Progress in reducing emissions in Scotland – 2023 Report to Parliament

In this report we monitor Scotland’s progress in reducing emissions and assess the
policies in place for delivering future emissions reduction.

Published:
20 March 2024

Type of publication:
Scotland reports

Country focus:
Scotland

Topics:
Carbon budgets, targets and progress

Contents

Chapter 3 - Cross-cutting issues

This chapter looks at cross-cutting issues in Scotland. Policy progress in governance, business and finance, just transition and skills, green choices and public engagement, UK emissions trading scheme, and adaptation is summarised.

Scoring criteria for assessing the Scottish Government’s policies and plans can be found in Annex 2. The colours (from green, representing ‘credible plans’, to red, representing ‘insufficient plans’) in the scorecards represent our assessment of the credibility of the Scottish Government’s policies and plans (see Table A3 in Annex 2). There are many policy areas where decarbonisation also depends on actions taken by the UK Government, so we have separately included an assessment (low, medium, or high) of the extent of the risk posed by UK Government actions within the narrative for each policy area in the scorecards (see Annex 2).

Key priority recommendations are given in Annex 1 and on our website, and they should be considered for the upcoming Climate Change Plan.

Our key messages are:

  • Governance: there has been some progress in improving relationships between central and local government to deliver Net Zero. But more clarity on division of roles and responsibilities and better coordination of actions across Scottish and UK Governments and local authorities is still needed.
    • The Scottish Government and the Convention of Scottish Local Authorities signed the ‘Verity House Agreement’, establishing how central and local governments will work together on shared priorities including just transition.
    • The UK and Scottish Governments need to work together effectively to deliver both governments’ climate targets. This requires greater transparency in the plans of both, clear responsibilities, and open and frequent consultation between Holyrood and Westminster.
  • People and business: the publication of the draft Energy Strategy and Just Transition Plan and the Heat in Buildings Public Engagement Strategy represent good progress on public engagement and the just transition.
    • More should be done to communicate the most impactful ways for Scottish people and businesses to reduce emissions and support them to make green choices across all sectors.
    • In the context of a just transition, the mixed handling of plans to close the Grangemouth refinery underlines the risk of omitting meaningful dialogue between communities, industry and government and the important role for the Scottish Government in ensuring a just transition.
  • UK Emissions Trading Scheme: the cap for traded emissions will be lowered from 2024, while the scheme will expand to domestic shipping, waste incineration and energy from waste sectors, and free allocations to aviation will be phased out from 2026.
  • Adaptation: climate change evidence in Scotland shows increasing temperatures, rainfall and sea levels, clear effects on people and ecosystems, and inevitable further impacts. Although some steps have been taken on adaptation policy, further urgent action is needed.

3.1 Cross-economy policies

3.1.1 Governance

The past year has seen some progress around governance, notably on the relationship between central and local government in delivering Net Zero. But there is still much more to be done to set the whole system up to effectively deliver the changes needed. Table 3.1 outlines progress and areas to be addressed.

Table 3.1

Policy scorecard for governance
Sub-sector / policy area Sector / sub-sector assessment
Partnership with local government Some risks (Y) Progress:

  • In June 2023, the Scottish Government and the Convention of Scottish Local Authorities (COSLA) signed the Verity House Agreement, setting out how central and local government will work together to deliver on shared priorities, including a just transition.
  • The Scottish Government published guidance to local authorities on how to fulfil their duties to publish Local Heat and Energy Efficiency Strategies and Delivery Plans by the end of 2023.[1]
  • The Climate Intelligence Service was set up to help local authorities deliver local climate action and benefits for their communities.[2] This aims to provide practical support to help local authorities build capacity and capability but is still developing its plans at present.

