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SP Paper 554  

TIC/S3/10/R9

9th Report, 2010 (Session 3)

Report on Low Carbon Scotland: The Draft Report on Proposals and Policies

CONTENTS

REMIT AND MEMBERSHIP

Introduction
Sectoral Analysis
Monitoring of Progress
Conclusion

Annexes to this report are available in the electronic version of this report which can be found on the following web page:

ANNEXE A: REPORTS FROM OTHER COMMITTEES

Report from the Economy, Energy and Tourism Committee

Annexes B, C and D to this report are available in the electronic version of this report which can be found on the following web page:

http://www.scottish.parliament.uk/s3/committees/ticc/index.htm

ANNEXE B: EXTRACTS FROM MINUTES

23 November (23rd Meeting, 2010 (Session 3))
30 November (24th Meeting, 2010 (Session 3))
14 December (26th Meeting, 2010 (Session 3))
21 December (27th Meeting, 2010 (Session 3))

ANNEXE C: ORAL EVIDENCE AND ASSOCIATED WRITTEN EVIDENCE

23 November (23rd Meeting, 2010 (Session 3))

Oral Evidence

Duncan McLaren, Chief Executive, Friends of the Earth Scotland, Colin
Howden, Director, Transform Scotland, and Elizabeth Leighton, Senior
Policy Officer, WWF Scotland, Stop Climate Chaos Scotland;
Gordon McGregor, Energy and Environment Director, Scottish Power,
Paul Brewer, Partner, PricewaterhouseCoopers LLP, Lynne Ross, Head of International Climate Change, Scottish and Southern Energy, and Martin Valenti, Project Manager, Scotland's 2020 Climate Group.

Written evidence

Stop Climate Chaos Scotland

30 November (24th Meeting, 2010 (Session 3))

Oral Evidence

Professor David Gray, Centre for Transport Policy, The Robert Gordon University; Professor Iain Docherty, Senior Lecturer, Department of Management, University of Glasgow; Dr Andy Kerr, Director of Scottish Alliance for Geoscience, Environment and Society, University of Edinburgh; Professor Tom Rye, School of Engineering and the Built Environment, Napier TRI; Anil Gupta, Team Leader for Environment and Regeneration, COSLA; George Tarvit, Development Manager, Sustainable Scotland Network.

Written evidence

COSLA and SOLACE

14 December (26th Meeting, 2010 (Session 3))

Oral Evidence

John Swinney MSP, Cabinet Secretary for Finance and Sustainable Growth, Bob Irvine, Deputy Director, Scottish Water and Climate Change, and Rosie Telford, Policy Officer, Climate Change Acts: Implementation, Scottish Government.

Supplementary written evidence

Cabinet Secretary for Finance and Sustainable Growth

ANNEXE D: LIST OF OTHER WRITTEN EVIDENCE

The Committee received written submissions in response to its calls for views from the following individuals:

CBI Scotland (187KB)
Consumer Focus Scotland (107KB)
COSLA AND SOLACE (153KB)
Cycle Touring Club Scotland (86KB)
Edinburgh Chamber of Commerce (86KB)
Energy Saving Trust (160KB)
Fife Council (124KB)
Friends of the Earth Scotland (208KB)
Glasgow City Council (61KB)
Highland Council (99KB)
Stop Climate Chaos Scotland (300KB)
Scottish Council for Voluntary Organisations (94KB)
Scottish Environment Protection Agency (228KB)
Scottish Environmental Services Association (153KB)
SPOKES (121KB)
Strathclyde Partnership for Transport (82KB)
Transform Scotland (190KB)

Remit and membership

Remit:

To consider and report on (a) matters relating to transport and infrastructure falling within the remit of the Cabinet Secretary for Finance and Sustainable Growth and (b) matters relating to climate change falling within the remit of the Cabinet Secretary for Rural Affairs and the Environment.

Membership:

Jackson Carlaw
Rob Gibson
Marlyn Glen
Charlie Gordon
Patrick Harvie (Convener)
Alison McInnes
Cathy Peattie (Deputy Convener)
Shirley-Anne Somerville

Committee Clerking Team:

Clerk to the Committee
Steve Farrell

Senior Assistant Clerk
Alastair Macfie

Assistant Clerk
Clare O'Neill

Committee Assistant
Lauren Spaven-Don

Report on Low Carbon Scotland: The Draft Report on Proposals and Policies

The Committee reports to the Parliament as follows—

INTRODUCTION

Background

1. The Scottish Government published The Low Carbon Scotland: The Draft Report on Proposals and Policies1 (RPP) on 17 November 2010. This was accompanied by a technical appendix which provides detail of the analysis which underpins the figures used in the RPP. These documents were published alongside the Scottish Government’s Draft Budget 2011-12 and associated documents including a carbon assessment of the Draft Budget.2

2. The RPP is required under section 35 of the Climate Change (Scotland) Act 2009 (the 2009 Act). It sets out the proposals and policies which the Scottish Government considers will assist it in meeting its annual targets for reductions in greenhouse gas emissions to 2022; an explanation of how these are expected to contribute towards the delivery of the interim target of 42% by 2020, the 2050 target of 80% and, in each target year, the domestic effort target.

3. The RPP forms part of a set of publications through which the Scottish Government describes what it considers to be the benefits and opportunities of developing a low carbon Scotland. The other documents are as follows:

  • A Low Carbon Economic Strategy for Scotland: Scotland- A Low Carbon Society

  • Draft Electricity Generation Policy Statement 2010: Scotland- A Low Carbon Society

  • Conserve and Save: Energy Efficiency Action Plan

  • A Low Carbon Public Engagement Strategy (to be published before the end of 2010).

4. The draft report has been published in the context of this suite of low carbon Scotland publications and is intended to define what is meant by a low carbon society and low carbon economy. It is structured in a manner which identifies the contributions to greenhouse gas emissions reduction which can be made by various sectors namely: energy supply; homes and communities; business and the public sector; transport; rural land use; and waste.

5. In 2009, during its scrutiny of the Climate Change (Scotland) Bill (“the Bill”), the Committee identified a need for a clear and comprehensive statement by the Scottish Government of how the proposed climate change targets would be delivered in practical terms. It expressed the view that the publication of the RPP would be the key vehicle for providing this information.

6. The Committee’s Stage 1 Report on the Bill stated—

“The Committee calls upon the Scottish Government to ensure that its statutory report on proposals and policies provides a comprehensive overview of the potential contribution of all sectors in society to achieving emissions reductions. It should provide clear statements of policy intent and the direction for policy development which will lead to the reductions required to meet the challenging targets set by this Bill. It should also outline those initiatives currently underway to tackle climate change, including the Government’s public engagement implementation plan.”3

7. The Committee considers that the draft RPP, in general terms, meets with its expectations in terms of structure and format.

Consideration of the RPP

Parliamentary scrutiny

8. Under the 2009 Act, Scottish Ministers must have regard to the views of the Parliament, or committee(s) of the Parliament, on the draft version of the RPP before a final version of the report is laid. The Act specifies a “period for Parliamentary consideration” of 60 days.4

9. The Transport, Infrastructure and Climate Change (TICC) Committee was designated as lead committee in consideration of the RPP. In addition, the Economy, Energy and Tourism (EET) Committee agreed to consider the specific energy-related aspects of the RPP as part of its wider scrutiny of the Scottish Government’s Draft Budget 2011-12 and to report its findings to this Committee. The report has been attached as Annexe A. The Committee is grateful to the Economy, Energy and Tourism Committee for providing valuable input to this report.

10. In this report, the Committee explores and comments on several aspects of the RPP, including the balance between policies to which the Scottish Government is already committed and the proposals that have been identified; the reliance on UK and EU policies and agreements; the policies and proposals related to each sector as set out in the draft report; and the proposals for the funding of the activities suggested.

11. The Committee acknowledges that the publication of the draft RPP was delayed due to a range of factors. However, as a consequence of this shift in the timing of the document’s publication, the already limited statutory 60 day period available for scrutiny was constrained further by a period of parliamentary recess. The Committee considers that this very tight timetable significantly restricted its ability to scrutinise the RPP in as comprehensive and effective manner as it would have wished.

12. The EET Committee, in its report, also raised concerns about the cumulative impact of the publication by the Scottish Government of a raft of energy and climate change documents alongside this year’s Draft Budget, and the limitation presented by the 60-day period for RPP consideration. It stated that this had an adverse effect on its ability to effectively scrutinise their contents.

13. The ETT Committee recommended that future versions of the RPP should not be published simultaneously with the Draft Budget. It also called on the TICC Committee to consider whether parliamentary committees should be consulted on the RPP much earlier in the budgetary cycle to allow them to propose what should be included in the forthcoming Draft Budget.

14. The TICC Committee recommends that the Scottish Government should consider carefully the timing of future RPPs to ensure that the optimum opportunity is afforded for its parliamentary scrutiny within the limited statutory period. The Committee would be happy to liaise with the Scottish Government on this matter.

Evidence to the Committee

15. The Committee took evidence from stakeholders and academics at its meetings on 23 and 30 November 2010 and then heard from the Cabinet Secretary for Finance and Sustainable Growth at its meeting on 14 December 2010. The Minutes of these meetings are attached at Annexe B to this report. The Committee issued a call for views on the RPP and received 17 submissions which are reproduced at Annexe D to this report. The Committee would like to thank all of those who provided oral and written evidence on the RPP.

Development of the RPP

16. In June 2009, the Scottish Government published its Climate Change Delivery Plan which outlined four transformational outcomes required in order to meet the long-term target of reducing carbon emissions by 80% by 2050. During the subsequent 18 month period, these transformational outcomes and related policies have formed the basis of extensive work by the Scottish Government on the development of the RPP. The transformational outcomes are:

  • A largely decarbonised electricity generation sector by 2030;

  • A largely decarbonised heat sector by 2050, with significant progress by 2030;

  • Almost complete decarbonisation of road transport by 2050 with significant progress by 2030;

  • A comprehensive approach to ensure that carbon (including the cost of carbon) is fully factored into strategic and local decisions about rural land use.

17. The publication of the RPP has been broadly welcomed by all witnesses appearing before the Committee as useful starting point in identifying the action necessary to deliver annual emissions reduction targets.5 Witnesses have acknowledged that its publication is as a result of significant work being undertaken by the Scottish Government and that it is a helpful document which pulls together complex information relating to existing policies and further proposals in each sector.

18. An example of the views expressed to the Committee on this point came from Gordon McGregor of Scottish Power, representing the 2020 Climate Group, who said—

“It must be recognised that the Scottish Government has done a good job, even across 18 months, of knitting together all the different policies in an internally consistent manner to reach the 42 per cent target. That is not an insignificant challenge, and the Government has responded reasonably well to it.”6

19. Lynne Ross from Scottish and Southern Energy, also representing the 2020 Climate Group, told the Committee—

“The RPP establishes investment signals for business and the pathway for individuals and organisations, by evidencing the pathway that we are embarking on and underpinning confidence to make the transition to a low-carbon economy.”7

20. Duncan McLaren, representing Stop Climate Chaos Scotland (SCCS), the coalition of key stakeholders who engaged with the Scottish Government on the development of the RPP, said of its publication—

“Our tests for the draft RPP were threefold: it should be credible, transparent and ambitious. We think that it is a good first attempt, in many respects, at meeting those benchmarks.”8

21. The Committee is aware of the extensive consultation and engagement with key stakeholders undertaken by the Scottish Government in preparing the draft report. It welcomes the fact that the Scottish Government has encouraged interested parties to contribute their views and expertise to help develop the RPP. It would urge the Scottish Government to continue with this approach in the development of future versions of the RPP.

The vision

22. As previously stated, the RPP is one of a suite of documents setting out the Scottish Government’s vision for a low carbon Scotland. The draft report outlines the need for a transition to a low carbon society and the challenges which will have to be faced in doing so. It also discusses the benefits to making this transition including health and well being, less pollution and a healthier natural environment.

23. In realising the potential for a low carbon society, the RPP states that business and industry leaders have recognised the economic benefits in making the transition. It goes on to state the people across Scotland are ready to “take the next step”9 as the financial and health benefits of making the transition have already been recognised. These claims were explored with witnesses and the Cabinet Secretary for Finance and Sustainable Growth.

24. The importance of the RPP setting out a vision for a low carbon society in Scotland was acknowledged by Dr Andy Kerr from the University of Edinburgh who told the Committee—

“One piece of feedback from many different stakeholder groups around Scotland was that we need to understand what the vision is that we are trying to achieve; doing it through simply saying, "There is a target in 2020 or 2015," will not allow that.

I was therefore very pleased to see in the suite of documents—the economic strategy, the energy efficiency action plan and the RPP—the Government's attempt to deliver a much broader narrative about the positive benefits of delivering the outcomes that we seek in a low-carbon economy and society.”10

25. The Committee believes the arguments surrounding the potential benefits of a low carbon society have been well rehearsed, particularly during the scrutiny of the Climate Change (Scotland) Bill. The Committee welcomes the work undertaken by the Scottish Government over the last 18 months to develop a framework for the delivery of the measures set out in the legislation.

26. However, the Committee remains to be convinced that the general public, as well as public and private sector organisations across Scotland, are yet to recognise all the financial, health benefits and environmental benefits of and are ready to take the next steps, which may involve difficult lifestyle choices as stated in the RPP.

27. In a written submission, Consumer Focus Scotland referred to the importance of the forthcoming public engagement strategy in changing the role of the public in the process—

“…we would also wish to see the Public Engagement Strategy being viewed as a vehicle for involvement of the public, and as a means of informing decision-making, rather than just (as paragraph 9.9 [of the RPP] suggests) as a means of presenting ‘key actions to the general public.”

28. During the period when it was taking evidence on the RPP, the public engagement strategy had not yet been published, although the Committee notes that it was scheduled to be launched around the time of this report’s publication. It is the Committee’s intention to take evidence on the strategy from the Minister for Environment and Climate Change early in 2011.

29. If the vision set out in the RPP is to become a reality, the importance of different groups in society understanding the climate change agenda and being aware of how they can contribute to it is considered to be crucial by the Committee. In this respect, it has long viewed the public engagement strategy for climate change as being key to the delivery of the Scottish Government’s climate change objectives. The Committee hopes that this strategy will include far-reaching and innovative proposals for the mobilisation and genuine involvement of the public.

Balance between proposals and policies

30. The RPP makes a distinction between proposals and policies.11 In summary, this is as follows:

  • a “policy” is considered to be a course of action which has been wholly or largely decided upon;

  • a “proposal” is considered to be a suggested course of action, the details of which might change as this course of action is explored.

31. The Executive Summary of the RPP also specifically states that proposals contained in the RPP have been identified from “a number of different sources and do not necessarily reflect current Government policy.”

32. The Committee notes the acknowledgement in the RPP that, if the carbon reduction targets are to be met, it would be necessary for all of the proposals and policies contained in the RPP to be adopted and implemented.

33. The Committee explored with witnesses the balance between the number of proposals contained in the RPP and the actual policies to which the Scottish Government is committed to. Differing views were expressed on this issue, with some witnesses expressing concern about the uncertainty surrounding the likelihood of the Scottish Government converting proposals into policies and the timing of this. For example, Professor Tom Rye from Edinburgh Napier University said—

“I find it rather disappointing, primarily because it places a lot of emphasis on the proposals and seems to have a very small number of policies. Given that transport is the second-fastest growing contributor to climate emissions in Scotland, I am concerned that the RPP does not go far enough in setting us down the road, as it were, to reducing those emissions.”12

34. On the other hand, Lynne Ross of the 2020 Climate Group was less concerned about the number of proposals, highlighting the fact that these might change in the light of future developments and saying—

“I suggest that the layout is adequate. We have engaged in discussion on the proposals, which are a fair reflection of policy options at this date. The important thing is the broader context and to send signals to businesses and individuals while recognising that new policy options will emerge and existing policy options may not work in the way that we neatly predict they will today.”13

35. In written evidence to the Committee, Stop Climate Chaos Scotland highlighted the importance of ensuring that draft proposals are translated into firm policies if the carbon reduction targets are to be met.14

36. When giving oral evidence to the Committee, the Cabinet Secretary for Finance and Sustainable Growth was asked whether the final version of the RPP would set out which menu of proposed options the Scottish Government would take forward. He responded by saying that—

“We have made decisions on some proposals—for example, we have taken decisions on domestic energy standards, which help to advance the arguments. We have developed a range of other elements as part of our policy commitments. The Government has a clear desire to take decisions readily to create the policy framework that will enable us to deliver all that is expected of us under the 2009 act.”15

37. When asked how the proposals in the RPP would be prioritised for delivery, the Cabinet Secretary said—

“A combination of different approaches will be taken. Some proposals will be taken forward because, by a change of policy, we can effect an outcome relatively quickly. Some will be taken forward on the basis of their compatibility with areas of policy development in which the Government is confident about the basis on which we can act, while others will inevitably have to wait for resource issues to be addressed in the medium term.” 16

38. The Committee acknowledges that the nature and intent of the RPP document is to detail a mix of adopted policies and proposals which have potential to be developed into policies. However, the Committee recognises that the RPP does not represent a step change in policy terms and presents only a menu of options for the future.

39. The Committee therefore recommends that the Scottish Government should move quickly to develop a programme of assessment and evaluation of the proposals contained within the document to inform decisions on which of these should be adopted and implemented to make a contribution towards meeting the emissions reduction targets. This process should also identify alternatives to those proposals which are found to be impractical or inappropriate.

40. The Committee recommends that the final version of RPP laid before the Parliament should set out the Scottish Government’s intentions in this regard, together with an indicative timetable for undertaking this work. It suggests that the production of the next RPP, likely to be towards the end of 2011, provides an opportunity for the Scottish Government to provide clear evidence of the outcomes of this analysis.

