SP Paper 288
EET/S4/13/R4
4th Report, 2013 (Session 4)
Low Carbon Scotland: Meeting our Emissions Reduction Targets 2013-2027, The Draft Second Report on Proposals and Policies
CONTENTS
Remit and membership
Report
Recommendations and Conclusions
Introduction
Background
Progress on the reduction of greenhouse gas emissions
The Committee’s scrutiny
Focus of the Committee’s scrutiny
The consultation process
Content and layout of the draft RPP2
Measuring progress
Clarity and transparency
Missed 2010 target
Financial provisions
Sources of funding and where financial burdens lie
Wider benefits
Reducing carbon emissions
Decarbonisation target
Emissions Performance Standard (EPS)
Carbon Capture and Storage (CCS)
The European Union (EU) Emissions Trading System (ETS)
Renewable energy
Renewable electricity and heat
Renewable heat target
District heating
Community ownership
Renewable electricity
Energy generation and supply
Grid access and transmission charges
Investment confidence
Electricity storage
Reducing energy demand
Energy efficiency measures
The Energy Efficiency Action Plan (EEAP)
Emissions abatement
Scottish energy efficiency schemes
UK energy efficiency schemes
Energy demand and building standards
Fuel poverty and fuel prices
The contribution of renewables, wholesale gas and electricity costs to fuel poverty
Annexe A: EXTRACTS FROM THE MINUTES OF THE ECONOMY, ENERGY AND TOURISM COMMITTEE
Annexe B: ORAL AND WRITTEN EVIDENCE
Remit and membership
Remit:
The remit of the Committee is to consider and report on the Scottish economy, enterprise, energy, tourism and renewables and all other matters within the responsibility of the Cabinet Secretary for Finance, Employment and Sustainable Growth apart from those covered by the remit of the Local Government and Regeneration Committee and matters relating to the Cities Strategy falling within the responsibility of the Cabinet Secretary for Health, Wellbeing and Cities Strategy.
Membership:
Marco Biagi
Chic Brodie
Murdo Fraser (Convener)
Rhoda Grant
Alison Johnstone
Mike MacKenzie
Margaret McDougall
Dennis Robertson (Deputy Convener)
David Torrance
Committee Clerking Team:
Clerk to the Committee
Jane Williams
Senior Assistant Clerk
Katy Orr
Assistant Clerk
Diane Barr
Committee Assistant
Vikki Little
Low Carbon Scotland: Meeting our Emissions Reduction Targets 2013-2027, The Draft Second Report on Proposals and Policies
The Committee reports to the Parliament as follows—
RECOMMENDATIONS AND CONCLUSIONS
1. RECOMMENDATION 1: We recommend that the Scottish Government undertake a broad range of consultation and engagement exercises, in advance of the publication of the draft RPP3 (in 2016), so that a wide range of stakeholders’ views can inform the content of that draft report.
2. RECOMMENDATION 2: The Act requires that the RPP2 report should provide an update on progress on the implementation of previous proposals and policies and also set out how the emissions reduction targets from 2013-2027 will be met. We therefore ask the Scottish Government to ensure that the data in the final RPP2 clearly sets out progress since RPP1.
3. RECOMMENDATION 3: We ask the Scottish Government to include information in the final RPP2 in some of the formats suggested by witnesses including identifying whether policies are Scottish, UK or EU and incorporating indicators and milestones to measure progress. It would also be helpful to include more detail on underlying assumptions.
4. RECOMMENDATION 4: We welcome the Scottish Government’s commitment to including additional data on the progress of the proposals and policies in RPP2 in its annual climate change reports to Parliament ahead of the publication of RPP3 in 2016. Given the difficulties witnesses have expressed about understanding how the impact of the policies in the draft RPP2 will be monitored, we recommend that the Scottish Government provide detail in the final RPP2 of how it intends to monitor its policies.
5. CONCLUSION 1: It is essential that the final RPP2 provides a clear framework for meeting annual targets and for making up ground for the missed 2010 target.
6. RECOMMENDATION 5: We ask the Scottish Government to consider publishing future draft RPP reports prior to publishing its draft budget to enable an assessment of the required budget allocations necessary to achieve specific policies.
7. RECOMMENDATION 6: We recommend that the final RPP2 provide greater transparency on who is expected to pay the costs of policies up to 2020.
8. RECOMMENDATION 7: We recommend that the final RPP2 include further detail, and some examples, of the potential wider economic, social and environmental benefits of implementing the proposals and policies, as well as an analysis of the consequences of doing nothing.
9. RECOMMENDATION 8: We note the Scottish Government’s announcement of a 2030 decarbonisation target for the electricity sector and would ask the Government to provide more detail on how the target will be achieved in the final RPP2. We also recommend that the Scottish Government continue to press the UK Government to set a 2030 target.
10. RECOMMENDATION 9: We note the Scottish Government’s decision to agree to the UK-wide EPS target. However, as highlighted by WWF Scotland, the high EPS level and expected timescale for implementation could put at risk the achievability of the Scottish Government’s 2030 decarbonisation target, as it reduces the incentive for power stations to fit CCS. The Committee asks for clarification in the final RPP2 on how the Scottish Government will address this risk.
11. RECOMMENDATION 10: We are concerned to hear from witnesses that the high costs of CCS could mean that the Scottish Government’s CCS 2020 target may not be achieved.
12. RECOMMENDATION 11: We recognise that the decision on which demonstration CCS schemes will proceed is one for the UK Government. We therefore ask the Scottish Government to continue pressing the UK Government for a decision on whether the CCS schemes at Grangemouth Port and Peterhead will receive funding.[1]
13. RECOMMENDATION 12: Given the concerns expressed by witnesses that the EU will not adopt a 30% emissions reduction target for 2020, we ask the Scottish Government to identify in the final RPP2 explicit proposals and policies which would mitigate this risk to achieving its emissions reduction targets.
14. RECOMMENDATION 13: We recommend that the Scottish Government continue to apply the maximum possible pressure on the EU to increase its emissions reduction target to 30%.
15. RECCOMMENDATION 14: We recommend the Scottish Government monitor both UK and EU policy and take steps to mitigate against any negative impacts of policy changes.
16. CONCLUSION 2: We welcome the Scottish Government’s consultation on its Outline for a Draft Heat Vision document and its ambition to provide a heat target to 2050 that will take into consideration environmental, economic and social aims. We look forward to publication of the Heat Generation Policy Statement (HGPS) later this year.
17. RECOMMENDATION 15: We ask the Scottish Government to update the district heating proposals and policies in the final RPP2 with the detail of its response to the Expert Commission on District Heating.
18. RECOMMENDATION 16: We agree with the Scottish Government’s view that more needs to be done to facilitate district heating and ask that the final RPP2 provide details of how the Scottish Government plans to address issues such as the promotion and funding of community district heating schemes, raising public awareness, assisting off-gas grid and rural properties and promoting investment in large industrial facilities.
19. CONCLUSION 3: The Committee remains of the view that the Scottish Government’s target of 100% equivalent of Scotland’s gross electricity consumption by 2020 is achievable, but recognises that this depends on the challenges identified in its renewable energy report[2] being addressed.
20. RECOMMENDATION 17: We ask the Scottish Government to include further detail of the renewables potential of Scottish Water in the final RPP2.
21. RECOMMENDATION 18: We urge the Scottish Government to continue to press the UK Government and energy companies to resolve current grid access and upgrade issues as quickly as possible. This will provide investment confidence and also enable communities to take advantage of low carbon opportunities and contribute to achieving the carbon emissions reduction targets.
22. RECOMMENDATION 19: We are concerned to hear that the lack of a decision on a transmission charging regime is having a negative impact on investment in the renewable energy sector and that there is effectively an investment ‘hiatus’. We welcome the establishment of the Intergovernmental Scottish Islands Renewables Steering Group and urge the Scottish Government to continue to work with the UK Government and Ofgem to find an equitable and quick solution.
23. RECOMMENDATION 20: We urge the Scottish Government to work with the UK Government to resolve any outstanding issues with the UK Energy Bill as quickly as possible in order that the Bill can be finalised and to improve investor confidence in low carbon energy generation.
24. CONCLUSION 4: The Committee acknowledges the challenges of increasing electricity storage capacity and welcomes the work that the Scottish Government is undertaking to find a suitable solution to the current electricity storage problems.
25. RECOMMENDATION 21: In order to help enhance scrutiny of how the Scottish Government’s proposals and policies will achieve energy efficiency and demand reduction targets, it would be helpful if, in future, the Scottish Government published an updated Energy Efficiency Action Plan (EEAP) at the same time as the draft RPP.
26. RECOMMENDATION 22: The Committee recognise that there will be less delivery and budget detail for policies and proposals on emissions abatement beyond 2020. However, we feel that in the interests of transparency, where there are significant reductions in emissions abatement beyond 2020, RPP2 should include some explanation of how the Scottish Government anticipate that significant reduction will be achieved. We therefore recommend that the final RPP2 provide clarity on those measures which have the potential to have a significant impact on achieving the emissions abatement targets post 2020.
27. RECOMMENDATION 23: We welcome the Scottish Government’s commitment to a £200m Scotland-wide National Retrofit Programme with a focus on tackling hard-to-treat and private rented properties. However, we are concerned that doubts remain about whether the energy companies will contribute the expected £135m each year from the implementation of the energy company obligation (ECO) scheme. We recommend that the Scottish Government seek assurances from the energy companies on their financial commitments and include this information in the final RPP2.
28. RECOMMENDATION 24: We recommend that the Scottish Government undertake an evaluation of the impact of its schemes to improve building energy efficiency and reduce energy demand to determine if the expected results are being achieved.
29. RECOMMENDATION 25: We ask the Scottish Government to continue to monitor the extent to which SMEs are able to achieve accreditation to deliver services under the Green Deal and be ready to promote their participation if necessary. We also ask the Scottish Government to raise witnesses’ concerns about the difficulties in retrofit measures meeting the golden rule criteria and with the amount that consumers will be expected to pay back with the UK Government.
30. CONCLUSION 5: Given the number of hard-to-treat properties in Scotland it is important that these property owners are able to easily access all available funding for energy efficiency measures. We welcome the Scottish Government’s commitment to review (and if necessary address) whether the planning process represents a barrier to the installation of solid wall insulation and air source heat pumps and whether it constrains access to ECO funding in Scotland.
31. RECOMMENDATION 26: We welcome the Scottish Government’s ambition to improve building regulations and cut emissions in new and existing buildings. However, given the concerns expressed about the predicted cost to businesses, especially SMEs, of achieving emissions reduction targets for existing buildings we ask the Scottish Government to provide greater detail in the final RPP2 on measures to assist SMEs in reducing energy consumption.
32. RECOMMENDATION 27: We ask the Scottish Government to keep under review building regulations in order to ensure that they deliver the necessary improvements in abatement required.
33. CONCLUSION 6: The Committee welcomes the publication of the Low Carbon Scotland: Behaviours Framework and the commitment by the Scottish Government to lead by example in encouraging low carbon living.
34. RECOMMENDATION 28: The Committee recognises that fuel prices, lower incomes and the poor energy efficiency of some of Scotland’s housing stock all contribute to fuel poverty. We welcome the work that the Scottish Government is doing to improve the energy efficiency of domestic and non-domestic buildings which will, in turn, reduce fuel bills. However, given the clear link between increases in the cost of fossil-fuel energy and the increase in fuel poverty we ask the Scottish Government to maintain pressure on the UK Government and energy providers to act on rising energy costs.
35. RECOMMENDATION 29: Raising awareness of water energy efficiency and its potential to reduce energy demand and energy bills could provide a possible ‘what-if’ scenario for reducing carbon emissions in domestic and non-domestic buildings. We therefore ask the Scottish Government to consider including information on water energy efficiency in the final RPP2.
INTRODUCTION
Background
36. On 29 January 2013 the Scottish Government published Low Carbon Scotland: Meeting our Emissions Reduction Targets 2013-2027.3 The document is a draft of the second report on proposals and policies (RPP2) for meeting Scotland’s annual greenhouse gas emissions targets.
