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ENVIRONMENT, CLIMATE CHANGE AND LAND REFORM COMMITTEE

AGENDA

7th Meeting, 2016 (Session 5)

Tuesday 4 October 2016 The Committee will meet at 10.00 am in the Robert Burns Room (CR1). 1. Decision on taking business in private: The Committee will decide whether

to take item 8 in private. 2. Scotland's Climate Change Adaptation Programme The Committee will take

evidence from—

Diarmid Hearns, Head of Policy, National Trust for Scotland; Angela Heaney, Senior Officer for Sustainable Development, Stirling Council; Dr Anna Moss, ClimateXChange Research Fellow, Dundee University; Martin Ogilvie, Resilience and Community Safety Manager, Dumfries and Galloway Council; Professor Garry Pender, Fellow of the Institution of Civil Engineers and Senior Vice Chair – Institution of Civil Engineers Scotland Committee, Institution of Civil Engineers; Dr Emily Taylor, Land Management Project Co-ordinator, Crichton Carbon Centre; Dr Maggie Keegan, Head of Policy, Scottish Wildlife Trust.

3. Subordinate legislation: The Committee will take evidence on the Climate Change (Annual Targets) (Scotland) Order 2016 [draft] from—

Roseanna Cunningham, Cabinet Secretary for Environment, Climate Change and Land Reform, John Ireland, Deputy Director of Low Carbon Economy Division, and Tom Russon, Climate Change Policy Advisor, Scottish Government.

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4. Subordinate legislation: Roseanna Cunningham (Cabinet Secretary for

Environment, Climate Change and Environment) to move—

S5M-01520—That the Environment, Climate Change and Land Reform Committee recommends that the Climate Change (Annual Targets) (Scotland) Order 2016 [draft] be approved.

5. Subordinate legislation: The Committee will take evidence on the Climate Change (Limit on Use of Carbon Units) (Scotland) Order 2016 [draft] from—

Roseanna Cunningham, Cabinet Secretary for Environment, Climate Change and Land Reform, John Ireland, Deputy Director of Low Carbon Economy Division, and Tom Russon, Climate Change Policy Advisor, Scottish Government.

6. Subordinate legislation: Roseanna Cunningham (Cabinet Secretary for Environment, Climate Change and Land Reform) to move—

S5M-01712—That the Environment, Climate Change and Land Reform Committee recommends that the Climate Change (Limit on Use of Carbon Units) (Scotland) Order 2016 [draft] be approved.

7. Subordinate legislation: The Committee will consider the following negative instruments—

Smoke Control Areas (Exempted Fireplaces) (Scotland) Revocation Order 2016 (SSI 2016/292); Smoke Control Areas (Authorised Fuels) (Scotland) Revocation Regulations 2016 (SSI 2016/293).

8. Scotland's Climate Change Adaptation Programme: The Committee will consider evidence heard earlier in the meeting.

Lynn Tullis Clerk to the Environment, Climate Change and Land Reform Committee

Room T3.40 The Scottish Parliament

Edinburgh Tel: 0131 348 5240

Email: ecclr.committee@parliament.scot.

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The papers for this meeting are as follows— Agenda item 2

Adaptation Cover Note

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PRIVATE PAPER

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Agenda items 3, 4, 5 and 6

Affirmative subordinate legislation cover note

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Agenda item 8

Negative subordinate legislation cover note

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Environment, Climate Change and Land Reform Committee

7th Meeting, 2016 (Session 5)

Tuesday 4 October 2016

Scotland’s progress towards meeting its climate change adaptation programme objectives

Scotland and Climate Change Adaptation

1. Climate change adaptation is defined by the Intergovernmental Panel on Climate Change (IPCC 2001) as an ‘adjustment in natural or human systems in response to actual or expected climatic stimuli or their effects, which moderates harm or exploits beneficial opportunities’1. Adaptation Scotland2 has created a web based interactive resource3 examining what ‘climate ready’ places may look like.

2. The Climate Change (Scotland) Act 2009 requires the Scottish Government to publish a climate change adaptation programme. Its first programme4 was published in 2014 and the Scottish Government has since produced annual progress reports on in 20155 and 20166.

3. The Adaptation Sub-Committee of the Committee on Climate Change7 is the independent advisor to the Scottish Government on its action to adapt to climate change. Scottish Ministers asked the Adaptation Sub-Committee to carry out the first independent assessment8 of the Scottish Government's progress against the objectives set out in the Adaptation Programme.

Environment, Climate Change and Land Reform Committee consideration

4. At its meeting on 28 June 20169, the Environment, Climate Change and Land Reform (ECCLR) Committee agreed to host a series of evidence sessions to consider both the Scottish Government’s greenhouse gas emissions targets as well as its progress towards meeting its adaptation objectives.

1 Further information on climate change adaptation is available in the SPICe briefing Climate Change:

Subject Profile, May 2016 2 http://www.adaptationscotland.org.uk/

3 http://www.sniffer.org.uk/climatereadyplaces/ and http://www.adaptationscotland.org.uk/how-

adapt/tools-and-resources/climate-ready-places 4 Scottish Government, “Climate Ready Scotland Scottish Climate Change Adaptation Programme”

29 May 2014 http://www.gov.scot/Publications/2014/05/4669 5 Scottish Government, “Climate Ready Scotland: Scottish Climate Change Adaptation Programme

First Annual Progress Report”, 28 May 2015 http://www.gov.scot/Publications/2015/05/2336 6 Scottish Government, “Climate Ready Scotland: Scottish Climate Change Adaptation Programme

Second Annual Progress Report”, 31 May 2016 https://beta.gov.scot/publications/climate-ready-scotland-scottish-climate-change-adaptation-programme-second-annual/ 7 https://www.theccc.org.uk/about/structure-and-governance/asc-members/

8 Committee on Climate Change Adaptation Sub-Committee’s report on the Scottish Climate Change

Adaptation Programme: An independent assessment: https://www.theccc.org.uk/publication/scottish-climate-change-adaptation-programme-an-independent-assessment-for-the-scottish-parliament/ 9 Environment, Climate Change and Land Reform Committee, Papers for Meeting 28 June 2016:

http://www.parliament.scot/Meeting%20Papers/20160628_ECCLR_Papers_PUBLIC.pdf

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5. At its meetings on 13 September10 and 20 September11 the Committee took evidence from a range of stakeholders on the Scottish Government’s climate change targets. At its meeting on 27 September12 the Committee heard from the Adaptation Sub-Committee on its independent assessment of the Scottish Government's adaptation programme.

6. At its meeting on 4 October, the Committee will hear from the following academics and stakeholders to get their views on the Scottish Government’s adaptation work:

Diarmid Hearns, Head of Policy, National Trust for Scotland;

Angela Heaney, Senior Officer for Sustainable Development, Stirling Council;

Dr Anna Moss, ClimateXChange Research Fellow, Dundee University;

Julie Robertson, Sustainable Glasgow Assistant Manager, Land and Environmental Services, Glasgow City Council;

Martin Ogilvie, Resilience and Community Safety Manager, Dumfries and Galloway Council;

Professor Gary Pender, Fellow of the Institution of Civil Engineers and Senior Vice Chair – Institution of Civil Engineers Scotland Committee, Institution of Civil Engineers;

Dr Emily Taylor, Land Management Project Co-ordinator, Carbon Crichton Centre;

Dr Maggie Keegan, Head of Policy, Scottish Wildlife Trust.

Future work 7. At its next meeting on 25 October 2015, the Committee will conclude its evidence taking on the Scottish Government’s greenhouse gas emissions targets and its progress towards meeting its adaptation objectives by hearing from the Cabinet Secretary for Environment, Climate Change and Land Reform.

Clerks Environment, Climate Change and Land Reform Committee

10

Environment, Climate Change and Land Reform Committee, Official Report for Meeting 13 September 2016: http://www.parliament.scot/parliamentarybusiness/report.aspx?r=10515 11

Environment, Climate Change and Land Reform Committee, Official Report for Meeting 13 September 2016: http://www.scottish.parliament.uk/parliamentarybusiness/report.aspx?r=10531 12

Environment, Climate Change and Land Reform Committee, Official Report for Meeting 13 September 2016: The Official Report of this meeting is due for publication by 6 pm on 3 October 2016 and can be found here: http://www.parliament.scot/parliamentarybusiness/CurrentCommittees/environment-committee.aspx

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Environment, Climate Change and Land Reform Committee

7th Meeting, 2016 (Session 5)

Tuesday 4 October 2016

SSI cover note on climate change instruments The Climate Change (Annual Targets) (Scotland) Order 2016

The Climate Change (Limit on Use of Carbon Units) (Scotland) Order 2016.