Approach to the implementation of the RPP

41. The RPP states that it recognises that the Scottish Government must use every tool available to achieve what is required including regulation where a voluntary approach proves unsuccessful.17

42. The enabling powers contained in the Climate Change (Scotland) Act 2009 cover many areas including domestic and non-domestic buildings, microgeneration and waste. The RPP outlines its preferred approach to implementation of proposals and policies by stating—

“The Government aims to keep the regulatory burden to a minimum, and where regulation is deemed necessary it will consult on proposals with those it will affect.”18

43. In a written submission, Friends of the Earth Scotland expressed concern that more consideration had not been given to the use of a regulatory approach in certain areas to provide greater certainty of delivery, saying—

“We are concerned that the RPP misguidedly steers away from regulation… This is a worrying cultural obstacle. Hard learned lessons about the weaknesses of voluntary measures…appear to have been forgotten. In too many sections of the RPP (housing, waste, transport, and agriculture) there is an explicit aversion to regulation. In some areas, for reasons of equity and public buy-in, funded incentives will of course be needed first, housing improvement for example. Yet in all areas a more systematic assessment of the pros and cons of voluntary, financial and regulatory measures is essential.”

44. Professor Iain Docherty of Glasgow University expressed the view that the strong, direct approach of regulation may be required in policy areas such as transport and the environment where the voluntary approach was less likely to be successful. He referred, by way of example, to the smoking ban where regulatory intervention to engineer radical change and deliver tangible health benefits was widely viewed as a success, and said—

“…That is the direction in which we must move. My reading of the trajectory question…is that if we ask nicely, through voluntary arrangements, for a long time, we will not start to get on to the trajectory that is needed.”19

45. Dr Andy Kerr from the University of Edinburgh also agreed that in areas such as agriculture and land use, some mandatory frameworks may be required. 20

46. An alternative view was expressed in a joint written submission from COSLA and SOLACE, which stated that—

“It would be useful to see some elements of voluntary action with the private sector being developed further, for instance around producer responsibility and possibly the introduction of the early stages of carbon labelling by the utilities and fuel organisations… Voluntary action is also useful in terms of relationships with the public, moving straight to enforcement is likely to alienate people and lead to unsustainable action in the climate change field.”

47. The Cabinet Secretary for Finance and Sustainable Growth was invited to comment on suggestions that the Scottish Government may be relying too heavily on voluntary mechanisms before considering regulation. He responded by restating his preference for the voluntary approach, saying that—

“It would be better and easier if voluntary activity was undertaken, as it would get buy-in from people and real oomph behind the approach that we are taking because people would be committed to the direction of travel. If we had to regulate, it would suggest a certain lack of empathy with members of the public about the question, which is undesirable.” 21

48. When pressed on how the Scottish Government would be able to establish whether voluntary action was actually making a contribution the emissions reduction, the Cabinet Secretary said—

“I would not like to suggest that anything other than a rigorous mechanism is being put in place to ensure that we make progress and that we can see whether we are making progress. If we do not make progress on the voluntary measures, we will have to take other action, but the Government would rather avoid that.”22

49. The Committee agrees that there should be a balance between voluntary and regulatory measures to deliver the RPP objectives. However, the majority23 of the Committee agrees with concerns expressed with regard to the Scottish Government’s assumption that the voluntary approach to the implementation of policies and proposals should be considered as the default starting point in all cases. It recognises the potential for this approach to cause delays in the implementation of the RPP, particularly in those sectors where there appears to be a real risk that the voluntary approach could prove unsuccessful or where voluntary approaches have already been tried and found to have failed.

50. The majority24 of the Committee therefore recommends that the Scottish Government should define failure criteria for voluntary measures and introduce an appropriate mechanism, as part of its ongoing development and monitoring of the RPP, to provide a realistic assessment of all policies and proposals where a voluntary approach is proposed to determine whether, in each case, this is likely to be sufficient to deliver the necessary changes.

Reliance on EU agreements and UK policies

51. Background information on the assumptions made, uncertainties and the sources of data used when producing the draft report is provided in the RPP and accompanying technical appendix. The RPP acknowledges that in a number of key policy areas such as energy and agriculture, legislative competence is retained at a UK or EU level and admits that—

“Scotland has limited flexibility when it comes to implementing measures to reduce emissions.”25

EU Emissions Trading System

52. In evidence, concerns were raised with regard to one assumption regarding in particular, that relating to the strengthening of the EU Emissions Trading System (ETS) cap.

53. The EU ETS operates through the trade of greenhouse gas emissions allowances throughout the EU. The European Commission website summarises the system as follows—

“The EU ETS works on the "cap and trade" principle. This means there is a "cap", or limit, on the total amount of certain greenhouse gases that can be emitted by the factories, power plants and other installations in the system. Within this cap, companies receive emission allowances which they can sell to or buy from one another as needed. The limit on the total number of allowances available ensures that they have a value.”26

54. Scotland’s share of these emission allowances is counted in the net Scottish emissions account and therefore the rate at which the EU caps the allowance has an affect on how much Scotland can reduce its emissions from the traded sector.

55. Currently the EU ETS allowance is set at 20% emission reductions by 2020 relative to 1990. The Scottish Government has said that Scotland’s 42% interim target can only be met if the EU ETS is strengthened to 30% by 2020. The RPP specifically states that —

“A critical success factor in ensuring we can achieve the targets is a more ambitious trajectory for the EU ETS cap.”27

56. The current position is that the EU has made clear that it will only strengthen this cap to 30% by 2020 if a global deal is agreed. It is not yet clear whether the agreed outcomes from the recent global summit on climate change in Cancun, Mexico will result in a change in the current EU position. The Committee notes that the continued uncertainty with regard to the EU position on this matter presents a real risk in terms of the ability of the measures outlined in the RPP to deliver the necessary level of emissions reductions.

57. On the general issue of the inter-relationship between the RPP and European policy commitments, Lynne Ross of the 2020 Climate Group admitted—

“I have spent a little time trying to disentangle the contribution from the European policy angle and the traded sector while looking at the underlying Scottish policies and proposals. I suggest that, in detailing the traded sector proposals and that sector's contribution, it has sometimes been difficult to look at the underlying Scottish proposals.28

58. SCCS raised concerns regarding the risk of relying on the EU ETS increasing to a 30% emission reduction target. Duncan McLaren told the Committee—

“If that does not happen, or if it happens too late, even with all the proposals in the document, we would still fall short on many of the annual targets between now and 2020. We believe not only that adequate proposals should be identified to get to the targets without that elevated level of uplift but that the proposals should be moved rapidly and in a managed way to policy through a process that includes getting them funded and getting agreement from stakeholders.”29

59. In a written submission to the Committee, the Confederation of British Industry Scotland (CBI) indicated that the business sector does not support the strengthening of the EU ETS to 30% as it believes is not yet clear how this will impact on UK sectors and effect competitiveness outwith the EU. However, CBI Scotland also recognised the reliance of the RPP on the cap increasing, stating that—

“The RPP has an inherent reliance on the EU increasing the EU Emissions Trading Scheme Targets to 30%. The main barrier for the Scottish Government will be the ability to influence changes to the EU ETS and the impact on Scotland’s targets if change is not forthcoming.”

60. In response to questioning on the concerns raised in relation to this issue, the Cabinet Secretary for Finance and Sustainable Growth said—

“The Government has always been clear about the achievement of our targets, as statutory targets. Moreover, we do not simply view them as statutory targets. They are more than that: achieving those targets is an absolute obligation of ours. If there is no EU agreement, we must of course consider other options to ensure that we can fulfil our commitments to deliver a 42 per cent reduction.”30

61. When asked specifically whether any additional emissions reduction options which might have to be considered would be met from domestic effort as opposed to the traded sector, the Cabinet Secretary confirmed that this would be the case.31

UK climate change policies

62. Some witnesses raised concerns regarding the RPP’s reliance on UK Government actions and the risks associated with aligning Scottish targets with so many UK policies. This issue is also discussed in the sectoral analysis section of this report where witnesses raised concerns regarding specific UK policies.

63. The Committee was told of the potential negative impact this could have in delaying actions set out in the RPP. By way of example, Dr Andy Kerr from the University of Edinburgh highlighted the fact that the green investment bank and the Green Deal will be rolled out in 2013 at the earliest. He expressed concern that, in the interim period, opportunities for taking action now could be missed. He told the Committee—

“That is a real issue that is not addressed in the RPP or in the draft budget. Stuff will be coming along at some point in the future, but what are we going to do right now? Who is going to do what now to deliver the investment? I do not see that clearly laid out, and there is a gap.”32

64. The Committee shares the concerns expressed in evidence that there could be further delays in the implementation of those elements of the RPP where the Scottish Government is reliant on the roll-out of UK policies and associated funding, some of which will not occur until 2012-13. It seeks reassurance from the Scottish Government that it will keep this situation under review and consider alternative approaches should any significant delay in the implementation of the relevant UK policies occur.

65. The Committee notes that one of the assumptions made when developing the RPP was that the EU ETS cap would be strengthened to 30% by 2020. This has not yet happened and there remains significant uncertainty as to when or even if agreement will be reached on this matter.

66. However, the Committee is reassured by the indication given by the Cabinet Secretary that, in the event that the EU ETS cap is not strengthened, the Scottish Government will propose additional compensatory measures to ensure that Scotland’s interim target of 42% reductions by 2020 will be met. The Committee recommends that the Scottish Government should, as a feature of the final version of the RPP, make a clear statement of its intended course of action should the EU not agree to a 30% reduction in emissions.

Funding of the proposals and policies in the RPP

67. The RPP includes details of the estimated costs of implementing the proposals and policies included in the document. Whilst time has not permitted the Committee to scrutinise the cost estimates for specific proposals and policies in any detail, it has explored more generally whether there is sufficient clarity in relation to funding models and whether there is adequate alignment with the Scottish Government’s budget process.

Parallel publication of the RPP and the Draft Budget 2011-12

68. The RPP acknowledges the relationship between the two documents and specifically states that the Scottish Government has aligned the development of the report with the preparation of the Draft Budget.33 It is acknowledged that the Scottish Government considered that it would be of benefit for the Parliament to scrutinise these two documents in parallel. Whilst the Committee understands the logic behind this approach it has, nevertheless, proved to be a challenge to the Parliament’s committees to do so, given the limited period available for scrutiny of these important documents.

69. Elizabeth Leighton from Stop Climate Chaos Scotland (SCCS) articulated this concern when she said—

“I see the neatness of looking at the budget alongside an RPP, that puts into question the possibility of adequate parliamentary scrutiny of both documents because of the distraction of budget negotiations. We fear that there will not be enough time to look into the RPP in the depth that it deserves.34

70. The Committee also received written evidence from Friends of the Earth Scotland which suggested that—

“…there is a need to ensure that parliamentary scrutiny of the RPP helps inform the Budget considerations, not the other way around.”

71. The Committee acknowledges the tight deadlines for reporting on the Scottish Government’s Draft Budget 2011-12 and the RPP as set out in the Climate Change (Scotland) Act 2009. The Committee has commented earlier in this report on the need to consider carefully how the limited statutory period for parliamentary consideration of the RPP might be best managed. It is of the view that the comments made by those giving evidence which question the value of publishing the budget and the RPP to the same timescale should be taken into account as part of any discussions on improving and enhancing the scrutiny of the next RPP.

Relationship between the Draft Budget 2011-12 and the RPP

72. The Draft Budget 2011-12 and RPP are clearly interlinked documents, however, some witnesses to this Committee and the Economy, Energy and Tourism Committee expressed concern regarding the lack of ‘read across’ between the two documents.

73. For example, in a joint written submission, COSLA and SOLACE raised concerns that the fact that Draft Budget 2011-12 only covered a one-year period made it difficult to plan for delivery of the proposals and policies detailed in the RPP in longer term with any certainty. They said—

“…this is the first document of its type in this process and whilst important, we should bear in mind the one year budget the Scottish Parliament is proposing to set. This twelve month financial timescale will have implications for the ability of a variety of stakeholders to currently commit to the long-term buy-in needed to start delivering outcomes from the outlined proposals and policies by 2020. Potentially it may be more appropriate to view this draft RPP as a process of highlighting further issues that require to be resolved as and when the setting of a longer term budget is undertaken by the Scottish Parliament in 2011.”

74. This view was shared by Professor Tom Rye from Napier University who stated—

“Tables in the back of the RPP show that £207 million a year will be spent on walking and cycling over the next five or six years. That is totally at odds with what we see in the budget. If your question is about the budget and its links to the RPP, my answer is that there is a very difficult disconnect. We have a one-year time horizon for spending, but a much longer time horizon in the RPP. It is not clear whether many of the measures in the RPP have funds attached to them.”35

75. However, Dr Andy Kerr of the University of Edinburgh was less concerned about the fact that the Draft Budget is set for one year only. He said that although the RPP requires investment over a much longer period, so long as future successive budgets have trajectories which take account of the changes that must take place in the next 10 to 20 years in terms of the targets set out in climate change legislation, having a one year budget was not a problem. 36

76. COSLA was also unconcerned regarding the potential negative impact on the medium to long-term planning outlined in the RPP of having a draft budget covering one year only. Anil Gupta told the Committee—

“Our view is that it is not as important for this RPP as it will be for later RPPs, by which time we will have a much clearer focus of where we want to go and what resources will be required.” 37

77. The Cabinet Secretary for Finance and Sustainable Growth was asked whether he believed that the Draft Budget 2011-12 contained sufficient provisions to act as a launch pad for the RPP, particularly as it is limited to only a single year. He responded by saying that the publication of a single year budget was not unprecedented and that further illustrative budget information for future years would be made available to the Parliament early in the new year.38

Lack of funding clarity and competing budget pressures

78. The RPP acknowledges the uncertainties regarding the financial costs of implementation of the proposals. It states—

“It has not been possible to show whether costs would be met by the Scottish Government, the broader public sector, business or individuals, as this would depend on exactly how a proposal was to be implemented.”39

79. The Committee heard evidence regarding the lack of clarity as to the actual costs of individual policies and how they will be delivered. Increasing competing pressures on existing public sector budgets was also an area of concern highlighted by witnesses. For example, in a joint written submission, COSLA and SOLACE said—

“In this revised funding context, the draft RPP would benefit from identification of basic information on which agency or sector will lead on the various proposals, policies and supporting measures identified…The cost to local government/public sector would also be a useful addition to the draft RPP, to enable a fuller discussion with the public on the provision of climate change policies relative to other priorities in the context of the current rationalisation of public services.”

80. This was reiterated by Lynne Ross, representing the 2020 Climate Group, when she said—

“The RPP does not prescribe precisely what proportion of cost will fall on the public or private sector, or on individuals.”40

81. The difficulties in terms of budget constraints and competing pressures faced by local authorities was also highlighted by Dr Andy Kerr of University of Edinburgh, when appearing before the Committee on the Draft Budget 2011-12—

“My concern about the budget is more that everything is being pushed down to local authorities, which have restricted budgets and an increasing number of targets. They will struggle to hit many of the targets and they are already starting to say that they cannot deliver on all the targets. I am sure that, if we pushed them, some targets could be met, but the danger is that the problem is simply being shovelled down to somebody else rather than solved.”41

82. The competing pressures on local authorities was also raised by Colin Howden from Transform Scotland, representing the Stop Climate Chaos Scotland coalition, when he told the Committee—

“At a time of reducing local authority budgets, we would raise concerns about the possibility that they might have to use their funds for existing duties, such as road maintenance, and will not have money to expand carbon-saving measures in other areas.”42

83. In giving evidence to the Committee, the Cabinet Secretary was asked to comment on whether the fact that the Scottish Government’s Draft Budget 2011-12 was only a one year budget might create uncertainty and discourage low carbon investment. In response, he said—

“Nobody could look at what the Government is doing—at its policy and legislative agendas—and say that it will in any way change tack on the low-carbon economy, the pursuit of the climate change agenda and the wider question of sustainability, which are at the core of the Government’s agenda. Whether we have financial information for one year, two years, 10 years or whatever, much of the activity is 20 or 30-year timescale material. The Government’s policy agenda is designed to give confidence and focus to the planning of different organisations and individuals.”43

84. The Cabinet Secretary was also asked whether the Scottish Government had considered a scenario whereby a lack of finance might act as an obstacle to the implementation of carbon proposals and so render the RPP unrealistic. He responded—

“Clearly, that would be disappointing. We must ensure that our efforts are clearly focused on trying to identify investment opportunities and attracting sufficient investors to make that happen. I acknowledge and accept the risk that that may not be able to be delivered, but the focus of Government efforts is certainly to ensure that it can be brought about.”44

85. The lack of clarity in relation to actual costs of proposals and policies and was not the only area of concern heard by the Committee. The RPP states that there is recognition that the development of innovative funding mechanisms must be supported45, however the lack of clearly defined funding paths brings a great degree of uncertainty and lack of clarity as to how a number of activities will be financed.

86. The Committee questioned the Cabinet Secretary on whether the Scottish Government was exploring the innovative funding models to deliver the necessary infrastructure and behaviour changes. He indicated that the Scottish Government was making efforts to devise appropriate funding methods.

87. The Cabinet Secretary also made clear his view that the changes needed would require not just public sector investment—

“…I should say that the low-carbon economy cannot be delivered by public expenditure alone. There is absolutely no way that that can be the case; we have to leverage in private investment…We want to make it clear to the private sector that we view this area as a development opportunity that the public sector will help to develop but which it cannot exclusively develop.”46

88. The Committee accepts that this year’s Draft Budget 2011-12 covers only one year and that it has been produced against a backdrop of public finance constraint. It also acknowledges that the RPP requires long term funding for the next 10 to 20 years. However, it is the Committee’s view that the RPP must be aligned with the Budget in a manner which presents an accurate and realistic picture of what can be achieved. It sees little benefit in setting challenging objectives and making ambitious estimates of emissions reduction to be made through proposals and policies if subsequent Scottish Government Budgets do not contain sufficient financial provision to allow these to be delivered.

89. It is the Committee’s view that, if there are circumstances in future years where the Scottish Government takes decisions which result in the scaling back or removal of funding for a policy or initiative which is included in the RPP, the document should be suitably amended to reflect that position. It recommends that the process being developed by the Scottish Government to monitor the progress of the RPP, should include a means to consider any such changing circumstances.