37. Scottish Ministers are required to lay this draft report before the Scottish Parliament by section 35 of the Climate Change (Scotland) Act 2009 (the Act).4
38. The draft RPP2 was published together with a Technical Annex and an “Outline for a draft heat vision”. The Scottish Government also announced a new target to decarbonise the power (electricity) sector.
39. The Act requires Scottish Ministers to set annual targets for emissions at least 12 years in advance. In October 2010, the Scottish Parliament passed legislation setting the first batch of annual targets for 2010 to 2022, and the following year the Scottish Parliament passed subsequent legislation setting the second batch of annual targets for 2023 to 2027.
40. The Act also requires that the report on proposals and policies details progress on the implementation of the previous reports on proposals and policies - in this case the Low Carbon Scotland: Meeting the Emissions Reduction Targets 2010-2022 (RPP1) report.5 The draft RPP2 sets out proposals and policies for meeting the measures set out in the first report, while extending the timeframe to cover targets for 2023-2027.
41. In Session 3, the Economy, Energy and Tourism Committee scrutinised the draft RPP16 in parallel with its scrutiny of the Scottish Government’s draft budget and reported its findings to the Transport, Infrastructure and Climate Change Committee in November 2011.7
Progress on the reduction of greenhouse gas emissions
42. The Act set statutory targets for emissions reductions in Scotland from baselines of 1990 or 1995 levels for key greenhouse gases. The emissions reduction targets are a 42% reduction by 2020 and an 80% reduction by 2050.
43. By 2010, greenhouse gas emissions in Scotland reduced by 24.3% from the 1990 baseline, which is more than halfway towards the 2020 target of 42%. It should be noted that improved methodology demonstrates that a greater reduction in emissions has been achieved than hitherto realised.8
44. The first annual target under the Act was set for 2010 and required that the net Scottish emissions account (NSEA) (comprising net emissions and the effect of the European Union (EU) Emissions Trading System) for that year did not exceed 53.65 MtCO2e. The Greenhouse Gas Emissions Inventory9 showed that the annual emissions target for 2010 was 54.71 MtCO2e, exceeding the target by 1.06 MtCO2e. If a target is not met, section 36 of the Act states that the Scottish Government should set out the “proposals and policies to compensate in future years for the excess emissions.”10
THE COMMITTEE'S SCRUTINY
Focus of the Committee’s scrutiny
45. The Committee agreed at its meeting on 12 December 2012 to scrutinise the proposals and policies in the draft RPP2 for energy supply and business. It agreed to focus on the following issues within its remit:
- Reducing energy demand and emissions.
- Renewable energy – electricity and the promotion of the use of heat from renewable sources heat.
- Interconnection and grid upgrades.
- Transmission charges.
- Measures for assessing the energy performance and energy efficiency of existing non-domestic buildings.
- Fuel prices and fuel poverty.
46. The Committee also agreed to include scrutiny of the decarbonisation target for the electricity sector, which was announced when the draft RPP2 was published.
47. The Committee would like to place its thanks on record to all those who provided oral and written evidence within what was a tight timescale for this inquiry. We would also like to thank the lead Scottish Government officials for providing an informal briefing to the Committee before the formal process began. Please refer to Annexe A for the minutes of the evidence sessions and Annexe B for full details of the written submissions received and the Official Reports of the meetings.
THE CONSULTATION PROCESS
48. The Scottish Government held two stakeholder workshops in Edinburgh in May and September 2012 to gather views on the proposed draft RPP2. This was in contrast to the extensive consultation and engagement with key stakeholders in the formulation of proposals and policies for the draft RPP1. Norman Kerr of Energy Action Scotland told the Committee—
“That [stakeholder events] is a valuable process, but it does not replace ordinary consumer ability to respond individually, because not all the stakeholders will get to such meetings.”11
49. In evidence to the Committee Dr Winskel of the University of Edinburgh agreed, stating that—
“One danger of stakeholder engagement in the area is that the usual suspects turn up, and we get positions from certain interest groups that then shape policy thinking.”12
50. In addition, Andrew Faulk of Consumer Focus Scotland told the Committee that—
“… I certainly struggled to read the entire document and respond to a call for views … Therefore, it would be helpful to have guiding questions that set out the areas that the Government is particularly interested in.”13
51. RECOMMENDATION 1: We recommend that the Scottish Government undertake a broad range of consultation and engagement exercises, in advance of the publication of the draft RPP3 (in 2016), so that a wide range of stakeholders’ views can inform the content of that draft report.
CONTENT AND LAYOUT OF THE DRAFT RPP2
52. In the draft RPP2 the Scottish Government states that—
“We will ensure that where possible, our assumptions, our data, and our decision making processes are clear and accessible as we work through the transition [to a low carbon economy].”14
Measuring progress
53. The Committee heard evidence on the clarity of the policies and proposals in the draft RPP2, whether it contained enough detail on delivery and whether it provided an adequate update on progress since RPP1.
54. In both the written and oral evidence received there was clear support for the ambitious targets outlined in the draft RPP2. In its written evidence, Scottish Enterprise said it—
“… welcomes the RPP2, and its emphasis on both reaffirming and strengthening targets. The targets give a strong focus to the industry and the clear signal of the determination of the Scottish Government to support the sector.”15
55. However, issues were raised about the level of detail in the draft RPP2 compared to RPP1, especially on measuring progress. The Committee heard from a number of witnesses16 that the draft RPP2 was less detailed compared with RPP1 and presented the information in a different format to RPP1, which made the document less accessible. In its written submission Stop Climate Chaos Scotland highlighted that—
“Rather than providing greater transparency of data, the draft RPP2 provides less information than the first RPP. It no longer distinguishes between UK, EU and Scottish policies as clearly as did previously, nor does it provide estimates of costs for proposals as the original report did.”17
56. Dr Winskel of the University of Edinburgh called for more detail to be included on measuring progress—
“Let us make it easy to find the evidence base, the benchmarks on progress from RPP1 and the read-across between it and RPP2. We need short-term transparency and clarity of policy mechanisms and budgets. In the longer term, we need treatment of the big uncertainties post-2020, which I have mentioned, and of how policy delivery is resilient to those.”18
57. When asked about the different formats for the two reports the Minister for Energy, Enterprise and Tourism told the Committee that the RPP2 should be viewed as a stand-alone document—
“RPP2 will replace RPP1, and our intention is to present a coherent set of proposals and policies without constant reference to the previous report. In other words, RPP2 stands on its own.”19
58. RECOMMENDATION 2: The Act requires that the RPP2 report should provide an update on progress on the implementation of previous proposals and policies and also set out how the emissions reduction targets from 2013-2027 will be met. We therefore ask the Scottish Government to ensure that the data in the final RPP2 clearly sets out progress since RPP1.
Clarity and transparency
59. Witnesses told the Committee that the draft RPP2 could be improved by adding more detail on how the proposals and policies will be delivered. In oral evidence to the Committee Norman Kerr of Energy Action Scotland said—
“RPP2 contains a lot of statements with no detail around them … If I was going to do anything with the document, I would expand on the detail.”20
60. Whilst Dr Winskel of the University of Edinburgh told the Committee that—
“Uncertainties are discussed in the technical annex, but in a very qualitative and descriptive way. The assumptions in the table give no sense of what confidence should be placed in them.”21
61. Andrew Faulk of Consumer Focus Scotland told of his difficulty in assessing delivery—
“ … Consumer Focus is unable to comment on the trajectory and the overall emissions. It is difficult to equate what happens at the policy end with what gets delivered, as we read the document from our perspective of not being experts.”22
62. Witnesses provided a number of suggested ways to improve the clarity and detail of the draft RPP2 including—
- Dr Winskel of the University of Edinburgh requested that “Scottish, UK and EU measures” should be clearly identified. 23
- Dr Williams of Scottish Water suggested the inclusion of: “incremental steps or indicators that sit beneath some of the higher-level policy objectives that will allow us to understand how the direction will pan out in reality.”24
- ·Professor Smith of Edinburgh Napier University suggested including: “ … more outlines of scenarios A, B and C, the short, medium and long term, and low, medium and high risk” and “Some examples of case studies.”25
63. The Minister for Energy, Enterprise and Tourism told the Committee that suggestions for improvement of the draft RPP2 were welcome—
“However, it is important to stress that the RPP2 document is a draft and that the purpose of the debate is that we benefit from parliamentary scrutiny and consider constructive, concrete and clear suggestions for improvements.”26
64. RECOMMENDATION 3: We ask the Scottish Government to include information in the final RPP2 in some of the formats suggested by witnesses including identifying whether policies are Scottish, UK or EU and incorporating indicators and milestones to measure progress. It would also be helpful to include more detail on underlying assumptions.
65. Dr Gardner of WWF Scotland suggested to the Committee that the final RPP2 should include details of evaluation and monitoring—
“ …one thing that is strikingly absent in RPP2 … is a more rigorous evaluation and monitoring programme that presents a real empirical description of the efficacy of the policies that we are committed to and examines whether they are delivering the emissions reductions that have been attributed to them and whether they are likely to deliver the emissions reductions that have been projected. It is a notable absence from the document.”27
66. David Wilson, Director of Energy at the Scottish Government told the Committee of existing monitoring procedures—
“The principal monitoring involves an annual assessment of whether or not we are achieving the statutory targets that have been agreed by Parliament. There are a number of measures within that to track progress against particular milestones in the various sectors that are contributing to the total. We have a range of measures to assess the extent to which we are moving positively towards delivering on our progress on the energy side … However, we publish an annual climate change report, which is lodged with Parliament. We will increase the reporting in that document and will set out how we are progressing on each area of the RPP, to ensure that there is full monitoring of progress and full transparency.”28
67. RECOMMENDATION 4: We welcome the Scottish Government’s commitment to including additional data on the progress of the proposals and policies in RPP2 in its annual climate change reports to Parliament ahead of the publication of RPP3 in 2016. Given the difficulties witnesses have expressed about understanding how the impact of the policies in the draft RPP2 will be monitored, we recommend that the Scottish Government provide detail in the final RPP2 of how it intends to monitor its policies.
Missed 2010 target
68. The 2009 Act requires that the Scottish Government must report to the Scottish Parliament setting out proposals and policies to compensate in future years for the missed emissions target in 2010. The Scottish Government has indicated that this information is provided throughout the draft RPP2. The Committee considered whether the draft RPP2 adequately set out proposals and policies to compensate for the missed target and heard conflicting views on the Scottish Government’s approach.
69. In oral evidence to the Committee Dr Gardner of WWF Scotland said that—
“There is a real concern that the failure to hit the very first target has not resulted in a step change in effort. Unfortunately, it is perhaps the reverse.”29
70. However, Professor Smith of Edinburgh Napier University told the Committee that given the current economic climate—
“I would not expect the Government to try and recover the missed element at this stage.”30
71. In its written evidence SEPA recommend that greater resilience be built into the draft RPP2 to avoid future targets not being met—
“We also believe that there needs to be greater resilience built into RPP2 to ensure that if some policy areas do not deliver to their full capacity that there is sufficient headroom to ensure that this does not prejudice meeting the challenging targets set.”31
72. CONCLUSION 1: It is essential that the final RPP2 provides a clear framework for meeting annual targets and for making up ground for the missed 2010 target.
FINANCIAL PROVISIONS
Sources of funding and where financial burdens lie
73. The Scottish Government estimates that the costs of implementing the measures in the RPP2 will be on average £1.6 billion per annum (or 1% of GDP) while the average benefits are estimated to amount to £1.2 billion (in 2011 prices) per annum.
74. The draft RPP2 was published towards the end of the parliamentary budget scrutiny process. Last session, during its scrutiny of RPP1, the Economy Energy and Tourism (EET) Committee recommended in its report to the Transport, Infrastructure and Climate Change Committee that for future publications the Scottish Government—
“considers publishing all of the energy and climate change information at least 6 months prior to the Draft Budget”.
