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I welcome the cabinet secretary back for the next item on the agenda, which concerns “Low Carbon Scotland: The Draft Report on Proposals and Policies”. The cabinet secretary is, again, joined by David Wilson. I ask Mr Swinney whether he wishes to make any opening remarks before we open the discussion to questions.
In the interests of time, I will pass on that, although I will make some brief remarks. David Wilson is now here in his proper role. David Fotheringham, who has just joined me, is from our housing and climate change team.
Will the budget, which we discussed earlier, allow the ambitions that are contained in the RPP to be delivered?
The budget and the RPP are complementary. As the committee will be aware, the report contains a range of initiatives and propositions over a long period. The budget is crafted in such a way as to support the direction of travel that the RPP envisages.
In its energy efficiency inquiry, the committee explored the suggestion that there would need to be a substantial increase in the budget for energy efficiency measures in domestic premises if we are to achieve the fuel poverty and carbon reduction targets. Two or three years ago, the figures suggested that those policy areas would require £100 million a year. To date, the budget does not reflect that. The amount for energy efficiency does not increase to the level that it is suggested is required to achieve those targets. What is the Government’s thinking on those issues?
The Government shares the committee’s objective on energy efficiency. Over the past few years, we have put in place additional schemes and initiatives—most, I readily accept, in dialogue with our colleagues in the Green party—about expanding the range of available energy efficiency schemes. In the coming period, we face significant budget challenges, with the available resources reducing.
To put it slightly more bluntly, will the amount of money that the Government is putting into energy efficiency deliver its energy reduction targets?
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.
You said that you were co-operating with other Governments, including the UK Government. Could it be said that it is co-operating with us? The budget for the enterprise network is around £400 million; the fossil fuel levy for one year would be £191 million. Given that that money is badly needed now, is that not an example of how our activities on the low-carbon economy and renewables are extremely constrained at this critical take-off period?
I would certainly welcome an approach on the fossil fuel levy that made those resources available to us. There is a huge opportunity. With a clear direction through UK accounting regulations, we could make progress.
You talk of lobbying and co-operation. I presume that the Treasury rules have had to be changed to shift the fossil fuel levy money into the green investment bank’s working capital.
I do not think that sufficient detail is available on the green investment bank’s status to provide a clear answer on that. For example, I do not yet know how the bank will be classified or where it will sit in relation to public expenditure and public borrowing. There are a range of uncertainties around the proposition.
So the implementation of the renewable energy section of the RPP is severely hampered by not having that resource to back up the budget that we are able to afford due to the other cuts.
We certainly could achieve more if we had access to the fossil fuel levy.
Is there any likelihood that discussions with the Treasury will clarify matters?
We have asked the Treasury for dialogue on the proposals that have been put together. We will, of course, take that forward. We gave the new Government plenty of time to consider the proposals that we put to it on how to find a way of deploying this expenditure in an additional fashion. In no way can we be criticised for the way in which we handled the issue. As I said, we gave the new Administration plenty of time; we raised the matter privately with it and gave ministers plenty of time to think about it without putting unrealistic timescales in place. Obviously, I hope that we can make more progress, and we will endeavour to do that.
We note that the UK Committee on Climate Change is making demands on the UK Government to increase the target range for carbon reduction over the next period of time. Should we take it from that that there is a dichotomy between what the UK Government is doing with regard to the Scottish potential to help and the obvious need for agreements to meet the new and enhanced targets?
Obviously, targets have been set and we are working to achieve them. That reflects the ambitions of the Scottish Government.
I have a follow-on question to Nigel Don’s question on the freight facilities grant. Clearly, the grant is significant in terms of our carbon footprint and transport policy. I think that you told Nigel Don that the £2.9 million that remains in the budget is sufficient to meet existing commitments. Can I take it that there will be no opportunity for any additional businesses to seek support from the freight facilities grant in the forthcoming year?
There will be some capacity to do that, but it will not be extensive.
Within the budget that has been allocated for next year, what capacity is there beyond the existing commitments?
I do not have that degree of detail in front of me, but I am happy to make it available to the committee.
The freight facilities grant works not unlike some of the renewable energy funds that we have discussed today. One would imagine—certainly, it is my recollection from previous years—that most of the £2.9 million will be taken up by existing commitments. In that regard, I look forward to hearing the cabinet secretary’s clarification on the matter. Does that mean that the Scottish Government has concluded that shifting freight from road to rail will no longer be a significant component of carbon reduction in transport policy terms?