90. The Committee’s scrutiny of the Draft Budget 2011-12 suggests that financial provision is not adequate to drive forward certain of the initiatives set out in the RPP, such as active travel and modal shift as it relates to the freight industry. The Committee has commented on these matters in its report to the Finance Committee on the Draft Budget 2011-12 and makes further reference to them in the transport section of this report.

91. The Committee also acknowledges the many concerns raised in terms of the need to provide greater clarity in the RPP on those proposals and policies which local authorities will be expected to deliver. It recommends that the Scottish Government should reflect on whether greater clarity on this issue could be provided in the final RPP.

92. The Committee also recognises the challenges presented to local authorities by budget constraints and the requirement to manage many competing priorities, of which emissions reduction is only one. It considers this to be a serious and significant issue which has potential to create an unnecessary barrier to the effective delivery of emissions reduction in the public sector. The Committee calls on the Scottish Government to provide details of how it intends to engage with COSLA and local authorities on how these challenges might be addressed.

SECTORAL ANALYSIS

Energy

93. Section 3 of the RPP summarises the proposals and policies relating to energy supply. It covers three main topics namely: electricity generation, renewable heat and energy efficiency measures.

94. The Economy, Energy and Tourism Committee (EET) took the lead on the energy provisions during Stage 1 scrutiny of the Climate Change (Scotland) Bill and agreed to report to this Committee on the energy section of the RPP, paying particular reference to energy supply. Its scrutiny of the RPP was also undertaken alongside its scrutiny of the Draft Budget 2011-12.

95. The EET Committee’s report is reproduced at Annexe A. It should be considered as complementary to this report and should be read in full alongside it.

96. The Transport Infrastructure and Climate Change Committee has referred to certain specific EET Committee recommendations in other parts of this report.

97. The EET Committee explored a number of areas of funding streams listed in the RPP including the Green Investment Bank, the Fossil Fuel Levy and the Scottish National Renewables Infrastructure Fund. It asked that the Scottish and UK Governments work together to try and release funds from the fossil fuel levy and also asked for more information on the green Investment Bank Fund.

98. The EET Committee also scrutinised the energy efficiency measures contained in the RPP and found there was a lack of financial information contained in the draft Budget on energy efficiency packages and the home insulation scheme. These points are discussed in the next section of this report which addresses the “homes and communities” component of the RPP.

99. The TICC Committee would like to restate its thanks to the EET Committee for its work. It notes and endorses all of the recommendations contained in the EET Committee’s report and expects the Scottish Government to give due consideration to its contents and to provide a full response to its recommendations.

Homes and Communities

100. Emissions from the residential sector come mostly from combustion for heating and cooking. The main areas where the RPP expects to achieve emissions reduction is through energy efficiency schemes, behavioural change and improvement in domestic energy efficiency through higher building standards.

101. The RPP sets out some milestones for 2020 for energy efficient measures for this sector which include—

  • every home to have loft and cavity wall insulation, where this is cost-effective and technically feasible, plus draught-proofing measures such as pipe lagging;

  • every home heated with gas central heating to have a highly efficient boiler with appropriate controls; and

  • at least 100,000 homes to have adopted some form of individual or community renewable heat technology for space and/or water heating.47

102. As a supporting measure, the Energy Efficiency Action Plan48 outlines actions to improve the energy efficiency of the residential sector and encourage energy efficient behaviour.

103. The technical appendix to the RPP confirms that much of the emissions reduction in this sector will be delivered through the implementation of reserved policies and ensuring effective take up in Scotland.49

UK proposals and policies

104. Funding for domestic energy efficiency improvements is dominated by the supplier obligation currently known as Carbon Emissions Reduction Target (CERT)50 and is a reserved policy. This will be replaced by the Green Deal post 2012 which is expected to focus on fuel poverty and hard to treat properties.

105. The RPP estimates the cost of implementing housing energy efficiency measures post-CERT will be around £2.9 billion to 2022 with most of these costs being met by consumers through the Green Deal or self-financing mechanisms.51

106. The RPP acknowledges that the supplier obligation has not tended to deliver in Scotland’s homes due to the nature of the housing stock and its rurality which means that it can be more costly to achieve energy efficiency improvements. 52

107. An example of this was provided to the Committee by Dr Andy Kerr of the University of Edinburgh who said that in relation to elderly Scottish building stock—

“There are things that we need to address in Scotland in particular that relate to tenement buildings and solid wall insulation. The issues are big and tricky. The UK-based grant mechanisms tend to go for the easy hits and tend to be for semi-detached houses in Sheffield, for example, rather than houses in Scotland. We tend to get a lesser share of those funds.”53

108. In written evidence to the Committee, Consumer Focus Scotland pointed out that many older properties are not able to take advantage of schemes directed at lower cost improvements It explained—

“Scottish Government figures show that older, detached buildings without access to the gas network are more likely to be rated ‘poor’ for energy efficiency, and that around 2/3 of all households living in houses with poor energy efficiency are in fuel poverty. A target for the insulation of these homes is needed. Consumers living in these houses are least able to heat their homes effectively, and have, in general, not been able to take advantage of lower costs measures on which most past programmes have concentrated.”54

109. In addition, there was a commitment from the previous UK Government to install smart meters for gas and electricity use in every home by 2020 to encourage households to be aware of energy consumption and thus manage it more efficiently. The UK Government has published a Smart Metering Implementation Programme Prospectus55 and it is expected roll out of smart metering will take place in 2012 with energy suppliers being responsible for their installation.

110. It is also expected that further emissions reduction in the homes and communities sector will be achieved by using heat produced from renewable sources which will be financed through the Renewable Heat Initiative (RHI).

111. As detailed in section 3 of the RPP, the UK Government has confirmed that the RHI scheme will begin in June 2011 with further details of its implementation yet to be announced. It will be the main funding mechanism for renewable heat installation in Scotland and the Scottish Government has stated that it will work with the Department for Energy and Climate Change (DECC) to ensure the scheme takes account of Scottish interests when it is introduced.

112. Stop Climate Chaos Scotland, in its written submission to the Committee’s call for views outlined its concerns regarding the assumptions made in relation to UK funded schemes. These included the concern that the RPP—

“..assumes pro-rata investment from the UK programmes (CERT and CESP) from 2010. Scotland’s track record with the supplier obligation would not give confidence in this assumption. In recent years, levels of investment have been approximately 70% rather that 100% pro-rata, although this last year indicates an improvement on this performance.”

113. On the proposal that fuel poverty and home insulation schemes are maintained, Stop Climate Chaos Scotland said in its submission—

“The proposals are not clear about the level of investment to be put towards either the fuel poverty or insulation programmes. The RPP states that the Scottish Government will “make a good start by proposing in our draft Budget to maintain our successful Energy Assistance Package and Home Insulation Scheme.” It does not make clear what ‘maintain’ means in practice and it implies that the Universal Home Insulation Scheme will not receive any funding. Judging from the number of homes to be offered help, we estimate that the current investment in home insulation (HIS and UHIS at £25 million) could be nearly halved, and fuel poverty (EAP at £45 million) cut by a third.”

Scottish proposals and policies

114. Listed under its proposals the RPP states that the Scottish Government will publish a Housing Policy Statement in the new year following on from the consultation on its housing policy reform discussion paper, Housing: Fresh Thinking, New Ideas.56 The aim is to incorporate climate change energy efficiency targets as part of overall housing policy and address the financial challenges which will arise through maximising potential sources of investment.

115. In addition, the Scottish proposals relating to fuel poverty and insulation programmes include a statement that “national and area-based schemes, or other approaches, will be required to maximise take-up of basic insulation measures and tackle fuel poverty, drawing in funding from UK Government schemes and other sources.”57 This section of the RPP also states that the Scottish Government’s priority will be to seek to maximise funding from UK, European and funding sources as the Scottish Government energy efficiency programmes such as Home Insulation Scheme (HIS) and Energy Assistance Package (EAP) are designed to “interact strongly with UK policies such as CERT to seek to ensure that Scotland receives its fair share of investment”. In addition, it states that the Scottish Government’s Draft Budget proposes to maintain these two schemes.58

116. The RPP outlines Scottish policies covering existing housing and new housing. With regard to existing housing, the Scottish Government is supporting area-based insulation and energy efficiency programmes through delivery in targeted areas. Currently 27 universal-access area-based schemes are being supported across Scotland. Funding of £10 million was allocated to these universal schemes in the budget for 2010-11.59

117. During evidence to the Committee on the Draft Budget 2011-12, Dr Dan Barlow from WWF Scotland raised concerns regarding the funding of the HIS programme saying—

“Last year, a commitment of £10 million was made to support a universal home insulation scheme. The draft budget does not allocate any funds to support a similar scheme.”60

118. Stop Climate Chaos Scotland was of the view that a significant increase in funding for area-based programmes is required with the aim of having a national retrofit programme by 2015. Elizabeth Leighton told the Committee—

“We would like to see the upscaled area-based scheme and a loan scheme alongside that, with the introduction of minimum standards for existing housing by 2015, which will escalate thereafter.”61

119. There were concerns among witnesses regarding the lack of clarity as to the funding of energy efficiency schemes and fuel poverty programmes in general. Some witnesses suggested that funding in the homes and communities sector may even be reduced. Elizabeth Leighton from WWF Scotland, representing SCCS said—

“Indeed, from the estimates of the number of homes reached, it looks as though the funding will decline rather than increase, which is not what one would expect from a programme that is seeking to achieve significant emissions reduction in an area that can achieve so many benefits for Scotland through the eradication of fuel poverty, the creation and maintenance of green jobs and the creation of greater wellbeing in society. We are not seeing transformation in the housing sector.”62

120. These concerns were echoed by Dr Dan Barlow from WWF Scotland when giving evidence on the Draft Budget 2011-12,—

“At this stage, it is not clear but it looks likely that the investment in home insulation will be less than it was last year. This is a major concern. At this stage, I remain concerned that we have not seen the step change in improving the level of investment that is required to make our homes more energy efficient.”63

121. The Cabinet Secretary for Finance and Sustainable Growth was asked to comment on the evidence received by the Committee that there exists a tension between social needs and carbon reduction needs and therefore measures could be targeted to areas where most efficiency gains can be made easily rather than tackling inefficient housing in areas with greater fuel poverty issues.

122. In response, he gave examples of where technological solutions in new-build properties can achieve the aim of addressing both emissions reductions and fuel poverty issues. He also acknowledged that this was not always the case with the retrofit of older properties. He told the Committee—

“A great deal more needs to be done to ensure that people are participating in retrofit. The voluntary activity is at the core of that.

The UK CERT—carbon emissions reduction target—programme prioritises low-income households in relation to energy efficiency and emissions reductions and is an important plank in the approaches that we can take.”64

123. The Committee raised the issue of how the Scottish Government expects the Renewable Heat Initiative and Green Deal will help deliver the heat and energy targets required in Scotland. In his response, the Cabinet Secretary said—

“Both those projects contribute to encouraging householders to consider new areas of activity and involvement. They provide important aspects of the drive to improve energy efficiency and reduce the carbon footprint by encouraging members of the public to participate in attractive and beneficial points on the agenda for tackling the issue.”65

124. The issue of the funding of energy efficiency policies and proposals was brought to the Committee’s attention by witnesses and was also raised with the Cabinet Secretary, in particular the claim that the Draft Budget 2011-12 represents a cut in funding for these programmes. He told the Committee—

“Mr Neil is undertaking commercial negotiation on some aspects of the energy efficiency budget. Details of that will become clear later on. I appreciate that that is not convenient for committees, but it explains why that dialogue is necessary.”66

125. The Committee notes that the EET Committee was given a similar message from the Cabinet Secretary for Finance and Sustainable Growth during its consideration of the Draft Budget 2011-12, i.e. that it was not possible to provide exact figures for either the home insulation scheme or energy efficiency packages at this time. The EET Committee had previously stated that investment should be in the order of £100-170 million per year and has recorded its disappointment at the proposed reduction of £20.7 million to £83.9 million for the ‘supporting sustainability’ budget.

Implementation

126. The question of whether the implementation of the RPP should be by voluntary or regulatory means has already been discussed earlier in this report. However, this issue was raised by a number of witnesses particularly in relation to this section of the RPP, where the method of delivery of the measures is 80% voluntary and 20% regulatory.

127. In a written submission to the Committee, COSLA and SOLACE expressed concerns with regard to the effective implementation of energy efficiency measures when they stated—

“For instance encouragement does not guarantee energy efficient behaviour will actually take place. Likewise while promoting the uptake of energy efficiency measures may be beneficial it is difficult to measure what is actually done, and any reductions that do occur. Connected to this is the potential for the Scottish Government to consider regulation of the energy performance of houses. A report will be published on this by the end of March 2011. Given current financial circumstances, imposition of further regulatory burdens could not be acted on without funding. “67

128. In relation to implementation of the measures contained in this section i.e. 80% of the measures are voluntary and 20% regulatory, the Cabinet Secretary reiterated the Scottish Government’s desire to adopt a voluntary approach and bring people along with them rather than impose regulations. He did however confirm that the approach to implementation would be kept under review. When asked by the Committee he said—

“Ministers will make a statement to outline their approach to regulation, particularly in the housing sector, in the early part of 2011 as the Government develops its thinking. It may be that we have to change that balance to encourage a faster pace of activity, but that is conditional on my answer to Cathy Peattie that I think that voluntary activity is more desirable than compulsion, particularly if we can motivate individuals to see the measures as a substantial point of intervention to make a difference to the climate.”68

Conclusions on homes and communities

129. The Committee notes that policies for reducing emissions from the homes and communities sector rely heavily on UK funding and the Scottish Government’s policies concentrate on measures to ensure access and increased up-take of these funding streams.

130. The Committee also notes the uncertainty surrounding a number of UK policies as further details on their implementation and funding have yet to be announced.

131. The Committee is concerned that an over-reliance on UK funding could pose a risk to the Scottish Government in achieving its targets as it does not have control of the timing of the roll-out of policies and control over their funding.

132. The Committee believes that it remains unclear the extent to which the Scottish Government will allocate appropriate funding to energy efficiency and fuel poverty schemes in 2011-12 should the UK funding mechanisms prove inadequate or inappropriate for Scotland.

133. The Committee recommends that, should funds from the UK policies prove inadequate, the Scottish Government should seek to provide additional alternative funding to ensure that energy efficiency targets in this sector are achievable.

Business and the Public Sector

134. This section of the RPP sets out how the Scottish Government envisages contributions to emissions reduction being delivered from non-traded industry, business and the public sector. The RPP acknowledges that much still needs to be done by both the business and private sectors to deliver the necessary improvements—

“Despite good progress in many businesses, there are still many opportunities for businesses and public bodies to improve the efficiency with which they use energy and other natural resources. These improvements make financial sense as many measures pay back their up-front costs quickly through savings in fuel costs.”69

135. It is acknowledged in the RPP that it is UK-wide legislation which will in the main influence decisions on energy-efficiency improvements in these sectors, although the Scottish Government has enabling powers via the 2009 Act which would allow additional legislative steps to be taken in Scotland.

136. There are three milestones in this section of the RPP, which identify the Scottish Government’s expectations of the business and public sectors. These are as follows—

  • The public sector will have reduced its energy consumption by at least 12% by 2020

  • Individual public bodies will have all set and be monitoring their own ambitious annual energy efficiency targets

  • All businesses will have access to consistent energy and resource efficiency advice

Business sector

137. The RPP states that, although some business are making good progress in relation to emissions reduction, there is still much that could be done to make improvements in areas such as energy use. It summarises the broad policies at a UK and Scottish level that are designed to reduce emissions and energy use in non-domestic buildings. It also refers to the Scottish Government’s Energy Efficiency Action Plan which sets out how it will support businesses to maximise their competitiveness through improved energy efficiency of their premises.

138. The document also sets out details of Scottish policies – essentially a new set of building standards for non-domestic buildings which came into force in October 2010 – and proposals, which include new-build non-domestic energy standards and the development of heat networks and district heating.

139. When asked about the ancillary benefits of low-carbon investment, Lynne Ross of the 2020 Climate Group suggested that more information may be required in this area—

“The 2020 group believes that there are many ancillary benefits and that they will lead to cost reductions for small businesses and households. In the current economic situation, those benefits are attractive, but they have not been set out fully or claimed, or overclaimed, in the RPP. There is a role in communicating those benefits in a more concrete way. Analysis is under way in the Government to start to frame those benefits.”70

140. Once again, the issue of the reliance on UK Government policies was highlighted as a potential risk to the delivery of RPP objectives. Gordon McGregor of the 2020 Climate Group said—

“I say that that is a risk not because I think that the UK policies will fail but because they are outwith the gift of the Scottish Government. Issues around areas such as the green deal, the renewable heat initiative, the carbon reduction commitment, climate change levying and the climate change agreements, which are subject to reform once the carbon price floor comes in at a UK level, will change quite dramatically in ways that we do not yet know about. We have to have our eyes wide open to the fact that the underlying assumptions of the RPP are subject to change over the next year or two.”71

141. Paul Brewer, also representing the 2020 Climate Group, suggested that it was not yet clear how the necessary levels of private investment would be obtained to ensure that some of the wider RPP objectives would be delivered, he said—

“I stress the question of how we will finance meeting the challenge of the climate change targets, particularly the energy usage and generation component. Although I do not think that at this stage of development it is reasonable to expect the RPP to approach the issue in any depth, I think that in certain areas one has to ask how the finance needed to deliver the plans will be sourced and whether there is an underlying economic proposition that the private sector will be involved in attracting the necessary finance.”72

142. When invited to comment on what work the Scottish Government would be doing to encourage investment in low carbon initiatives, the Cabinet Secretary responded—

“We must ensure that our efforts are clearly focused on trying to identify investment opportunities and attracting sufficient investors to make that happen. I acknowledge and accept the risk that that may not be able to be delivered, but the focus of Government efforts is certainly to ensure that it can be brought about.”73

143. The Committee welcomes the fact that businesses, and particularly large businesses, are increasing their investment in low carbon projects and are looking much more seriously and proactively at how they integrate emissions reduction with their business models and practices. However, private investment on a significant scale will be required if emissions reduction targets are to be met.