75. Witnesses told the Committee of their difficulties in matching budget commitments to specific proposals and policies. Professor Smith of Edinburgh Napier University said that—
“Transparency would be very useful, particularly from a policy perspective and from the point of view of being able to cross-reference with the expenditure budget.”32
76. Whilst Dr Gardner of WWF Scotland told the Committee that—
“It is a challenging exercise to compare a budget with the RPP—I know as I have tried to do it—and the draft RPP2 does not help with that.”33
77. The Scottish Government has budgeted £411m for 2013-14 to support the delivery of measures to reduce greenhouse gas emissions. During its scrutiny of the draft 2013-14 budget the Committee recommended in its report to the Finance Committee that the Scottish Government—
“ … assess how both public and private sector investment can be increased to ensure that targets in the next Low Carbon Scotland document are achievable”.34
78. As the draft RPP2 covers a period which extends beyond the budget for 2013-14, the section on funding and financing the climate change targets identifies a number of possible sources of capital funding, including a variety of financing models. This includes the Green Investment Bank, the Scottish Futures Trust and the Scottish Investment Bank.
79. Whilst the draft RPP2 does not quantify the distribution of anticipated costs between groups such as government, business and individuals, the Technical Annex describes in very broad terms who might be expected to meet the bill for several policies and proposals.
80. In oral evidence to the Committee Rupert Steele of ScottishPower said—
“When people are considering policies, it is always helpful to consider their costs and who will pay them. That is good discipline in any policy making and I encourage that approach to be considered in RPP2.”35
81. Dr Winskel of the University of Edinburgh agreed, telling the Committee that there should be more detail on investment up to 2020—
“Over the period to 2020, we are looking for quite a high level of detail on policy, on investment and on where the investment will come from, such as whether it will be at UK or Scottish level and whether it will be from the public sector or the private sector.” 36
82. In written evidence to the Committee, Consumer Focus Scotland indicated that the final RPP2 should specify who will be paying the expected costs—
“It would be helpful if the comparative costs and benefits of different measures were integrated in the report alongside emission reduction potential, so that the balance between complementary actions in different sectors could be more easily compared. Further, the balance between the costs to consumers, the public sector and industry needs to be fair and transparent.”37
83. In response to a question on whether the draft RPP2 provided enough transparency on who is responsible for costs, the Minister for Energy, Enterprise and Tourism said—
“ …if there are ways in which we can make the document clearer, we would be very happy to consider them.”38
84. RECOMMENDATION 5: We ask the Scottish Government to consider publishing future draft RPP reports prior to publishing its draft budget to enable an assessment of the required budget allocations necessary to achieve specific policies.
85. RECOMMENDATION 6: We recommend that the final RPP2 provide greater transparency on who is expected to pay the costs of policies up to 2020.
Wider benefits
86. The Committee heard that the Scottish Government’s estimated cost of its policies and proposals of around £1.6 billion per annum versus the estimated benefits of around £1.2 billion per annum does not include consideration of the wider benefits to society of implementing these proposals and policies.
87. In its written evidence SEPA highlight the importance of including economic, social and environmental benefits in the final RPP2—
“There is an opportunity for RPP2 to show the wider benefits of these actions to help to secure the behavioural change that is needed, and to show wider financial savings.”39
88. The Committee is of the view that the Scottish Government has a key role to play in helping to inform consumers and businesses of the ways in which a low carbon economy could improve their life, and in so doing, potentially influence their behaviour. Benefits could include living in a society with less carbon emissions and more green space, better health from living in a warm home and more disposable income from spending less on fuel bills.
89. The Technical Annex that accompanied the RPP1 included a cost-benefit analysis for landfill, which compared the options against a ‘do nothing’ scenario. There is no such analysis in the Technical Annex which accompanies RPP2.
90. RECOMMENDATION 7: We recommend that the final RPP2 include further detail, and some examples, of the potential wider economic, social and environmental benefits of implementing the proposals and policies, as well as an analysis of the consequences of doing nothing.
REDUCING CARBON EMISSIONS
91. In the draft RPP2 the Scottish Government states that—
“Our policy is that renewable generation should operate alongside upgraded and more efficient thermal stations, and that there should be a particularly strong role for CCS.”[40]
Decarbonisation target
92. The Scottish Government has set a decarbonisation target to achieve a carbon intensity of 50 gCO2/kWh of electricity generation in Scotland by 2030,41 down from an estimated 291 gCO2/kWh in 2011. The Committee heard evidence that whilst this target was welcome, there were a number of significant risks to the decarbonisation target being met. These include the impact on emissions of the agreed UK-wide Emissions Performance Standard (EPS) level, uncertainty over the viability of Carbon Capture and Storage (CCS) and uncertainty over the EU adopting a greenhouse gas emission reduction target of 30%. These issues are considered in turn below.
Emissions Performance Standard (EPS)
93. In the UK draft Energy Bill the emissions performance standard for fossil-fuel power plants is set at 450 g/kWh until 2044.42 The Committee heard conflicting views on the Scottish Government’s agreement to this UK-wide EPS target.
94. Rupert Steele of ScottishPower said that a UK-wide EPS target was necessary to secure investment and security of supply—
“The Westminster Government was right to give a guarantee that those who build CCGTs [Combined Cycle Gas Turbine plants] now will not need to fit CCS until 2045, because that will drive the investment that is necessary to keep the lights on. If Scotland sets a different policy, the likely result will be that CCGTs will be built in England instead. That is the reality when we face a security of supply problem.”43
95. Mr Steele went on to explain that—
“There is not necessarily a conflict, but energy policy involves decarbonising, security of supply and affordable cost, and achievement of all three of those at the same time is very hard … My guess is that people will be extremely anxious to maintain security of supply under all circumstances.”44
96. However, Dr Gardner of WWF Scotland warned that an EPS target of 450 g/kWh would have a detrimental impact on power stations fitting CCS—
“The RPP makes some statements about the expected roll-out of CCS by 2025 with another step change in 2027 but does not indicate how that might be compelled or why, say, a power generator or company operating a gas-fired power station in Scotland would fit CCS if there is no emissions performance standard to require that to happen … we hope that the Scottish ministers will make some statements that will give confidence about the aspiration for the roll-out of CCS. At the moment, however, it all seems hopeful at best.”45
97. The Minister for Energy, Enterprise and Tourism told the Committee of the importance for investment confidence of both the Scottish and UK Governments setting a 2030 decarbonisation target—
“There are many other challenges that need to be overcome. I do not want to overstate things, because those challenges are serious and various, but if a clear signal can be given to investors, I think that we will go some way towards removing the risk that there will be leakage of all the benefits and gains, including jobs, to Germany and France. Frankly, there is a risk of that happening at the moment.”46
98. RECOMMENDATION 8: We note the Scottish Government’s announcement of a 2030 decarbonisation target for the electricity sector and would ask the Government to provide more detail on how the target will be achieved in the final RPP2. We also recommend that the Scottish Government continue to press the UK Government to set a 2030 target.
99. RECOMMENDATION 9: We note the Scottish Government’s decision to agree to the UK-wide EPS target. However, as highlighted by WWF Scotland, the high EPS level and expected timescale for implementation could put at risk the achievability of the Scottish Government’s 2030 decarbonisation target, as it reduces the incentive for power stations to fit CCS. The Committee asks for clarification in the final RPP2 on how the Scottish Government will address this risk.
Carbon Capture and Storage (CCS)
100. The Scottish Government has set targets to demonstrate CCS at commercial scale in Scotland by 2020 and to achieve 1600 MW of CCS installed by 2027, with full retrofit across conventional power stations thereafter by 2025-30. The calculations for total installed coal and gas capacity assumes 500MW of CCS demonstration plant will be operational by 2020.
Are CCS targets achievable?
101. The Committee heard conflicting views on whether the 2020 target could be met with witnesses expressing concerns about the high investment cost and the current untested nature of CCS.
102. Rupert Steele of ScottishPower told the Committee that—
“There is a question about whether 500MW of CCS will be available by 2020.”47
103. In written evidence to the Committee RSPB Scotland recommend the inclusion of a ‘CCS-not-feasible’ scenario in the final RPP2—
“Explicitly considering a scenario where Carbon Capture and Storage is not viable or developed as expected by 2020 and 2027, and its implications for hitting the proposed decarbonisation target.”48
104. Conversely, Rob McDonald of SSE told the Committee that—
“The target is perfectly reasonable, but the first priority must be to deliver a demonstration project and prove that the technology works, because there is uncertainty about its effectiveness.”49
105. Dr Winskel of University of Edinburgh agreed, telling the Committee that—
“The assumptions in RPP2 are quite reasonable. It is still at the level of setting the ambition rather than the means of delivery ... it is saying that there will be a gradual step up in the 2020s, but that it will be quite dramatic around 2025 to 2027. I am always suspicious about those kinks in the curve.”50
106. The Minister for Energy, Enterprise and Tourism acknowledged that key decisions affecting CCS were still to be made—
“CCS and clean-coal technologies have the potential to transform our power generation and to make a massive contribution to Scotland’s low-carbon future … we await the Westminster Government’s decisions on four remaining schemes to access the £1 billion of up-front capital support. Moreover, with regard to EMR (Electricity Market Review), we are also waiting to work out the on-going revenue stream and support under the contracts for difference.”51
CCS cost and investment
107. Niall Stuart of Scottish Renewables said that high investment costs were a contributory factor—
“As Dr Winskel has said, at best we will have an extremely limited CCS capacity by 2020. The aspirations are more likely to be met by 2030 … On most cost projections, CCS comes out as being more expensive than nuclear and significantly more expensive than onshore wind and biomass.”52
108. Rupert Steele of ScottishPower told of the need to attract investors—
“If a framework is developed that makes it worth investors’ while to fit CCS, they will do it. To tell investors that they cannot build a power station unless they fit CCS is quite risky with the current state of the technology.”53
109. The Minister for Energy, Enterprise and Tourism acknowledged that there were challenges, telling the Committee that the emissions targets may not be met without CCS—
“Of course we recognise that there are challenges under CCS … it is difficult for me to see how emissions targets could be met if there were no commitment to CCS in Scotland, the UK and Europe. CCS is the sine qua non of meeting the targets and there is public policy support for it across these islands.”54
110. However, the Minister added that, in his view, CCS would be implemented—
“It is perfectly reasonable for us to assume that carbon capture and storage, which is a technology that is supported in the UK, will be implemented. That is the position.”55
111. RECOMMENDATION 10: We are concerned to hear from witnesses that the high costs of CCS could mean that the Scottish Government’s CCS 2020 target may not be achieved.
112. RECOMMENDATION 11: We recognise that the decision on which demonstration CCS schemes will proceed is one for the UK Government. We therefore ask the Scottish Government to continue pressing the UK Government for a decision on whether the CCS schemes at Grangemouth Port and Peterhead will receive funding.[56]
The European Union (EU) Emissions Trading System (ETS)
113. The EU ETS acts as an incentive for organisations to reduce their emissions by charging them for the CO2e that they emit. The EU ETS aims by 2020 to reduce EU-wide emissions by 20% compared to emissions in 2005. The Scottish Government has a statutory emissions reduction target of 42% by 2020 and wants the EU to raise its 2020 greenhouse gas emission reduction target to 30%.
114. In Annex B57 of the draft RPP2 the Scottish Government outlines emissions reduction target projections for four different scenarios. The only scenario where the emissions reduction targets from now until 2027 will be met is where there is a 30% EU emissions reduction target and full implementation of all RPP2 policies and proposals.
