grow sustainably. The new Scottish Marine Environmental Enhancement Fund will provide a mechanism for sectors that use the marine environment to contribute to practical conservation and restoration projects to help strengthen the resilience of the marine and coastal environment

6. Active travel networks enable low or zero carbon transport, and provide opportunities for people to improve and maintain their physical and mental health. The National Walking & Cycling Network generates £85m of expenditure from its 6000 kilometres of paths, trails and canal towpaths and provides additional health benefits such as reducing the risk of a range of illnesses including depression.

Submission from SNH

There were numerous suggestions around the Green New Deal or related concepts. See box for example.

Launch Green New Deal to build net zero carbon infrastructure

• The programme should be designed to create skilled jobs and build Scottish supply chains.
• This should include investment in natural assets such as reforestation and peatland restoration.
• Pay for this through a carbon tax and leveraging in private capital.

Submission from Scottish Environment link

A number of submissions dealt specifically with energy issues. See boxes.

Local councils could develop municipal energy and transport companies leading to tighter controls on green indicators alongside an additional revenue stream for the council.

Public sector pension funds remain underutilised in Scotland as sources of long term patient investment in social housing developments and renewable energy projects.

The Scottish Government must now take the lead and exert the public ownership, direction and control that is needed to make sure that our communities and our workforce gain the full benefits of the transition to green energy. We need strategically targeted support for research and development programmes including government, companies and universities, alongside investment in start-up companies in the solar panel industry, wind turbines and other forms of renewable energy. An up scaled SNIB must play a role in this.

Submission from Unison Scotland

The Scottish Government must avoid using its economic powers to preference oil and gas, delivering a 'fossil fuel lock-in' within Scotland's energy system which would inhibit efforts to increase the deployment of renewable energy technologies and risk the achievement of our net-zero target.

The Scottish Government can utilise its education and skills powers and work with Skills Development Scotland and further education institutions to introduce a Renewables Transition Training Fund. A Renewable Transition Training Fund can support oil and gas professionals, supply chain businesses, tradesmen and public servants to acquire sustainable, exportable skills and join the renewable energy industry internationalise our industry, and can use its trade, export and investment powers to highlight that Scotland's skills can help other countries decarbonise their economies while maintaining economic growth.

Heat makes up 55% of Scotland's energy use and decarbonising heating is essential if we are to meet our targets for 2030.

Use the public estate as a primer to create supply chains and local manufacturing and developing the skills we'll need in the future, now.

The Scottish Government can work in partnership with industry to develop an economic plan that ensures the long-term future of our economy and energy is low-carbon. Led by a Scottish Cabinet Secretary this plan should deploy the powers of The Scottish Government and establish the support required to maximise economic opportunities and job creation across all the renewable technologies that form our energy system.

Submission from Scottish Renewables

Government should set a deliverable longer-term target of at least 75GW of offshore wind by 2050.

The UK should develop world-leading commercial scale projects for both gas-fired generation with CCS and hydrogen power generation by the mid-2020s. Low-carbon thermal power stations should be used to catalyse investment in shared decarbonisation infrastructure for industrial clusters

Government should explore ways to channel strategic investment into key enabling infrastructure needed to unlock local supply chain opportunities, and explore incentives. The UK should seek to deploy the most extensive and efficient charging network in the world by 2025, with local bodies empowered to tender for charge point assets.

To deploy low-carbon heat at scale and get the most value from taxpayer funding for clean heat, there should be a move from a system of grants to provision of 'interest free' loans for home and business owners making their properties 'net zero ready', with further support available to those less able to pay

Submission from Scottish Southern Electric

Scotland has significant natural resources and technical expertise that make it well suited for the rapid expansion required in renewable energy generation if we are to meet our climate targets. Currently we have an ambition for a "largely decarbonised" electricity system by 2032, and a target for "the equivalent of 50% of the energy for Scotland's heat, transport, and electricity consumption to be supplied from renewable sources" by 2030

These are unambitious, represent a slow growth in the renewables sector, and don't align with our new climate targets. Instead, to stimulate opportunities in the renewables sector as part of a Just and Green Recovery and a Just Transition, the Scottish Government should set a target for 100% of electricity and 85% of total energy generated, not just consumed, in Scotland to be from renewables by 2030.