1. These affirmative instruments have the effect of setting annual targets for the period 2028-2032 and setting a limit of zero on the net amount of carbon units that may be credited to net Scottish emissions accounts during the period 2018-2022. Background - Scotland and Climate Change

2. The Climate Change (Scotland) Act 2009 set a framework by which Scotland would cut greenhouse gas emissions and established the following targets:

Interim target of 42% reduction (from 1990 levels) by 20201

80% reduction (from 1990 levels) by 2050

3. Annual targets are also set for the period 2010 – 2050 through subordinate legislation and the latest instruments were laid in the Scottish Parliament on 7 September 2016. These were referred to the Environment, Climate Change and Land Reform Committee and will be considered on 4 October 2016. Advice on Targets

4. The Climate Change (Scotland) Act 2009 requires the Scottish Government to take advice on these targets. This advice is currently provided by the UK Committee on Climate Change (CCC) which also reports annually on Scotland’s progress towards meeting these targets. 5. On 15 March 2016 the CCC published its advice2 on Scottish emissions targets from 2028–2032 and on 13 June 2016 the Scottish Government published Scottish Greenhouse Gas Emissions 20143. While the reports published in the previous four years demonstrated the targets had been missed4, the 2014 publication showed a 45.8% reduction compared with baseline emissions had been

1 On 25 May 2016, the First Minister confirmed legislation will be introduced to increase this target to

reflect ambitions developed at the United Nations Framework Convention on Climate Change 21st session of the Conference of the Parties (COP21) in October 2015. The Cabinet Secretary for Environment, Climate Change and Land Reform has written to the Committee on Climate Change seeking renewed advice on the 2020 interim target. 2 Committee on Climate Change, Scottish emissions targets 2028 – 2032, 15 March 2016

3 Scottish Government, Scottish Greenhouse Gas Emissions 2014

4 Further information on the history of the targets, including the reasons the Scottish Government has

suggested for not meeting annual targets so far, can be found in the SPICe briefing Climate Change: Subject Profile, May 2016

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achieved. The Scottish Government responded5 by requesting updated advice from the Committee on Climate Change to assist with the setting of targets. The Committee on Climate Change provided advice in its subsequent response6 and the instruments for consideration7 are the result of this. 6. The Scottish Government has produced a briefing on this subordinate legislation which has been provided at Annexe C. This is accompanied by a statement, as required by the Climate Change (Scotland) Act 2009 which can be found at Annexe D.

Environment, Climate Change and Land Reform Committee work programme 7. On 13 September 2016, the Environment, Climate Change and Land Reform Committee held an evidence session with the CCC upon the publication of its “Reducing emissions in Scotland – 2016 progress report”8, the latest annual report providing independent analysis of how Scotland is progressing towards meeting its targets. 8. The Committee took evidence9 from:

Lord Deben, Chair of the Committee on Climate Change

Matthew Bell, Chief Executive of the Committee on Climate Change

9. This session was followed by a meeting10 with relevant stakeholders and academics. The Committee took evidence from:

Andy Kerr, Executive Director, Edinburgh Centre for Carbon Innovation (ECCI), University of Edinburgh;

Robin Parker, Public Affairs Manager, WWF Scotland;

Sue Roaf, Professor, School of the Built Environment, Heriot Watt University;

Richard Dixon, Director, Friends of the Earth Scotland;

Robin Matthews, Natural Assets Theme Leader and ClimateXChange Coordinator, James Hutton Institute; and

5 Cabinet Secretary for Environment, Climate Change and Land Reform, Letter to the Chief Executive

of the Committee on Climate Change, 24 June 2016 6 Matthew Bell, Chief Executive, Committee on Climate Change, Letter to the Cabinet Secretary for

Environment, Climate Change and Land Reform, 6 July 2016. 7 This subordinate legislation was laid in the Scottish Parliament on 7 September 2016: Draft SSI: The

Climate Change (Annual Targets) (Scotland) Order 2016 and Draft SSI: The Climate Change (Limit on Use of Carbon Units) (Scotland) Order 2016. A statement on the proposed annual targets was published on the same date. 8 Committee on Climate Change, Reducing emissions in Scotland – 2016 progress report, 13

September 2016 9 Environment, Climate Change and Land Reform Committee, Official Report, 13 September 2016

10 Environment, Climate Change and Land Reform Committee, Official Report, 20 September 2016

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Tom Rye, Director of TRI and Professor of Transport Policy, Transport Research Institute, Napier University.

Delegated Powers and Law Reform Committee consideration of the instruments 10. At its meeting on 13 September 2016, the Committee considered the instruments and determined that it did not need to draw the attention of the Parliament to either of the instruments on any grounds within its remit. 11. A copy of the Explanatory Notes and the Policy Notes are included with the briefings included in the annexes. Annexes The following documents are attached as annexes: Annexe A Briefing on the Climate Change (Annual Targets) (Scotland)

Order 2016 . Annexe B Briefing on the Climate Change (Limit on Use of Carbon Units)

(Scotland) Order 2016 Annexe C Briefing on the instruments from the Scottish Government Annexe D The Climate Change (Annual Targets) (Scotland) Order 2016 -

Statement under section 5(4) of the Climate Change (Scotland) Act 2009 in respect of the annual targets set by the Order

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Climate Change (Annual Targets) (Scotland) Order 2016 [draft] Title of Instrument: Climate Change (Annual Targets) (Scotland) Order

2016 [draft] Type of Instrument: Affirmative Laid Date: 7 September 2016 Circulated to Members: 29 September 2016 Meeting Date: 4 October 2016 Minister to attend meeting: Yes Motion for approval lodged: Yes – S5M-01520 Drawn to the Parliament’s attention by the Delegated Powers and Law Reform Committee? No Reporting deadline: 1 November 2016 Purpose 12. For the purposes of Part 1 of the Climate Change (Scotland) Act 2009, this Order sets the annual emission reduction targets for each year in the period 2028-2032. Procedure 13. The draft Order was laid on 7 September 2016 and referred to the Environment, Climate Change and Land Reform Committee. The Order is subject to affirmative procedure (Rule 10.6). It is for the Environment, Climate Change and Land Reform Committee to recommend to the Parliament whether the Order should be approved. The Cabinet Secretary for Environment, Climate Change and Land Reform has, by motion S5M-01520 (set out in the agenda), proposed that the Committee recommends the approval of the Order. Recommendation 14. The Committee must decide whether or not to agree to the motion, and then report to Parliament accordingly, by 1 November 2016. EXPLANATORY NOTE As per purpose above and including: No business and regulatory impact assessment has been prepared for this Order as no impact on business, charities or voluntary bodies is foreseen. POLICY NOTE The above instrument (“the Order”) will, if approved, be made by the Scottish Ministers in exercise of the powers conferred by section 4(1) of the Climate Change

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(Scotland) Act 2009 (“the Act”) and all other powers enabling them to do so. The Order is subject to the affirmative procedure. Policy Objectives The purpose of the Order is to set annual greenhouse gas emission reduction targets (“annual targets”) for each year in the period 2028-2032. The targets match one of the options recommended by the Committee on Climate Change (“CCC”)11, who are designated under the Act as the relevant body for providing independent, expert advice to the Scottish Ministers. In the Act, an “annual target” for any year means the target for the maximum amount of the ‘net Scottish emissions account’ for that year. In this context ‘net Scottish emissions account’ means the aggregate amount of net Scottish emissions of greenhouse gases (as reduced by any carbon units credited to it, and increased by any carbon unit debited from it). In July 2016, the CCC recommended that Scottish Ministers adopt one of two options for setting annual targets for each year in the period 2028-203212. The CCC has advised that both of these options would be consistent with a reduction (over the period to 2050) of net Scottish emissions accounts which would allow ‘the 2050 target’ to be met (i.e. it would allow the net Scottish emissions account for 2050 to be at least 80% lower than the baseline). The targets set out in this Order match the more ambitious of the two options recommended by the CCC. Consultation The Scottish Ministers requested advice from the CCC as to the levels at which to set the annual targets. The targets to be set by the Order accord with the advice of the CCC. Impact Assessments A further Strategic Environmental Assessment (SEA) is not required for the Order because a full SEA (which took account of the 2050 target, which remains in place) was carried out for the Climate Change (Scotland) Bill. The final Assessment was published in November 200813 and considered a range of high level and more detailed level options for reducing Scotland’s greenhouse gas emissions. In particular, the setting of annual targets to mark out the trajectory of reductions needed to meet the 2050 target does not, in itself, have any detrimental effect on the environment. Rather, it is the measures that are implemented to deliver emissions reductions that will have environmental effects. Section 35 of the Act places a duty on the Scottish Ministers to lay before the Scottish Parliament, as soon as reasonably practicable after setting a batch of