115. The draft RPP2 states that it will be difficult to achieve a 30% EU reduction, but it does not provide an alternative scenario to meet the Scottish Government’s targets should the EU not agree a 30% emissions reduction target to 2020—
“Of course, this challenge is even greater due to: the inability to achieve an EU-wide consensus on a 30% emission reduction by 2020; the historical emissions data is constantly under revision and since the targets for this report were set the data has been revised upwards making it more difficult to hit our targets.”58
116. The Committee heard from a number of witnesses that there were serious doubts that the EU would agree a 30% target. In oral evidence to the Committee, Rob McDonald of SSE said—
“We are quite worried that the EU will not set a 30 per cent target; therefore, the targets overall look challenging. However, they are still an appropriate ambition.”59
117. This view was echoed by Dr Winskel of the University of Edinburgh who suggested including some ‘what-if’ thinking in the final RPP2—
“RPP2 assumes a default position that essentially takes a Scottish trajectory for traded sector emissions that is based on Scottish targets for decarbonisation. The problem with that is that the Scottish targets on electricity are very ambitious …The EU ETS is likely to continue in some form post 2020, but we do not know what its level of ambition will be—getting Europe to sign up for a target of 30 per cent by 2030 has proved difficult—so this is another area in which we need some what-if thinking.”60
118. Dr Winskel added that further detail was required on the post-2020 EU ETS target—
“ … after 2020 there are lots of uncertainties about the details and the overall trajectory relative to the European Union emissions trading system. I am not especially concerned about annual fluctuations, but there are lots of questions about the overall shape of the trajectory, particularly post-2020.”61
119. In its written evidence SEPA explain that greater scope to meet the Scottish Government’s targets is required—
“We are concerned whether there is enough “headroom” in the RPP so that if things do not go to plan then there may not be scope to meet the targets. This could arise from policies and proposals not delivering to the extent assumed, from the lack of an EU agreement to increase the target to 30% or where emissions increase due to unforeseen circumstances.”62
120. RECOMMENDATION 12: Given the concerns expressed by witnesses that the EU will not adopt a 30% emissions reduction target for 2020, we ask the Scottish Government to identify in the final RPP2 explicit proposals and policies which would mitigate this risk to achieving its emissions reduction targets.
121. RECOMMENDATION 13: We recommend that the Scottish Government continue to apply the maximum possible pressure on the EU to increase its emissions reduction target to 30%.
122. RECCOMMENDATION 14: We recommend the Scottish Government monitor both UK and EU policy and take steps to mitigate against any negative impacts of policy changes.
RENEWABLE ENERGY
123. In the draft RPP2 the Scottish Government states that its renewable energy targets is that—
“50% of Scotland’s gross electricity consumption be provided by renewables by 2015 and 100% by 2020 … at least 500 MW of renewable energy (electricity and heat) to be in local and community ownership by 2020.”63
Renewable electricity and heat
124. The Scottish Government has raised its 2020 renewable energy target from 80% to 100% of Scotland’s gross electricity consumption by 2020. By 2011, renewables capacity had generated 36.1% of Scotland’s electricity needs. During its recent inquiry into the achievability of the Scottish Government’s renewable energy targets, the EET Committee concluded that: “The Committee‘s central finding is that the Scottish Government‘s renewable energy target for electricity generation is achievable, but only if a number of issues are addressed.”64
Renewable heat target
125. The Scottish Government has set a target of 11% of Scotland’s heat to come from renewable sources by 2020. It published its Outline for a Draft Heat Vision65 on 29 January 2013 and asked for stakeholder comments. The heat strategy was widely welcomed, with Forth Energy stating in its written submission that it—
“.. welcomes the Scottish Government’s intent to develop a longer-term strategic vision on heat and a Heat Generation Policy Statement.”66
126. Niall Stuart of Scottish Renewables told the Committee that the 11% heat target was achievable—
“With the extension of the renewables obligation for biomass to 15MW, the introduction of the renewable heat incentive and the Scottish Government’s work to map out barriers to district heating with the expert commission on district heating, there is enough to ensure that we hit the 11 per cent renewable heat target”.67
127. But, Mr Stuart added that there was now a need for future ambition, asking the Scottish Government to put—
“ …in place a package of measures that promote renewable heat and do not just get us up to the 11 per cent renewable heat target by 2020, but get us on the trajectory to meet the commitment in RPP2 to largely decarbonise energy for heat by 2050.”68
128. David Wilson of the Scottish Government confirmed that both the 11% heat target and target for 100,000 homes to have adopted some form of individual or community renewable heat technology for space and/or water heating were achievable and on target. However, Mr Wilson acknowledged that there was a challenge beyond 2020—
“That takes us into the area of further promoting renewable heat, both domestically and potentially in service and manufacturing properties. Developing that more widely will be a big challenge beyond 2020.”69
129. CONCLUSION 2: We welcome the Scottish Government’s consultation on its Outline for a Draft Heat Vision document and its ambition to provide a heat target to 2050 that will take into consideration environmental, economic and social aims. We look forward to publication of the Heat Generation Policy Statement (HGPS) later this year.
District heating
130. The Scottish Government established an Expert Commission on District Heating in 2012 to advise it on the steps needed to ensure a major move to the provision of district heating in Scotland. The Commission reported[70] in November 2012 and the Scottish Government is currently considering its 18 recommendations.
131. The Committee heard from Dr Gardner of WWF Scotland that—
“ …the expert commission on district heating has brought forward a package of 18 recommendations. It would have been welcome if some of those measures had found their way into RPP2 … Specifically on district heating, RPP2 would have been significantly improved if those examples had been included.”71
132. The Minister for Energy, Enterprise and Tourism confirmed that the Scottish Government would “publish a formal response shortly”72 to the Expert Commission’s recommendations.
Costs and funding for renewable heat and district heating
133. In its written submission, HIE indicated that the high cost of switching to renewable heat remained an issue—
“HIE’s own desk based research shows that around 45% of the population of the H&Is is off gas and a significant proportion is off grid. Renewable heat should be a viable alternative but despite the Renewable Heat Incentive (RHI) and loan schemes, high switching costs remain an issue.”73
134. In its written submission Scottish Renewables, agreed, stating that upfront capital costs were a barrier—
“The launch of the domestic phase of the RHI should stimulate interest in renewable heat technologies, offering huge potential to cut costs. However, the upfront capital cost of these units is still likely to be a major barrier to widespread deployment, particularly among the fuel poor.”74
135. However, Andy McDonald of Scottish Enterprise told the Committee that funding was available—
“We have also been considering the renewable energy investment fund and some of the investment support that is available to encourage district heating programmes, either at community level or a larger level. In that way, some of the challenges of bringing forward new technology and allowing the supply chain to develop might be recognised and addressed.”75
136. Dr Winskel of the University of Edinburgh told the Committee that local authorities need assistance and suggested the use of infrastructure funds—
“We need to rethink how the infrastructure for community and district heating is paid for … There are infrastructure funds out there, so there are roles for infrastructure investment, public infrastructure investment and the Green Investment Bank.”76
137. Whilst Niall Stuart of Scottish Renewables said that—
“… there is a sense that there are lots of small initiatives or initiatives that, of themselves, will not transform the roll-out of renewable heat, so there is a need for a more coherent, overarching strategy … The Government needs to consider how it can get other big industrial facilities to invest in renewable heat, because that will ensure the most rapid progress towards the target.”77
138. In response to questions on the costs of renewable heat, the Minister told the Committee that although cost was a factor, there was funding available—
“Access to the district heating schemes is available under the renewable energy investment fund, which is £103 million … The £50 million warm homes fund has also set district heating as a priority.”78
139. The Minister acknowledged that there was a lot more to do to implement district heating and that, for it to be successful, it required joint working—
“However, to get there with district heating, there needs to be close joint working between public sector bodies, utilities, the Government, tenants, and local authorities. We need to bring all those people together around the table to work out how best to deliver the schemes.”79
Community ownership
140. SCVO welcomed the Scottish Government’s target for at least 500 MW of renewable energy (electricity and heat) to be in local and community ownership by 2020, but indicated that a 2030 target was now required—
“ … the sector would like to see a new and more ambitious target set for 2030 which only takes into account genuine community ownership. This would give communities greater confidence to develop new projects and deliver the increased benefits that ownership brings. In addition to financial benefits, a degree of ownership with a genuine stake in the scheme is more likely to lead to a greater understanding and adoption of wider low carbon behaviour in the community.”80
141. RECOMMENDATION 15: We ask the Scottish Government to update the district heating proposals and policies in the final RPP2 with the detail of its response to the Expert Commission on District Heating.
142. RECOMMENDATION 16: We agree with the Scottish Government’s view that more needs to be done to facilitate district heating and ask that the final RPP2 provide details of how the Scottish Government plans to address issues such as the promotion and funding of community district heating schemes, raising public awareness, assisting off-gas grid and rural properties and promoting investment in large industrial facilities.
Renewable electricity
143. The Committee heard that the contribution of onshore wind to the achievement of emissions reduction targets was substantial. Rupert Steele of ScottishPower said—
“That [onshore arrays] is the cheapest large-scale renewable option available to consumers … Our aim is to maximise the delivery of that low-cost option to minimise the amount that we have to bill consumers.”81
144. Niall Stuart of Scottish Renewables, agreed, telling the Committee that—
“I can put it no more simply than this: a moratorium on onshore wind is a moratorium on all forms of renewable energy and an end to the trajectory that we have seen in our power sector emissions over the past five or six years.”82
145. Whilst Dr Winskel of the University of Edinburgh agreed, he added that there were issues with siting wind farms, telling the Committee that—
“Siting the wind farms has become more difficult as the ambitions have increased, but that is the nature of the targets. Onshore wind has a large burden to carry in terms of the delivery of the renewables directive and the Climate Change (Scotland) Act 2009. If you are looking to create a low-carbon electricity supply, onshore wind is the cheapest large-scale solution.”83
146. CONCLUSION 3: The Committee remains of the view that the Scottish Government’s target of 100% equivalent of Scotland’s gross electricity consumption by 2020 is achievable, but recognises that this depends on the challenges identified in its renewable energy report84 being addressed.
147. Dr Williams told the Committee of the potential that Scottish Water’s ambitious renewable energy programme, stating with future investment its electricity generation could—
“…be as high as offsetting our entire electricity demand and enabling more generation. We are actively seeking to pursue that ambition, partly through the regulated business. When it is in the best interests of customers for us to invest in hydro schemes, we are taking the opportunity to do so. About 25 gigawatt hours’ worth of hydro is involved in the current programme.”
148. RECOMMENDATION 17: We ask the Scottish Government to include further detail of the renewables potential of Scottish Water in the final RPP2.
ENERGY GENERATION AND SUPPLY
149. In the draft RPP2 the Scottish Government states that—
“Business certainty and investment are prerequisites for a successful transition [to a low carbon economy].” 85
Grid access and transmission charges
150. In the draft RPP2 the Scottish Government acknowledges the need for extensive new onshore and offshore grid development and reinforcement in Scotland, as well as strengthened connections within and across the UK.
151. Witnesses expressed serious concerns that the current delays in both grid upgrades and a decision on a fair transmission charging regime were hindering investment in renewable energy developments. In written evidence to the Committee, Burcote Wind stated that—
“Grid infrastructure and its associated charging regime currently represent one of the biggest barriers to achieving Scotland’s renewables targets.”86
152. Calum Davidson of HIE explained that—
“There is a particular problem in Orkney, where there is, effectively, a moratorium on connecting anything more than about 3kW.”87
153. The Committee also heard that addressing grid access issues could provide an opportunity for local markets, with Niall Stuart of Scottish Renewables saying that—
“Generators would be interested in selling electricity locally at a discounted price, rather than being told that they cannot generate at all. I am not clear what the barriers to achieving that are, but there is clearly a role for the Office of the Gas and Electricity Markets, National Grid and SSE’s distribution arm.”88
154. In September 2010, Ofgem launched Project TransmiT, which is a fundamental review of transmission charging arrangements. The aim of the review is to ensure that arrangements are in place to facilitate the move to a low carbon energy sector. Ofgem has yet to produce its final report and the Scottish Government states in the draft RPP2 that it is pressing for an equitable outcome on charging.