144. The Committee agrees that if private finance is to be levered in to the scale required, investors will need to have confidence that investments in low carbon projects are worthwhile from a business perspective. It suggests that “early wins” and good examples of successful investments and business opportunities are essential if this investor confidence is to be provided.

145. The Committee therefore calls on the Scottish Government to indicate whether it has carried out any scenario planning which anticipates early private sector activity which might deliver such success and act as encouragement to others in the business sector.

Public sector

146. The RPP states that—

“The public sector in Scotland, including the Scottish Government itself, must become a leader in the adoption of low carbon, energy efficient technology and practice.”74

147. The document also restates the fact that the 2009 Act places duties on Scottish public bodies in relation to climate change which come into force on 1 January 2011. These will be supported by Scottish Government guidance, consultation on which ended in November 2010.

148. One important issue which emerged during the Committee’s consideration of the RPP related to the lack of clarity in the discussion of the role which will be expected of local authorities in the delivery of proposals and policies. The Committee heard that, as a consequence, it was extremely difficult for local authorities to make an assessment of the likely cost implications. Anil Gupta, representing COSLA, summed up this situation when he said—

“One of the areas where we find it slightly more difficult at the moment is the lack of clarity about who is to do what and at what cost. Those sorts of things will be particularly important as we try to provide for, or require more money to deliver, some of the changes that are required.”75

149. In a joint written submission, COSLA and SOLACE added—

Our biggest concern is the need to recognise the different ways that resources can be directed, when we do not have the ability to raise additional money. In the main part the next version of the RPP should more directly approach the matter of local government powers, including potentially simplified arrangements that would allow local government to exercise such powers.”

150. Professor Tom Rye of Napier University echoed these views, stating that—

A large number of transport measures in the RPP will have to be delivered at local level. However, as Anil Gupta indicated, it is not clear that the local level has the money or the capacity to do that or that the activity ties in with local authorities' commitments under their single outcome agreements. That is a significant problem. There is a real disconnect between what the higher level of government wishes the lower level to do and what the lower level can or will do.”76

151. Elizabeth Leighton, representing Stop Climate Chaos Scotland, also voiced concerns that the public sector is being asked to deliver a major contribution to the climate change agenda in the absence of additional resources—

“…the public sector needs the resources, skills and capacity to deliver on that duty. We have called for those to be provided through Government directly or through the alternative financing mechanisms that we have talked about. It could perhaps be done by redirecting savings into energy efficiency programmes.”77

152. Dr Andy Kerr of the University of Edinburgh also questioned whether local authorities currently have enough of the required skills to deliver what will be required of them. He said—

“I return to the question whether local authorities have the skills sets. I do not think that they do. What the RPP does not say but associated documents do say is that one of the big gaps in the next 10 or 15 years will be in skills, whether in senior decision making or in installing renewables technology. That is a huge gap that can be addressed only if we create partnerships between the higher or further education sector and the relevant authorities to support and build short courses and executive courses to meet those needs.”78

153. In its report, the EET Committee also stated its concern about the potential skills gaps and the challenges and scale of training and retraining required. The EET Committee recommended that the Scottish Government provides the necessary funds for the education and training sector in Scotland to enable the Scottish population to fully take advantage of the employment opportunities in the renewables sector by providing the right skills at the right time.

154. This Committee endorses that view and recommends that the Scottish Government provides greater clarity on how it will support academia, local authorities and others to ensure they have the skills and funding to deliver transformational policies such as electric car charging points and adequately ensure compliance with new stringent energy standards across all sectors.

155. During discussions on the readiness and capacity of the public sector to deliver what will be required of it in terms of emissions reduction, the Committee heard differing on views regarding the suitability of current organisational structures to this task. Dr Iain Docherty of Glasgow University said—

“Our voluntary structures for creating the collaboration and partnership that we would like between authorities for public policy reasons might well be reaching the limits of their endeavour. Given the urgency of the carbon issue and the varying incentives for different locations in different local authorities, particularly in the central belt, where the system is more fragmented, we need to ask the serious question whether our local government structure is fit to deliver low-carbon policies.”79

156. However, an alternative view on the structural readiness issue was given by George Tarvit of the Sustainable Scotland Network, who said—

“Our focus is not on structural change in local government, because there are bigger issues on which to focus. Local government is reasonably well structured to focus on some issues in the RPP. We have done a huge amount of work to support network members in getting their heads around the agenda. However, we could be criticised for the pace of change and the skills that are available locally—we need to skill up.”80

157. The Committee considers sustainable procurement to be a hugely important element in the delivery of more sustainable public services. However, a note of caution in relation to this issue was sounded by COSLA and SOLACE in a written submission—

“COSLA and SOLACE both recognise the potential carbon reduction savings that could be achieved through procurement. However, there is a need for some caution and recognition of the technical work required to underpin this. While some areas of specification will be fairly straight forward – for instance in buying low carbon fleets, when carbon has to sit alongside other equally pressing issues there will need to be a robust, easy way of assessing carbon that can be agreed and used by contractors.”

158. The issue of procurement was raised with the Cabinet Secretary for Finance and Sustainable Growth, who was asked to elaborate on how the Sustainable Procurement Action Plan, now over a year old, is delivering low carbon decisions. He said—

“We have consulted widely on how a procurement action plan could deliver a meaningful impact. We have shared that thinking with public bodies through the publication of the procurement action plan. It is designed to embed sustainability within procurement and, as a consequence, to assist us in dealing with some of the wider objectives that must be confronted. We will have to revisit the plan to determine whether it is changing practice.”81

159. The Committee is encouraged by the progress the Scottish Government has made in consulting on and developing its Sustainable Procurement Action Plan. It also welcomes the Cabinet’s Secretary’s commitment to review the plan to determine its effectiveness and to share information on the outcomes of that exercise with the Committee.82

160. The importance of strong leadership and cooperation in the public sector was also raised by George Tarvit of Sustainable Scotland Network—

“Political commitment and leadership will also be required, and we have been putting in a huge effort to shore that up. Local partnership working will also be critical. Much work has already been done at regional level. In the local footprint project, the SSN has increasingly been working with a sort of collective of local authorities.” 83

161. An example of one area in which cooperation between public bodies might be useful was provided by Anil Gupta of COSLA—

In the public sector, we would like there to be better alignment of the different advice-giving arrangements, so that, for example, there could be a single delivery plan for low-carbon advice in Scotland. I do not mean a collapsing of different bodies, but we could have a single delivery plan similar to the set-up for zero waste Scotland, which has now been under way for the best part of a year.”84

162. It is the Committee’s view that local authorities have a responsibility to make a significant contribution towards meeting emissions reduction targets.

163. However, the Committee notes that local authorities are concerned that there are several issues on which further clarity and definition is required if they are to prepare to fulfil this responsibility effectively. The Committee calls on the Scottish Government to hold discussions with COSLA to resolve these concerns. It also recommends that the role of public bodies in delivering proposals and policies should be more clearly defined in the next RPP.

Transport

164. The RPP reiterates that transport is the only sector in which emissions have risen since 1990.85 The technical appendix to the RPP confirms that emissions from domestic transport have risen by 7% since 1990 and emissions from international aviation and shipping have increased by 20% in the same timeframe.86

165. The report also states that “a very ambitious implementation” of all the proposals and policies which relate to the transport sector would deliver a 13% reduction in emissions on a 1990 baseline by 2020.

166. The RPP provides only two milestones for transport in 2020 which are:

  • a mature market for low carbon cars, resulting in average efficiencies for new cars of less than 95 gm/kmCO2e;

  • an electric vehicle charging infrastructure in place in Scottish cities.87

167. When questioned on the inclusion of only a limited number of milestones in the transport section of the RPP, the Cabinet Secretary commented—

“I acknowledge that the largest challenge in the transport area is emissions reduction. The draft RPP contains a range of different interventions, some of which are now being assiduously implemented…The fact that there are only two milestones should not be seen as a lack of acknowledgement of the seriousness of the question, because I concede that there needs to be a substantial focus on transport activity.”88

168. The Cabinet Secretary also informed the Committee that the Scottish Government was working closely with the UK Government on the provision of electric vehicle charging infrastructure.89 The Committee notes that proposals were announced on 14 December 2010 to provide funding for 234 charging points at public locations and 80 in workplaces in Scotland as part of a match-funding arrangement between the Scottish and UK Governments.

169. Evidence to the Committee on the transport sector of the RPP concentrated on the lack of any economic instruments in the proposals and policies and the perceived contradictions between the Draft Budget 2011-12 and the RPP with regard to two areas: the Cycling, Walking and Safer Streets budget and the Freight Facilities Grant.

Economic instruments

170. As previously stated, the Scottish Government engaged fully with key stakeholders on the development of the RPP, which has been welcomed by this Committee. This process heard that earlier versions of the RPP included a wider range of proposals than those contained in the version laid in the Parliament. For example, the Committee heard from witnesses that earlier drafts had included proposals on public and residential parking management. Colin Howden told the Committee—

“Where the RPP falls down on transport is in the fact that it is short on economic instruments—there is nothing in it to bring the external costs of transport back into the price paid by the transport user. For example, there is nothing in the RPP on road user charging or on a workplace parking levy, both of which were in previous versions of the RPP.”90

171. The RPP confirmed that the Scottish Government’s proposals for reductions in transport emissions were based largely on the findings of the Atkins Study,91 with some of the measures in that study identified by the Committee on Climate Change as Scottish levers for unlocking emissions reductions.92 Professor Tom Rye of Edinburgh Napier University highlighted the road user charging aspect of the report stating—

“Much of the review work that the University of Aberdeen and Atkins did on developing measures to mitigate the impact of climate change included road user charging. Indeed, many other measures in the report, which work through in some respects to the RPP, count on road user charging or something like it being in place to lock in the benefits of some of the softer measures in the RPP. If road user charging does not go ahead, we can expect some of the softer measures to perform less effectively than they would if road user charging or some other fiscal-type measure were in place.”93

172. The Committee notes whilst there are no economic instruments detailed in the transport section of the RPP, these appear to have been actively considered as part of the document’s development. It also notes that there is recognition by some observers that such levers may be required in future should other measures to reduce transport emissions prove unsuccessful.

Cycling, Walking and Safer Streets

173. The RPP restates that the Cycling Action Plan for Scotland, published in June 2010, sets out a framework for a tenfold increase in the proportion of road journeys made by bicycle.94

174. The Committee received both oral evidence and a number of written submissions which raised concerns about level of funding in the Draft Budget to support improvements in active travel. For example, Colin Howden told the Committee—

“One of our concerns is that, although the RPP indicates that we should invest in walking and cycling, last week's draft budget stripped out the cycling, walking and safer streets fund, which is a major component of the funding for cycling infrastructure in Scotland. “95

175. Dr Dan Barlow of WWF Scotland, during scrutiny of the Draft Budget 2011-12, reiterated the fact that there did not appear to be a Cycling, Walking and Safer Streets ring-fenced fund in the Draft Budget 2011-12. He said—

“Previously, it was around £9 million. If that is not anywhere in this budget, we will have gone backwards in the total spending that is available to support active travel, walking and cycling. To that extent, we are concerned that we have not got the balance right.”96

176. When giving evidence to the Committee, the Cabinet Secretary was asked whether RPP objectives in this area would be met if appropriate levels of funding were not in place. He said—

“The Government's budget for sustainable and active travel increases from £21.2 million this year to £25.1 million in 2011-12. There are not many budget lines like that in the Government's draft budget…Cycling investment has increased year on year for the past three years and it increased by nearly 50 per cent in the last year alone, so there are a lot of good things happening on that.”97

177. In its report to the Finance Committee on the Draft Budget 2011-12, the Committee notes that the future of the Cycling, Walking and Safer Streets (CWSS) budget appears to be unclear, with there being no mention of this budget line (formerly around £9 million) in the budget document.

178. The Committee has consistently called for increases in the funding for sustainable and active travel in successive reports on the Scottish budget. In its report to the Finance Committee, it reiterates this call for proper resources to be allocated to walking and cycling if ambitions in relation to active travel are to be realised.

Freight Facilities Grant

179. Under the “Scottish Policies” section of the RPP, reference is made to the operation of four freight grant schemes by the Scottish Government, aimed at encouraging the transfer of freight from road to rail or water. It also states that the Scottish Government will investigate options to encourage further freight modal shift, including financial incentives such as a mode shift grant.

180. Whilst these references in the RPP are welcomed, the Committee notes that a large number of oral and written representations it received on both on the RPP and on the Draft Budget 2011-12 raised concerns about the removal of the Freight Facilities Grant.

181. In a written submission to the Committee, on the RPP, CBI Scotland warned that the removal of the freight facilities grant would—

“…impact greatly a scheme which is designed to ease modal shift, and thereby hamper the logistics industry in its bid to play a significant part towards Scotland’s climate change reduction targets.”

182. The Committee addressed this issue as part of its consideration of the Draft Budget 2011-12 and has drawn the Finance Committee’s attention to its concern that the Draft Budget 2011-12 contains a significant reduction in support for modal shift in the freight industry. The Committee is also concerned at the reported closure of the Freight Facilities Grant for expenditure which will be incurred after 31 March 2011.

183. In its report to the Finance Committee, the Committee stated its belief that it is essential that support is given to the freight industry to encourage modal shift from road to rail and sea, particularly in light of action needed to meet Scotland’s climate change targets. Closing the Freight Facilities Grant would seem to contradict that important policy message and also run counter to the Scottish Government’s statement in the RPP that it will provide further incentives to encourage freight modal shift.

184. The Cabinet Secretary was questioned on this issue when he gave evidence to the Committee on the RPP and he said—

“I am happy to listen to further representation on the issue, but…since April 2007, the "Support for Freight Industry" capital budget line for FFG projects has totalled more than £40 million, but the fund has consistently underspent. The provisions in the budget for 2011-12 are more akin to the pattern of expenditure.”98

Hierarchy of transport issues

185. Another issue raised with the Committee was that of a suggested hierarchy of sustainable transport issues in the RPP. Colin Howden of Transform Scotland introduced this issue—

“In the hierarchy of measures in the RPP, the headings are broadly correct. However, from a sustainable transport perspective, they are presented in the wrong order. Reducing the need to travel should always be the first thing to consider. Then, we should consider modal shift. Only finally should we consider greater efficiency and better technology for the transport that remains. The RPP takes a very different approach: it considers the technology first, and then eventually gets on to measures for demand management. The order of the hierarchy is wrong.”99

186. In a written submission, Consumer Focus Scotland supported the view that greater emphasis should be placed on the need to reduce travel demand—

“We would welcome greater emphasis in this chapter on the potential for reducing the need to travel. The current proposals concentrate on technical solutions rather than looking at the services which consumers are seeking to access when they travel…Delivering more services online would also reduce the need for people to travel to a particular place to access services.”

187. COSLA and SOLACE also suggested in a written submission that there was a need for the RPP to address this issue—

“We need to consider the effects of the proposals in the way they might limit transport, internationally and internally. Connectivity needs to be managed in a way that does not result in Scotland being at a disadvantage with our competitors… This highlights the need for the RPP to identify policies and proposals to target the supply of activities as well as seek to reduce demand.”

188. The Cabinet Secretary stated in evidence that he did not think that the transport issues in the RPP needed to be set out in a hierarchy, but would be happy to consider any views expressed by the Committee on this issue. He was also invited to comment on suggestions that a reduction in travel demand should feature more extensively in the document, and he indicated that there were currently no plans for this—

“The approach that the Government has taken is to identify measures in the RPP that would result in our annual emissions reduction targets being met by 2022. The measures are contained in the documentation. That, essentially, is our agenda for the areas that we will consider.”100

Scottish Transport Appraisal Guidance

189. The Committee also raised with the Cabinet Secretary the question of whether any work is being done to review or revise the Scottish Transport Appraisal Guidance (STAG) in light of the work that is being done on the RPP. It was suggested to him that both documents should be better aligned and that the STAG should move away from mainly considering time and vehicle operating costs and start to address the impact on carbon emissions. In response, he said—

“The STAG appraisal process must be appropriate for the policy framework of the time. Therefore, we will need to ensure that there is nothing inconsistent between the STAG process and the current terms of Government policy.”101

190. However, the Cabinet Secretary confirmed that no review of the STAG process was underway.

Rural transport issues

191. Although the Committee did not discuss rural transport issues with witnesses when taking oral evidence, it notes the following comments made by COSLA and SOLACE in a joint written submission—

“This chapter as currently drafted also significantly underplays the transport issues of rural Scotland. Many of the proposals and policies will work in urban settings but walking and cycling as a primary transport choice is not often an option in rural areas. It would be useful if the finalised RPP detailed more measures on improving accessibility rather than promoting mobility.”

Conclusions and recommendations on transport

192. The Committee considers that the discussions around the allocation of resources for active travel and freight modal shift during scrutiny of the Draft Budget 2011-12 support its comments earlier in this report on the need to ensure that there is greater alignment between the objectives set out in the RPP and the Budget.

193. The Committee has outlined its concerns that the Draft Budget 2011-12 may not include sufficient measures to encourage both active travel and freight modal shift. It notes that, at the same time, the RPP includes proposals and policies which suggest that improvements in these areas are integral to its objective of meeting the emissions reduction targets. The Committee calls on the Scottish Government to provide details of how it intends to address such inconsistencies.

194. The Committee notes that the Cabinet Secretary is not convinced that a hierarchy of transport measures is necessary. The Committee disagrees and considers it essential that Scottish Government policy direction matches the transport objectives set out the RPP if emissions targets are to be met. It is of the view that there is little sign that this is happening at present to a sufficient degree and that there needs to be a more progressive shift in direction.

195. The Committee also supports the view expressed by witnesses and in written evidence that the RPP should include reference to a need to reduce the need to travel and the contribution that this could make to emissions reduction. It calls on the Scottish Government to include reference to this issue in the final version of the RPP and to develop its approach more fully in advance of the next RPP.

Rural Land Use

196. The formative and complex nature of the policies and proposals contained in the RPP, combined with the constraints of the period for scrutiny, meant that the Committee did not spend a great deal of time considering the rural land use section of the document. However, the issues that were raised by witnesses and in written evidence are summarised here.