11

Established by the Climate Change Act 2008. 12

http://www.gov.scot/Topics/Environment/climatechange/legislation/CCC-updated-advice 13

http://www.gov.scot/Publications/2008/12/03145652/0

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annual targets, a report detailing proposals and policies for achieving those targets. The first Report on Proposals and Policies (RPP1), covering emission reduction targets to 2022, was published in March 2011. The second Report on Proposals and Policies (RPP2), covering emission reduction targets to 2027, was published in March 2013. SEA Reports, which accompanied the drafts of both RPP114 and RPP215, considered the potential environmental effects of the measures they contained. Many of the proposals and policies that were previously assessed in RPP1 and RPP2 SEAs will also be relevant to the draft of the third statutory Report on Proposals and Policies (RPP3), which will follow from the setting of the third batch of annual targets through the present instrument. To ensure that new proposals and policies are assessed, as well as the cumulative effects of measures operating in combination, further SEA Reports will be undertaken for RPP3, and for individual policies and measures as appropriate. A further Equality Impact Assessment (EQIA) is not required for the Order because a full EQIA was carried out for the Climate Change (Scotland) Bill (which took account of the 2050 target, which remains in place). The final Assessment was published in May 200916. A Child Rights and Wellbeing Impact Assessment (CRWIA) is not required for the present instrument as it is considered that the setting of targets will not, in itself, have any effect on children and young people. A Privacy Impact Assessment (PIA) is not required for the present instrument, as it has no relevance to personal information or intrusive technologies. Financial Effects A Business and Regulatory Impact Assessment (BRIA) is not required for the Order as the annual targets set for each year in the period 2028-2032 will not impose any additional costs or new regulatory burdens on businesses, the third sector or public sector organisations. A Regulatory Impact Assessment (the predecessor to BRIA) was carried out for the Climate Change (Scotland) Bill. The final Assessment was published on 5 May 200917. BRIA have also been carried out for a number of the measures in RPP1 and RPP2. The individual measures, or related groups of measures, detailed in RPP3 will be subject to BRIA as appropriate. The potential costs of specific individual measures designed to reduce emissions will be assessed in the BRIAs that are carried out as appropriate during the policy development process. Many of the individual measures can realise financial savings, usually from reduced demand or greater efficiency that can outweigh the initial cost of making the change. Directorate for Energy and Climate Change

14

http://www.gov.scot/Publications/2010/11/18140057/0 15

http://www.gov.scot/Topics/Environment/climatechange/scotlands-action/lowcarbon/meetingthetargets/SEA 16

http://www.gov.scot/Topics/People/Equality/18507/EQIASearch/ScottishClimateChangeBill 17

http://www.scotland.gov.uk/Publications/2009/05/01155216/0

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Scottish Government August 2016

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SSI cover note for: Climate Change (Limit on Use of Carbon Units) (Scotland) Order 2016 [draft];

Title of Instrument: Climate Change (Limit on Use of Carbon Units)

(Scotland) Order 2016 [draft Type of Instrument: Affirmative Laid Date: 7 September 2016 Circulated to Members: 29 September 2016 Meeting Date: 4 October 2016 Minister to attend meeting: Yes Motion for approval lodged: Yes - S5M-01712 Drawn to the Parliament’s attention by the Delegated Powers and Law Reform Committee? No Reporting deadline: 1 November 2016 Purpose 15. For the purposes of Part 1 of the Climate Change (Scotland) Act 2009, this Order sets a limit of zero on the net amount of carbon units that may be credited to net Scottish emissions accounts during the period 2018-2022. 16. It also provides that carbon units credited to or debited from the net Scottish emissions account as a result of the operation of the European Union emission trading scheme (“the EU ETS”) in accordance with the Carbon Accounting Scheme (Scotland) Regulations 2010 do not count towards that zero limit. The EU ETS (including the associated use of carbon units) operates by—

limiting, or encouraging the limitation of, activities that consist of the emission of greenhouse gases or that cause or contribute to such emissions, or

encouraging activities that consist of, or cause or contribute to, reductions in greenhouse gas emissions or removal of greenhouse gases from the atmosphere.

Procedure 17. The draft Order was laid on 7 September 2016 and referred to the Environment, Climate Change and Land Reform Committee. The Order is subject to affirmative procedure (Rule 10.6). It is for the Environment, Climate Change and Land Reform Committee to recommend to the Parliament whether the Order should be approved. The Cabinet Secretary for Environment, Climate Change and Land Reform has, by motion S5M-01712 (set out in the agenda), proposed that the

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Committee recommends the approval of the Order. Recommendation 18. The Committee must decide whether or not to agree to the motion, and then report to Parliament accordingly, by 1 November 2016. EXPLANATORY NOTE As per purpose above and including: No business and regulatory impact assessment has been prepared for this Order as no impact on business, charities or voluntary bodies is foreseen. POLICY NOTE The above instrument will, if approved, be made by the Scottish Ministers in exercise of the powers conferred by section 21(1) and (4) of the Climate Change (Scotland) Act 2009 (“the Act”) and all other powers enabling them to do so. The instrument is subject to the affirmative procedure. Policy Objectives

The purpose of the Order is to set a limit of zero (“the zero limit”) on the net amount of carbon units that may be credited to ‘net Scottish emissions accounts’ during the period 2018-2022. Section 13(1) of the Act defines ‘net Scottish emissions account’ as the aggregate amount of net Scottish emissions (emissions of greenhouse gases minus removals such as carbon sequestration by woodland), reduced or increased by the amount of carbon units credited to or debited from it. The kinds of carbon units which may be credited and debited are described in the Carbon Accounting Scheme (Scotland) Regulations 201018. The limit on the use of carbon units during the period 2018-2022 will not apply to carbon units credited to or debited from the net Scottish emissions account as a result of the operation of the EU Emission Trading Scheme (‘EU ETS”). The zero limit set by the Order will ensure that the Scottish Ministers do not credit to the net Scottish emissions accounts (during the period 2018-2022) any carbon units purchased by them. In consequence, the annual emission reduction targets for each year in the period 2018-2022 will need to be achieved entirely through domestic effort (including the operation of the EU ETS). As required by the Act, the Scottish Ministers requested advice from the Committee on Climate Change (“CCC”)19, who are designated under the Act as the relevant body for providing independent, expert advice to the Scottish Ministers, as to the levels at which to set the limit.

18

S.S.I. 2010/216, as amended by S.I. 2011/1043, S.S.I. 2015/189 and S.S.I. 2016/46. 19

Established by the Climate Change Act 2008.

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On the 6 July 2016, the CCC’s advised that the Scottish Ministers are unlikely to need to purchase any carbon units to achieve the existing annual emission reduction targets for the period 2018-2020 (i.e. a zero limit may be set on use of carbon units for this period); whereas, to achieve the existing annual targets for the period 2021-2022, two options are available, namely additional abatement or the purchase of carbon units by the Scottish Ministers20. The Scottish Government proposes to adopt the option of additional abatement. The setting of a zero limit on the use of carbon units during the whole period 2018-2022 accords with the recommendations of the CCC, on the basis that the annual targets for 2021-2022 will be achieved through proposals and policies to meet these targets without the purchase of any carbon units by the Scottish Ministers. Consultation The Scottish Ministers requested advice from the CCC as to the levels at which to set the limit. The limit set by the Order accords with the advice of the CCC. Impact Assessments A Strategic Environmental Assessment (SEA) has not been prepared because the setting of the zero limit would have no detrimental effect on the environment. An Equality Impact Assessment (EQIA) has not been prepared because the zero limit would not affect different sections of the population in different ways. A Child Rights and Wellbeing Impact Assessment (CRWIA) is not required for the present instrument as it is considered that the setting of a zero limit will not, in itself, have any effect on children and young people. A Privacy Impact Assessment (PIA) is not required for the present instrument, as it has no relevance to personal information or intrusive technologies. Financial Effects

No business and regulatory impact assessment has been produced for the Order as no impact on the private and voluntary sectors is foreseen. In particular, the zero limit set by the Order will not impose any new regulatory burdens on any of these sectors. Directorate for Energy and Climate Change Scottish Government August 2016

20

http://www.gov.scot/Topics/Environment/climatechange/legislation/CCC-updated-advice

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Annexe C

EMISSION REDUCTION TARGETS UNDER THE CLIMATE CHANGE (SCOTLAND) ACT 2009

Background briefing for the

Environment, Climate Change and Land Reform Committee of the Scottish Parliament

September 2016 Introduction 1. This briefing paper provides background information about the emission reduction targets, and associated carbon accountancy mechanisms, in the Climate Change (Scotland) Act 2009, to inform the Committee’s climate change work. Targets to reduce greenhouse gas emissions 2. The Climate Change (Scotland) Act 2009 (“the Act”) was passed unanimously by the Scottish Parliament in June 2009. The Act sets out a comprehensive framework to reduce emissions of greenhouse gases as Scotland’s contribution, as a developed nation, to the global effort necessary to limit emissions in order to avoid dangerous levels of climate change. 3. Section 1 of the Act sets the 2050 target, which is for the “Net Scottish Emissions Account” to be reduced by at least 80% from the Baseline Period. Section 2 of the Act sets an interim 2020 target, for a reduction of at least 42%. 4. The Act also requires that the Scottish Ministers set, by Order, annual emissions reduction targets for each year in the period 2010-2050, consistent with achieving the long-term (2050 and interim 2020) targets. 5. The annual targets are set, in batches, at least 12 years in advance, in order to give certainty to business, industry and other organisations about Scotland's intended emissions trajectory. The first batch, for 2010-2022, was set in October 2010. The second batch, for 2023-2027, was set in October 2011. The third batch, for 2028-2032, must be set by 31 October 2016, or as soon as reasonably practicable afterwards. Future batches are required to be set at 5-year intervals. 6. All annual targets in the period 2020-2050 must be set at an amount that is at least 3% less than the target for the preceding year. 7. When setting annual targets, Ministers must have regard to a set of statutory “target setting criteria” in section 4(4) of the Act. A statement explaining how these criteria have been taken into account when setting the level of the proposed targets must be published as soon as practicable after a draft Order is laid.