155. Rob McDonald of SSE told the Committee that the unfair charging regime to Scotland’s islands needs to be addressed as a matter of urgency, and more generally, as it was making Scotland uncompetitive—
“First, we need to sort out the transmission charges in Scotland generally, because it is unforgivable for Ofgem and National Grid to have identified a problem two years ago that has still not been fixed. That is a necessary condition, but still not a sufficiently acceptable condition.”89
156. Calum Davidson of HIE said that too many uncertainties remained for investors to commit—
“We are in a vicious circle when it comes to transmission charging and issues to do with islands connections. People will not commit because of uncertainty, especially over transmission charging costs and electricity market reform; because they cannot commit, colleagues on the transmission side cannot build.”90
157. He added that policy and funding issues needed to be addressed—
“We have about a gigawatt sitting there ready to go, but we are constrained by some relatively minor—in the greater scheme of things—policy issues and some not insignificant funding issues. If we address those issues, we will open up a new generation of significantly low-carbon, very high-yield wind for Scotland.”91
158. Rob McDonald of SSE agreed and urged the Scottish and UK Governments to work together to provide clarity for developers—
“Somewhere between the Scottish Government and the UK Government, we have to get policy clarity on renewables obligation certificates, on other support for renewables and on transmission charges, which will allow developers to give a clear signal.”92
159. The Minister for Energy, Enterprise and Tourism told the Committee that he agreed that an urgent resolution to the unfair transmission charging in Scotland’s islands was required and indicated that the Scottish Government was working with the UK Government as part of the Intergovernmental Scottish Islands Renewables Steering Group, which was established in 2012 with a remit to find a solution to the problems of high transmission charges for the Western Isles—
“ … we are taking a constructive approach to working with Ed Davey and others. I was delighted that he agreed to my suggestion to participate in and jointly lead a cross-governmental working group on island transmission charging … However, the group must come to a quick solution.”93
160. RECOMMENDATION 18: We urge the Scottish Government to continue to press the UK Government and energy companies to resolve current grid access and upgrade issues as quickly as possible. This will provide investment confidence and also enable communities to take advantage of low carbon opportunities and contribute to achieving the carbon emissions reduction targets.
161. RECOMMENDATION 19: We are concerned to hear that the lack of a decision on a transmission charging regime is having a negative impact on investment in the renewable energy sector and that there is effectively an investment ‘hiatus’. We welcome the establishment of the Intergovernmental Scottish Islands Renewables Steering Group and urge the Scottish Government to continue to work with the UK Government and Ofgem to find an equitable and quick solution.
Investment confidence
162. In addition to the negative impact of grid access issues and unfair transmission charges, the Committee heard that a current barrier to renewable energy investment is the amount of uncertainty around the detail of the draft UK Energy Bill. Calum Davidson of HIE told the Committee—
“ … we are very concerned that there will be a wall at 2020. For encouraging investment, particularly large-scale investment in Scotland, the bill is giving only a four-year window for offshore wind. We therefore think that it is critical for the UK Government to follow the Scottish Government’s example and publish 2030 targets.”94
163. Rob McDonald of SSE said that there remained too many unknowns—
“We do not know what the market structure will look like as far as capacity payments for thermal plant are concerned. We do not know how the strike prices will work. We do not even know whether pumped storage will qualify for a capacity payment. I agree that there is huge uncertainty.”95
164. RECOMMENDATION 20: We urge the Scottish Government to work with the UK Government to resolve any outstanding issues with the UK Energy Bill as quickly as possible in order that the Bill can be finalised and to improve investor confidence in low carbon energy generation.
Electricity storage
165. The draft RPP2 states that, although financially and technologically challenging, the successful delivery of electricity storage solutions in Scotland will help to achieve the emissions reduction targets. The Scottish Government is working with the Institute of Mechanical Engineers in Scotland to critically assess the viability and efficacy of different storage options including their potential application across Scotland.
166. In its written submission to the Committee SSE state that there will be a greater role for electricity storage—
“The intermittent nature of renewable generation means there will be an ever increasing role for electricity storage facilities in order to ensure Scotland’s electricity demand requirements can be met at all times.”96
167. CONCLUSION 4: The Committee acknowledges the challenges of increasing electricity storage capacity and welcomes the work that the Scottish Government is undertaking to find a suitable solution to the current electricity storage problems.
REDUCING ENERGY DEMAND
168. In the draft RPP2 the Scottish Government states that it aims to achieve—
“… a 12% reduction in total final energy consumption by 2020.”97
Energy efficiency measures
169. The draft RPP2 indicates that achieving the energy reduction target will require a step change in the provision of energy efficient homes to 2030, through retrofitting of existing housing and improving building regulations for new build homes.
170. The Committee heard evidence on whether the 12% target was achievable, what the target should be beyond 2020 and whether the draft RPP2 provided the necessary “step change”.
171. In its written evidence, Scottish Enterprise suggests that the Scottish Government has a key role to play in achieving the demand reduction target—
“Demand reduction is the most cost-effective means of delivering emissions reduction targets ... and it will be important for the Scottish Government to communicate that the 12% reduction in overall demand is very much an initial step if the transformational outcomes for 2027/2030 are to be achieved.”98
The Energy Efficiency Action Plan (EEAP)
172. In 2010 the Scottish Government published the Conserve and Save: Energy Efficiency Action Plan (EEAP)99 alongside the RPP1, which set the framework for energy efficiency and micro-generation, by detailing the actions required for Scotland to meet its statutory emissions reduction targets. Progress reports were published in 2011 and 2012, however, an updated EEAP was not published alongside the draft RPP2.
173. The Committee heard that an updated EEAP would have provided some necessary detail, with Norman Kerr of Energy Action Scotland saying that—
“It would have been useful to have had an update to the energy efficiency action plan alongside RPP2, just as we had such a plan alongside RPP1, to give us the route map going forward. What is the perceived mix of energy company obligation, our new national retrofit programme—whatever that might be called—boiler scrappage and renewable heat? Those make up a plan, and it would be useful, in engaging further with members of the public, local authorities and housing providers, to have that explained in more detail than we have in the document.”100
174. RECOMMENDATION 21: In order to help enhance scrutiny of how the Scottish Government’s proposals and policies will achieve energy efficiency and demand reduction targets, it would be helpful if, in future, the Scottish Government published an updated Energy Efficiency Action Plan (EEAP) at the same time as the draft RPP.
Emissions abatement
175. In written evidence Professor Smith of Edinburgh Napier University questioned what the measures were that would achieve the expected abatement of 72 ktC02e in 2018 rising to 650 ktC02e in 2027, listed under Additional Technical Potential in Fabric and Energy Efficiency in the Homes and Communities section of the draft RPP2—
“ … as there is not detail as to proposed measures or solutions within the RPP2 …the solutions which would be far greater than the combined efforts of ECO/Green Deal and NRP”.101
176. Professor Smith also requested detail as to how this abatement level could be achieved—
“In figure 5.12 in the carbon budget, there is a graph that shows that there will be a staggering reduction in emissions between 2020 and 2030. If we then examine what new technology is supposed to deliver that reduction, we find that it will be in the residential sector and that it will be air-source heat pumps … if we withdrew that line from the graph, we would not meet the 2030 targets by any means.”102
177. Rob McDonald of SSE told the Committee that air-source heat pumps are not the answer—
“I do not want to overplay the importance of air-source heat pumps. They have a role to play, but they are not a magic bullet for tackling fuel poverty and energy efficiency.”103
178. In response, David Fotheringham of the Sustainability and Innovative Funding Division at the Scottish Government told the Committee that the detail would be included in RPP3—
“At this stage, we are looking quite far ahead with regard to realising that potential, so it does not make sense for us to set out in detail how we will do so. We will do further analysis on that and come up with a more definite proposal in the next RPP, which is due to be published towards the end of 2016. We are convinced that the abatement potential exists, but we need to do further work to identify how we can realise it.”104
179. He added that additional funding would not be required for hard-to-treat properties as the abatement benefits would build up over time—
“The point is that, when the scheme begins, abatement will be at a relatively low level and then build. Obviously, the emissions reductions that we get from measures will continue for a period of time; in other words, the benefit that you get from them in the first year will continue for a number of years—indeed, for the life of those measures.”105
180. The Minister for Energy, Enterprise and Tourism committed to providing detail in writing to the Committee. This written evidence explained that the type of upgrades—
“ …which underpin the assumptions about emission abatement to be achieved from the National Retrofit Programme and the Additional Technical Potential, include measures such as: cavity wall insulation, solid wall insulation, loft insulation, floor insulation, draught proofing, pipe lagging, radiator shelves and foils, cylinder insulation, low energy lights, double or secondary glazing, advanced heating controls, boiler upgrades, improved electrical appliances, and photovoltaic.”106
181. In response to a question on how the measures will be funded David Wilson, of the Scottish Government indicated that it was too soon to include budget information for the period in question—
“As we are talking about a period that is six years away at its earliest—and for much of the new part of the RPP, the detailed numbers are for 2023 to 2027—it is not unreasonable for the detail to be less precise further out than it is rightly expected to be for 2013 to 2015-16, which is the spending review period.”107
182. RECOMMENDATION 22: The Committee recognise that there will be less delivery and budget detail for policies and proposals on emissions abatement beyond 2020. However, we feel that in the interests of transparency, where there are significant reductions in emissions abatement beyond 2020, RPP2 should include some explanation of how the Scottish Government anticipate that significant reduction will be achieved. We therefore recommend that the final RPP2 provide clarity on those measures which have the potential to have a significant impact on achieving the emissions abatement targets post 2020.
Scottish energy efficiency schemes
The National Retrofit Programme (NRP)
183. To reduce the demand for household energy, the NRP aims to upgrade Scotland’s housing stock, tackle fuel poverty and reduce carbon emissions. The Scotland-wide NRP scheme was widely welcomed.
184. The Scottish Government allocated £65 million in its 2013-14 budget to meet the fuel poverty target and hopes to achieve an investment of £135 million from the energy companies through the implementation of the energy company obligation (ECO) scheme. During its scrutiny of the 2013-14 budget, the Committee heard concerns about whether it was reasonable to expect that the private sector would increase its level of investment at this time.
185. Similar concerns were raised in evidence by Norman Kerr of Energy Action Scotland, who asked the Scottish Government to commit £200m per year—
“It [the Scottish Government] is hoping that it will get £165 million108 from the energy companies. That is more than it has ever had from the energy companies before … It is fair to say that if the Scottish Government doubled its funding, the achievement of the £200m or more target would be a far easier ask than it is just now.”109
186. Mr Kerr also queried whether the expected abatement could be achieved from the NRP given that the Scottish Government had not increased its budget allocation—
“The technical annexes talk about the national retrofit programme achieving 59 kilotonnes of carbon reduction in 2013. For 2017, the number increases to 207 kilotonnes, but the budget line for the programme remains flat. I struggle to understand how we can almost quadruple the carbon abatement in that programme when the budget line is flat.”110
187. David Fotheringham of the Scottish Government said that he expected the £200m investment to be achieved—
“On the overall level of funding, the idea is that the NRP will combine with funding for the energy companies to get an annual funding pot of around £200 million, which was the sum of money for which the committee called last year in its work on fuel poverty.”111
Improving Scotland’s housing stock
188. The Committee heard that there is a particular problem with uptake of energy efficiency measures in the private rented sector. In its written evidence, SCVO welcomed the proposal to improve energy efficiency in social housing, stating that—
“It will be important to have the correct mix of incentives and regulation to encourage private landlords to improve their homes whilst ensuring that minimum standards protect tenants when they choose not to.”112
189. Norman Kerr of Energy Action Scotland agreed, explaining that as incentives had not worked, minimum standards were now required—
“Why would I, as a private sector landlord, invest £8,000 or £10,000 in one of my houses to make it more energy efficient for my tenant’s benefit when I could do absolutely nothing and still get the same rent?”113
190. David Fotheringham of the Scottish Government, told the Committee that—
“ … the national retrofit programme will focus on harder-to-treat buildings such as properties that require solid wall insulation …The national retrofit programme will also be targeted at privately owned properties.”114
Transparency
191. In its written evidence, SCVO highlighted that the number of energy efficiency schemes and funding is potentially confusing to consumers—
“In addition, there are concerns that RPP1 and RPP2 have a confusing array of funding and improvement schemes which could leave the average householder confused about the best course of action for them. Whilst advice is available it would be preferable to simplify and consolidate these schemes where possible and bring them under more unified branding.”115
Monitoring and evaluation
192. Mackintosh Environmental Architecture Research Unit provided details in its written evidence of work that it has undertaken on evaluating the energy efficiency of low energy housing developments across Scotland. It suggested that there is very little evaluation of the actual performance of low energy homes (both new-build and retrofit) at present, adding that—
“What is significant is that in the cases that it does happen, a significant performance gap is emerging in terms of what proposed and actual energy consumption and environmental performance is being achieved.”116
193. Gavin Peart of the Scottish Government told the Committee that while some evaluation measures were in place, more could be done—
“We expect the occupiers of a building to use it in a certain way, but often they do not use it in that way. I presume that the other issue is whether what is designed is built on site. Those matters are of concern to us.”117
194. RECOMMENDATION 23: We welcome the Scottish Government’s commitment to a £200m Scotland-wide National Retrofit Programme with a focus on tackling hard-to-treat and private rented properties. However, we are concerned that doubts remain about whether the energy companies will contribute the expected £135m each year from the implementation of the energy company obligation (ECO) scheme. We recommend that the Scottish Government seek assurances from the energy companies on their financial commitments and include this information in the final RPP2.
