Just Transition Commission Interim Report

4. Bringing equity to the heart of climate change policies

4.1 We know that action taken to tackle climate change has the potential to create both winners and losers. The imperative of a just transition is that Governments design policies in a way that ensures the benefits of climate change action are shared widely, while the costs do not unfairly burden those least able to pay, or whose livelihoods are directly or indirectly at risk as the economy shifts and changes.

4.2 The just transition debate has often focused on jobs and the potential for either their creation or destruction. But consideration of equity needs to be much broader than this. For example, policies to reduce emissions could impact consumer bills in ways that are unfair to those on lower incomes, while investment decisions, if not properly designed, could adversely affect the connectedness of rural communities. On the other hand, there are opportunities to improve wider social outcomes like health and health inequalities as a result of low-carbon investments.

4.3 The landmark ‘Net Zero’ report from the Committee on Climate Change has set out the technological and societal changes needed to end our contribution to climate change.^[19] While political decisions are needed regarding the mixture of policies (investment, regulation, law change, incentives, supporting measures etc.) to bring about this change, there is also an urgent need for consideration of how and to what effect the costs are split between the state, the private sector, and individuals. Different methods of financing must be explored and, in some circumstances, there will be a case for public investment and ownership to best deliver the benefits of a just transition.^[20]

4.4 The allocation of costs is key. A situation whereby only those who have money to invest are in a position to benefit from the opportunities of the net-zero transition would represent an injustice.

4.5 Mechanisms are needed, across all levels of Government, to identify these equity considerations and then make sure they are properly addressed as policy is developed (while acknowledging the split of devolved and reserved responsibilities). The risk associated with not doing so is great – if action taken to reduce emissions is unfair, or is perceived by the public as being unfair, then it risks the kind of backlash seen in France with the ‘gilets jaunes’ protests. This should serve as a reminder of the importance of ensuring we understand and address public concerns regarding the net-zero transition.

4.6 The just transition cuts across Cabinet portfolios. The drive to reduce emissions will touch on many aspects of people’s lives. There is a need for joined-up thinking from Government as to how it can place equity at the heart of its drive to tackle climate change and ensure the transition to net-zero is a fair one.

Evidence/Examples

4.7 While matters of equity and fairness have been a consistent theme across all our meetings to date, many of these issues were highlighted to us during an early session we held considering transport and housing.

4.8 With regards to transport, the drive to lower emissions brings with it many equity considerations. For instance, in the case of electric vehicles concerns were raised to us that rural communities may be left behind if future investment in supporting infrastructure lags behind in these areas. Networks in rural areas may also be less resilient, which could exacerbate risks of rural communities feeling isolated or cut-off. Recent work carried out by the Poverty and Inequality Commission has outlined some of the issues rural communities face with regards to transport and has highlighted the importance of paying attention to connectivity when changing transport systems.^[21] Again, related to the uptake of electric vehicles, there have been concerns raised that the distribution of costs required to upgrade the electricity grid may disproportionally fall on low-income households who are less likely to benefit from their uptake.^[22] While acknowledging the mix of devolved and reserved responsibilities that exist, we would hope this does not prevent consideration by Scottish Government of how such concerns are managed.

4.9 We can also point to the case of Low Emission Zones (LEZs) as an area that requires consideration of equity to be at the heart of any policy proposals. There is evidence demonstrating the impact LEZs can have on reducing air pollution.^[23] There are concerns that, if poorly designed, interventions such as LEZs may exacerbate existing health inequalities by simply displacing traffic (and the resulting air pollution) from one area to another. The Clean Air for Scotland Review makes clear that the poorest income groups are currently disproportionately affected by air pollution through residential location and/or occupational exposure.^[24]

4.10 Such nuances highlight the importance of ensuring wider equity concerns (be they related to health or the questions of ‘who pays’ and ‘who benefits’) are fully considered alongside the drive to reduce emissions when setting policy. Some stakeholders we spoke to felt that Health Impact Assessments should be given greater priority when decisions are made regarding transport infrastructure to ensure some of these questions are considered.

4.11 We can make similar points regarding equity in the context of housing. Improved energy efficiency of the housing stock brings with it many benefits – reduced emissions, warmer homes, reduction to fuel poverty – but here too there will be questions of how improvements are paid for. During our process of gathering evidence, we heard how existing Government schemes are delivering by lifting households out of fuel poverty. In future this will need to be built on as the need to expand energy efficiency programmes increases.

4.12 We were fortunate to be able to hear directly from residents of a residential home in Aberdeen.^[25] Residents told us how they had been living with persistently poor and expensive heating that had significant impacts on their quality of life. This had improved dramatically when a local district heating network had been extended to the home, providing cheaper, reliable energy to the residents. We were told how a key to the success of this heat network was the way the company had been established as a not-for-profit with the express aim of keeping prices affordable for consumers. This provides a good demonstration of what is possible when equity considerations (in this case reducing fuel poverty) are given due consideration alongside the need to reduce emissions. We should be thinking about how we take these positive examples and spread them across the country.

Future plans

4.13 The need for equity to be at the heart of climate policy is not new. In many respects, it is why this Commission was established by Scottish Ministers. Even though it is not new, we would argue that there needs to be more thinking on how equity considerations can be incorporated into decisions across portfolio areas. We can point to examples, particularly in housing and transport, where this is being thought about. However, we will need more developed and joined-up approaches as we enter the next stage of emissions reduction, which will impact more directly on people’s day to day lives.

4.14 In the year ahead we will seek to build on engagement we have had with NHS Heath Scotland. Through this we hope to both better understand the evidence base relating to climate change and equity, and also consider what tools could be applied to identify the interaction between equity and climate policies in practice.^[26] We hope this will represent a productive contribution that will help Government develop its own thinking on how these wider impacts are incorporated into decision-making.

4.15 In the next section we also outline what we see as being current evidence gaps that require to be filled to support implementation of a just transition in Scotland. While we are not able in the time available to us to answer these ourselves, this interim report will hopefully provide some indication of the areas we believe merit further attention from Government.