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Relationship of targets to Reports on Proposals and Policies 8. As soon as reasonably practicable after each batch of annual targets is set, Ministers must lay before the Parliament a report setting out proposals and policies (an “RPP”) for meeting these targets. Before doing so, a draft report is laid for a period of 60 days for “parliamentary consideration”. The first report (RPP1) covering the period 2010 -2022 was published in March 2011, and the second report (RPP2) was published in June 2013. A third report will be published after targets in the period 2028-2032 are set in legislation. The Committee on Climate Change 9. Before setting a batch of annual targets, Ministers must request advice from the Committee on Climate Change (CCC). The CCC is an independent expert body established by the UK Climate Change Act 2008 to provide climate change advice to the UK Government and devolved administrations. 10. The CCC uses emissions and economic modelling to determine the technical feasibility and cost effectiveness of making emissions reductions across various sectors of the Scottish economy. The CCC keeps in regular contact with the Scottish Government’s analytical teams in order to ensure consistency of approach and that it has access to the latest available data. 11. Ministers must publish the CCC’s advice on annual targets, and this is available on the Scottish Government’s climate change webpages (www.gov.scot/climatechange). Advice on the targets for 2028-2032 was provided in March 2016, and updated in July 2016. Measuring emissions - the concept of carbon dioxide equivalent (CO2e) 12. The Act covers the six greenhouse gases listed in the Kyoto Protocol: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride (SF6). Nitrogen triflouride (NF3) has subsequently been added. 13. These greenhouse gases are weighted by global warming potential. The global warming potential for each gas is defined as its warming influence relative to that of carbon dioxide, as specified by the Intergovernmental Panel on Climate Change (IPCC). Greenhouse gas emissions are then presented in tonnes of carbon dioxide equivalent units (tCO2e).” Because the quantities in question can be large, the measurement factor is often scaled up to thousands of tonnes (kilo - kt) or millions of tonnes (mega - Mt). 14. The Act defines a “Baseline Period” for reporting against the long-term (interim 2020 and 2050) emission reduction targets, which are defined as percentage reductions from this period. The Baseline Period is:

i. 1990 for carbon dioxide, methane and nitrous oxide; and ii. 1995 for fluorinated gases.

Reporting against targets – the Net Scottish Emissions Account 15. All the emissions reduction targets set out in the Act (long-term and annual) are based on the “Net Scottish Emissions Account (NSEA)”.

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16. The NSEA is defined in the Act as the aggregate amount of “net Scottish emissions” of greenhouse gases, reduced / increased by the amount of carbon units21 credited to / debited22 from it in accordance with the Carbon Accounting Scheme Regulations made under the Act23. 17. “Net Scottish Emissions” are defined in the Act as the amount of “Scottish emissions”, reduced by the amount of “Scottish removals” of that gas. “Scottish emissions” covers all emissions from sources territorially located within Scotland, plus Scotland’s share of mobile transport emissions, including domestic and international aviation and shipping. “Scottish removals” refer to the removal of carbon dioxide from the atmosphere by carbon sinks. Carbon sinks are defined by the United Nations Framework Committee on Climate Change (UNFCCC) as “any process, activity or mechanism which removes a greenhouse gas, an aerosol or a precursor of a greenhouse gas from the atmosphere” – for instance woodlands. 18. There are two mechanisms by which carbon units can be credited to / debited from the NSEA.

i. As the result of the operation of the EU Emissions Trading System (EU ETS) in Scotland. The details of this mechanism are set out in more detail in the following section.

ii. Ministers may credit to the NSEA any international carbon units purchased by them, thereby offsetting domestic emissions.

19. Official Statistics on Scottish greenhouse gas emissions are published annually and are available on the Scottish Government website (http://www.gov.scot/Topics/Statistics/Browse/Environment). Because of the complexities involved in assembling these statistics, this data is usually published approximately 18 months after each reporting year. In recent years, these figures have become available in early summer. These publications set out figures on both a net Scottish emissions basis, referred to as “source emissions”, and on the NSEA basis used for reporting against targets, referred to as “adjusted emissions”. The use of carbon units through the operation of the EU ETS 20. Launched in 2005, the EU ETS is an EU policy aimed at mitigating climate change by limiting greenhouse gas emissions from industry sectors and aviation (the “traded sector”). Participants include more than 11,000 heavy energy-using installations in power generation, the manufacturing industry and airlines across 31 countries in the European Economic Area. 21. The EU ETS is a ‘cap and trade’ system. A limit (cap) is placed on the overall volume of emissions from participants in the system. Within the cap, organisations

21 Carbon units are emissions allowances that represent 1 tCO2e each. The types of units specified

are internationally recognised and are monitored and tracked under United Nations and European Union rules. The units are subject to significant scrutiny and are accepted as representing genuine and verifiable emissions reductions. 22

Carbon units that are counted as credits reduce the level of the NSEA compared with source emissions. Carbon units that are counted as debits increase the level of the NSEA compared with source emissions. 23

The Regulations were made in 2010, and subsequently amended in 2015 and 2016.

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receive or buy emissions allowances which they can trade (1 allowance equals 1 tCO2e). Each year, an organisation must surrender enough allowances to cover its emissions. The cap is reduced over time so that by 2020, the volume of emissions permitted within the system will be 21% lower than in 2005. The reducing cap, alongside the financial considerations of trading emissions allowances, incentivises organisations within the system to find the most cost effective way of reducing their emissions. 22. Energy intensive installations (principally non-renewable power generators and heavy industry) in Scotland, as well as aviation, are covered by the EU ETS and are known as the "traded sector". 23. The EU ETS element of the NSEA is calculated by subtracting the number of emissions allowances surrendered from Scottish fixed installations in a given year, as well as an estimate of CO2 emissions surrendered from Scotland’s share of domestic and international aviation, from Scotland’s notional share of the overall EU ETS cap24. Ministers must then credit to / debit from the NSEA an amount of carbon units equal to the difference. 24. This approach is defined under the Act’s Carbon Accounting Regulations. It reflects the fact that important policy levers that affect emissions from the traded sector are not held by the Scottish Government and recognises that Scotland is part of a wider EU mechanism designed to reduce emissions across Europe. The domestic effort target 25. To ensure the majority of the action to meet emission reduction targets is taken domestically, rather than by offsetting domestic emissions through the purchase of international credits, Section 8 of the Act defines a “domestic effort target”. 26. The domestic effort target requires Ministers to ensure that at least 80% of the reduction in the NSEA in each year is achieved through reductions in “net Scottish emissions”. For the specific purpose of ascertaining whether this target has been met, the Act stipulates that the use of carbon units through the operation of the EU ETS is treated as though it is a reduction in “net Scottish emissions”. 27. In other words, the operation of the EU ETS in Scotland is considered to form a part of domestic effort to reduce emissions. However, the crediting to the NSEA of any international carbon units purchased by Ministers would not count as part of domestic effort. Limits on the use of carbon units 28. Section 21 of the Act requires Ministers to set, by Order, a series of limits, over specified periods, on the net amount of carbon units that may be credited to the NSEA. Setting a limit that would permit the use of carbon units to offset domestic emissions does not commit Ministers to their use.

24

The Scottish Government publishes a methodological paper which documents the calculations that determine how a notional emissions cap has been calculated for: (i) greenhouse gas emissions from fixed installations located in Scotland, and (ii) Scotland’s share of emissions from domestic and international aviation.

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29. Ministers may provide that carbon units of a specific description do not count towards the limit. In order to allow for the unimpeded use of carbon units associated with the operation of the EU ETS in Scotland, these have been excluded from the limits set to date. Given this exclusion, it follows that the limits apply solely to the crediting to the NSEA of any international carbon units purchased by Ministers. 30. By requiring that the limits be set in advance (generally by 2 years), these Orders provide Ministers the opportunity to signal intentions regarding how they intend to meet future annual targets. For example, a zero limit would indicate that all targets over this period will be met entirely through domestic effort (as defined above) and thereby guarantees that the domestic effort target will be met in each of these target years. 31. Before setting a limit on the use of carbon units, advice must be requested from the Committee on Climate Change, and if a limit is different from that recommended by the CCC, a statement setting out the reasons why must be published by Ministers. 32. Following advice from the CCC, limits on the number of carbon units that may be credited to the NSEA have been set for each year in the periods 2010-2012 and 2013-2017. A limit for the period 2018-2022 must be set in legislation no later than 31 December 2016, or as soon as reasonably practicable afterwards. Limits for future periods are required to be set at 5-year intervals. Revisions to the Scottish Greenhouse Gas Inventory 33. The Scottish Greenhouse Gas Inventory provides the source of data from which the Official Statistics on Scottish emissions are compiled. The inventory is the key tool for understanding the origin and magnitudes of emissions. The inventory is compiled in line with international guidance on national inventory reporting from the Intergovernmental Panel on Climate Change. 34. The Scottish Greenhouse Gas Inventory is updated every year to reflect technical improvements in the underpinning science, data and modelling. These updates result in successive revisions to the entire time-series of Scottish emissions for all years back to 1990 and the Baseline Period, both on a “source” and an “adjusted” basis, up to that point. 35. At the time when the Climate Change (Scotland) Act 2009 was passed, the most up to date inventory covered the years from 1990 to 2008 and is therefore known as the 1990-2008 inventory. This is the original inventory upon which the long-term targets in the Act and the fixed annual targets were set. Since the original (1990-2008) inventory, the net effect of revisions has been to increase the level of emissions during the Baseline Period. In other words, based on improved science and international reporting requirements, etc, we now understand that Scotland has historically been emitting greater amounts of greenhouse gas than was understood to be the case at the time the Act was passed.