197. The RPP acknowledges that, compared to other sectors of the economy, there is much greater uncertainty in estimating emissions from rural land use and predicting the effect of changing practices.102

198. The RPP contains two milestones for this sector:

  • Adoption by the UNFCCC of wetland management as a reported item in the greenhouse gas inventory process. Expected at Conference of the Parties 16 in Cancun, Mexico, in December 2010.

  • Plant 100 million trees by 2015.

It also states that milestones for agriculture will be developed following the publication in 2011 of research projects currently being undertaken by the Scottish Government and the Committee on Climate Change. The Scottish Government is currently consulting on its draft Land Use Strategy which is due to be published by March 2011 and will cover years 2011-15.

199. The Committee notes the statement made in evidence by the Cabinet Secretary that—

“The key consideration is that the RPP and the land use strategy must have clear compatibility.”103

200. The Scottish Government has also initiated a ‘Farming for a Better Climate’ communication strategy aimed at encouraging farmers to adopt efficiency measures which will reduce emissions. Dr Andy Kerr of the University of Edinburgh commented on this initiative as it relates to the RPP—

“On the broader issues, such as the farming for a better climate programme, a lot of positive work has been going on, particularly on cross-compliance and getting people to work together more effectively. There is a lot of good stuff in there, but we still appear to have a disconnect between what we intend to do and what is actually happening on the ground.104

201. The Committee notes that, in a written submission, COSLA and SOLACE supported the view that the delivery of emissions reduction through land use was challenging—

“The interdependent nature of land use activities coupled with scientific uncertainty about emissions estimates and changing practices makes it challenging to measure the impact of emission reductions in this sector. Likewise while maximising the uptake of voluntary actions to reduce emissions and improve farm performance may be beneficial, this does depend on voluntary actions being undertaken by individuals, meaning there is no guarantee of uptake, and therefore no guarantee of emissions being reduced.”

202. One rural land use issue in which the Committee has an interest is the potential for peatland restoration to make a valuable contribution to emissions reduction. The RPP refers to fact that the effects of restoration on emissions “are complex and uncertain both in scale and timing”.105 The Committee notes that the RPP includes a proposal to further identify the emissions abatement potential of peatland restoration and to carry out a restoration trial to inform this process.

203. The Committee notes a written submission from Friends of the Earth Scotland which suggested that the RPP should, even at this stage, include a firm commitment to peatland restoration —

"While the Government has recognised the carbon abatement potential of peatland restoration, p.118 of the RPP suggests waiting for international accounting rules before taking clear action. Given the clear scientific basis for peatlands as a carbon sequester as well as the additional environmental benefits restoration can bring, the RPP should commit to restoring 600,000 hectares by 2016.”

204. The Committee discussed the issue of further research in the land use sector and in particular, peatland restoration with Duncan McLaren of Stop Climate Chaos Scotland, who told the Committee—

“It would be desirable for the RPP to identify areas across the range of interventions where research funding from Scottish funding institutions should be directed to support the measures that the RPP sets out. That is particularly so for areas such as peatlands, where uncertainties have been identified. I would welcome that.”106

205. The Committee asked the Cabinet Secretary how the process of rewetting and measuring carbon emissions from peatlands might be funded to help meet the RPP's targets. In response, the Cabinet Secretary indicated that, on 13 December 2010, the Scottish Government had announced £200,000 of research funding to help inform how peatlands landscape might be restored. The Committee welcomes this initiative and looks forward to viewing the results of the research.

206. The Committee notes that, in its written submission, Friends of the Earth Scotland suggested that the RPP might usefully include reference to the potential carbon benefits of much wider adoption of organic agriculture techniques, as identified by the Soil Association.

207. The Committee considers managing the land to be critical to ensuring that carbon locked up in soils is preserved and that emissions generated from land use practices such as agriculture, forestry and energy development are minimised. It acknowledges, however, that the rural land uses section of the RPP is one which perhaps presents the highest level of uncertainty and challenges in terms of emissions reduction.

208. The Committee would expect that the Scottish Government’s Land Use Strategy, once published, will begin to shed some light on some of these issues and begin to shape how land use can make a contribution to climate change objectives. It would also expect the Land Use Strategy to help inform the development of the next RPP.

Waste

209. The RPP outlines the Scottish Government’s plans to move towards a Zero Waste Scotland which involves considering the resource opportunities of waste, encouraging recycling, and reducing the reliance on landfill sites for waste disposal.

210. In June 2010, the Scottish Government published Scotland’s Zero Waste Plan setting out its vision for a zero waste society.107 The plan covers commercial, industrial and household waste. As stated in the RPP, central to the Zero Waste Plan is the principle of the waste hierarchy as set out in the European Waste Framework Directive.108 The hierarchy is as follows: reduce, reuse, recycle, energy recovery and finally, the least desirable option being disposal.

EU and UK policies

211. Two main European policies have a direct influence on Scottish waste policies, namely: The EU Revised Framework Directive (2008/98/EC) which contains the hierarchy definition and makes provision for re-use and recycling targets; and the Landfill Directive (1999/31/EC) which contains technical requirements for waste and landfills. The Landfill Directive contains landfill reduction targets in relation to municipal waste to 75% of the 1995 baseline by 2010, 50% by 2013 and 35% by 2020 and the Directive applies to Scotland through the Landfill (Scotland) Regulations.

212. The UK landfill tax aims to encourage waste producers to adhere to the waste hierarchy as defined in the EU directive. This tax is set to rise each year until 2014-15 at which point it will be set at £80 per tonne.109

Scottish policies

213. The RPP lists the Zero Waste Plan under “Scottish Policies” and provides further information on its proposals. It states that the largest emission reductions could be made by requiring that certain priority waste materials be sorted at source and collected separately or, as appropriate, treated after collection. The intention is to treat the following wastes separately—

  • Food waste, from households and business sectors, such as commercial kitchens, hospitality sector, food retailers and manufacturers;

  • Materials such as paper/card, metals, plastics, textiles and glass from households, commerce and industry.110

214. The plan aims to develop a waste prevention programme and proposes two targets for all waste i.e. 70% recycled and 5% sent to landfill by 2025. In addition, the Scottish Government plans to introduce a landfill ban on food waste and dry recyclables from 2015 and that all biodegradable waste be banned from landfill by 2017. Zero Waste Scotland111 has been set up to support the delivery of the plan.

215. Under supporting and enabling measures, the RPP lists the enabling powers contained in the Climate Change (Scotland) Act 2009 which give Ministers the powers to make various orders in relation to waste management. The RPP specifically states, however, that there are no plans to use these powers in the short term and the preference is to adopt a voluntary approach wherever possible.112

216. The inclusion of the enabling powers was commented on by COSLA and SOLACE when they stated in their written submission that—

“The reference to the secondary legislation outlined under the supporting and enabling measures should be removed unless the Government intends to bring forwards measures to use them. At present we understand that this is not the case. If this position were to change in the near future this measure or policy could be introduced into the next RPP scheduled for draft publication in late 2011. Whilst the Government’s desire to pursue voluntary measures at present is noted, there are only two examples of voluntary agreements given whereas there are six sets of powers currently proposed to be unutilised.” 113

217. Concerns were also raised regarding the fact that the RPP waste section relies solely on the Zero Waste Plan and does not cover broader issues in relation to resource efficiency. Friends of the Earth Scotland, stated in its written submission —

“In the waste management section, the RPP entirely focuses on measures within the Zero Waste Plan for Scotland. While this provides a sound basis, it does not incorporate all the measures that have been proposed for, or available for, reducing emissions from waste management, including many previously enabled by the Climate Change (Scotland) Act. We believe this section should consider introducing as policies or proposals (or in some cases, enabling measures), a series of measures for waste prevention, including consideration of domestic waste charging. It should set timetables for implementation of all the additional measures enabled by the Act, such as mandatory waste management plans. Furthermore it should explicitly extend proposals for landfill bans to incineration bans, as applied in Flanders to promote action higher up the waste hierarchy. “114

Waste infrastructure

218. The Committee heard from witnesses that one of the main barriers in achieving effective waste management relates the lack of appropriate infrastructure to encourage and deliver waste management practices such as waste separation.

219. Stop Climate Chaos Scotland highlighted how infrastructure issues can make the Scottish Government’s aim of separating at source particularly difficult. Duncan McLaren told the Committee—

“Much stronger guidance needs to be given at this critical moment, when infrastructure is being put in place to manage waste for the next 10 or 15 years. Too many proposals are still coming forward in areas such as Inverness and East Renfrewshire—I have seen two in the past month—for facilities that take mixed waste and degrade it into a fuel instead of separating it to renew resource.”115

220. Martin Valenti from SEPA, representing the 2020 Climate Delivery Group, highlighted the frustrations inherent in the waste management infrastructure currently in place. He said—

“Infrastructure issues arise. I understand from the waste sub-group that 153 different types of waste collection exist in Scotland. When you tell that to someone who is not involved in waste collection, they are perplexed…

The food businesses in the waste sub-group really want to recycle their food waste. At the moment, they cannot do that and waste is going to landfill. There is a desire for recycling among the waste collectors, the energy companies, the food companies and even the small businesses. Glasgow has 7,500 food establishments, and right now they are all throwing waste in the bin. They feel that they want to do better but that the infrastructure is not yet in place. They cannot understand why it is not in place, because it is not rocket science. All that is needed is a couple of vehicles, a different receptacle and a different way of collecting waste. The plants are there and are ready and waiting.”116

221. COSLA and SOLACE, in their written submission, highlighted the problems for local authorities in relation to access to funding for improvements to waste management infrastructure. They commented—

“Local authorities will struggle to access funding internally for waste management infrastructure given the currently competing capital demands to deliver other priorities. This leads to a situation, where councils continue to be faced with mounting landfill tax bills, have limited ability to avoid these costs because there is limited alternative treatment infrastructure, that they can access partly because of lack of council funding/anchor tonnage for infrastructure to enable it to be commercially viable and get constructed in the first instance. “117

Lack of clarity in relation to proposals and policies

222. A number of witnesses raised the point that the only Scottish policy listed in relation to waste was the Zero Waste Plan and there was a certain level of ambiguity as to whether this plan represented clearly defined policies that the Scottish Government are committed to or suggested proposals for action.

223. In its written submission to the Committee, COSLA and SOLACE raised this issue stating—

“There is a general requirement within the draft RPP to specify a clear distinction between a proposal and a policy and there is a specific example of confusion on this matter within the waste chapter. The as-yet unimplemented proposals regarding landfill bans and supporting policies is included in the relevant tables as a policy and not as a proposal. However, the summary bullet points in the technical appendix highlight there are policies and proposals in the Waste sector. This adds to the lack of clarity in fully considering this section of the draft RPP. “

224. Highland Council also raised concerns in its written submission when it stated—

“Much of what is proposed within the text of the document has yet to be consulted upon through the Zero Waste Plan. Therefore it would seem appropriate to suggest that the Zero Waste Plan and Landfill Bans waste policies in Table 15 be identified as proposals rather than policies until the details and scope of any regulations are agreed. These could then be identified as policies in subsequent versions of draft RPPs once the detail of the regulations has been resolved. “118

225. The Cabinet Secretary was asked about the fact that this section of the RPP deals exclusively on how to deal with waste rather than the wider issue of resource efficiency measures. He replied—

“Waste is a fundamental issue, because it is a product of our energy use and our consumption decisions. We ignore that activity at our peril. I make no apology for waste considerations being central to the discussion and the thinking.”119

226. The need for a more co-ordinated approach to waste management processes as raised by witnesses was discussed and in particular, the issue of food waste was highlighted. The Cabinet Secretary told the Committee—

“Joint activity by authorities is needed on waste disposal arrangements. Much good co-operation has taken place in several areas and I certainly want to encourage that. The Government has put in place the zero waste strategy to drive that process. A discernible improvement in activity levels has occurred in recent years, which we will consider.

227. When pressed on how the Scottish Government plans to be proactive in this area, the Cabinet Secretary said—

“The zero waste strategy drives the process. On food waste, I do not know whether I can say much more than I have said. Most local authorities have in place a means of addressing food waste. The maximum participation of the public in the process must be encouraged. ”120

228. The Committee notes the work being done by the 2020 waste sub-group and urges the Scottish Government to adopt a proactive approach and to work closely with that sub-group and the waste industry and other stakeholders to identify opportunities within the current financial constraints to improve waste management facilities and the coordination of waste collection, treatment, recycling and disposal.

229. The Committee recommends that in developing the RPP, and in advance of the next RPP , the Scottish Government should consider wider issues in relation to waste and incorporate proposals in relation to all aspects of the waste hierarchy and not just on the issue of waste treatment.

MONITORING OF PROGRESS

230. The RPP outlines plans for monitoring progress of the implementation of proposals and policies contained in the draft report. It states in the Executive Summary that a more comprehensive approach to monitoring progress will be developed in consultation with key partners. This will be done in parallel with the Parliamentary scrutiny process, and will be presented in the final report.121

231. The RPP explains that the Scottish Government is currently developing a Low Carbon Monitoring and Management Framework which will incorporate the work by the 2020 Climate Group on indicators. It states that this work will be referred to in the final RPP.

232. The Committee wrote to the Cabinet Secretary seeking his comments on the appropriateness of including its approach to monitoring in the final RPP without proper parliamentary scrutiny having taken place. In his response he states—

“The statutory requirements relating to the laying of the RPP itself do not extend to the monitoring framework for action on climate change, but we consider it good practice to share the latest information about how the Scottish Government is planning to monitor climate change policy development.”122

Monitoring of progress under the 2009 Act

233. Monitoring of progress towards achieving the climate change targets will be measured against the level of the Net Scottish Emissions Account. Scotland’s emissions are disaggregated from UK data and reported in the Greenhouse Gas Emissions Inventory for England, Scotland Wales and Northern Ireland.123

234. The Climate Change (Scotland) Act requires that Ministers report on emissions associated with the consumption of goods and services in Scotland. The RPP states—

“Consumption-based emissions reporting is a complex and evolving field and the Scottish Government is currently working to determine the most suitable methodology on which to base its reports.

This report therefore focuses on policies to reduce emissions as measured against the annual targets by the Net Scottish Emissions Account. While the impact of the proposals and policies on Scotland's wider international emissions footprint has not been quantified here, the measures have been developed with consumption-based emissions in mind.”124

235. In supplementary written evidence to the Committee, the Cabinet Secretary elaborated on consumption reporting when he said—

“Consumption-based emissions analysis is a complex and evolving field and the Scottish Government is currently working to determine the most suitable methodology on which to base future reports. We expect to publish a formal estimate of consumption-based emissions up to 2010, in accordance with the s. 37 requirement, alongside the report on Scotland’s performance against the production-based annual target for 2010, which is due in 2012.”125

Monitoring of the RPP

236. Stop Climate Chaos Scotland gave its views on the monitoring mechanisms contained in the RPP. Elizabeth Leighton told the Committee—

“The RPP breaks down monitoring into sectors—it takes a milestones approach. That is helpful, even if we do not agree with the milestones that have been selected in some areas. The approach is useful, but we would like the Government to improve on it by selecting an overall ambition for the sector and then setting adequate milestones to measure progress.

I turn to the issue of consumption emissions. We need to look at them alongside territorial emissions so that we see in the round our contribution to addressing the global challenge of climate change.”126

237. In written evidence to the Committee, Consumer Focus Scotland highlighted the importance of effective monitoring when it stated—

“Provision of information on progress, as well suggestions for activities, is critical to inform consumers’ behaviour. In addition, consumers’ commitment can be reinforced or undermined by reports of successes on the part of the public sector and businesses. Transparent and disaggregated monitoring and reporting is therefore critical, and should be a key element of the Public Engagement Strategy.”127

238. Following publication of the RPP, the 2020 Climate Group published a set of guidelines to measure progress towards meeting climate change targets in the form of Key Performance Indicators (KPIs), which the Group hoped would help inform the debate on the RPP.

239. When giving evidence to the Committee, Lynne Ross representing the 2020 Climate Group said of the KPIs—

“The policies and proposals certainly provide the framework for action, but the delivery must be monitored through the KPIs. The target for each KPI has to link to the carbon outcome that is required. There is some coming together. Now that the RPP is published, we and others can reflect on whether the KPIs can meet the carbon targets if they are expressed correctly.”128

240. SEPA, in its written submission, highlighted the work it had undertaken with the 2020 Climate Group to develop a set of KPIs. It stated—

“The use of a wide range of indicators will be essential in providing us with a more detailed insight of the transition and in helping us to understand the effectiveness and success of the policies and proposals. SEPA developed a range of Key Performance Indicators (KPIs) for each sector and these contributed to the paper subsequently published by the 2020 Climate Group. Through its significant data holdings and its understanding of the environment, SEPA will continue to make a positive contribution in the important task of measuring progress. ”129

241. When giving evidence to the Committee, the Sustainable Scotland Network referred to the KPIs. George Tarvit said—

“I have heard that the 2020 group is taking that idea forward, but I have yet to see the detail. I think that it makes some sense to add detail to what is in the RPP, but I would not hold back on the RPP just to develop the indicators. Cross-sector dialogue would be required on what the indicators look like and how you put them into operation.”130

242. The Cabinet Secretary was also asked to provide further information on the extent of the Scottish Government’s engagement with the 2020 Climate Group and the development of the KPIs. He replied—

“The 2020 Group is independent of Government. Scottish Government officials engage with the Group at a number of levels. Climate change officials have met members of the 2020 Group informally to discuss the KPI work being undertaken by the Group and to provide an overview of the aims of the Scottish Government's Low Carbon Management Framework.

The development work by officials on the Scottish Government Low Carbon Management Framework is ongoing. Part of this work includes consideration of which indicators could be helpful to demonstrate activity and efficiencies in each sector. ”131

243. The Committee welcomes the useful work undertaken by the 2020 Climate Group on how progress on achieving emission reduction targets through the proposals and policies set out in the RPP might be monitored.