195. RECOMMENDATION 24: We recommend that the Scottish Government undertake an evaluation of the impact of its schemes to improve building energy efficiency and reduce energy demand to determine if the expected results are being achieved.
UK energy efficiency schemes
The Green Deal
196. The Green Deal is a UK-wide scheme which aims to enable private firms to offer consumers energy efficiency improvements to their homes and to community spaces and businesses at no upfront cost, and recoup payments through a charge in instalments on the energy bill. The expected financial savings must be equal to or greater than the costs attached to the energy bill. This is known as “the golden rule”.
197. In his written evidence, Professor Smith of Edinburgh Napier University indicated that there are difficulties in retrofit measures meeting the golden rule criteria—
“Recent presentations by a number of different research organisations have stated the difficulty for current retrofit measures to meet the Golden Rule for the Green Deal. If there is a blockage and significant delay for new products solutions and innovations to enter into the Green Deal and current solutions are limited in meeting the “golden Rule” – this would potentially result in the RPP2 not being able to deliver its intended objectives.”118
198. Whilst Norman Kerr of Energy Action Scotland suggested that the Scottish Government should consider how it promotes the Green Deal—
“The green deal is not a programme that has been designed to support low-income households or houses in fuel poverty, given the financial payback and the period of time over which the finance must be paid back. For example, in the case of a green deal loan of £10,000 for external wall insulation, the householder who took out the loan or whoever is in the house, if it changes hands, will repay somewhere in the region of £22,000.”119
199. The Minister for Energy, Enterprise and Tourism said that whilst the Scottish Government was broadly supportive of the Green Deal, it had issues about its practicality and operability—
“The success of the green deal will therefore be predicated on the ability of ordinary small businesses such as plumbers and electricians to access that work. They must not be shut out of the work. Provided that they are properly accredited, they should have access to do the work at the agreed rate. That should be a requirement of the green deal. I have made that point to the Westminster Government and I am waiting for a response.”120
200. RECOMMENDATION 25: We ask the Scottish Government to continue to monitor the extent to which SMEs are able to achieve accreditation to deliver services under the Green Deal and be ready to promote their participation if necessary. We also ask the Scottish Government to raise witnesses’ concerns about the difficulties in retrofit measures meeting the golden rule criteria and with the amount that consumers will be expected to pay back with the UK Government.
The Energy Company Obligation (ECO)
201. The ECO121 is a UK Government policy which requires energy supply companies to deliver energy efficiency measures to homes, to reduce heating costs for vulnerable consumer groups and save carbon in hard to treat homes. It replaces both the Carbon Emission Reduction Target (CERT)122 and the Community Energy Saving Programme (CESP).123
202. In its written evidence, the Existing Homes Alliance suggested that the NRP could attract ECO funding—
“This programme has great potential to attract significant ECO funding into Scotland.”124
203. Rupert Steele of ScottishPower agreed, telling the Committee that the ECO scheme offered the opportunity to deliver solid wall insulation for Scotland’s hard-to-treat properties—
“There is no doubt that the ECO energy efficiency scheme is a testing one to deliver. We do not yet know what the demand for solid wall insulation will be, and the scheme is quite complicated …It is clear that Scotland has a lot of solid-wall properties and will therefore be an attractive place to look.”125
204. However, Rob McDonald of SSE told the Committee that Scotland’s hard-to-treat properties could be missing out on ECO funding—
“One issue is that, in Scotland, solid wall insulation is not counted as permitted development. Similarly, air-source heat pumps have to go through a much tougher planning regime in Scotland than they do in England and Wales. The contrast is really quite stark.”126
205. On the issue of permitted development rights for solid wall insulation and air source heat pumps, David Wilson of the Scottish Government said—
“We do not think that the Scottish process is necessarily more onerous or difficult, but we are looking into it and will address it if we can.”127
206. CONCLUSION 5: Given the number of hard-to-treat properties in Scotland it is important that these property owners are able to easily access all available funding for energy efficiency measures. We welcome the Scottish Government’s commitment to review (and if necessary address) whether the planning process represents a barrier to the installation of solid wall insulation and air source heat pumps and whether it constrains access to ECO funding in Scotland.
Energy demand and building standards
207. In 2009 the Scottish Government appointed a panel to advise it on the development of a low carbon building standards strategy to increase energy efficiency and reduce carbon emissions. The Sullivan report128 recommended that energy standards for new build non-domestic buildings should deliver carbon dioxide savings of 75% more than 2007 standards and new build domestic buildings should deliver carbon dioxide savings of 60% more than 2007 standards.
208. Having considered the Sullivan recommendations, the Scottish Government concluded that the costs of a 75% improvement would take a considerable period of time to payback through energy bills and it is therefore currently consulting on proposed levels of up to 60% reduction in new-build emissions for non-domestic buildings and around 45% reduction in new-build emissions for domestic properties.
209. Richard Atkins of the Royal Incorporation of Architects in Scotland (RIAS) told the Committee that the proposed lower rate of emissions abatement will not provide the required step change—
“As we have talked about, it does not even look like they will require the next step change that is set out in the Sullivan report … So there are no regulations driving the process and there is very little incentive for the developer or house builder to drive down energy costs.”129
210. In relation to existing buildings, the Scottish Council for Development and Industry (SCDI), questioned in its written submission whether businesses could meet the predicted costs of achieving the 43% reduction in emissions target—
“Currently regulations are voluntary, however these would become mandatory. Assuming, as the Scottish Government estimates, that the cost will be £10 per square metre or £1130 per square foot, the total cost of compliance would be around £12.5bn. It should be noted that SMEs represent 97% of the non-domestic built environment. It has to be questioned whether such high costs can be met given the forecast restricted availability of private and public finance.”131
211. Professor Smith of Edinburgh Napier University agreed that SMEs needed support—
“The RPP document covers the commercial sector, outlining the expenditure—a small amount—that the Scottish Government would provide or support for public and commercial buildings. However, we feel that the SME sector is a critical area that needs more support.”132
212. Dr Gardner of WWF Scotland told the Committee that minimum building standards should be introduced more quickly—
“ … in many instances the balance of effort falls on the other side of 2020 … Instead of placing such huge reliance on that period for meeting targets in future, we should take immediate action, for example by bringing forward to 2015 the proposed introduction of minimum standards or by ensuring that we do not roll back on new-build standards for homes and non-domestic buildings.”133
213. However, Richard Atkins of RIAS said that the current timescale was unrealistic—
“The built environment has the potential to deliver the level of energy demand reduction that is envisaged, but not in the timescales that are suggested and certainly not in the current fiscal regulatory climate… we are probably looking at a 25, 30 or 40-year programme rather than a short-term programme, because it comes back to what is driving the intervention.”134
214. RECOMMENDATION 26: We welcome the Scottish Government’s ambition to improve building regulations and cut emissions in new and existing buildings. However, given the concerns expressed about the predicted cost to businesses, especially SMEs, of achieving emissions reduction targets for existing buildings we ask the Scottish Government to provide greater detail in the final RPP2 on measures to assist SMEs in reducing energy consumption.
215. RECOMMENDATION 27: We ask the Scottish Government to keep under review building regulations in order to ensure that they deliver the necessary improvements in abatement required.
Influencing behaviour
216. The Scottish Government published its Low Carbon Scotland: Behaviours Framework135 on 4 March 2013. The Framework outlines what the Scottish Government will do to drive and support the move to low carbon living in the lead-up to the first key climate change target in 2020 and explains how progress will be monitored.
217. David Wilson of the Scottish Government told the Committee that—
“There is a strong role for the Government and the public sector as a whole to lead by example. All public bodies are obliged to do so under the climate change duty in the Climate Change (Scotland) Act 2009. However, we are keen to encourage use of mechanisms by which we can offer support, advice and encouragement to ensure that the various savings can be implemented.”136
218. CONCLUSION 6: The Committee welcomes the publication of the Low Carbon Scotland: Behaviours Framework and the commitment by the Scottish Government to lead by example in encouraging low carbon living.
FUEL POVERTY AND FUEL PRICES
219. The draft RPP2 reiterates the Scottish Government’s commitment to—
“Make sure no-one in Scotland has to live in fuel poverty, as far as practicable, by 2016”.137
The contribution of renewables, wholesale gas and electricity costs to fuel poverty
220. The energy efficiency measures outlined in the draft RPP2 aim to reduce energy demand and fuel bills and tackle fuel poverty. The Committee heard that if people are to be convinced to adopt energy efficiency measures in their properties they need to be aware of the benefits of doing so. Norman Kerr of Energy Action Scotland said that—
“The fuel-poor consumer is not particularly interested in where their energy comes from—whether it is from a low-carbon energy provider or whatever. They are interested in whether they can afford to use it.”138
221. The draft RPP2 states that: “By 2020, the CCC (Committee on Climate Change) estimates that support for low carbon power generation will increase energy bills by around £100, while wholesale gas prices would add £130 under DECC’s central scenario.”139 It also claims that accessing green energy will help to stabilise energy prices for customers, as there will be less reliance on wholesale gas and oil prices.
222. Niall Stuart of Scottish Renewables told the Committee that the cost of energy is not the only reason for fuel poverty—
“In Alistair Buchanan’s interview on Radio 4 yesterday, he said clearly that compared with the rest of Europe, the cost of gas in the UK is low and the cost of electricity is decidedly average. That is why we need to do more to understand exactly the dynamics of fuel poverty and what drives it. Is it household income, the cost of energy or the quality of our housing stock?”140
223. However, the Committee heard from Dr Winskel of the University of Edinburgh that wholesale gas prices are not expected to fall—
“There are huge amounts of uncertainty, but the balance of evidence is that we will not see a dramatic reduction in gas prices based on unconventional gas in Europe—at least over the next several years.”141
224. Rob McDonald of SSE agreed and told the Committee that this underlined the need for a low carbon energy option—
“ … around two thirds of the increase in electricity prices has been driven by wholesale international gas prices … that underlines the importance of investing in low-carbon technologies so that we get off the treadmill of being reliant on volatile international gas prices.”142
225. In response to a question on the link between rising energy company profits and increasing fuel poverty numbers, Rupert Steele of ScottishPower said—
“It is feasible for companies to make huge investments in energy infrastructure only if there are commensurate profits that reflect the appropriate return on those investments.”143
226. In its written evidence, Scottish Water suggest increasing the awareness of the link between water energy efficiency and energy costs could reduce household energy bills—
“In the context of energy, it is important to understand that heating water in the home is over five times more carbon intense than the carbon associated with water supply.”144
227. RECOMMENDATION 28: The Committee recognises that fuel prices, lower incomes and the poor energy efficiency of some of Scotland’s housing stock all contribute to fuel poverty. We welcome the work that the Scottish Government is doing to improve the energy efficiency of domestic and non-domestic buildings which will, in turn, reduce fuel bills. However, given the clear link between increases in the cost of fossil-fuel energy and the increase in fuel poverty we ask the Scottish Government to maintain pressure on the UK Government and energy providers to act on rising energy costs.
228. RECOMMENDATION 29: Raising awareness of water energy efficiency and its potential to reduce energy demand and energy bills could provide a possible ‘what-if’ scenario for reducing carbon emissions in domestic and non-domestic buildings. We therefore ask the Scottish Government to consider including information on water energy efficiency in the final RPP2.
ANNEXE A: EXTRACTS FROM THE MINUTES OF THE ECONOMY, ENERGY AND TOURISM COMMITTEE
2nd Meeting, 2013 (Session 4), Wednesday 16 January 2013
Report on Proposals and Policies 2 (in private): The Committee agreed its approach to scrutiny of the Report on Proposals and Policies 2. The Committee agreed to take consideration of oral evidence and of the draft report in private at future meetings. The Committee also agreed to delegate to the Convener responsibility for arranging for the SPCB to pay, under Rule 12.4.3, any expenses of witnesses to the inquiry.