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The impact of inventory revisions on progress towards targets 36. Since the Act was passed, inventory revisions have had only a modest impact on the “level of stretch” required by the long-term (2050 and interim 2020) targets in the Act, which are defined as percentage reductions from the Baseline Period. 37. However, since the Act was passed, the inventory revisions have had a substantial impact on the “level of stretch” required by the annual targets, which are set as fixed amounts of emissions (in tCO2e) based on the inventory current at that time. 38. All of the existing fixed annual targets (for the years 2010-2027) were set on the basis of the 1990-2008 inventory. The subsequent upward revisions to the inventory mean that the “level of stretch” associated with these targets has increased since the time there were set. 39. For example, the annual target for 2020 was set as 40,717,000 tCO2e and this was based on the 1990-2008 inventory. At that time, this represented a 42% reduction from the Baseline Period which is the same as the interim target set out in the Act. Based on the most recent (1990-2014) inventory, this same fixed target now represents a 47.3% reduction from the Baseline Period. This is because emissions during the Baseline Period have been revised upwards whilst the annual target remains as the fixed amount of greenhouse gas emissions as prescribed in the Act. 40. A further effect of the inventory revisions is that the existing fixed annual targets have become inconsistent with the trajectory required to meet the long-term (2050 and interim 2020) percentage reduction targets. This means that the fixed annual targets are now more stretching than the percentage reduction targets. Climate Change Legislation Team Energy & Climate Change Directorate Scottish Government September 2016

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Annexe D

The Climate Change (Annual Targets) (Scotland) Order 2016 Statement under section 5(4) of the Climate Change (Scotland) Act

2009 in respect of the annual targets set by the Order

Laid before the Scottish Parliament on 7 September 2016

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Introduction 1. The Climate Change (Annual Targets) (Scotland) Order 2016 (“the Order”) sets annual targets for each year in the period 2028-2032. Those targets are set pursuant to section 4 of the Climate Change (Scotland) Act 2009 (“the Act”). 2. This statement sets out, in respect of the annual targets set by the Order, the reasons for setting those targets at those levels, and the extent to which those targets take account of the “target-setting criteria” (as defined by the Act). Background 3. The Act requires the Scottish Ministers to ensure that the net Scottish emissions account25 for the year 2050 is at least 80% lower than the baseline26 (the “2050 target”), with an “interim 2020 target” for a reduction of at least 42%. 4. The Act also requires the Scottish Ministers to, by order, set annual targets27 for each year in the period 2010-2050. The existing targets for 2010-2022 were set by the Climate Change (Annual Targets) (Scotland) Order 2010, whereas those for 2023-2027 were set by the Climate Change (Annual Targets) (Scotland) Order 2011. 5. The Climate Change (Annual Targets) (Scotland) Order 2016 (“the Order”) sets the third batch of annual targets, covering each year in the period 2028-2032. For the period 2020-2050, each target must be an amount that is consistent with a reduction over that period of net Scottish emissions accounts which would allow the 2050 target to be met, and be at least 3% less than the target for the preceding year. 6. The Scottish Ministers, when setting the targets for each year in the period 2028-2032, had regard to advice received they from the UK Committee on Climate Change as to the cumulative amount of net Scottish emissions for the period 2010-2050 that is consistent with a reduction over that period of net Scottish emissions accounts which would allow the 2050 target to be met. They also had regard to the matters mentioned in section 4(4) of the Act (the “target setting criteria”). 7. The Act requires that, as soon as reasonably practicable after making the Order, the Scottish Ministers must lay before the Parliament a report setting out proposals and policies for meeting the annual targets. These reports must be laid in draft, for a period of Parliamentary consideration of 60 days, before being finalized. The third report on proposals and policies will follow the setting of annual targets for the years 2028-2032.

25

The “net Scottish emissions account” for a given year refers to the net total amount of greenhouse gas emissions attributable to Scotland for that year (as reduced by the amount of those gases removed due to land use and forestry), as further reduced or increased by the amount of carbon units credited to or debited from it. 26

The “baseline” means the aggregate amount of net Scottish emissions of each of greenhouse gas for 1990 or 1995 (whichever of those years is the baseline year for the particular greenhouse gas). 27

The “annual target” for a given year is the target for the maximum amount of the net Scottish emission account set for that year. These targets are set in fixed amounts of greenhouse gas, measured in tonnes of carbon dioxide equivalent (tCO2e).

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Advice from the Committee on Climate Change 8. The Committee on Climate Change (CCC) is an independent expert body established by the UK Climate Change Act 2008 to provide climate change advice to the UK Government and devolved administrations. The Climate Change (Scotland) Act 2009 requires that the Scottish Ministers request advice from the CCC before setting each batch of annual targets. 9. The CCC provided advice to the Scottish Government on the setting of annual targets for the years 2028-2032 in a report, Scottish Emissions Targets 2028-2032: The high ambition pathway towards a low carbon economy, published on 15 March 2016 (hereafter “the March advice”)28. On 14 June 2016, Official Statistics containing the updated (2014) Scottish greenhouse gas inventory were released29. On 24 June 2016, the Scottish Ministers wrote to the CCC asking whether this updated inventory information would affect the recommendations made in their March advice30. On 6 July 2016, the CCC provided updated recommendations for the levels of the annual targets for 2028-2032 (hereafter “the July advice”)31. 10. In their July advice, the CCC recommends that the Scottish Ministers adopt one of two options for setting annual targets for 2028-2032. The targets proposed in the draft Order match the more ambitious of the two options set out by the CCC. In adopting this option, the annual targets for 2028-2032 are set based on a simple extension (applying the 3% per annum statutory criterion) of the existing annual target pathway. 11. The alternative option set out by the CCC involves loosening the existing annual targets for 2025–2027 and then basing those for 2028–2032 on a simple extension of that (loosened) pathway. The CCC consider that the loosening of existing targets could be justified on the basis of bringing the annual target trajectory back into line with the long-term ambition of the Act. The existing annual targets, which remain fixed (in tCO2e terms) on the basis of the greenhouse gas inventory that was current when they were set, have become tougher than the long-term ambition of the Act, which is expressed in percentage terms (i.e. an 80% reduction by 2050), as a result of successive technical improvements to the inventory. Relationship between the setting of annual targets and commitment to new climate change legislation 12. The Scottish Government has announced that it will outline proposals for a new Climate Change Bill in early 2017, including a new 2020 target of reducing actual Scottish emissions by more than 50%32. 13. To ensure that future Scottish legislation represents an appropriate, evidence-based response to the increased global ambition seen in the UNFCCC Paris

28

http://www.gov.scot/Topics/Environment/climatechange/scottish-emissions-targets-2028-2032 29

http://www.gov.scot/Publications/2016/06/2307 30

http://www.gov.scot/Topics/Environment/climatechange/24June2016 31

http://www.gov.scot/Topics/Environment/climatechange/legislation/CCC-updated-advice 32

http://www.gov.scot/programme2016

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Agreement, the Cabinet Secretary for Environment, Climate Change and Land Reform has written to request further advice from the CCC33. 14. In the meanwhile, the Scottish Government remains fully committed to discharging the obligations of the 2009 Act, including the setting of the third batch of annual targets. The proposed annual targets for 2028-2032 15. The Scottish Government is seeking the Scottish Parliament’s agreement to set the following annual targets for the years 2028-2032, shown here in bold text in the context of the existing (i.e. already legislated) annual targets for the years 2010-2027.

Annual target (tCO2e)

% reduction year-on-year

% reduction from baseline*

2010 53,652,000 -31%

2011 53,404,000 -0.46% -31%

2012 53,226,000 -0.33% -31%

2013** 47,976,000 -9.86% -38%

2014 46,958,000 -2.12% -39%

2015 45,928,000 -2.19% -41%

2016 44,933,000 -2.17% -42%

2017 43,946,000 -2.20% -43%

2018 42,966,000 -2.23% -44%

2019 41,976,000 -2.30% -46%

2020 40,717,000 -3.00% -47%

2021 39,495,000 -3.00% -49%

2022 38,310,000 -3.00% -50%

2023 37,161,000 -3.00% -52%

2024 35,787,000 -3.70% -54%

2025 34,117,000 -4.70% -56%

2026 32,446,000 -4.90% -58%

2027 30,777,000 -5.10% -60%

2028 29,854,000 -3.00% -61%

2029 28,958,000 -3.00% -63%

2030 28,089,000 -3.00% -64%

2031 27,247,000 -3.00% -65%

2032 26,429,000 -3.00% -66%

* The % reductions against baseline levels are rounded to the nearest percentage point and shown on the basis of the most recent (2014) Scottish greenhouse gas inventory

34. Revisions to the inventory

(which have occurred every year for which Official Statistics are available) have the effect of changing the % reduction from baseline figures, as the annual targets remain fixed but the baseline level of emissions is revised. ** The large drop in 2013 reflects Phase III of the EU Emissions Trading System coming into effect.