244. The Committee believes the introduction of Key Performance Indicators, or a similar mechanism, could be a useful addition to the process of monitoring the progress of the RPP. However, the Committee is aware that proper consultation on the specific KPIs identified by the 2020 Climate Group has not yet taken place.

245. The Committee welcomes the commitment given by the Cabinet Secretary to ongoing work with the 2020 Climate Group and other stakeholders on the development of the Scottish Government’s Low Carbon Management Framework, which will include an assessment of whether the use of indicators would be beneficial to this exercise.

246. The Committee considers it essential that comprehensive monitoring of this and successive RPPs takes place and that the monitoring process measures performance against targets and also identifies any emerging risks that targets may not be met.

247. The Committee recommended earlier in this report that, as part of its monitoring of the RPP, the Scottish Government should assess the performance of proposals and policies where a voluntary approach is being taken to determine whether they are delivering on their objectives. The Cabinet Secretary in giving evidence to the Committee, suggested that this work would form part of the monitoring process.132 The Committee looks forward to seeing how this element is to be addressed in the monitoring proposals contained in the final RPP.

248. The Committee has also commented earlier in this report on the need to better align the RPP with Scottish Government Budgets. It further recommends that the monitoring mechanisms developed for the RPP should also incorporate a means of assessing whether Budgets deliver sufficient funding for proposals and policies, identifying any funding shortfall and flagging up any required revisions to the RPP or climate change targets that may be required as a consequence.

249. The Committee is of the view that accurate monitoring and reporting will be particularly essential beyond 2011, when the periods between the publication of RPPs will extend to 5 years to tie in with batches of annual targets. It therefore requests clarity from the Scottish Government as to whether regular progress reports will be made available to the Parliament and publicly during the lifetime of RPP documents and, if so, to what timetable.

250. The Committee also calls on the Scottish Government to provide information as to how the RPP monitoring process will interface with and inform reports on annual targets required under the 2009 Act.

251. The Committee also wishes to record its concern that details of the monitoring process to be applied by the Scottish Government were not available in the draft RPP to allow it to receive parliamentary scrutiny. It will, however, note the Scottish Government’s proposals for monitoring the progress in the final RPP with interest.

CONCLUSION AND SUMMARY OF RECOMMENDATIONS

The Committee considers the draft RPP document to be a good first attempt by the Scottish Government in setting out in detail the range of proposals and policies that will be required to meet it annual emissions reduction targets to 2022.

It has made several recommendations in this report, which are summarised as follows:

  • the Scottish Government should consider carefully the timing of future RPPs to ensure that the optimum opportunity is afforded for its parliamentary scrutiny within the limited statutory period. It should also consider the value of publishing the RPP at the same time as the Scottish Government’s Draft Budget.

  • the public engagement strategy on climate change should include far-reaching and innovative proposals for the mobilisation and genuine involvement of the public.

  • the final version of the RPP laid before the Parliament should set out the Scottish Government’s intentions to develop a programme of assessment and evaluation of the proposals contained within the document to inform decisions on which of these should be adopted and implemented.

  • the Scottish Government should define failure criteria for voluntary measures and introduce an appropriate mechanism to provide a realistic assessment of all policies and proposals where a voluntary approach is proposed to determine whether these are is likely to be sufficient to deliver the necessary changes (agreed by majority)133.

  • the Scottish Government should keep under review the roll-out of UK policies on which emissions reduction measures in Scotland are reliant and consider alternative approaches should any significant delay in the implementation of the relevant UK policies occur.

  • the Scottish Government should, as a feature of the final version of the RPP, make a clear statement of its intended course of action should the EU not agree to a strengthening of the EU ETS to 30%.

  • the RPP must be aligned with the Scottish Government’s Budget in a manner which presents an accurate and realistic picture of what can be achieved. It sees little benefit in setting challenging objectives and making ambitious estimates of emissions reduction to be made through proposals and policies if subsequent Budgets do not contain sufficient financial provision to allow these to be delivered.

  • greater clarity and definition should be provided in the RPP on those policies and proposals which local authorities will be expected to deliver.

  • the Scottish Government should provide details of how it intends to engage with COSLA and local authorities on how, during a period of budget constraints, the public sector will take forward its responsibility for making a significant contribution towards meeting emissions reduction targets.

  • the Committee notes and endorses all of the recommendations contained in the EET Committee’s report (attached at Annexe A) on the energy section of the RPP and expects the Scottish Government to give due consideration to its contents and to provide a full response to its recommendations.

  • should funds from the UK policies for reducing emissions from the homes and communities sector prove inadequate, the Scottish Government should provide additional alternative funding to ensure that energy efficiency targets in this sector are achievable.

  • the Scottish Government should indicate whether it has carried out any scenario planning which anticipates early private sector activity which might deliver such success and act as encouragement to others in the business sector.

  • the Scottish Government should provide greater clarity on how it will support academia, local authorities and others to ensure they have the skills and funding to deliver transformational policies such as electric car charging points and adequately ensure compliance with new stringent energy standards across all sectors.

  • the Scottish Government should provide details of how it intends to address inconsistencies between policies and proposals in the RPP and what the Committee considers to be insufficient provision to encourage both active travel and freight modal shift in the Draft Budget 2011-12.

  • Scottish Government policy direction should match the transport objectives set out the RPP if emissions targets are to be met. It is the Committee’s view that there is little sign that this is happening at present to a sufficient degree and that there needs to be a more progressive shift in direction.

  • the final version of the RPP should include reference to a need to reduce the need to travel and the contribution that this could make to emissions reduction.

  • the Scottish Government’s Land Use Strategy should inform the development of the next RPP.

  • in developing the RPP, and in advance of the next RPP, the Scottish Government should consider wider issues in relation to waste and incorporate proposals in relation to all aspects of the waste hierarchy and not just on the issue of waste treatment.

  • comprehensive monitoring of this and successive RPPs should take place. The monitoring process should measure performance against targets and also identify any emerging risks that targets may not be met.

  • the monitoring mechanisms developed for the RPP should also incorporate a means of assessing whether Budgets deliver sufficient funding for proposals and policies, identify any funding shortfall and flag up any required revisions to the RPP or climate change targets that may be required as a consequence.

  • the Scottish Government should provide information as to how the RPP monitoring process will interface with and inform reports on annual targets required under the 2009 Act.

  • the Scottish Government should provide clarity as to whether regular progress reports will be made available to the Parliament and publicly during the lifetime of RPP documents and, if so, to what timetable.

  • the Committee calls on the Scottish Government to take the recommendations in both this report and the EET Committee report (attached at Annexe A) into account before the final version of the RPP is laid in the Scottish Parliament.

  • It expects that the next RPP, to be introduced following the production of the next tranche of annual climate change targets, to contain updated and more refined details on how the Scottish Government’s challenging emissions reduction targets will be met

ANNEXE A

REPORT FROM THE ECONOMY, ENERGY AND TOURISM COMMITTEE

Low Carbon Scotland: Draft Report on Proposals and Policies

The Committee reports to the Parliament and the Transport, Infrastructure and Climate Change Committee as follows—

INTRODUCTION

Background

1. The Scottish Government published a document entitled Low Carbon Scotland: The Draft Report on Proposals and Policies on 17 November 2010. This document was published to accompany the Scottish Government’s Draft 2011-12 Budget. The Draft Report on Proposals and Policies is formally being considered as a whole by the Transport, Infrastructure and Climate Change Committee as the lead committee. However, with the agreement of the Transport, Infrastructure and Climate Change Committee, the Economy, Energy and Tourism Committee is taking evidence on the issues raised in Chapter 3 of the Draft Report, specifically energy supply, as this falls within the Committee’s remit. It should be noted that as part of its normal budget scrutiny work, the Committee took evidence on the energy expenditure levels proposed within the Draft Budget as well as the Carbon Assessment of the 2011-12 Draft Budget and the Draft Electricity Generation Policy Statement 2010 documents.

2. In addition to the written submissions of evidence received, the Committee held 3 oral evidence-taking sessions as follows—

Evidence from various interested organisations (24 November 2010)

Norman Kerr, Director, Energy Action Scotland
Mark Ruskell, Director of Communications, Scottish Renewables
Elizabeth Leighton, Senior Policy Officer, WWF Scotland

Evidence from the enterprise agencies (1 December 2010)

Crawford Gillies, Chair, Scottish Enterprise
Iain Scott, Director of Finance, Scottish Enterprise
Julian Taylor, Director of Strategy and Economics, Scottish Enterprise
William Roe, Chair, Highlands and Islands Enterprise
Alex Paterson, Chief Executive, Highlands and Islands Enterprise
Forbes Duthie, Director of Finance, Highlands and Islands Enterprise

Evidence from the Cabinet Secretary for Finance and Sustainable Growth and Scottish Government officials (8 December 2010)

John Swinney MSP, Cabinet Secretary for Finance and Sustainable Growth
David Wilson, Director of Energy, Scottish Government
David Fotheringham, Sustainable Housing Team Leader, Scottish Government

3. The Committee would like to express its thanks, both to those who submitted written evidence, and to those who took part in the oral evidence sessions. All the written evidence can be found at:
http://www.scottish.parliament.uk/s3/committees/eet/meetings.htm

Climate Change (Scotland) Act 2009 and key Scottish Government policies

4. The Climate Change (Scotland) Act 2009 requires that the Scottish Ministers lay a report in Parliament setting out their proposals and policies for meeting the annual emissions reduction targets. This report - Low Carbon Scotland: The Draft Report on Proposals and Policies (RPP) - is to be scrutinised by relevant parliamentary committees in the first instance to inform Parliament and the final report. The main objective of the Scottish Government’s report is to set out how Scotland can deliver annual targets for reductions in emissions to 2022, including a 42% reduction in emissions by 2020134.

5. The target set out in the Climate Change (Scotland) Act 2009 for an 80% reduction by 2050 will require emissions to fall to a little under 15 Mt CO2 equivalent. When the Economy, Energy and Tourism Committee carried out its energy inquiry in 2009, it concluded at the time that “the current trajectory for emissions reductions (based on the trend between 1990 and 2005) is not sufficient to meet this statutory target in Scotland”.135

6. As indicated above, the Draft Report on Proposals and Policies was laid at the same time as the Scottish Government’s Draft 2011-12 Budget and the Committee has considered both reports to determine if they provide the framework to fulfil the commitments within the Climate Change (Scotland) Act 2009. For the Economy, Energy and Tourism Committee, the Report’s provisions in Chapter 3 on energy supply has been the main focus of evidence-taking and is the main focus of this report. Chapter 3 contains proposals and policies on electricity generation, renewable heat and energy efficiency measures.136

7. It should be noted from the outset that the Scottish Government’s Draft Budget 2011-12 contains provisions for expenditure on an energy budget which has been reduced from £43.2 million in 2010-11 to £34.6 million for 2011-12, representing a real terms cut of 22%. Other related cuts being 17% on innovation and industries and 12% on industry and technology grants.

8. The Committee noted that part of the reason for the reduction between 2010-11 and 2011-12 was that the 2010-11 energy budget included an allocation of £10m for the Saltire Prize. David Wilson, Director of Energy Scottish Government indicated that this sum would be transferred to Scottish Enterprise to fund the Wave and Tidal Energy: Research, Development and Demonstration Support fund (WATERS), and that this transfer would be reflected in the Spring Budget Revision.

“…the spend during 2010-11 on the WATERS scheme that is being taken forward by Scottish Enterprise is being transferred from our budget this year—I think that that will be done in the spring budget revision. It is not in the Scottish Enterprise budget for this year yet, but Scottish Enterprise is assuming that it will become part of its budget. There is no transfer into Scottish Enterprise's budget before 2011-12.”137

9. In the draft budget 2011-12, the Scottish Government states that “Energy is key to delivering the low carbon economy, meeting our climate change targets and is a key industry sector in its own right.” Key priorities are listed as “delivery of the Renewables Action Plan, including investment in the £70 million National Renewables Infrastructure Fund”, with further priorities being “...heat and skills, the delivery of the Energy Efficiency Action Plan and support to implement the Low Carbon Economic Strategy”.138

low carbon scotland: the draft report on proposals and policies: key issues

The creation of a low carbon economy

10. It is the Scottish Government’s intention to create a low carbon economy and through the development of a low carbon economy “see Scotland become the green energy capital of Europe”.139 The Scottish Government has outlined in the draft budget 2011-12, the Low Carbon Report on Proposals and Policies (RPP) and the Low Carbon Economic Strategy Report how they intend to achieve this ambition.

Emissions reduction

11. A key question for the Committee during its consideration of the RPP is whether the current plans and policies will enable the Scottish Government to meet the targets specified in the Climate Change (Scotland) Act 2009. In some of the evidence heard, witnesses indicated that in their view, the Scottish Government’s current policy could only achieve 38% emissions reduction, as opposed to the target of a 42% reduction by 2020. For example, in its written submission, Stop Climate Chaos Scotland stated—

“… the RPP acknowledges that current policy can only achieve a 38% cut in emissions by 2020. Drafted proposals must therefore be translated into policy if the remaining reductions are to be achieved.”140

Renewable energy- electricity and heat

12. The largest reduction within the energy budget for 2011-12 is in the area of renewable energy, which has been reduced by just over £11 million, or almost 50%.141 This area includes support for the Community Renewables Loan Fund, Community Energy Scotland (established tohelp communities make the most of opportunities available to themthrough sustainable energy development) and support for the development of district heating networks.

13. It should be noted that the Scottish Government has set a target for renewable electricity generation that by 2020, 80% of Scottish electricity demand is to be provided by renewable sources.142 The Scottish Government states that “Scotland now generates 22% of its final electricity demand from renewables and is comfortably on course to meet targets of 31% by 2011 and 80% by 2020”.143

14. The Scottish Government has also set a target for 11% of Scotland’s heat to come from renewable sources, and for a 12% reduction in total final energy consumption by 2020.

15. The Committee recommended in its 2009 energy inquiry report that—

“Given that heat accounts for the majority of our energy demand in Scotland, the Committee supports a marked increase in investment in combined heat and power plants, particularly those using renewable fuels and those combined with district heating.”

16. The Committee also recommended the rapid introduction of heat initiatives modelled on renewable obligation certificates and the consideration of financial incentives, including local taxation or non-domestic rate rebates, for renewable heat installations.144

17. The UK Government confirmed in the October 2010 Spending Review that the UK Renewable Heat Incentive (RHI) scheme will begin in June 2011, with a commitment of £860 million funding for the UK over the spending review period. However, the spending review also indicated that the RHI would have to find efficiency savings of around 20% from the previous administration’s proposals. Further details on implementation are still to be announced.145

18. Mark Ruskell of Scottish Renewables told the Committee that there is still uncertainty surrounding the RHI—

“We know that there will be an RHI, but we do not know whether someone who receives an RHI will have to substantially invest in energy efficiency in their home.”146

19. Scottish Renewables indicated that there is scope to support heating schemes prior to the RHI introduction in June 2011—

“Consideration needs to be given to ways in which loan and grant support for energy efficiency work can dovetail with the RHI to avoid creating any state aid issues.”147

20. The Scottish Government has an obligation under the Climate Change (Scotland) Act 2009 to publish a Renewable Heat Action Plan which will contain all of Scotland’s policies for encouraging and supporting renewable generation. The Scottish Government published the Renewables Action Plan: Update 2148 on 4 August 2010 and has committed to updating the plan every 6 months.

21. Scottish Renewables also stated in a written submission to the Committee that the Scottish Government should “Support offshore wind before competitors gain advantage.”149 One of the key policies to support this are the grants available from the Wave and Tidal Energy: Research, Development and Demonstration Support fund (WATERS) which help to develop emerging energy technologies and improve the operation of marine renewables devices. Scottish Renewables told the Committee that they would “welcome the continuation of this funding stream”.

22. For these reasons, the Committee asked the Cabinet Secretary for Finance and Sustainable Growth if the proposed reduction in the energy budget was compatible with the Scottish Government’s priorities for carbon reduction and the development of the renewables sector. Mr Swinney responded that —

“In the Scottish Parliament's current financial arrangements, I cannot avoid confronting a 25 per cent reduction in capital expenditure […] We are taking a focused approach to the opportunities in the low-carbon economy sector. In several areas, we are ensuring that we identify the opportunities to support and fund projects through the decisions that the Government and its agencies take.”150

Decarbonisation of the energy sector and the role of Carbon Capture and Storage (CCS) technology

23. The Scottish Government believes that one of the ways of achieving the emissions reductions target is the drive towards a low carbon Scotland. It has stated that it aims to see the—

“Demonstration of CCS at commercial scale in Scotland by 2020 and full retrofit across coal and gas power stations thereafter by 2025-30.”151

And aims to—

“Deliver a low carbon energy supply without the need to rely on nuclear plant.”152

24. According to the Draft Electricity Generation Policy Statement 2010, the Scottish Government policy for reducing emissions from thermal generation requires “that CCS should be fitted to new or existing Scottish coal power stations by 2020, to be economically and technically proven by 2020 and progressively fitted to all coal and gas thermal plants thereafter by 2030.”153 In its view, full decarbonisation of the electricity supply sector in Scotland can be achieved by 2030. The statement also contains further detail on the recent developments in renewable electricity generation, thermal electricity generation, energy efficiency, transmission and interconnection. It also covers the Scottish Government’s plans and policies for onshore wind, offshore wind, wave and tidal power. Overall, the Scottish Government believes that—

“The decarbonisation of the electricity sector is a vital first step to decarbonising other parts of the Scottish economy.”154

25. It should be noted that there are proposed new developments for thermal electricity generation plants: Hunterston coal power station and Cockenzie gas power station. Additionally, work is underway for the introduction of the CCS levy, the 300 MWe CCS requirement and the proposed UK carbon floor price and Emissions Performance Standard.