6th Meeting, 2013 (Session 4), Wednesday 20 February 2013
1. Report on proposals and policies 2: The Committee took evidence from—
Niall Stuart, Chief Executive, Scottish Renewables;
Dr Mark Winskel, Research Co-ordinator, UK Energy Research Centre, University of Edinburgh;
Andrew Faulk, Policy Manager for Energy, Consumer Focus Scotland;
Norman Kerr, Director, Energy Action Scotland;
Richard Atkins, Chartered Architect, The Royal Incorporation of Architects in Scotland;
Dr Sam Gardner, Senior Climate and Energy Policy Officer, WWF Scotland;
Professor Sean Smith, Director of the Institute for Sustainable Construction, Napier University.
2. Report on proposals and policies 2 (in private): The Committee considered the evidence heard.
7th Meeting, 2013 (Session 4), Wednesday 27 February 2013
2. Report on proposals and policies 2: The Committee took evidence from—
Rupert Steele, Director of Regulation, Scottish Power;
Rob McDonald, Managing Director of Regulation and Strategy, SSE;
Calum Davidson, Director of Energy and Low Carbon, Highlands and Islands Enterprise;
Dr Mark Williams, Environmental, Regulation and Climate Change Manager, Scottish Water;
Andy McDonald, Director Renewable Energy and Low Carbon Technology, Scottish Enterprise.
8th Meeting, 2013 (Session 4), Wednesday 6 March 2013
2. Report on proposals and policies 2: The Committee took evidence from—
Fergus Ewing, Minister for Energy, Enterprise and Tourism, David Wilson, Director of Energy, David Fotheringham, Team Leader, Sustainable Housing Strategy; Sustainability and Innovative Funding Division, and Gavin Peart, Head of Strategy Unit, Building Standards, Scottish Government.
7. Report on proposals and policies 2 (in private): The Committee considered the evidence heard.
9th Meeting, 2013 (Session 4), Wednesday 13 March 2013
2. Report on proposals and policies 2 (in private): The Committee considered a paper on key issues.
10th Meeting, 2013 (Session 4), Wednesday 20 March 2013
1. Report on proposals and policies 2 (in private): The Committee considered a draft report. Several changes were agreed to, 7 by division.
Rhoda Grant proposed that the following text be added to the end of the first sentence of recommendation 3. The proposal was disagreed to by division: For 3 (Murdo Fraser, Rhoda Grant and Margaret McDougall), Against 4 (Dennis Robertson, Mike MacKenzie, Chic Brodie and Joan McAlpine), Abstentions 0.
such as those included in RPP1.
Mike MacKenzie proposed that the following text be removed from the end of recommendation 3: The proposal was agreed to by division: For 4 (Dennis Robertson, Mike MacKenzie, Chic Brodie and Joan McAlpine), Against 3 (Murdo Fraser, Rhoda Grant and Margaret McDougall), Abstentions 0.
and uncertainties and the use of ‘what-if’ exercises to evaluate the potential benefits and risk to proposals and policies. (The Committee comments later in this report on specific areas where the use of ‘what-if’ exercises would be beneficial.)
Rhoda Grant proposed that the following text be added to the end of recommendation 4. The proposal was disagreed to by division: For 2 (Rhoda Grant and Margaret McDougall), Against 4 (Dennis Robertson, Mike MacKenzie, Chic Brodie and Joan McAlpine), Abstentions 1 (Murdo Fraser).
with indicators and milestones.
Mike MacKenzie proposed that the following text should be removed from the end of conclusion 1: The proposal was agreed to by division: For 4 (Dennis Robertson, Mike MacKenzie, Chic Brodie and Joan McAlpine), Against 3 (Murdo Fraser, Rhoda Grant and Margaret McDougall), Abstentions 0.
The Committee considers that the inclusion in the final RPP2 of ‘what-if’ scenarios would provide reassurance about the overall resilience of RPP2 should policies not deliver to their full capacity.
Rhoda Grant proposed that the following text should be added after conclusion 1: The proposal was disagreed to by division: For 2 (Rhoda Grant and Margaret McDougall), Against 4 (Dennis Robertson, Mike MacKenzie, Chic Brodie and Joan McAlpine), Abstentions 1 (Murdo Fraser).
Section 36 of the Climate Change Act requires Scottish Ministers to set out proposals and policies to compensate for any missed target. We ask the Government state clearly how the final RPP2 fulfils this requirement and recommend early compensatory action is taken to mitigate the effect of cumulative emissions.
Chic Brodie proposed that the following recommendation should be removed (located before recommendation 5): The proposal was agreed to by division: For 4 (Dennis Robertson, Mike MacKenzie, Chic Brodie and Joan McAlpine), Against 3 (Murdo Fraser, Rhoda Grant and Margaret McDougall), Abstentions 0.
RECOMMENDATION: We ask the Scottish Government to provide greater clarity on budget allocations for its policies in the final RPP2.
Mike MacKenzie proposed that the following text be removed from the end of recommendation 6: The proposal was agreed to by division: For 4 (Dennis Robertson, Mike MacKenzie, Chic Brodie and Joan McAlpine), Against 3 (Murdo Fraser, Rhoda Grant and Margaret McDougall), Abstentions 0.
We ask the Scottish Government to clearly identify in the final RPP2 where the expected financial burdens will lie and assess the impact of these costs on individuals and businesses (to ensure that the burden of these costs is not disproportionate).
7. Report on proposals and policies 2 (in private): The Committee considered a draft report. Several changes were agreed to, 7 by division.
Murdo Fraser proposed that the following text be removed from recommendation 9: The proposal was disagreed to by division: For 1 (Murdo Fraser), Against 6 (Dennis Robertson, Mike MacKenzie, Chic Brodie, Rhoda Grant, Margaret McDougall and Joan McAlpine), Abstentions 0.
We also recommend that the Scottish Government continue to press the UK Government to set a 2030 target.
Chic Brodie proposed that the following text be removed from the end of recommendation 10: The proposal was agreed to by division: For 4 (Dennis Robertson, Mike MacKenzie, Chic Brodie and Joan McAlpine), Against 3 (Murdo Fraser, Rhoda Grant and Margaret McDougall), Abstentions 0.
We ask the Scottish Government to include in the final RPP2 scenario planning for this possibility including any plans to address the risk of CCS not being delivered to expected timescales.
Murdo Fraser proposed that the following recommendation be removed: The proposal was disagreed to by division: For 1 (Murdo Fraser), Against 6 (Dennis Robertson, Mike MacKenzie, Chic Brodie, Rhoda Grant, Margaret McDougall and Joan McAlpine), Abstentions 0.
RECOMMENDATION 13: We recommend that the Scottish Government continue to apply the maximum possible pressure on the EU to increase its emissions reduction target to 30%.
Mike MacKenzie proposed that the following recommendation be removed (located after recommendation 16): The proposal was agreed to by division: For 5 (Murdo Fraser, Dennis Robertson, Mike MacKenzie, Chic Brodie and Joan McAlpine), Against 2 (Rhoda Grant and Margaret McDougall), Abstentions 0.
RECOMMENDATION: We ask the Scottish Government to confirm when it will provide detail of a target for local and community ownership of renewable energy beyond 2020.
Chic Brodie proposed that the following recommendation should be removed (located after recommendation 23): The proposal was agreed to by division: For 4 (Dennis Robertson, Mike MacKenzie, Chic Brodie and Joan McAlpine), Against 3 (Murdo Fraser, Rhoda Grant and Margaret McDougall), Abstentions 0.
RECOMMENDATION: In addition, the Scottish Government should include in the final RPP2 a ‘what-if’ scenario should the expected investment not materialise in future including details of how the Scottish Government will mitigate this risk.
Mike MacKenzie proposed that the following text should be removed from the end of recommendation 24: The proposal was agreed to by division: For 4 (Dennis Robertson, Mike MacKenzie, Chic Brodie and Joan McAlpine), Against 3 (Murdo Fraser, Rhoda Grant and Margaret McDougall), Abstentions 0.
We also ask that the Scottish Government provide information on the results of this evaluation in future RPP reports.
Mike MacKenzie proposed that the following recommendation be removed (located after recommendation 24): The proposal was agreed to by division: For 5 (Murdo Fraser, Dennis Robertson, Mike MacKenzie, Chic Brodie and Joan McAlpine), Against 2 (Rhoda Grant and Margaret McDougall), Abstentions 0.
RECOMMENDATION: Given the findings of the Mackintosh Environmental Architecture Research Unit that there is a gap between the expected impacts of energy efficiency measures on energy consumption, the Committee recommend that the Scottish Government undertake an evaluation of actual performance versus expected results.
ANNEXE B: ORAL AND WRITTEN EVIDENCE
Wednesday 20 February 2013
Official report
1. Report on proposals and policies 2: The Committee took evidence from—
Niall Stuart, Chief Executive, Scottish Renewables;
Dr Mark Winskel, Research Co-ordinator, UK Energy Research Centre, University of Edinburgh;
Andrew Faulk, Policy Manager for Energy, Consumer Focus Scotland;
Norman Kerr, Director, Energy Action Scotland;
Richard Atkins, Chartered Architect, The Royal Incorporation of Architects in Scotland;
Dr Sam Gardner, Senior Climate and Energy Policy Officer, WWF Scotland;
Professor Sean Smith, Director of the Institute for Sustainable Construction, Napier University.
Scottish Renewables (281KB pdf)
Consumer Focus Scotland (173KB pdf)
WWF Scotland (280KB pdf)
Professor Sean Smith (127KB pdf)
Wednesday 27 February 2013
Official report
2. Report on proposals and policies 2: The Committee took evidence from—
Rupert Steele, Director of Regulation, Scottish Power;
Rob McDonald, Managing Director of Regulation and Strategy, SSE;
Calum Davidson, Director of Energy and Low Carbon, Highlands and Islands Enterprise;
Dr Mark Williams, Environmental, Regulation and Climate Change Manager, Scottish Water;
Andy McDonald, Director Renewable Energy and Low Carbon Technology, Scottish Enterprise.
Scottish Power (154KB pdf)
SSE (266KB pdf)
Highlands and Islands Enterprise (152KB pdf)
Scottish Water (360KB pdf)
Scottish Enterprise (127KB pdf)
Wednesday 6 March 2013
Official report
2. Report on proposals and policies 2: The Committee took evidence from—
Fergus Ewing, Minister for Energy, Enterprise and Tourism, David Wilson, Director of Energy, David Fotheringham, Team Leader, Sustainable Housing Strategy; Sustainability and Innovative Funding Division, and Gavin Peart, Head of Strategy Unit, Building Standards, Scottish Government.
Written evidence
The Committee received a number of written submissions and these can be viewed online at:
http://www.scottish.parliament.uk/parliamentarybusiness/CurrentCommittees/59658.aspx
BSW Timber
Bullough, Professor Per
Burcote Wind
Caithness Windfarm Information Forum
Existing Homes Alliance Scotland
Forth Energy
Mackintosh Environmental Architecture Research Unit
Met Office
National Grid
Page, Sally
RSPB Scotland
Scottish Government
Stop Climate Chaos Scotland
Scottish Council for Development and Industry
Scottish Council for Voluntary Organisations
Scottish Environment Protection Agency
Scottish Natural Heritage
SSE
Wood Panel Industries Federation
Supplementary evidence
UK Energy Research Centre
Scottish Government 1
Scottish Government 2
SSE
Footnotes:
1 Immediately prior to publication of this report the UK Government announced that the Peterhead Project in Aberdeen and the White Rose Project in Yorkshire would proceed as preferred bidders with a final investment decision taken in early 2015. Source: UK Government press notice 13/028, https://www.gov.uk/government/news/preferred-bidders-announced-in-uk-s-1bn-ccs-competition
2 Economy, Energy and Tourism Committee 7th Report, 2012 (Session 4), Report on the achievability of the Scottish Government’s renewable energy targets: http://www.scottish.parliament.uk/parliamentarybusiness/CurrentCommittees/55892.aspx
3 Scottish Government: Low Carbon Scotland: Meeting our Emissions Reduction Targets 2013-2027: http://www.scotland.gov.uk/Resource/0041/00413150.pdf
4 Climate Change (Scotland) Act 2009: http://www.legislation.gov.uk/asp/2009/12/contents
5 Scottish Government: Low Carbon Scotland: Meeting the Emissions Reduction Targets 2010-2022 (RPP1): http://www.scotland.gov.uk/Publications/2013/01/3958
6 Scottish Government: Low Carbon Scotland: Meeting the Emissions Reduction Targets 2010-2022 (RPP1): http://www.scotland.gov.uk/Publications/2011/03/21114235/0
7 Economy, Energy and Tourism Committee report on Scottish Government: Low Carbon Scotland: Meeting the Emissions Reduction Targets 2010-2022 (RPP1): http://scottish.parliament.uk/parliamentarybusiness/CurrentCommittees/45089.aspx#annd
8 An explanation of this improved methodology is provided at paragraphs 2.4.2 and 2.4.3 in the Scottish Government’s document: Low Carbon Scotland: Meeting our Emissions Reduction Targets 2013-2027: http://www.scotland.gov.uk/Resource/0041/00413150.pdf .