33

http://www.gov.scot/Topics/Environment/climatechange/CCC-future-targets-letter 34

http://www.gov.scot/Publications/2016/06/2307

Existing annual targets

Proposed third batch of annual

targets

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16. The proposed annual targets meet the statutory requirements set out in the Act. Each proposed target is at least 3% less than the target for the preceding year. The continuation of such an annual target pathway out to 2050 would lead to a reduction from baseline levels of at least 80% (based on the most recent Scottish greenhouse gas inventory), consistent with allowing the 2050 target to be met. 17. The proposed annual targets are more ambitious than the UK’s fifth carbon budget (covering the period 2028-2032), which implies a 57% reduction from baseline levels (based on the most recent UK greenhouse gas inventory). They are also more ambitious than the EU’s 2030 target for a 40% reduction from 1990 levels. Reasons for setting targets at the proposed levels 18. This section sets out the Scottish Ministers’ reasons for setting annual targets for each year in the period 2028-2032 at the levels in the Order (“the targets”). 19. The targets match the more ambitious of the two options recommended by the CCC. The setting of these targets will extend and strengthen Scotland’s emission reduction pathway, in a manner that is evidence-based and consistent with the Scottish Government’s commitment to high ambition on tackling climate change. 20. The Scottish Government’s approach to climate change targets is that these should be based on the best available evidence. The Scottish Ministers consider that the expert, independent advice provided by the CCC provides this basis. 21. The Scottish Ministers have elected to follow the more ambitious of the CCC’s recommended options for setting annual targets for the years 2028-2032. This approach will send clear and positive signals regarding Scottish ambition, thereby;

i. Providing an appropriate stepping stone towards commitments to future legislation.

ii. Helping to strengthen Scotland’s position in the competitive low-carbon marketplace and build business confidence in exploiting the opportunities that this presents, by reaffirming Scotland’s long-term commitment to the low-carbon economy.

22. The targets are ambitious, but achievable given Scotland’s strong progress to date and in the context of the transformative changes associated with the transition to a low-carbon economy. Extent to which the proposed targets take account of the target-setting criteria 23. This section highlights considerations the Scottish Ministers have had with regard to each of the target-setting criteria listed in section 4(4) of the Act, including any advice they have received from the CCC. (a) the objective of not exceeding the fair and safe Scottish emissions budget 24. The Act defines the “fair and safe Scottish emissions budget” as “the aggregate amount of net Scottish emissions for the period 2010-2050 recommended by the CCC as being consistent with Scotland contributing appropriately to

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stabilisation of GHG concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system”. 25. In January 2011, the CCC has advised that it considers that a “fair and safe Scottish cumulative emissions budget” would be Scotland’s appropriate contribution to required global emissions reductions consistent with limiting risks of dangerous

climate change, based on limiting global warming to around 2°C35. At this time, the

CCC advised that a fair and safe Scottish cumulative emissions budget for the years in the period 2010-2050 would be 1,250,000,000 tCO2e. 26. The effect of technical improvements to the Scottish greenhouse gas inventory has led the CCC to update their January 2011 advice on the level of the fair and safe Scottish cumulative emissions budget. In their March advice, the CCC advised that a fair and safe Scottish cumulative emissions budget for the years in the period 2010-2050 would be 1,330,000,000 tCO2e. In their July advice, the CCC state that the proposed targets for 2028-2032, if met, would be commensurate with cumulative Scottish emissions over the period 2010-2050 of 1,277,000,000 tCO2e. (b) scientific knowledge about climate change 27. The CCC updated its analysis of climate science in its March advice, drawing extensively on the most recent assessment from the Intergovernmental Panel on Climate Change. The Scottish Government has reviewed and accepts that analysis. 28. The CCC concludes that the scientific case for the existence of human-induced climate change and its effects remains robust and continues to grow and strengthen. Although gaps and uncertainties in understanding continue to exist, the case for strong action on mitigation remains strong. In particular, if global emissions continue at the current rate, the cumulative emissions needed for a medium (50%)

chance of staying below 2°C of global warming will be exceeded by around the late

2030s. The cumulative emissions needed for a likely (>66%) chance of staying

below the additional Paris Agreement goal of 1.5°C will be exceeded by around

2020. (c) technology relevant to climate change 29. The Scottish Government accepts the CCC’s high-level assessment, set out in their March advice, of the technologies that may play an important role in the transition to a low-carbon economy and agrees that decarbonisation of electricity supply, heat use and transport will be key to meeting Scotland’s emissions targets. Also important will be the development of carbon capture and storage to reduce emissions from large point sources and the continuing penetration of technologies that enable more efficient use of the energy we produce. This assessment continues to accord with the Transformational Outcomes identified in the Scottish Government’s Climate Change Delivery Plan36.

35

https://www.theccc.org.uk/publication/letter-scotland-advised-to-cut-emissions-by-3-5-each-year-from-2020-to-2050-31-january-2011/ 36

http://www.scotland.gov.uk/Publications/2009/06/18103720/0

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30. We will set out our policies on the energy technologies that will help us reach our emission targets in our overarching Energy Strategy, due for draft publication in late 2016. (d) economic circumstances, in particular the likely impact of the target on— (i) the Scottish economy;

(ii) the competitiveness of particular sectors of the Scottish economy; (iii) small and medium-sized enterprises (SMEs); (iv) jobs and employment opportunities. 31. The Scottish Government shares the CCC’s high-level assessment, set out in their March advice, that the transition to a low-carbon economy has the potential to; lead to higher levels of economic growth and resource efficiency for Scotland, create opportunities across the Scottish economy and for business of all sizes, benefit SMEs through the expansion of low-carbon markets and reduced energy bills, and lead to higher growth in jobs within Scotland. 32. Scotland’s transition to a low-carbon economy is well underway. In 2014, the low carbon and renewable energy economy was estimated to be worth £5.6 billion, with 21,500 full-time equivalent employees37. There will be opportunities for further growth as the sector matures in the 2020s and many of the markets that it serves become increasingly mainstream. 33. The Scottish Government is aware that the low-carbon transition may also pose competitiveness challenges within certain sectors, for example the risk of production moving to other countries (often referred to as ‘carbon leakage’). It notes the CCC’s assessment, set out in their March advice, that these risks remain limited and manageable, especially given the recent increases in international pledges to implement low-carbon action. 34. The Scottish Government has put programmes in place to support businesses and the public sector to gain economic benefits and increase competitiveness where possible while reducing their carbon emissions. The SG-funded Resource Efficient Scotland (RES) programme offers free advice and support to SMEs to implement energy and resource efficiency measures that translate to cost savings. From 2013 to 2015 the programme has supported over 10,000 businesses to make lifetime cost savings of £180 million, along with significant energy and carbon savings. This is complemented by the RES SME Loan scheme which provides loans of up to £100,000 for the installation of resource efficiency measures and renewable energy technologies. Since inception in 2008 it has successfully financed over 800 projects resulting in estimated financial savings of over £32 million. 35. For the public sector, the Scottish Government launched the Non Domestic Public Sector Energy Efficiency Framework in March 2016 to support the procurement of energy efficiency retrofit work. This has highlighted the potential to support up to £300 million of activity across the Scottish public sector estate, using a standardised approach and gaining economies of scale. In addition, Salix Finance Ltd currently manages a £14.3 million revolving, interest-free loans fund on behalf of

37

https://www.ons.gov.uk/economy/environmentalaccounts/bulletins/finalestimates/2014

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the Scottish Government for public sector energy efficiency implementation projects. These projects have produced >£68 million and 336,000 ktCO2e lifetime savings since 2008. 36. The Scottish Government’s national infrastructure priority for energy efficiency – “Scotland’s Energy Efficiency Programme - will deliver a 15-20 year programme of investment in energy efficiency and decarbonisation of heat supply. This will deliver economic benefits such as: affordable energy bills for homes and businesses; opportunities to create a substantial Scottish market and supply chain for SMEs; physical and mental health benefits, and associated health service savings; and community regeneration, where investment includes external building fabric improvements. 37. In terms of the economic costs and benefits associated with emission reduction measures, the Scottish Government shares the CCC’s view, as set out in their March advice, that short-medium term costs should be balanced against substantial co-benefits and the risk of storing up greater costs in the long term. 38. Some emission reduction measures can be achieved at a negative short-medium term cost (i.e. financial savings – usually from reduced demand or greater efficiency – outweigh the cost of making the change). However, it is acknowledged that other measures, including the investments in low-carbon infrastructure needed to achieve longer-term emissions reductions, retain higher short-medium term costs than high-carbon alternatives. In their advice to the UK Government on the setting of the fifth UK carbon budget38, the CCC estimated that meeting their proposed budget will involve an annual cost in 2030 of around 0.1% of expected GDP. These short-medium term costs must, however, be viewed in the context of the likely higher costs of inaction - as demonstrated in the 2006 Stern Review of the Economics of Climate Change39. 39. The precise costs and benefits of meeting future annual targets, both existing and proposed, will depend on a range of uncertain factors. These include the pace of innovation and the path of technology costs and performance, fossil fuel prices, wider economic performance, the level of demand and behaviour of consumers and the mix of policies and proposals that will be used to meet the targets. (e) fiscal circumstances, in particular the likely impact of the target on taxation, public spending and public borrowing 40. In their March advice, the CCC reviews the impact of their modelling scenarios on the fiscal positions at both Scottish and UK levels. At the UK level, they identify a range of potential fiscal impacts (e.g. EU Emission Trading System auction revenues, fuel duty revenues), but conclude that these are likely to remain manageable. Given the current balance of reserved and devolved powers, most of these UK level impacts would not directly impact the Scottish fiscal position.