26. However, according to the Scottish Government, “the price of allowances alone is not likely to be high enough to drive decarbonisation of the power sector by 2030.”155 The Scottish Government states in the RPP that—

“ … the policies aim to incentivise the construction of low-carbon infrastructure to enable the transformational outcomes … renewable heat will not pay back the additional capital costs of installation, and so requires a financial incentive to be created.”156

Interconnection and grid upgrades

27. One of the key issues for the Committee in its 2009 report on energy was the vital need to further develop the nation’s electricity transmission system if the full potential for renewable energy technologies was to be captured. In our 2009 report, we said that, “In our view, the existing grid infrastructure within Scotland and from Scotland to England is the first priority.”157

28. In his evidence to the Committee, Alex Paterson, Chief Executive of Highlands and Islands Enterprise, told the Committee that grid connectivity “to the Western Isles and other parts is vital” and that it was an important issue for them. He said—

“There is a wider issue with grid connectivity in the Highlands and Islands, transmission charging and connection charging. The current set-up is a disincentive to investment in parts of the region.”158

29. On its part, the Scottish Government has said that it wants to seek “increased interconnection and transmission upgrades capable of facilitating projected growth in renewable capacity”.159

30. The Committee was therefore disappointed to note the recent decision of Scottish and Southern Energy not to develop the transmission line from the mainland to the Western Isles, due to a lack of financial underwriting from electricity generators, attributed in part to the high level of transmission charges.

Transmission charges

31. The Committee also raised concerns in its 2009 energy report regarding the evidence received at the time in relation to the current and planned charging and access regimes to the transmission networks. We remain particularly concerned that this regime is already undermining the viability of renewable energy developments in Scotland and could act as a major inhibitor to growth in this sector. The Committee has made a submission to Ofgem’s review of transmission charging and grid access to cover these issues.

32. The RPP states that Scotland having greater powers will assist in the creation and funding of a low carbon energy sector—

“Responsibility for the way energy markets and energy generation, transmission and supply are regulated would help deliver a low carbon energy sector in Scotland, develop connection to the UK and Europe for the export of energy and ensure security of Scotland’s future energy supply.”160

33. We are aware that the Scottish Government has stated that the issue of the locational charging methodology applied by Ofgem levies higher charges on generators furthest from the main centres of demand for connection and use of the grid is a barrier to renewable energy in Scotland.161

34. During his evidence, William Roe, Chair of Highlands and Islands Enterprise, told the Committee that—

“Changing the capping and charging regimes is critical to market and investor confidence.”162

And that—

“…there is no question but that the opportunities in and around the Highlands and Islands are of a nature, diversity and scale the like of which our country has not seen before ... All of them hold great promise and will hold even greater promise if the energy charging and transmission regime—which was created for the previous century—can be turned into a 21st century regime.”163

35. Similarly, Alex Paterson of Highlands and Islands Enterprise told the Committee—

“We therefore welcome the Ofgem consultation and the Department of Energy and Climate Change’s move to look at transmission capping at least as an interim measure.”164

36. The Committee shares the view that this is an issue that needs resolved as soon as possible. We welcome Ofgem’s offer of a more detailed engagement with the Committee on this issue in the New Year. Resolving this problem will go a long way to assisting the ability of the Scottish Government to meet the emissions targets in the Climate Change (Scotland) Act 2009.

Green Investment Bank (GIB) and the Fossil Fuel Levy (FFL)

37. In its 2009 energy report, the Committee called on the Scottish and UK Governments to “work constructively together to see if a way can be found that will release the funds held by Ofgem in its fossil fuel levy account in a manner which will not impact on the Scottish Consolidated Fund.”165 The Committee notes that the UK Government’s proposal is to ring-fence £250 million of investment from the proposed Green Investment Bank (GIB) from 2013 in return for the Scottish Government’s agreement to draw down the fossil fuel levy and accept clawback of the same funds from the Scottish Consolidated Fund.

38. The Scottish Government has stated that it is not in agreement with the UK Government’s proposal and has expressed the view that there is a need for the fossil fuel levy money to be made available for investment immediately—

“The UK proposal falls well short of the Scottish Government's long-argued case to have the FFL funds made immediately available in full in addition to Scotland's DEL to introduce the urgent and much needed support to accelerate key renewables industry developments in Scotland - particularly in relation to infrastructure for offshore wind manufacture and deployment.”166

39. The Committee heard evidence supporting the view of immediacy. Mark Ruskell of Scottish Renewables told the Committee that—

“From an industry viewpoint, this proposal does not release the funds within the next 6-12 months, when investment in the offshore supply chain is needed.”167

40. Crawford Gillies of Scottish Enterprise reiterated this view in evidence to the Committee. He said—

“… if we had more resources—for example, if we were able to get the fossil fuel levy money—that would undoubtedly allow us to accelerate what we are doing.”168

41. Alex Paterson of Highlands and Islands Enterprise told the Committee that HIE could not at the moment provide all the necessary funds for the development of renewable energy in its area. He said—

“Various other sources must come together, and the fossil fuel levy is particularly important, given the port infrastructure investment requirements … The opportunity is huge and the financial investment requirement is equally huge.”169

42. The Committee would like to see the funds from the fossil fuel levy being made available to take advantage of investment in renewable energy and not to miss the opportunities available. The Committee asks the Scottish and UK Governments to work constructively together to see if a way can be found that will release the funds held by Ofgem in its fossil fuel levy account in a manner which will not impact on the Scottish Consolidated Fund.

43. More generally, we share the desire of the Scottish Government to see more information on the Green Investment Bank, particularly in relation to the timeframe for development and scale of the proposed fund, the nature of funding (grants, loans or equity etc.) and the governance and oversight issues, including the role of the Scottish Ministers. Furthermore, we share the view as a Committee that the Green Investment Bank should be located in Scotland.

Scottish National Renewables Infrastructure Fund (N-RIF)

44. One of the most significant developments was the announcement by the Scottish Government that it is to create a £70m Scottish National Renewables Infrastructure Fund (N-RIF), to be delivered through a partnership of Scottish Enterprise and Highlands & Islands Enterprise until 2015. A figure of £17m has been included in the Draft Budget for 2011-2012. The purpose of the N-RIF is “strengthening port and manufacturing facilities, to leverage additional low carbon investment and improve supply chain provision for manufacturing offshore wind turbines and related components”.170

45. However, in correspondence with the Committee the Cabinet Secretary confirmed that the N-RIF would be funded from within the existing resources of Scottish Enterprise—

“To reiterate briefly, the £70M NRIF, which will be operational between now and 2015, will be available for sites in the SE area … HIE is similarly committed to supporting infrastructure investment as part of its wider commitment to renewables, although it has not ring fenced a specific budget for the purpose.”171

And that—

“HIE were making no allocation to the fund. The fund would therefore only apply to projects in the SE area.”

46. This was confirmed in oral evidence to the Committee. Crawford Gillies, Chair of Scottish Enterprise told the Committee that the money was “coming from within our overall settlement” and that Scottish Enterprise had allocated £8.5 million within the budget figures for the next year and would be able to allocate the full £17 million (or up to £20 million) if necessary. He told the Committee—

“we are confident that, should the quality demand be anything up to £20 million, we will find the resources in year to meet that demand.”172

47. Scottish Enterprise told the Committee that their spend on energy was increasing, despite an overall reduction in the budget allocation for HIE and SE of 7%. Crawford Gillies said—

“In our case, the overall spend in the energy sector is anticipated to rise by 65 per cent year on year. That is a significant increase, and it includes the NRIF.”173

48. Alex Paterson of Highlands and Islands Enterprise told the Committee that no money had been ring-fenced from within their existing budget for the N-RIF—

“It is important to say that our support for renewables is not just for offshore wind, which is primarily what the NRIF is for. We are involved in a wider range of activity, which includes R and D and company support, as well as infrastructure support.”174

49. The Committee noted that Scottish Enterprise indicated in evidence that they had an anticipated spend of around £6 million on port development activity, prior to the N-RIF announcement.

50. Both HIE and Scottish Enterprise indicated the importance of the N-RIF and that their priorities included renewables. Alex Paterson of Highlands and Islands Enterprise said—

“… we share the priority of renewables […] Therefore, one of HIE’s top priorities is to ensure that we capitalise and realise the opportunities and benefits that renewable energy brings to the region”.175

51. The creation of the N-RIF and the initial investment was welcomed by Scottish Renewables. However, they told the Committee that a greater investment was required—

“The National Renewables Infrastructure Plan identified £223m of investment required in ports and harbours for Scotland to capture the maximum economic opportunities of the offshore wind supply chain. The early release of Fossil Fuel Levy and early access to the GIB would help to create the right funding package to match the NRIF monies.”176

52. The Scottish Government expects that its initial investment in the N-RIF will leverage significant private sector investment. This view is shared by the government agencies who gave evidence to the Committee. For example, Crawford Gillies of Scottish Enterprise, told the Committee—

“It is important to recognise that we get—and expect to get—significant leverage on the investment. It is not just Scottish Enterprise going in; we are leveraging private sector finance, which should be a significant part of what happens”. 177

53. More generally, William Roe of HIE said that—

“We have worked stringently to try to ensure that we achieve greater leverage in every project in which we invest. For every £1 that we have invested in the Hebrides, which is the toughest part of the Highlands and Islands, more than £7 has been provided by others. That is a testament to the possibility of achieving greater leverage and of our ability to do so.”178

54. In evidence to the Committee the Cabinet Secretary for Finance and Sustainable Growth agreed that funding for the N-RIF would come from Scottish Enterprise’s budget and that SE would provide £17 million next year if required—

“The national renewables infrastructure fund will be supported out of the budgets of Scottish Enterprise.”

And that the amount for next year—

“…depends entirely on the demand for support under the national renewables infrastructure fund.”179

55. The Committee is encouraged by support for other opportunities within the renewables sector, such as the Scottish Government’s support for the International Technology and Renewable Energy Zone (ITREZ), a hub of engineering excellence around Glasgow.

Fuel Poverty

56. The Scottish Government definition of fuel poverty is as follows: “A household is in fuel poverty if it would be required to spend more than 10% of its income (including Housing Benefit or Income Support for Mortgage Interest) on all household fuel use.”180 According to Scottish Government figures, 25.3% of Scottish households were in fuel poverty in 2007 using this definition and 32.7% in 2009.181

57. In its 2009 energy report, the Committee stated at the time that the Scottish Government’s statutory target of eliminating fuel poverty by 2016 looked immensely challenging.182 During our current scrutiny of the RPP and the Draft 2011-12 Budget, the Committee heard evidence from Norman Kerr of Energy Action Scotland that more investment was required to meet the 2016 target—

“In 2006, Energy Action Scotland calculated that, with 10 years to go to reach the statutory target of eradicating fuel poverty by 2016, it would take £170 million a year for 10 years. We have not had that investment over the past four years, and the amount needed continues to build up, so we are moving significantly further away from the investment that we need if we are going to meet the 2016 target.”183

58. He also said—

“It is hard to see, at this point and given the information in the draft budget, how we can meet the aspirations that are set out in the RPP. For example, the line in the housing budget for support for the energy assistance package, which is the main fuel poverty programme, has been reduced by £20.5 million … the £10 million that went into support for the universal home insulation scheme—has gone. So we have seen somewhere in the region of £20 million to £30 million go from, energy efficiency.”184

59. The Scottish Government’s House Condition Survey Key Findings for 2009 found that the number of households in fuel poverty had in fact increased over the past year with 770,000 homes now in fuel poverty, compared with 618,000 in 2008.185 This is an increase of 6.2% in one year and an increase of 7.4% since 2007. The survey indicated that fuel poverty has continued to increase from 2002 to 2009.

60. William Roe of Highlands and Islands Enterprise told the Committee that fuel poverty is currently worse in the seven local authorities in the Highlands and Islands than anywhere else in Britain. He said—

“It would be obscene if all that energy could be generated and distributed but the seven local authority areas in the Highlands and Islands remained the worst in the UK for fuel poverty.”186

61. The Scottish Government defines ‘extreme fuel poverty’ as a household having to spend more than 20% of its income on fuel. The Scottish Government’s House Condition Survey Key Findings for 2009 found that extreme fuel poverty had also risen with 243,000 homes in extreme fuel poverty in 2009, compared with 182,000 in 2008.187 This is an annual increase of 2.5% and an overall increase of 8.7% for both fuel poverty and extreme fuel poverty.

Fuel Prices

62. The Scottish Government states that “the 3 main factors in fuel poverty are incomes, energy efficiency and fuel costs.”188 In its 2009 energy report, the Committee stated that it considered that fuel poverty was a blight on our society, was inconsistent with our goal for a socially just energy system and called on Ofgem as the energy regulator to take all steps to ensure the transparency of social tariffs and require energy utilities to deliver on these and address problems with pre-payment meters.189

63. We are, therefore, worried by the continued increase in both fuel poverty and extreme fuel poverty in some Scottish households and are concerned that the Scottish Government’s target of eliminating fuel poverty by November 2016 looks increasingly unachievable given these continued increases as well as with the reduction in the support for households within the energy budget, the reduction in household incomes more generally and the increase in fuel prices. The Committee welcomes, in respect of the latter, Ofgem’s probe into energy prices amongst the major suppliers.

Energy Efficiency Measures

64. The Scottish Government has stated that “Household energy efficiency could save a cumulative £8.5bn by 2050, and provide thousands of jobs190” and that it would “proactively develop district heating as a discrete policy area within energy efficiency.”191 In response to this, Norman Kerr of Energy Action Scotland told the Committee that—

“There are very few CHP or district heating schemes in Scotland. If we want to move on, we need to encourage the enterprise companies to look to how they can support the growth of those schemes.”192

65. He also said that it was not apparent to him what input the enterprise agencies have had to date with regards to home energy efficiency schemes and that these have so far been led by local authorities.

66. The Committee also heard that the cuts in funding of incentive schemes, the increases in fuel prices and the financial investment expected of consumers to implement renewable energy measures in their homes would all make achieving the expected household energy efficiency savings challenging. Norman Kerr of Energy Action Scotland told the Committee of his concerns of the ability of people to repay loans under the Green Deal scheme—

“Even a low-cost loan for someone who lives off the gas grid or who lives in fuel poverty is an issue. We might tell such people that they need solid-wall insulation and something such as a heat pump. A heat pump costs £8,000 to £10,000 and solid-wall insulation might cost another £8,000 to £10,000. We have to ask how people would be able to repay a loan of £20,000, and over how long a period they should be allowed to repay it.”193

Home insulation schemes and area-based energy conservation programmes

67. The Scottish Government budget does not contain money for the continuation or expansion of the home insulation scheme, which is funded through the carbon emissions reduction target programme, and will come to an end in 2012.

68. The Committee heard from the Cabinet Secretary for Finance and Sustainable Growth that it was not possible to provide exact figures for either the home insulation scheme or energy efficiency packages at this time as the level of future investment was still the subject of negotiations between the Scottish Government and private companies. In a follow-up letter to the Committee the Cabinet Secretary indicated that “The EAP and HIS budgets will be announced shortly”.194 The Committee notes the lack of financial information provided on this during the budget scrutiny process. The Committee had previously stated that investment should be in the order of £100-170 million per year and is therefore disappointed at the proposed reduction of £20.7 million to £83.9 million for the ‘supporting sustainability’ budget.

The Scottish Government’s Energy Efficiency Action Plan

69. The Scottish Government’s Conserve and Save: Energy Efficiency Action Plan (EEAP) contains a target “to reduce total final energy demand in Scotland by 12% by 2020” with the aim that “the combination of reducing demand and incentivising clean supply will provide the most efficient route towards decarbonisation”.195

70. The key question for the Committee was whether the RPP and the Draft 2011-12 Budget provide the necessary framework and resources to achieve this target. The EEAP provides an indication of how this will be monitored and an outline of a reporting framework. The Scottish Government states that the EEAP is “a key component of our approach to meeting Scotland’s climate change targets and securing the transition to a low carbon economy in Scotland.”196

71. The Scottish Government estimates that the up-front cost of implementing home energy efficiency measures to be “around £2.9 billion to 2022” and that “most of these costs will be met by the consumers”. In written evidence, WWF Scotland stated that the energy efficiency budget was being cut rather than increased. It said that it—

“…would appear from details of the scale of the proposals that home energy efficiency investment could be as much as halved to just £12.5m alongside cuts to the fuel poverty programme. WWF believes that this year’s Budget should include an explicit commitment for £100m to support energy efficiency improvements in existing homes.”197

72. In her oral evidence, Elizabeth Leighton of WWF Scotland told the Committee that what was required was—

“…an upscaling in a national retrofit programme to be fully integrated with an adequately funded fuel poverty programme.”198

73. She also said that—

“This is not a time to step back from energy efficiency programmes; it is a time to invest in them further.”199

74. In its 2009 energy report, the Committee recommended that the Scottish Government, in the forthcoming budget round, should consider substantially increasing resources for an area-based, targeted energy efficiency/conservation programme designed to tackle fuel poverty and reduce energy demand. At the time, the Committee stated that the size of the investment could be in the order of £100-170 million per year over the next decade to come, with spending targeted on the basis of a geographical mapping of fuel poverty needs.200

75. The Committee questioned the Cabinet Secretary for Finance and Sustainable Growth on whether the Draft Budget 2011-12 energy budget allocation was of a scale necessary to deliver on the recommendation in our 2009 energy report. He said—

“The Government shares the committee's objective on energy efficiency [...] That is a difficult question for me to answer because, as I said, it is not only Government activity that will achieve that but private investment, investment by utility companies and the various initiatives that they have. However, the Government is committed to working in that direction to achieve those objectives.”201

The Green Deal

76. The UK coalition Government introduced the Energy Bill on 8 December 2010 with a key aim of enabling people to invest in energy efficient measures to their home or business. The Bill includes a new financing framework called the Green Deal which will provide funding for energy efficient measures by adding a charge on energy bills, meaning that consumers do not have to pay upfront costs and instead pay back the money over a period of time.

77. The Green Deal is not expected to be operational until autumn 2012 and WWF Scotland indicated in their written submission to the Committee that the Scottish Government needed to consider the provision of other finance options prior to its introduction. She said—

“Soft loans (similar to the Home Energy Saving Scotland Loans scheme) offering zero or low interest and a long payback period should be included as a policy in the RPP to encourage and support take-up of more expensive measures such as solid wall insulation.”202

78. In a letter to the Committee the Cabinet Secretary for Finance and Sustainable Growth indicated that the Energy Saving Scotland Home Loan “pilot scheme had been evaluated, and the evaluation report will be published before Christmas.203” The Committee looks forward to reading the report and would hope that the Scottish Government will recommend a continuation of the pilot scheme.