9 Scottish Government: Scottish Greenhouse Gas Emissions 2010: http://www.scotland.gov.uk/Publications/2012/07/9583/0
10 Climate Change (Scotland) Act 2009: http://www.legislation.gov.uk/asp/2009/12/contents
11 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Col 2498.
12 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Col 2499.
13 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Cols 2498-99
14 Scottish Government: Low Carbon Scotland: Meeting our Emissions Reduction Targets 2013-2027, Page 20, paragraph 2.2.7: http://www.scotland.gov.uk/Resource/0041/00413150.pdf .
15 Scottish Enterprise, written submission, Page 9.
16 Dr Winskel, Dr Gardner, Stop Climate Chaos Scotland.
17 Stop Climate Chaos, written submission, Page 2.
18 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Col 2499.
19 Economy, Energy and Tourism Committee, Official Report, 6 March 2013, Col 2619.
20 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Col 2474.
21 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Col 2476.
22 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Col 2471.
23 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Col 2494.
24 Economy, Energy and Tourism Committee, Official Report, 27 February 2013, Col 2564.
25 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Col 2501.
26 Economy, Energy and Tourism Committee, Official Report, 6 March 2013, Cols 2619-20.
27 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Col 2511.
28 Economy, Energy and Tourism Committee, Official Report, 6 March 2013, Cols 2640-41.
29 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Col 2515.
30 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Col 2514.
31 SEPA, written submission, Page 1.
32 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Col 2517.
33 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Col 2516.
34 Economy, Energy And Tourism Committee: Report to the Finance Committee on the 2013/14 Draft Scottish Government Budget: http://www.scottish.parliament.uk/parliamentarybusiness/CurrentCommittees/54207.aspx
35 Economy, Energy and Tourism Committee, Official Report, 27 February 2013, Col 2572.
36 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Cols 2475-76.
37 Consumer Focus Scotland, written submission, Page 3.
38 Economy, Energy and Tourism Committee, Official Report, 6 March 2013, Col 2620.
39 SEPA, written submission, Page 4.
40 Scottish Government: Low Carbon Scotland: Meeting our Emissions Reduction Targets 2013-2027, Page 78: http://www.scotland.gov.uk/Resource/0041/00413150.pdf
41 Scottish Government: Low Carbon Scotland: Meeting our Emissions Reduction Targets 2013-2027, Page 70, Paragraph 4.2.4: http://www.scotland.gov.uk/Resource/0041/00413150.pdf
42 UK Draft Energy Bill: http://www.official-documents.gov.uk/document/cm83/8362/8362.pdf
43 Economy, Energy and Tourism Committee, Official Report, 27 February 2013, Col 2565.
44 Economy, Energy and Tourism Committee, Official Report, 27 February 2013, Col 2566.
45 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Col 2512.
46 Economy, Energy and Tourism Committee, Official Report, 6 March 2013, Col 2622.
47 Economy, Energy and Tourism Committee, Official Report, 27 February 2013, Col 2568.
48 RSPB Scotland, written submission, Page 1.
49 Economy, Energy and Tourism Committee, Official Report, 27 February 2013, Col 2567.
50 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Cols 2478-79.
51 Economy, Energy and Tourism Committee, Official Report, 6 March 2013, Col 2632.
52 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Cols 2478-79.
53 Economy, Energy and Tourism Committee, Official Report, 27 February 2013, Cols 2565-66.
54 Economy, Energy and Tourism Committee, Official Report, 6 March 2013, Cols 2643-44.
55 Economy, Energy and Tourism Committee, Official Report, 6 March 2013, Col 2644.
56 Immediately prior to publication of this report the UK Government announced that the Peterhead Project in Aberdeen and the White Rose Project in Yorkshire would proceed as preferred bidders with a final investment decision taken in early 2015. Source: UK Government press notice 13/028, https://www.gov.uk/government/news/preferred-bidders-announced-in-uk-s-1bn-ccs-competition
57 Scottish Government: Low Carbon Scotland: Meeting our Emissions Reduction Targets 2013-2027, Page 168: http://www.scotland.gov.uk/Resource/0041/00413150.pdf
58 Scottish Government: Low Carbon Scotland: Meeting our Emissions Reduction Targets 2013-2027, Ministerial Foreword: http://www.scotland.gov.uk/Resource/0041/00413150.pdf
59 Economy, Energy and Tourism Committee, Official Report, 27 February 2013, Col 2564.
60 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Col 2476.
61 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Col 2471.
62 SEPA, written submission, Page 3.
63 Scottish Government: Low Carbon Scotland: Meeting our Emissions Reduction Targets 2013-2027, Page 78: http://www.scotland.gov.uk/Resource/0041/00413150.pdf
64 EET Committee Report on the achievability of the Scottish Government's renewable energy targets, Page 2, paragraph 6: http://www.scottish.parliament.uk/parliamentarybusiness/CurrentCommittees/57013.aspx
65 Scottish Government, Outline for a Draft Heat Vision: http://www.scotland.gov.uk/Resource/0041/00413386.pdf
66 Forth Energy, written submission, Page 3.
67 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Col 2470.
68 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Col 2477.
69 Economy, Energy and Tourism Committee, Official Report, 6 March 2013, Col 2639.
70 Expert Commission on District Heating report: http://www.scotland.gov.uk/Resource/0040/00408383.pdf
71 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Col 2505.
72 Economy, Energy and Tourism Committee, Official Report, 6 March 2013, Cols 2637-38.
73 HIE, written submission, Page 5.
74 Scottish Renewables, written submission, Page 5.
75 Economy, Energy and Tourism Committee, Official Report, 27 February 2013, Cols 2575-76.
76 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Col 2484.
77 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Col 2482.
78 Economy, Energy and Tourism Committee, Official Report, 6 March 2013, Cols 2637-38.
79 Economy, Energy and Tourism Committee, Official Report, 6 March 2013, Col 2638.
80 SCVO, written submission, Page 3.
81 Economy, Energy and Tourism Committee, Official Report, 27 February 2013, Col 2572.
82 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Col 2488.
83 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Col 2488.
84 Economy, Energy and Tourism Committee 7th Report, 2012 (Session 4), Report on the achievability of the Scottish Government’s renewable energy targets: http://www.scottish.parliament.uk/parliamentarybusiness/CurrentCommittees/55892.aspx
85 Scottish Government published Low Carbon Scotland: Meeting our Emissions Reduction Targets 2013-202,: Page 42, Paragraph 3.3.4.i: http://www.scotland.gov.uk/Resource/0041/00413150.pdf
86 Burcote Wind, written submission, Page 2.
87 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Col 2488.
88 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Col 2498.
89 Economy, Energy and Tourism Committee, Official Report, 27 February 2013, Col 2557.
90 Economy, Energy and Tourism Committee, Official Report, 27 February 2013, Col 2558.
91 Economy, Energy and Tourism Committee, Official Report, 27 February 2013, Col 2559.
92 Economy, Energy and Tourism Committee, Official Report, 27 February 2013, Col 2558.
93 Economy, Energy and Tourism Committee, Official Report, 6 March 2013, Col 2629.
94 Economy, Energy and Tourism Committee, Official Report, 27 February 2013, Col 2558.
95 Economy, Energy and Tourism Committee, Official Report, 27 February 2013, Col 2567.
96 SSE, written submission, Page 4.
97 Scottish Government: Low Carbon Scotland: Meeting our Emissions Reduction Targets 2013-2027, Page 78: http://www.scotland.gov.uk/Resource/0041/00413150.pdf,.
98 Scottish Enterprise, written submission, Page 2.
99 Scottish Government: Energy Efficiency Action Plan: http://www.scotland.gov.uk/Publications/2010/10/07142301/0
100 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Cols 2491-92.
101 Professor Sean Smith, written submission, Page 2.
102 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Col 2507.
103 Economy, Energy and Tourism Committee, Official Report, 27 February 2013, Cols 2560-61.
104 Economy, Energy and Tourism Committee, Official Report, 6 March 2013, Col 2623.
105 Economy, Energy and Tourism Committee, Official Report, 6 March 2013, Col 2634.
106 Scottish Government, supplementary written submission 2, Page 1.
107 Economy, Energy and Tourism Committee, Official Report, 6 March 2013, Col 2626.
108 This figure should be £135 million.
109 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Col 2487.
110 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Col 2470.
111 Economy, Energy and Tourism Committee, Official Report, 6 March 2013, Col 2635.
112 SCVO, written submission, Page 3.
113 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Col 2495.
114 Economy, Energy and Tourism Committee, Official Report, 6 March 2013, Col 2633.
115 SCVO, written submission, Page 3.
116 Mackintosh Environmental Architecture Research Unit, written submission, Page 1.
117 Economy, Energy and Tourism Committee, Official Report, 6 March 2013, Col 2630.
118 Professor Sean Smith, written submission, Page 2.
119 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Col 2491.
120 Economy, Energy and Tourism Committee, Official Report, 6 March 2013, Cols 2631-32.
121 Energy Company Obligation: www.decc.gov.uk/.../1732-extra-help-where-it-is-needed-a-new-energy-compan.pdf
122 Carbon Emission Reduction Target: www.decc.gov.uk/en/content/cms/funding/funding_ops/cert/cert.aspx
123 Community Energy Saving Programme: www.decc.gov.uk/en/content/cms/funding/funding_ops/cesp/cesp.aspx
124 Existing Homes Alliance, written submission, Page 2.
125 Economy, Energy and Tourism Committee, Official Report, 27 February 2013, Col 2556.
126 Economy, Energy and Tourism Committee, Official Report, 27 February 2013, Col 2556.
127 Economy, Energy and Tourism Committee, Official Report, 6 March 2013, Col 2640.
128 A Low Carbon Building Standards Strategy for Scotland (The Sullivan Report): http://www.scotland.gov.uk/Resource/Doc/217736/0092637.pdf
129 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Col 2518.
130 SCDI subsequently provided this corrected figure.
131 SCDI, written submission, Page 1.
132 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Col 2503.
133 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Col 2508.
134 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Cols 2508-09.
135 Scottish Government: Low Carbon Scotland: Behaviours Framework: http://www.scotland.gov.uk/Publications/2013/03/8172
136 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Col 2642.
137 Scottish Government: Low Carbon Scotland: Meeting our Emissions Reduction Targets 2013-2027, Page 89, Paragraph 5.2.1: http://www.scotland.gov.uk/Resource/0041/00413150.pdf
138 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Col 2472.
139 Scottish Government: Low Carbon Scotland: Meeting our Emissions Reduction Targets 2013-2027, Page 87, Paragraph 4.11.4: http://www.scotland.gov.uk/Resource/0041/00413150.pdf
140 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Col 2474.
141 Economy, Energy and Tourism Committee, Official Report, 20 February 2013, Col 2473.
142 Economy, Energy and Tourism Committee, Official Report, 27 February 2013, Col 2555.
143 Economy, Energy and Tourism Committee, Official Report, 27 February 2013, Col 2555.
144 Scottish Water, written submission, Pages 6-7.
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