38

https://documents.theccc.org.uk/wp-content/uploads/2015/11/Committee-on-Climate-Change-Fifth-Carbon-Budget-Report.pdf 39

http://webarchive.nationalarchives.gov.uk/+/http:/www.hm-treasury.gov.uk/sternreview_index.htm

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41. The Scottish Government’s position is that Scotland’s interests would be best served by giving greater responsibility to the Scottish Parliament and Government. Under the current devolution settlement, the main responsibilities for energy policy and regulation are reserved to the UK Government, as are a number of additional key policy and fiscal levers. Of the tax powers currently being devolved as the result of the Scotland Act 2016, Air Passenger Duty (APD) is the only one with substantial potential interdependency with emissions reduction targets. A Strategic Environmental Assessment in relation to the Scottish Government’s plans for the APD replacement tax is being undertaken. 42. The Scottish Government welcomes the CCC’s proposal, set out in the March advice, to continue to provide further advice, through their Scottish annual progress reports, on specific policy options that balance fiscal and other considerations. (f) social circumstances, in particular the likely impact of the target on those living in poorer or deprived communities 43. People are not affected equally by the impacts of climate change (e.g. flooding, storms and heatwaves). Research suggests that more deprived people find it harder to prepare for, respond to and recover from extreme weather events, like flooding40. The individuals and groups in Scotland who are most likely to be affected by a changing climate include:

People on low incomes

People with health problems

Disabled people, particularly those with poor mobility

Older people

Children and young people

People who are less well supported by family, friends and agencies

People who have difficulties reading or understanding English

People living in places at risk

People who lack insurance cover 44. The Scottish Government recognises the need for emissions reduction policies that help reduce, rather than promote, social and economic inequalities. For example, our Home Energy Efficiency Programmes for Scotland are targeted at households in and at risk of fuel poverty, helping make them warmer and more affordable to heat, as well as reducing their environmental impact. This is very much in line with the advice from the CCC, who advises that suitably targeted energy efficiency measures can help to alleviate fuel poverty, even in the face of expected continued increases to energy prices. 45. As well as making homes warmer and more affordable to heat, our continued investment in energy efficiency supports jobs right across Scotland, as well as contributing to improving health and early year’s outcomes. Recognising the importance of energy efficiency and the many co-benefits it has, we have designated it as a national infrastructure priority and have begun to develop Scotland’s Energy

40

http://www.sniffer.org.uk/files/7513/4183/8010/UKCC22_LiteratureReview_web.pdf, http://www.gov.scot/Publications/2015/12/9621, http://www.jrf.org.uk/report/climate-change-justice-and-vulnerability

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Efficiency Programme, which will provide an offer of support to buildings across Scotland to improve their energy efficiency. 46. The Climate Challenge Fund, which enables communities across Scotland to take local action on climate change, has a particular focus on engaging with Scotland’s most disadvantaged communities. The Fund aims to support future proofing community activity which delivers environmental and community benefits whilst also keeping emissions low in the future. 47. The Scottish Government will, through the systematic use of Equalities Impact Assessments, continue to integrate equality considerations into the development of policies on both climate change mitigation and adaptation. (g) the likely impact of the targets on those living in remote rural communities and island communities 48. Climate change is already presenting challenges for Scotland’s remote rural and island communities. Disruptions to key infrastructure and transport links have larger and more sustained impacts on those communities which do not have access to alternative routes and infrastructure. 49. The Scottish Government agrees with the CCC’s high-level assessment, set out in their March advice, that measures to reduce emissions, such as investment in renewable heat and power generation, could have positive impacts for those in rural and island communities. 50. The Scottish Government recognises that it is important to ensure that the differential impacts of national policy on these communities are considered, so that flexible solutions can be found and implementation tailored appropriately. In particular, it will be important that policies to reduce transport emissions do not adversely affect rural or island communities. In their March advice, the CCC advise that the overall reductions in transport emissions envisioned in their “High Ambition” modelling scenario remain consistent with continuing to meet the mobility requirements of those living in rural and island communities. (h) energy policy, in particular the likely impact of the target on energy supplies, the renewable energy sector and the carbon and energy intensity of the Scottish economy 51. The Scottish Government shares the CCC’s views that making additional progress towards decarbonising Scotland’s energy mix will be key to meeting Scotland’s emissions targets in the 2020s, 2030s and beyond. 52. The Scottish Government has already set a number of targets to deliver a largely decarbonised energy system by 2050, including 100% of Scotland’s electricity demand to be met from renewables by 2020. Renewable electricity output has risen three-fold in 10 years, and in 2015 generated 56.9% of its electricity demand from renewable sources.

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53. In the second report on proposals and policies, the Scottish Government set a non-statutory target for the emissions intensity of Scottish electricity generation to have fallen to less than 50 gCO2/kWh by 2030. In 2014, the average greenhouse gas emissions per kilowatt hour of electricity generated in Scotland was estimated to be 196 gCO2/kWh. The Scottish Government notes the CCC’s March advice to aim to reduce the target even further, to 10-20 gCO2/kWh by 2030. 54. Between 1998 and 2013, Scottish carbon productivity (the level of Gross Value Added per tCO2e) has more than doubled. Between 2005 and 2013, Scottish energy productivity (the level of Gross Value Added per GWh of final energy consumed) has increased by around 25%41. 55. Under the forthcoming Energy Strategy and third report on proposals and policies, the Scottish Government will undertake fresh analysis and consideration of electricity generation options, in line with previous commitments to largely decarbonise the electricity grid and enhance community renewables. Alongside energy generation, the way in which energy is distributed and consumed will become pivotal components of the Scottish Government’s Energy Strategy – taking a truly ‘whole system’ approach to delivering our long term climate change targets. (i) environmental considerations and, in particular, the likely impact of the targets on biodiversity 56. The Nature Conservation (Scotland) Act 2004 requires every public body and office-holder, in exercising any functions (including those relating to policy development and the planning process), to further the conservation of biodiversity so far as is consistent with the proper exercise of those functions. 57. The Scottish Government agrees with the CCC’s high-level assessment, set out in their March advice, that there are significant wider environmental benefits, including in terms of biodiversity, associated with the actions to reduce emissions, in addition to the central long-term global benefit of mitigating climate change. 58. The likely environmental impacts of setting specific annual targets for 2028-2032 has been considered as part of the pre-screening process required by the Environmental Assessment (Scotland) Act 2005 (ID: PRE\00731)42. It was concluded that the existence of a target or targets to reduce emissions does not in itself have an environmental effect. It is the measures that are implemented to attempt to achieve those targets that will have environmental effects. A full Strategic Environmental Assessment (SEA) was published alongside the second report on proposals and policies and considered the potential environmental effects of the measures it contained43. This assessment was conducted at a high-level and it is expected that, as individual measures are developed and taken forward, further more specific assessments will be undertaken to identify specific risks and mitigation

41

http://www.gov.scot/Topics/Statistics/Browse/Business/Energy/EIS2016 42

http://www.gov.scot/Topics/Environment/environmental-assessment/sea/SEAG 43

http://www.gov.scot/Topics/Environment/climatechange/scotlands-action/lowcarbon/meetingthetargets/SEA

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measures. SEA will also be undertaken, as appropriate, for the measures that will be set out in the third report on proposals and policies. (j) European and international law and policy relating to climate change 59. As part of their March advice, the CCC updated its analysis of international circumstances in relation to climate change policy. A key development has been the reaching of the UNFCCC Paris Agreement in December 2015, which represents the first truly global agreement to reduce greenhouse gas emissions. 60. The Paris Agreement aims to hold the increase in global temperature to well below 2°C above pre-industrial levels, to pursue efforts to limit it to 1.5°C and to reach net zero global emissions of greenhouse gases in the second half of the century. 61. As set out above, Scottish Ministers have written to the CCC to request their expert, independent advice on future Scottish targets and legislation in response to the Paris Agreement. In the meanwhile, setting the proposed annual targets for 2028-2032 under the current Act provides an appropriate stepping stone towards commitments to future legislation. 62. The Scottish Government recognises the importance of international collaboration in addressing a challenge such as climate change. In particular, the EU, which has set a target to reduce emissions by at least 40% by 2030, plays an important leadership role in international climate change policy. Participation in the EU Emissions Trading System has contributed to the reductions in Scottish emissions from large carbon-intensive users of energy achieved to date. 63. The recent vote for the UK to leave the EU does not change the requirements placed on Scottish Ministers by Scotland’s domestic climate change legislation. It may have implications for how these targets are to be met in future, but these are not yet clear and the CCC has committed to publishing further analysis on this in the autumn.