To be addressed:

  • The Scottish Government and COSLA should together develop an agreed framework for delivery of the Verity House Agreement’s priority of driving a just transition. This should include clear roles for each aspect of delivery and how this will be coordinated.
    • The Verity House agreement commits to developing a fiscal framework to co-develop budgetary plans to deliver against its priorities. Further, the 2023/24 PfG aims to continue the joint working group on sources of local government funding to identify options for reforms to Council Tax and other revenue-raising levers. These processes should be used to align funding settlements to the roles local authorities are expected to play in delivering Net Zero.
  • The Scottish Parliament’s Net Zero, Energy and Transport Committee’s report on the role of local government for Net Zero highlighted local authority access to capital and skills as key barriers to overcome.[3], [4] The Improvement Service identified more standardised national guidance, mechanisms for collaboration and support to align messaging, adapt resources and improve engagement as potential actions to address this.[5]

Risk due to UK Government: low

  • The Scottish Government is responsible for partnering effectively with its local authorities.
Policy alignment and coordination Significant risks (O) Progress:   

  • The National Planning Framework 4 includes sustainability policies against which planning applications need to be assessed.
  • The 2023/24 Scottish Budget included a high-level carbon assessment recording all spending that is linked to meeting emissions reduction targets.

To be addressed:

  • The Scottish Government should set out clear roles and responsibilities for delivering aspects of Net Zero and adaptation, as well as details of how these will be coordinated and accountability mechanisms (recommendation R2024-002).
    • In several areas, the Scottish Government has repeatedly failed to stick to timelines for delivering key strategies and policies. Stronger accountability mechanisms should ensure commitments are met, which will help build confidence in the Net Zero transition.
  • The Scottish Government should increase transparency and detail around its expected pathways to Net Zero, quantifying the abatement expected from the policies and plans in the new Climate Change Plan (recommendation R2022-402). This was one of the recommendations in Audit Scotland’s 2023 report, alongside stronger collaboration mechanisms between departments.[6]
  • As recommended by the Scottish Government’s Joint Budget Review and building on a recommendation from the Fraser of Allander Institute, the Scottish Government should take forward development of a Net Zero assessment process that would apply during the early stages of policy development. The Climate Emergency Response Group has published a briefing considering what this could look like.[7]
  • The Scottish Government should build on the approach in the 2023/24 Budget by assessing the expected emissions impact of each measure and capturing negative impacts.
  • The Scottish Government should work with the UK Government and Ofgem to develop effective ways of working between national and local governments and the newly introduced Regional Energy Strategic Planners.[8]

Risk due to UK Government: high

  • The UK and Scottish Governments need to work together effectively to deliver both governments’ climate targets. This requires greater transparency in the plans of both, clear responsibilities, and open and frequent consultation between Holyrood and Westminster. The lack of engagement prior to recent UK announcements undermines this.

3.1.2 People and business

Scotland has seen some progress in people and business areas, especially in the areas of just transition, green choices, and public engagement. Table 3.2 outlines progress and areas to be addressed across the areas of business, finance, just transition and skills, and green choices and public engagement.

Table 3.2

Policy scorecard for people and business
Sub-sector / policy area Sector / sub-sector assessment
Business Significant risks (O) Progress:  

  • Scottish Enterprise announced a focus on the energy transition as one of its three long-term ‘missions’ for Scotland’s economic development strategy. While no new incentives or funding were announced, existing schemes including the Green Jobs Fund and Business Energy Scotland continue to support Scottish business decarbonisation.

To be addressed:

  • The Scottish Government should build on the establishment of the new Small Business Unit to ensure sufficient incentives, advice, engagement, and financial support are available for Scottish businesses to improve energy efficiency, adopt low carbon heating and electric vehicles, for example by scaling up funding such as that provided by Business Energy Scotland.

Risk due to UK Government: medium

  • The UK Government holds some important levers for guiding business decarbonisation, including corporate regulatory requirements. However, economic development policy including support for businesses to respond to Net Zero is largely devolved.
Finance Mostly reserved Progress:

  • While no significant progress has been made in the area in 2023, a number of existing schemes continue, including the Green Heat Finance Task Force and a partnership between NatureScot and private finance to support and enable large-scale native woodland restoration.[9], [10]
  • In December 2022, the Scottish National Investment Bank committed to invest over £80 million in projects in offshore wind farm servicing, renewable energy skills development, energy management and storage and data analytics for reducing energy use.