As well as reducing emissions associated with energy, this has potential to act as a driver for continued Government intervention in renewable energy, and create jobs in new or expanded renewable energy.

Submission from Friends of the Earth Scotland

Other submissions considered more specific issues such as woodlands. See box.

The role that natural capital can play Managing native and ancient woodland, provides job opportunities as well as benefits for biodiversity and carbon sequestration - needs to be better recognised in the Scottish forestry sector.

Investment in timber as a high quality, sustainable material that locks in carbon Managing deer in Scotland

Increasing the urban tree canopy cover

Submission from Woodland Trust Scotland

A number of submission made specific points around Biodiversity. See box.

RSPB Scotland

Now is the time to properly integrate biodiversity considerations across policy areas and departments.

Brexit will see the end of the hugely important EU LIFE funding stream that has delivered so much for Scotland's biodiversity - Scottish projects account for c. 21% of the UK LIFE funding allocation. Large-scale nature restoration projects are particularly affected by the loss of LIFE funding.

In addition to legislation, we must invest in policies and structures that will better protect our biodiversity from the key drivers of loss identified in the UN IPBES and State of Nature reports, particularly those that are known to be intensifying in Scotland.

Scottish Environment LINK

Protect and enhance biodiversity through Investment in catchment scale habitat restoration and linkage projects as part of a Nature Network for Scotland.

Scottish Wildlife Trust

Reduce the hidden cost of damage to biodiversity Establish a £1bn green conservation fund using existing infrastructure and natural capital and combine with conservation finance models to leverage in private capital.

Some specific mention was made of strategies for Scotland's peatlands.

Various

Stop Climate Chaos Scotland

Consider the long-term financial value of peatland carbon trading and its global value by supporting its restoration in an equitable way.

Direct investment in things like peatland restoration, woodland creation and management and changes in farming practice and funding. Ban commercial peat extraction for horticulture and ban the sale of peat for horticultural use thus driving development of alternatives.

Other contributions in this area included:

• HIE
• Environment & Forestry Directorate, Scottish Government
• Scottish Natural Heritage

A summary of key points from submissions can be found in the table below.

Aberdeen Climate Action

Develop semi-permanent work gangs. These work gangs would expand low-carbon infrastructure: rail electrification, 'deep refurbishment' for housing, local and micro grids to facilitate energy resilience and trading, conversion of gas boilers to hydrogen, conversion of electrical-only to heat pumps, road conversion to separate vehicle, bus/metro/tram, cycle and pedestrian routes.

Centre for Energy Policy

Design and plan recovery with strong foundation in net-zero.

Government could consider how they can make best use of use public resources to support effective retrofitting programmes and developing strong domestic supply chains to enable Scottish households to become more energy efficient

Implement the Energy Efficient Scotland programme proposed by CEP

Citizens' Advice Scotland

Cost-effective energy efficiency improvements - creating well-paid work, and ultimately reducing household costs for people on low incomes and Improved targeting of energy efficiency measures – health factors

Corra Foundation

Tax relief on energy costs for home working (HMRC)

programme of renovation and retrofitting homes to decrease fuel poverty, increase energy efficiency

Friends of the Earth Scotland

SG to leverage its new relationship with the business community by directing it towards delivering social and environmental priorities

HIE

Green energy transformation using natural assets –wave, tidal

More appropriate policy to support primary production is required with procurement regulations which place greater store on the environmental and socio-economic benefits of local supply and distribution

Infrastructure Commission for Scotland

SG should establish a route map for the implementation of a viable outcome focused system of resource use, reduction, collection, treatment and repurposing to support the creation of a vibrant circular economy

Oil and Gas UK

Invest in low carbon infrastructure, renewables and carbon capture to:

• Utilise and retain skills in the oil and gas sector

Support the oil and gas supply chain to diversify and pivot to renewables.

Scottish Environment LINK

Prioritising the transition to a zero-carbon circular economy while embracing the Just Transition agenda. A regulatory level playing field for reducing carbon production to ensure that all business compete on other matters and not undercut competitors by ignoring the Climate Emergency.

Expand business grant and advice schemes supporting innovation & adoption of circular economy

Scottish Forum on Natural Capital

With an increasing focus on sustainability and resilience, Scotland has the opportunity to utilise its expertise in finance to accelerate impact-based investment to support energy transition and decarbonisation.