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Environment, Climate Change and Land Reform Committee

7th Meeting, 2016 (Session 5)

Tuesday 4 October 2016

SSI cover note on smoke control areas Smoke Control Areas (Exempted Fireplaces) (Scotland) Revocation Order 2016 (SSI 2016/292) Smoke Control Areas (Authorised Fuels) (Scotland) Revocation Regulations 2016 (SSI 2016/293) Procedure for Negative Instruments 1. Negative instruments are instruments that are “subject to annulment” by resolution of the Parliament for a period of 40 days after they are laid. All negative instruments are considered by the Delegated Powers and Law Reform Committee (on various technical grounds) and by the relevant lead committee (on policy grounds). Under Rule 10.4, any member (whether or not a member of the lead committee) may, within the 40-day period, lodge a motion for consideration by the lead committee recommending annulment of the instrument. If the motion is agreed to, the Parliamentary Bureau must then lodge a motion to annul the instrument for consideration by the Parliament.

2. If that is also agreed to, Scottish Ministers must revoke the instrument. Each negative instrument appears on a committee agenda at the first opportunity after the Delegated Powers and Law Reform Committee has reported on it. This means that, if questions are asked or concerns raised, consideration of the instrument can usually be continued to a later meeting to allow correspondence to be entered into or a Minister or officials invited to give evidence. In other cases, the Committee may be content simply to note the instrument and agree to make no recommendation on it.

Recommendation 1. The Committee is invited to consider any issues which it wishes to raise on these instruments.

Delegated Powers and Law Reform Committee 2. At its meeting on 27 September 2016, the Committee considered the following instruments and determined that it did not need to draw the attention of the Parliament to either of the instruments on any grounds within its remit. 3. A copy of the Explanatory Notes and the Policy Notes are included with the papers.

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SSI 2016/292 Title of Instrument: Smoke Control Areas (Exempted Fireplaces)

(Scotland) Revocation Order 2016 (SSI 2016/292) Type of Instrument: Negative Laid Date: 16 September 2016 Circulated to Members: 29 September 2016 Meeting Date: 7 November 2016 Minister to attend meeting: No Motion for annulment lodged: No Drawn to the Parliament’s attention by the Delegated Powers and Law Reform Committee? No Reporting deadline: 7 November 2016 Purpose This Order revokes the Smoke Control Areas (Exempted Fireplaces) (Scotland) Order 2014 (“the 2014 Order”). The 2014 Order made provision for certain fireplaces to be exempted from the prohibition, under section 20 of the Clean Air Act 1993 (“the 1993 Act”), of the emission of smoke in smoke control areas. EXPLANATORY NOTE As per purpose above and including: The Regulatory Reform (Scotland) Act 2014 amended section 21 of the 1993 Act to allow a list of the exempted classes or descriptions of fireplace to be published in such manner as the Scottish Ministers consider appropriate. That list is published at www.scottishairquality.co.uk. Consequently, the 2014 Order is no longer required. No Business and Regulatory Impact Assessment has been prepared for this Order as no impact upon business, charities or voluntary bodies is foreseen. POLICY NOTE The above Instruments are made in exercise of the powers conferred by sections 20 and 21 of the Clean Air Act 1993. The Instruments are subject to the negative procedure. Background The Clean Air Act 1993 enables local authorities to declare smoke control areas in which it is an offence to emit smoke from chimneys. Premises within a smoke control

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area must either burn smokeless fuels or use appliances that burn smoky fuel, such as coal or wood, without creating smoke. Section 20 of the Act generally prohibits the emission of smoke in smoke control areas. Section 21 of the Act allows the Scottish Ministers to make Orders exempting classes of fireplace from section 20, subject to conditions. However section 50 of the Regulatory Reform (Scotland) Act 2014 amended section 21 so that exempt fireplaces can now be included on a list published by the Scottish Ministers. Such fireplaces may be used to burn fuel that is otherwise unauthorised for use in smoke control areas, provided that no or limited smoke is emitted. It is, however, possible to burn authorised fuel in non-exempt fireplaces in smoke control areas. Section 20(6) of the Act allows the Scottish Ministers to declare, by regulations, these authorised fuels. Section 20(6) has been similarly amended as described above so that authorised fuels can now be included on a list published by the Scottish Ministers. Policy objectives The Order and Regulations revoke the Smoke Control Areas (Exempted Fireplaces) (Scotland) Order 2014 and the Smoke Control Areas (Authorised Fuels) (Scotland) Regulations 2014 (which listed the exempt fireplaces and authorised fuels), as these are no longer required. The Instruments will be distributed to all local authorities and, for information, to the Scottish Environment Protection Agency (SEPA). Local authorities are responsible for declaring and enforcing smoke control areas. Consultation and Impact Assessment The Instruments do not impose any new legal or financial burdens on business or industry, therefore no consultation or impact assessment was undertaken. When manufacturers or suppliers apply for exemptions, technical experts at Ricardo Energy & Environment are consulted in order to test the fireplaces and fuels. Only those fireplaces and fuels which comply with inspection criteria, when used under specified conditions, are recommended for use in smoke control areas. The fireplaces, which burn mainly wood, and the fuels included on the lists have been tested by Ricardo Energy & Environment on behalf of the Scottish Government and recommended for exemption and authorisation respectively. All models and fuels have passed the British Standard tests for smokeless operation. Financial effects The Cabinet Secretary confirms that no BRIA is necessary as the instrument has no financial effects on the Scottish Government, local government or on business. . Scottish Government Directorate for Environment & Forestry 9 September 2016

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SSI 2016/293 Title of Instrument: Smoke Control Areas (Authorised Fuels)

(Scotland) Revocation Regulations 2016 (SSI 2016/293)

Type of Instrument: Negative Laid Date: 16 September 2016 Circulated to Members: 29 September 2016 Meeting Date: 4 October 2016 Minister to attend meeting: No Motion for annulment lodged: No Drawn to the Parliament’s attention by the Delegated Powers and Law Reform Committee? No Reporting deadline: 7 November 2016 Purpose These Regulations revoke the Smoke Control Areas (Authorised Fuels) (Scotland) Regulations 2014 (“the 2014 Regulations”). The 2014 Regulations declared specified fuels to be authorised fuels for the purposes of Part III of the Clean Air Act 1993 (“the 1993 Act”). EXPLANATORY NOTE As per purpose above and including: The Regulatory Reform (Scotland) Act 2014 inserted subsections (5A) to (5C) into section 20 of the 1993 Act, which allow for fuels to be authorised by being included in a list kept by the Scottish Ministers and published in such manner as they consider appropriate. That list is published at www.scottishairquality.co.uk. Consequently, the 2014 Regulations are no longer required. No Business and Regulatory Impact Assessment has been prepared for these Regulations as no impact upon business, charities or voluntary bodies is foreseen. POLICY NOTE The above Instruments are made in exercise of the powers conferred by sections 20 and 21 of the Clean Air Act 1993. The Instruments are subject to the negative procedure.

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Background The Clean Air Act 1993 enables local authorities to declare smoke control areas in which it is an offence to emit smoke from chimneys. Premises within a smoke control area must either burn smokeless fuels or use appliances that burn smoky fuel, such as coal or wood, without creating smoke. Section 20 of the Act generally prohibits the emission of smoke in smoke control areas. Section 21 of the Act allows the Scottish Ministers to make Orders exempting classes of fireplace from section 20, subject to conditions. However section 50 of the Regulatory Reform (Scotland) Act 2014 amended section 21 so that exempt fireplaces can now be included on a list published by the Scottish Ministers. Such fireplaces may be used to burn fuel that is otherwise unauthorised for use in smoke control areas, provided that no or limited smoke is emitted. It is, however, possible to burn authorised fuel in non exempt fireplaces in smoke control areas. Section 20(6) of the Act allows the Scottish Ministers to declare, by regulations, these authorised fuels. Section 20(6) has been similarly amended as described above so that authorised fuels can now be included on a list published by the Scottish Ministers. Policy objectives The Order and Regulations revoke the Smoke Control Areas (Exempted Fireplaces) (Scotland) Order 2014 and the Smoke Control Areas (Authorised Fuels) (Scotland) Regulations 2014 (which listed the exempt fireplaces and authorised fuels), as these are no longer required. The Instruments will be distributed to all local authorities and, for information, to the Scottish Environment Protection Agency (SEPA). Local authorities are responsible for declaring and enforcing smoke control areas. Consultation and Impact Assessment The Instruments do not impose any new legal or financial burdens on business or industry, therefore no consultation or impact assessment was undertaken. When manufacturers or suppliers apply for exemptions, technical experts at Ricardo Energy & Environment are consulted in order to test the fireplaces and fuels. Only those fireplaces and fuels which comply with inspection criteria, when used under specified conditions, are recommended for use in smoke control areas. The fireplaces, which burn mainly wood, and the fuels included on the lists have been tested by Ricardo Energy & Environment on behalf of the Scottish Government and recommended for exemption and authorisation respectively. All models and fuels have passed the British Standard tests for smokeless operation. Financial effects The Cabinet Secretary confirms that no BRIA is necessary as the instrument has no financial effects on the Scottish Government, local government or on business.

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Scottish Government Directorate for Environment & Forestry 9 September 2016