To be addressed:

  • The Green Heat Finance Task Force recommended that the Scottish Government should provide a strategy to unlock private funding to install energy efficiency and low-carbon heating measures.

Risk due to UK Government: medium

  • The UK Government holds some important levers for guiding finance decarbonisation, including regulation of financial markets.
Just transition and skills Significant risks (O) Progress:   

  • The draft Energy Strategy and Just Transition Plan, published in January 2023, consults on how the government will deliver a just energy transition by increasing access to affordable energy, prioritising households at risk of fuel poverty, offering community benefits and shared ownership opportunities on renewable energy projects, and shifting investment and employment to renewable sectors in fossil fuel dependent economic areas.
  • In June 2023, three discussion papers were published on transport, buildings, and land and agriculture, providing evidence on the key risks for a just transition spanning impacts on jobs and skills, fuel and transport poverty, affordability issues, and biodiversity, among others.

In addition, the Scottish Government has:

  • Published a discussion paper on just transition for the Grangemouth industrial cluster that sets out how the government proposes to retain the cluster’s role within the energy supply chain while supporting jobs and local communities.[11]
  • Allocated £25 million from the Just Transition Fund to the Scottish National Investment Bank to leverage private investment in the energy transition in the North East.[12]
  • Included, in the Heat in Buildings consultation, flexibility and protections for specific groups and circumstances through exemptions, additional time or a modified version of the Standard.[13]
  • Committed, in the 2023/24 PfG, to a Green Industrial Strategy to realise the economic opportunities of the transition.
  • NatureScot also published an action plan for nature-based jobs and skills in the context of an insufficient workforce to implement nature-based solutions.[14]

To be addressed:        

  • In November 2023, the Just Transition Commission raised concerns that there had been ‘minimal engagement with workers, the community, or government ministers’ in relation to the announcement that Petroineos will close the Grangemouth refinery from 2025. The Scottish Government has an important role to play in ensuring a just transition for workers and local communities.
  • The Scottish Government should publish the Energy Strategy and Just Transition Plan in 2024. Building on the responses to the consultations that were published in 2023, this should include a plan that sets out specific actions and demonstrates how they will help make low-carbon options accessible and affordable.
  • Sectoral just transition action plans for transport, buildings and construction, and agriculture and land use should be published in 2024, setting out how risks for households and workers will be addressed in each sector, as identified in the 2023 discussion papers.
  • The Climate Emergency Skills Action Plan should be updated by the end of 2024, including specific timelines and responsibilities for developing education and skills policy that align with the upcoming UK skills strategy. The plan should specifically identify the skills required for the delivery of the Climate Change Plan and demonstrate how education and skills provision will help new entrants and existing workers meet changing skills requirements.[15]

Risk due to UK Government: medium

  • The UK Government can implement cross-economy policies that will affect the cost of low-carbon technologies, such as rebalancing energy costs which can reduce energy bills. It is also expected to deliver a skills strategy that should provide clarity on skills needs across the UK. The Scottish Government is best placed to identify the risks posed by the transition and develop policies to address them, including grants and training schemes.
Green choices and public engagement Some risks (Y) Progress:

  • Results from the first Scottish climate change public engagement survey were published in November 2022, while development of sectoral just transition action plans is being informed by workshops, engagement events and deliberative research.[16], [17], [18], [19], [20]

Further, the Scottish Government:

  • Published its Heat in Buildings Public Engagement Strategy in December 2023, which commits to further explore embedding public participation in policy making. It also commits to actions that will help people understand the changes they need to make, actively participate in shaping policy, and support household action to install clean heating.
  • Launched the £550,000 Climate Engagement Fund to fund local and national climate change engagement projects and formed the Climate Policy Engagement Network to provide a framework for stakeholders to help shape climate policy.[21], [22], [23] These initiatives aim to support organisations to act as ‘trusted messengers’ on regional climate action and to aid communication and engagement with a wide range of communities.
  • Continues to use the public-facing ‘Net Zero Nation’ website to increase awareness and promote household green choices around travel, home heating and buying and waste.[24]
  • Continues to fund Climate Action Towns, the Scottish Communities Climate Action Network, community climate action hubs and smaller community initiatives.[25]
  • Announced policies to make green choices more accessible, attractive, and affordable:
    • In October 2023, a six-month trial commenced allowing customers to travel on Off-Peak tickets at any time of the day on ScotRail services to encourage modal shift.[26] Scotland has strong concessionary public transport fares, including free bus travel for under-22s.[27]
    • Promoting active travel and funding loans for used and new e-bikes.[28]
    • Continuing to fund free advice around home heating and energy efficiency through Home Energy Scotland, as well as grants and interest-free loans for heat pumps, energy efficiency improvements and energy storage systems.[29], [30], [31]

To be addressed:

  • Communication and engagement should highlight the impact of diet and aviation and support low-carbon choices in these areas (recommendation R2024-003).

Risk due to UK Government: low

  • Lowering of ambitions and reluctance to consider demand-side measures at UK level may undermine consumer confidence and could therefore weaken efforts made by the Scottish Government to raise awareness of climate change and promote green choices.[32]

3.1.3 UK Emissions Trading Scheme

The UK Emissions Trading Scheme (ETS) covers some emissions in the electricity supply, industry and transport sectors. From 2021 to 2023, the cap on emissions for the traded sectors was set at 5% below the UK’s expected notional share of the EU ETS cap.[33]

The UK ETS Authority, which includes the Scottish Government, has announced the following changes to the UK ETS:

  • The cap on emissions for the traded sector will be lowered from 2024, resulting in there being 989.5 million allowances (where one allowance allows for the emission of 1 tCO2e) in total between 2021 and 2030, which includes:
    • 887 million allowances from the ‘central’ trajectory set out in the UK Government’s Net Zero Strategy.
    • 49 million allowances which are stated in the response to the Developing the UK Emissions Trading Scheme consultation as being for the purpose of ‘supporting a smooth transition for participants and enabling continued flexibility to mitigate market risks and carbon leakage’.
    • 5 million allowances to ‘ensure there is no sudden drop in allowance supply between 2023 and 2024’.
  • On top of this, an additional 29.5 million allowances will be retained in reserve ‘for future market management’.
  • The ETS will be expanded to the domestic shipping, waste incineration, and Energy from Waste sectors.
  • Free allocations to aviation (i.e. flights within the UK and from the UK to the European Economic Area covered by the UK ETS) will be phased out from 2026.

We welcome the tightening of the ETS cap, which will now decline sharply over time. However, its level has been set at a looser amount than in the ‘central’ trajectory of the UK Government’s Net Zero Strategy. This means that more effort will be required in areas of the economy not covered by the UK ETS.

3.2 Adaptation

The evidence of climate change in Scotland is already clear, with the average temperature 0.65OC warmer compared to 30 years ago, increased rainfall, and the sea level around the coast rising by 10-30 mm per decade. These changes are now having clear impacts on Scotland’s people and ecosystems, and further climate change in Scotland over the coming decades is inevitable no matter how rapidly global greenhouse gas emissions are reduced.

The Committee assessed Scotland’s adaptation progress in the November 2023 Scotland adaptation report.[34]

Key messages include:

  • There is a clear need for further urgent action on adaptation in Scotland. Since our previous adaptation progress report in 2022, recent weather events have continued to highlight Scotland’s ongoing vulnerability to weather and climate extremes.
  • Notable steps have been taken on adaptation policy, including the new Fourth National Planning Framework explicitly referring to climate resilience and nature-based solutions. Yet important gaps remain, including in water supply, drought resilience standards and leakage reduction targets.
  • Delivery and implementation remain slow, with only one of the 33 climate resilience outcomes set by the Committee showing progress.
  • Adaptation monitoring and evaluation is slowly improving but remains limited, preventing a full understanding of climate risks and adaptation progress.
  • The next national adaptation plan must embed adaptation in upcoming legislation and Net Zero policies. It should focus on driving delivery and unlocking more public and private investment.
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