Financial matters

79. The central issue for the Committee as part of its scrutiny of the RPP and the Draft 2011-12 Budget is whether the necessary finance, as well as the appropriate policies, are in place to achieve the targets set out in the Climate Change (Scotland) Act 2009.

80. In written evidence, WWF Scotland indicated that they did not think the Draft 2011-12 Budget prioritised energy issues sufficiently. It said—

“While the Draft Budget identifies tackling climate change and maximising Scotland’s low carbon economic opportunities as priorities, it falls short of providing the step change in spending priorities needed to reflect this vision.”204

81. William Roe of Highlands and Islands Enterprise told the Committee that if there were additional resources available to his organisation, then these would be spent on renewable energy issues and that it was HIE’s ambition to have the Highlands and Islands labelled as “Europe’s marine renewable energy capital”.205

82. Elizabeth Leighton of WWF Scotland told the Committee that it was unclear how the policies within the RPP were to be funded—

“When we match the budget with the draft report on proposals and policies, it is not clear in several cases where the budget commitments are to the policies that are written into the RPP.”206

83. The Committee heard from a number of organisations that they found interpreting: a) what the Draft Budget would be spent on in relation to energy issues; b)where the cuts in expenditure would be; and c) how the Low Carbon Report and Draft Budget linked together very difficult.

84. For example, Scottish Renewables indicated in its written evidence that it was unclear what the cuts to the energy budget were—

“Clarity from the Scottish Government is required to understand what the likely impact on energy spending will be across the budget, not just under the energy budget line. This will require Level 4 information for 2011-12 to analyse further the proposed spend.”207

85. WWF Scotland indicated in their written submission that they would like future budgets to “…provide details of specific policies or programmes which will be funded under specific budget headings” as “the level of detail set out in the Draft Budget makes it difficult to apply carbon assessment in a more robust and detailed manner.”

86. From our own analysis of the energy expenditure outlined in the Draft 2011-12 Budget, it appears that there are 3 “new” items - SEGEC & Grid Enhancement, Energy Resilience and CNI, and Low Carbon Economy. Low Carbon Economy had the largest allocation, £10.2 million, and its purpose which appears to be the provision of advice and support to business and public sector on non-domestic energy efficiency to support delivery of actions in the Energy Efficiency Action Plan; Low Carbon Economic Strategy; and Renewable Action Plan. The Draft Budget also indicates support for key technology development in priority areas, promotion of low carbon practices in business and public sector and sponsorship of the Scottish Environment Conference.

87. The Committee questioned the reduction in the support for freight industry from £10.3 to £2.9 million, given the success in moving freight from road to rail, and the consequent reduction in emissions. The Cabinet Secretary for Finance and Sustainable Growth told the Committee that to date there had been an underspend in the support for freight industry and that the £2.9 million allocation was sufficient to meet existing Scottish Government commitments—

“Since 1 April 2007, the capital budget for the freight facilities grant projects has totalled more than £40 million, while the awards of freight facilities grants have totalled less than £8 million. That puts into perspective the challenge that there has been”.

And that—

“Resources have been available and have been reallocated to other projects, because we have not been able to get the demand. If I am suddenly inundated with requests from companies with good proposals that are state aid compliant and supportable, and which transfer freight from road to rail, I will be more than happy to search for the additional resources that will be required to address that demand.”208

88. The Committee asked the Cabinet Secretary what capacity there was within the £2.9 million budget for the allocation of new freight facility grants. The Cabinet Secretary told the Committee that “I do not have that degree of detail in front of me, but I am happy to make it available to the committee.”209 The Committee notes that this information was not provided.

Access to detailed budgetary information

89. This Committee has repeatedly raised concerns over the years regarding the lack of immediate access to more detailed (level 4) information in draft budgets and the detrimental impact this has on the Committee’s ability to scrutinise and suggest possible amendments to the draft budget. This issue has again arisen this year and is covered within our conclusions and recommendations in the report to the Finance Committee on the Draft 2011-12 Budget.

90. The Committee notes, however, that there was a discrepancy in relation to the energy budget figures and understands that the 2010-11 level 4 figures were, in fact, draft budget figures and not outturns and therefore were unreliable when making comparisons between financial years.

Future budgets, carbon assessments and the RPPs

91. In relation to future documents on draft budgets and on climate change matters, Mark Ruskell of Scottish Renewables suggested that—

There should be an identifiable read-across between aspirational policies and the programmes that are in the RPP, and the budget lines that are progressing from one year to the next.”210

92. WWF Scotland, indicated to the Committee in written evidence that the carbon assessment of the Draft Budget could be more effective if it were “further developed, and integrated more closely with other carbon assessment approaches e.g. individual project level carbon assessments and the RPP process”.211

93. More generally, the Committee questions whether a one-year budget provides enough information to parliamentary committees when considering how the medium and long-term climate change targets are to be financed and if the Scottish Government is putting in place the necessary finance to meet these targets over the medium- and longer-terms.

Skills gap and employment creation

94. The Scottish Government has stated that “jobs in the low carbon sector in Scotland could grow by 4% a year to 2020, rising from 70,000 to 130,000, over 5% of the Scottish workforce”.212 Scottish Renewables stated in their written evidence to the Committee that—

“The Scottish Government has identified skills as a potential barrier to development of the offshore wind market (Low Carbon Scotland: The Draft Report on Proposals and Policies: Scotland - A Low Carbon Society), so it is incumbent upon government and industry to work together to overcome this.”

And that—

“It is not clear from the draft 2011-12 budget how the allocation for Skills Development Scotland in particular will impact directly on this area of work.”213

95. The Scottish Government's Skills Strategy Refresh was published in October 2010 and set out Skills Development Scotland's (SDS) overall approach to supporting the Scottish Government Economic Strategy’s key sectors, which include energy. In that strategy document, the Scottish Government estimated that a further 60,000 additional low carbon jobs could be created—

“It is now estimated that concerted action combined with an expanding global market could increase low carbon employment in Scotland to around 130,000 by 2020 from the current figure of some 70,000. An additional 26,000 jobs are forecast in renewables, 26,000 jobs in emerging low carbon technologies and a further 8,000 jobs in environmental management.214

96. The Committee is supportive of the efforts to create low carbon employment opportunities. However, the Committee is concerned about the potential skills gaps and the challenges and scale of training and retraining required. The Committee recommends that the Scottish Government provides the necessary funds for the education and training sector in Scotland to enable the Scottish population to fully take advantage of the employment opportunities in the renewables sector by providing the right skills at the right time.

Conclusions and Recommendations

97. Whilst the Committee welcomes the publication by the Scottish Government of a range of energy and climate change documents alongside this year’s Draft Budget, the fact that parliamentary committees only have a 60-day period to conclude evidence-taking and report to a lead committee for it to then complete the final report is immensely challenging. Overall, we feel that this has had an adverse effect on the ability of this Committee to effectively scrutinise their contents.

98. The Committee would therefore recommend for future years for the publication of the annual Reports on Proposals and Policies that these documents are not published simultaneously with the Draft Budgets and that the Scottish Government considers publishing all of the energy and climate change information at least 6 months prior to the Draft Budget.

99. The Committee recommends to the lead committee that it may wish to consider whether parliamentary committees should be consulted much earlier in the budgetary cycle in terms of whether the Scottish Government is on track to meet the target of a 42% reduction in emissions by 2020 and 80% by 2050, and thereby be in a position to propose what should be included in forthcoming Draft Budget. Ideally, this might be at the start of a three-year spending review.

100. More specifically, the Committee notes the apparent disparity of statements made by the Scottish Government and the enterprise agencies of energy, and renewable energy in particular, being a top priority, with the proposed cut to the energy budget. We also note the discrepancy between what we called for as a Committee in our 2009 energy report in relation to energy efficiency schemes – namely a rise to between £100-170 million per year – with what is actually being proposed for the next financial year. In this respect, the Committee is concerned that the funding that is being proposed for 2011-12 is not going to be enough to meet the targets set in the Climate Change (Scotland) Act 2009.

101. The Committee also regrets that we appear to be in severe danger of failing to meet the target of eliminating fuel poverty by 2016. The numbers of households in Scotland in fuel poverty or in extreme fuel poverty are increasing, not decreasing. We recommend that as a matter of urgency, the Scottish Government puts in place measures to address the increases in fuel poverty, for example, through a significant boost to the home insulation scheme and its extension throughout Scotland.

102. The Committee had anticipated that the policies within the Report on Policies and Proposals would be costed (as they were in Scotland’s Independent Budget Review) and would like to see this in future reports. For those policies which are based on assumptions, for example the assumed compliance rates for new build properties, the Committee would like further information to be provided to enable effective scrutiny. The Committee would also like future RPPs to include both medium and longer term trends and to have more policies than proposals.

103. The Committee would like to see the funds from the fossil fuel levy being made available to take advantage of investment in renewable energy and not to miss the opportunities available. The Committee asks the Scottish and UK Governments to work constructively together to see if a way can be found that will release the funds held by Ofgem in its fossil fuel levy account in a manner which will not impact on the Scottish Consolidated Fund.

104. More generally, we share the desire of the Scottish Government to see more information on the Green Investment Bank, particularly in relation to the timeframe for development and scale of the proposed fund, the nature of funding (grants, loans or equity etc.) and the governance and oversight issues, including the role of the Scottish Ministers. Furthermore, we share the view as a Committee that the Green Investment Bank should be located in Scotland.

105. The Committee heard from the Cabinet Secretary for Finance and Sustainable Growth that it was not possible to provide exact figures for either the home insulation scheme or energy efficiency packages at this time as the level of future investment was still the subject of negotiations between the Scottish Government and private companies. In a follow-up letter to the Committee the Cabinet Secretary indicated that “The EAP and HIS budgets will be announced shortly”.215 The Committee notes the lack of financial information provided on this during the budget scrutiny process. The Committee had previously stated that investment should be in the order of £100-170 million per year and is therefore disappointed at the proposed reduction of £20.7 million to £83.9 million for the ‘supporting sustainability’ budget.

106. More generally, the Committee questions whether a one-year budget provides enough information to parliamentary committees when considering how the medium and long-term climate change targets are to be financed and if the Scottish Government is putting in place the necessary finance to meet these target over the medium- and longer-terms.

107. The Committee requests further information from the Scottish Government on what finance options are in place for consumers prior to the introduction of the UK Green Deal in autumn 2012 and whether there will be an equivalent Scottish measure? The Committee is concerned that households will not invest the sums necessary for climate change measures, as the returns on their energy bills do not always cover the upfront capital costs.

108. Finally, the Committee is supportive of the efforts to create low carbon employment opportunities. However, the Committee is concerned about the potential skills gaps and the challenges and scale of training and retraining required. The Committee recommends that the Scottish Government provides the necessary funds for the education and training sector in Scotland to enable the Scottish population to fully take advantage of the employment opportunities in the renewables sector by providing the right skills at the right time.


Footnotes:

3 Scottish Parliament Transport, Infrastructure and Climate Change Committee. 2nd Report, 2009 (Session 3). Stage 1 Report on The Climate Change (Scotland) Bill (SPP 249). Para 228.

4 Climate Change (Scotland) Act, section 35.

5 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 23 November 2010, Cols 3387, 3455, 3389.

6 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 23 November 2010, Col 3387.

7 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 23 November 2010, Col 3386.

8 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 23 November 2010, Col 3362.

9 Scottish Government. (2010) Low Carbon Scotland: The Draft Report on Proposals and Policies. Scottish Government. Page 14. Available at: http://www.scotland.gov.uk/Resource/Doc/331949/0107999.pdf
[Accessed 20 December 2010]

10 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 30 November 2010, Col 3454.

11 Scottish Government. (2010) Low Carbon Scotland: The Draft Report on Proposals and Policies. Scottish Government. Page 26. Available at: http://www.scotland.gov.uk/Resource/Doc/331949/0107999.pdf
[Accessed 20 December 2010]

12 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 30 November 2010, Col 3455.

13 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 23 November 2010, Col 3387.

14 Stop Climate Chaos Scotland and the 2020 Climate Group. Written submission to the Transport, Infrastructure and Climate Change Committee.

15 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 14 December 2010, Col 3561.

16 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 14 December 2010, Col 3562.

17 Scottish Government. (2010) Low Carbon Scotland: The Draft Report on Proposals and Policies. Scottish Government. Page 23. Available at: http://www.scotland.gov.uk/Resource/Doc/331949/0107999.pdf

[Accessed 20 December 2010]

18 Scottish Government. (2010) Low Carbon Scotland: The Draft Report on Proposals and Policies. Scottish Government. Page 24. Available at: http://www.scotland.gov.uk/Resource/Doc/331949/0107999.pdf

[Accessed 20 December 2010]

19 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 30 November 2010, Col 3458.

20 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 30 November 2010, Col 3459.

21 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 14 December 2010, Col 3559.

22 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 14 December 2010, Col 3561.

23 Rob Gibson and Jackson Carlaw dissented.

24 Rob Gibson and Jackson Carlaw dissented.

25 Scottish Government. (2010) Low Carbon Scotland: The Draft Report on Proposals and Policies. Scottish Government. Page 24. Available at: http://www.scotland.gov.uk/Resource/Doc/331949/0107999.pdf
[Accessed 20 December 2010]

27 Scottish Government. (2010) Low Carbon Scotland: The Draft Report on Proposals and Policies. Scottish Government. Page 27. Available at: http://www.scotland.gov.uk/Resource/Doc/331949/0107999.pdf
[Accessed 20 December 2010]

28 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 23 November 2010, Col 3387.

29 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 23 November 2010, Col 3365.

30 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 14 December 2010, Col 3558.

31 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 14 December 2010, Col 3559.

32 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 30 November 2010, Col 3465.

33 Scottish Government. (2010) Low Carbon Scotland: The Draft Report on Proposals and Policies. Scottish Government. Page 23. Available at: http://www.scotland.gov.uk/Resource/Doc/331949/0107999.pdf
[Accessed 20 December 2010]

34 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 23 November 2010, Col 3364.

35 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 30 November 2010, Col 3463.

36 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 30 November 2010, Col 3463.

37 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 30 November 2010, Col 3463.

38 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 14 December 2010, Col 3563-4.

39 Scottish Government. (2010) Low Carbon Scotland: The Draft Report on Proposals and Policies. Scottish Government. Page 32. Available at: http://www.scotland.gov.uk/Resource/Doc/331949/0107999.pdf
[Accessed 20 December 2010]

40 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 23 November 2010, Col 3394.

41 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 30 November 2010, Col 3445.

42 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 23 November 2010, Col 3375.

43 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 14 December 2010, Col 3564.

44 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 14 December 2010, Col 3563.

45 Scottish Government. (2010) Low Carbon Scotland: The Draft Report on Proposals and Policies. Scottish Government. Page 23. Available at: http://www.scotland.gov.uk/Resource/Doc/331949/0107999.pdf
[Accessed 20 December 2010]

46 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 14 December 2010, Col 3562.

47 Scottish Government. (2010) Low Carbon Scotland: The Draft Report on Proposals and Policies. Scottish Government. Page 52. Available at: http://www.scotland.gov.uk/Resource/Doc/331949/0107999.pdf
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[Accessed 20 December 2010]

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60 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 30 November 2010, Col 3445.

61 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 23 November 2010, Col 3371.

62 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 23 November 2010, Col 3364.

63 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 30 November 2010, Col 3445.

64 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 14 December 2010, Col 3567.

65 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 14 December 2010, Col 3567.

66 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 14 December 2010, Col 3568.

67 COSLA and SOLACE. Written submission to the Transport, Infrastructure and Climate Change Committee.

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70 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 23 November 2010, Col 3391.

71 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 23 November 2010, Col 3388.

72 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 23 November 2010, Col 3389.

73 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 14 December 2010, Col 3563.

74 Scottish Government. (2010) Low Carbon Scotland: The Draft Report on Proposals and Policies. Scottish Government. Page 73. Available at: http://www.scotland.gov.uk/Resource/Doc/331949/0107999.pdf
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75 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 30 November 2010, Col 3454.

76 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 30 November 2010, Col 3470.

77 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 23 November 2010, Col 3370.

78 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 30 November 2010, Col 3471.

79 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 30 November 2010, Col 3471.

80 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 30 November 2010, Col 3472.

81 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 14 December 2010, Col 3570.

82 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 14 December 2010, Col 3570.

83 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 30 November 2010, Col 3472.

84 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 30 November 2010, Col 3473.

85 Scottish Government. (2010) Low Carbon Scotland: The Draft Report on Proposals and Policies. Scottish Government. Page 81. Available at: http://www.scotland.gov.uk/Resource/Doc/331949/0107999.pdf
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89 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 14 December 2010, Col 3564-5.

90 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 23 November 2010, Col 3364.

92 Scottish Government. (2010) Low Carbon Scotland: The Draft Report on Proposals and Policies. Scottish Government. Page 84. Available at: http://www.scotland.gov.uk/Resource/Doc/331949/0107999.pdf
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94 Scottish Government. (2010) Low Carbon Scotland: The Draft Report on Proposals and Policies. Scottish Government. Page 84. Available at: http://www.scotland.gov.uk/Resource/Doc/331949/0107999.pdf

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96 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 30 November 2010, Col 3439.

97 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 14 December 2010, Col 3573.

98 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 14 December 2010, Col 3573.

99 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 23 November 2010, Col 3376.

100 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 14 December 2010, Col 3572.

101 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 14 December 2010, Col 3572.

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104 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 30 November 2010, Col 3478.

105 Scottish Government. (2010) Low Carbon Scotland: The Draft Report on Proposals and Policies. Scottish Government. Page 108. Available at: http://www.scotland.gov.uk/Resource/Doc/331949/0107999.pdf
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116 Scottish Parliament Transport, Infrastructure and Climate Change Committee. Official Report, 30 November 2010, Col 3404.

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