Not at all. In my answer to Nigel Don, I simply made the point that we have struggled to find projects to support. When I was at the Transport, Infrastructure and Climate Change Committee yesterday, Charlie Gordon mentioned feedback from the freight industry that the bureaucracy and approachability of the grant scheme make it difficult to wrestle with. I explained that I suspected that some of that was required, because the area is redolent with state aid issues, therefore there is a requirement for a process to be gone through, however tiresome and irritating people might find it. We have to observe those constraints. I said that, if the freight industry wishes to make representations on those matters, I will be happy to consider them.
I recall from previous discussions with the freight industry that similar points were made. Does the cabinet secretary conclude that, because the scheme is a bit difficult to access and operate, there is no requirement or benefit in finding an alternative mechanism for encouraging the transfer of freight from road to rail?
I want to reassure Mr Macdonald on the matter. We did not go into this thinking, “How can we construct a scheme that is difficult for people to apply to?” We went into it saying, “How can we encourage people to transfer from road to rail or other mechanisms?” We did that mindful of compliance with state aid requirements. From his ministerial experience, I am sure that Mr Macdonald knows the challenges of state aid issues.
Thank you. That is helpful.
I know that the committee will be keen to have the details, but a number of issues are still the subject of negotiation, which the Minister for Housing and Communities is taking forward. In a sense, the answer to Mr Macdonald’s question lies in the negotiations that Mr Neil is having. With the passage of time, we would be happy to share that information with the committee.
With whom is Mr Neil negotiating? Is this a matter of allocating resources within Government or negotiating with external parties?
It is about negotiating with external parties.
In relation to some of the existing energy supply company arrangements that are in place.
That would be a fair guess.
Thank you very much—that is helpful. In taking the matter further forward, we have talked about the number of homes that are affected. The aspect that is perhaps under Mr Swinney’s immediate control is the amount of Scottish Government funding that is made available for these matters. Is Scottish Government funding for domestic energy efficiency set to increase or decrease next year compared with this year?
Again, that is part and parcel of the work that Mr Neil is doing, so I am not in a position to give absolute clarity on that point today. I am sorry that I cannot give more information.
And that relates to the Scottish Government’s contribution as well as to the wider funding packages.
Yes.
Thank you for that information. I look forward to hearing more on the matter.
I ask David Wilson to provide a bit of detail on that issue.
We are developing the detail of how we will allocate resources even within the level 4 figures that we have now passed to you. On the community renewables line, there is quite a complex interaction between the grant funding that we provide to implement the community and renewable energy scheme—which we have done over the year—and the new feed-in tariff scheme that the UK Government has introduced, which applies across the board. It is clear that it will not be possible for people to receive grant support alongside the feed-in tariff support from the UK Government, which is revenue collected from consumers more widely, so we are having to change that support. We have a proposal to introduce what is in effect a loans scheme for community renewables, which can be taken forward alongside the feed-in tariff. The amount of money that will go into that will be correspondingly less than we have been used to, but significant support will still be available to communities. Further detail will follow.
That sum is not currently in the budget lines or indicated in the documents that you have let us have at this stage.
That money is in the budget lines.
Is it in the level 4 figures as the renewable energy entry?
Yes.
Can you confirm that the low-carbon economy line will not be available for either domestic or community purposes? Apparently it relates to business and the public sector.
It is primarily about business and the public sector—technological support and support for industry.
I have a question about energy efficiency. Having stronger building regulations to deal with energy efficiency in the commercial sector would be one tool in the Government’s toolbox, but that would deal with future build, as opposed to existing build. The retrofitting of many premises will be a massive undertaking for the private sector.
Those matters are primarily for the individual companies concerned, although I would be surprised if, in this day and age, companies were investing in new plant without taking into account the opportunities for significant improvements in and benefits from energy efficiency. We can certainly provide good and strong advice on energy efficiency. The Sullivan report on building standards from 2007 gave us a pretty dynamic agenda on the question of building standards and future energy requirements. We are pursuing that as part of the Government’s approach to developing building standards in Scotland.
In the draft RPP, there is, quite reasonably, a reliance on a high level of uptake of home energy efficiency measures. What assumptions have been made about the future take-up of schemes such as the home insulation scheme and the energy assistance package? Are the levels of take-up in the RPP significantly more than recent levels of take-up, on the assumption that people will become familiar with the schemes? You might not have the detail to hand. Perhaps the officials can help.