Scottish Futures Trust

The upgrading of the electricity grid will be important to support the roll out of EV charging points and heat decarbonisation – direct taxpayer subsidy in addition to Ofgen RAB

Scottish Natural Heritage

Investing in nature based solutions to CC: Grow and diversify green finance, Transforming land use and future rural support, Urban Green Infrastructure, Sustainable marine management and incentives, Active travel networks

Scottish Renewables

All government support for the economy and business post-Covid should be coherent with regard to: a) Scotland's commitment to reach Net Zero by 2045; b) the First Minister's statement on protecting and enhancing our stock of natural capital and c) Scotland's ambitions for a wellbeing economy

Scottish Southern Electric

. To deploy low-carbon heat at scale and get the most value from taxpayer funding for clean heat, there should be a move from a system of grants to provision of 'interest free' loans for home and business owners making their properties 'net zero ready', with further support available to those less able to pay

SSE

Net zero power system by 2040

Strategic investment in networks • green fiscal rule • offshore wind revolution • building on market successes• green-light shovel-ready transmission investments • enable electrification locally • optimise connections

Leading the charge on electric vehicles: • turbo-charged infrastructure • clean Corporate fleets

Clean industrial revolution • flexible low-carbon power generation • ccs and hydrogen clusters • low-carbon and home-grown supply chains

Green buildings for green jobs • home improvement Stimulus • low-carbon Heat incentives • heat decarbonisation pathway

STUC

Support a Just Transition to Introduce a £13 billion green investment stimulus package. This will:

• Create 150,000 new jobs, retaining the skills of those employed in the oil & gas sector.
• Accelerate SG climate priorities like building active travel routes, reforestation & retrofitting buildings.

Create publicly owned energy and infrastructure companies to maximise green job creation.

SURF

Controls should be put in place to ensure projects and schemes funded by SG to create jobs in a zero-carbon economy should create high quality jobs and utilise or develop local supply chains. Investment to tackle the environmental and economically corrosive problem of vacant and derelict land

Unison

Local councils could develop municipal energy and transport companies leading to tighter controls on green indicators alongside an additional revenue stream for the council.

Public sector pension funds remain underutilised in Scotland as sources of long term patient investment in social housing developments and renewable energy projects.

Other similar suggestions were made by a range of institutions including:

• Historic Environment Scotland
• RSPB Scotland
• Scotland's Rural College
• Scottish Enterprise Rural Leaders
• Scottish Islands Federation

There were a limited number of dissenting voices:

Counterview: View that two possible priorities for economy after lockdown ends, namely decarbonisation and economic recovery are mutually exclusive.

Very negative over costs of wind farms – costs and intermittency. And that move to Greener energy would "kill economy"

(Global Warming Policy Foundation)

Use the pandemic recovery to further green recovery but also "The danger is that green agenda has reduced priority over returning the economy to pre-covid times." (Kincardine Estates)

5.2 Measurement and assessment

There was some discussion of measurement and assessment, primarily around embedding green principles within appraisal and decision making. See table.

Ecometrica Group

Use a wellbeing lens to prioritise or refine economic policy. The wellbeing economy framework can be applied to all areas of conventional economic policy

Inclusion Scotland

Government should work with environmental voluntary organisations to embed green recovery principles at the very beginning of decision-making process. Adopt a Future Generations principle to address long term challenges such as climate change (non-partisan way).

Consider impact on disabled people in terms of urban and infrastructure planning, housing, transport, energy efficiency, waste management, risk management and emergency planning. Importance of good access to information

Infrastructure Commission for Scotland

SG should develop an infrastructure assessment framework and methodology that will enable system wide prioritisation of infrastructure investment decisions based on their contribution to net zero.

National Trust for Scotland

Importance of NPF for wellbeing and circular economy

Scotland's Rural College

The Chief Economist should undertake a regular analysis of the performance of the natural economy and its target potential compared to benchmark economies, alongside further development of the natural capital assessment.

Scottish Natural Heritage

Mainstreaming natural capital accounting

SCVO

Ensuring that policy and budgetary decisions concerning economic recovery are environmentally stress-tested.

University of Edinburgh

Integrate Environmental Data By modelling cause and effect from climate actions to societal impact we can demonstrate the wider benefits of transitioning to a net zero economy, in particular on wellbeing, environment and biodiversity.