I am not sure whether David can help. It helps when all your officials are called David—you can just randomly ask one of them to answer. My officials might have that detail, but Wendy Alexander makes an important comment about the point at which householders taking energy efficiency measures becomes routine, rather than exceptional. That fundamentally shapes some of the retrofit issues that Stuart McMillan spoke about. I know from my experience of going through some of this work that significant gains can be made with relatively small investments, but getting around to it is the greater challenge. There is an important point in there.
The analysis is based on the experience of other schemes, but some of those schemes are at a fairly early stage, so we do not necessarily have definitive information on uptake. Assumptions had to be made about the level of uptake in future years.
It would be helpful if you wrote to the committee on that, because the central debate around the RPP is about whether we are relying on policies and proposals. Although in some cases it is reasonable to rely to some extent on proposals, there is an issue about making sure that we do not make hockey-stick assumptions about uptake. Some sense of the magnitude of the uptake would be helpful.
From what David Fotheringham has said, it does not seem to me that any hockey-stick assumptions are being made. There might be something between existing programme assumptions and hockey-stick assumptions that we are not picking up, such as a reasonable assumption about how consumer practices might change over time, which would be worthy of further consideration.
On a related matter, what sort of territory are we in about assumptions for the rate of compliance with new building standards over the RPP’s time horizon?
I am not aware of a specific date, but it is intended to be produced soon. We can write to you with the detail of that.
That would be great.
I entirely accept that, and I am not trying to be difficult in any way, but a process is under way and I cannot provide the clarity that you seek because I do not have it to offer. I will certainly relay your points to Alex Neil so that we can help the committee.
That would be helpful. Three committees have a finger in that pie. It is an issue of growing concern, not least because of the weather. Having clarity by Christmas would allow us to reflect on the situation.
We need clarity for our Christmas pie.
I want to pursue energy generation, particularly microrenewables, rather than energy efficiency. My question is less about money than it is about the system working. The cabinet secretary will be well aware that microrenewables not only use a free primary source but increase the resilience of the electricity system and reduce the need for investment in the distribution system, so we win on every count.
Actually, it is markedly less to do with money and more to do with process. We have certainly looked at a number of questions on microrenewables. To say that the thinking on microrenewables is divided is to understate the conflict that exists around some of the questions. However, we have tried to simplify and clarify matters. As members will be aware, we have taken that approach with the planning system in general. I want to keep the issues under constant review because, to go back to Wendy Alexander’s point, as public attitudes about energy efficiency and microgeneration change, we must ensure that we do not have a regulatory system that is an obstacle to people doing their bit for the process. I am keen to avoid that if at all possible.
I agree that we must not have a regulatory system that gets in the way—that would be the worst possible thing—but the cabinet secretary will be aware that we need, for example, a good manufacturer of small wind turbines. If that is what we want—and I am not suggesting that it is the only thing—we need to have supply. We certainly need permitted development rights, but we also need to ensure that we have quality assurance one way or another for installers, so that the man or woman in the street can buy equipment, have it installed and know that it is going to work and that they will get their investment back.
That all fits together in a culture of enablement, in which people are not put off by their first encounter with microgeneration because it looks too hard. Wendy Alexander made the completely fair point that public attitudes are changing: people are more engaged in these subjects and want to do more. We will have to ensure that members of the public do not find the process too difficult and obstructive, with too many hurdles, because that would undermine their enthusiasm for contributing.
I can say from personal experience that there are minefields in that system.
Part of the challenge with low-carbon activity and the RPP—it comes into budget scrutiny as well—is to ensure that we encourage budget holders not to think simply that unless there is a budget for district heating schemes, nobody should think about them. There are plenty of opportunities in the construction and development sectors to pursue some of the objectives. I assure you that those items are very much on the agenda as part of the guidance on delivering more sustainability in energy generation that the Government issues across its various areas of interest.
I will add briefly to that. One of the key parts of the energy budget that we discussed earlier is the specific funding to the Energy Saving Trust and the Carbon Trust. Through a wide range of mechanisms, they provide significant support to organisations and individuals and actively encourage them to come forward with particular types of renewables generation.
That concludes our questioning on the RPP. I thank the cabinet secretary and his officials for their attendance. Given your difficulty in getting here, cabinet secretary, I am sure that you will want to have a quick word with the Minister for Transport, Infrastructure and Climate Change before his statement this afternoon.
Surely. We have been talking.
Before I close the public part of the meeting, I inform members that next week we will take evidence from George Mathewson and Professor Hughes Hallett on the annual report of the Council of Economic Advisers and consider our draft reports on the draft budget scrutiny and the RPP.
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