Scottish Government

Energy

Facts and figures

5.7 The supply of energy is essential to run businesses, to deliver public services, to heat homes, and to transport goods and people. The Scottish Energy Study provides detailed information on the use of energy by each sector. The residential sector is the largest energy consumer (34%), with the transport sector in second position at 29% and the industrial sector in third position at 21%. Between 1990 and 2002 energy use in the residential and transport sectors increased significantly; this was balanced by a reduction in energy use by the business sector (the closure of Ravenscraig steel works being the major factor), resulting in little overall change in energy consumption in Scotland over the period.

5.8 Oil and gas are the major forms in which energy is consumed at 41% and 36% respectively, with 19% of energy consumed coming from electricity. Electricity in Scotland is generated from the following sources: nuclear (32%); coal (31%); gas (25%); hydro-electric (9%); wind (1%).

5.9 The energy sector is the largest source of direct GHG emissions in Scotland, and includes power generation, refineries, solid fuel transformation processes and the oil and gas industries. The sector produced 37% of Scottish GHG emissions (excluding removals) in 2003. Electrical power generation contributes most of the emissions from the energy sector.

5.10 Direct GHG emissions from the energy sector in Scotland increased by 3% between 1990 and 2003. In 2003, the main power producers (public electricity and heat production) contributed 76% to emissions in the energy sector, and these emissions increased by 22% between 1990 and 2003.

5.11 Changes to the mix of fuels used to generate electricity (changes in proportion of nuclear and low rainfall resulting in reduced hydro power) explain much of the year to year fluctuations in GHG emissions from this sector.

5.12 In contrast to the increase in Scottish emissions, UK emissions from the energy sector fell by 15% between 1990 and 2003. There are a number of reasons for this. The mix of generation capacity in Scotland is different from the rest of the UK. We have a higher proportion of nuclear and hydro-electricity plant, and hence a lower CO 2 emission may be expected. On the other hand, the fossil fuel generation in Scotland is from conventional coal and gas fired stations, whilst in England and Wales there has been increased commissioning and utilisation of combined cycle gas turbines ( CCGT) over the period. CCGT exhibit higher generation efficiencies than conventional thermal plants. Overall, emissions in Scotland are lower per unit of electricity generated.

5.13 In addition, Scotland is a net exporter of electricity to other parts of the UK. Of the electricity generated by major power producers, approximately 20% is exported to other parts of the UK. Fugitive emissions from fuels (emissions from the extraction and distribution of coal, oil and natural gas) contributed 6% of GHG emissions from this sector in 2003.

Policy developments

Energy policy: reserved or devolved?
Responsibility for energy issues is shared between the UK Government and the Executive. Overall energy policy is reserved to the UK Government, while the Executive has responsibility for the promotion of renewable energy generation, the consenting of electricity generation and transmission development, and energy efficiency in Scotland.

5.14 The UK Government's goals for energy policy, as set out in the Energy White Paper, ¹⁶ are to:

• put the UK on a path to cut CO 2 emissions by some 60% by 2050, with real progress by 2020;
• maintain the reliability of energy supplies;
• promote competitive markets in the UK and beyond; and
• ensure that every home is adequately and affordably heated.

5.15 The Executive is also committed to these goals and believes that they can be achieved together. The White Paper emphasises the importance of energy efficiency, renewable energy and emissions trading in delivering across all four goals.

5.16 The UK Energy Review was announced in November 2005 and a public consultation issued in January 2006 as part of that process. This is reviewing progress against all four goals and will consider future options for energy supply and demand, including the role of current generating technologies (eg renewables, coal, gas and nuclear power) and new and emerging technologies. It will also be considering energy use by the transport sector and the role of energy efficiency.

5.17 The Energy Review is clearly an important step in addressing medium and long-term energy issues in the context of climate change and the Executive will play its full part in that process to ensure that the Scottish perspective is taken on board.

5.18 The rest of this section examines:

• energy efficiency;
• the energy mix and new technologies;
• renewable energy (electricity, heat, microgeneration and the planning system); and
• building standards.

Energy efficiency

5.19 Energy efficiency has an essential role to play in a balanced approach to providing for Scotland's current and future energy needs and reducing carbon emissions. Energy efficiency can help meet a range of objectives: it can help tackle fuel poverty, improve business profitability, reduce the costs of delivering public services, as well as reducing our carbon emissions.

5.20 Energy efficiency measures are often the most cost effective and easiest way to reduce emissions by individuals, businesses and the public sector. The scope for reducing energy consumption and carbon emissions is significant; it has been estimated that energy efficiency has the technical potential to reduce energy consumption by up to a third, although the level of reduction that is economically achievable will be lower.

5.21 The Executive is currently developing the first Energy Efficiency Strategy for Scotland, due to be published later in 2006. This will encompass a more joined-up approach to energy efficiency interventions in the residential, business, transport and public sectors. The Strategy will require partnership working between the Executive and others to be effective, recognising that everyone needs to take responsibility for using less energy and using it more efficiently. The effectiveness of the strategy will be measured through the carbon savings it delivers and a specific carbon savings target will be set within it for all of the measures it covers. This will represent the collective contribution of energy efficiency measures to the overarching Scottish Target.

5.22 The residential and transport sectors have shown significant growth in energy consumption and therefore these sectors must be a focus for the Strategy. But these sectors are also the most difficult to tackle - involving changing the behaviour of millions of individuals. Recent increases in energy prices are acting to raise awareness of energy efficiency, but are also causing concerns, for example, about fuel poverty. The Strategy will also recognise that heating and lighting buildings makes up the majority of non-transport energy use. Scotland already has some of the highest standards for building energy efficiency in the UK - but, nevertheless, there are additional opportunities in this area. Significant opportunities are also available in the business and public sectors and as these sectors tend to be more straightforward and cost-effective to target they will also be a focus for the Strategy.

5.23 Linked to the Strategy, and reflecting a holistic approach, we will set out a range of measures to help cut energy-related emissions from the heating and lighting of buildings. Aside from transport, energy used for building heat and light is the major contributor to GHG emissions. These measures will encourage a range of investments in technologies such as microgeneration, local and renewable heat and energy efficiency.

5.24 Energy efficiency initiatives which are supported at present by the Executive, and which are covered in the relevant sections elsewhere in this Programme, include:

• The Central Energy Efficiency Fund ( CEEF) is a £20m revolving loan fund to assist the public sector make the initial capital investment to achieve energy savings;
• Loan Action Scotland is a similar revolving loan fund to assist SMEs, receiving £2m of Executive support;
• The Carbon Trust and the Energy Saving Trust are funded directly by the Executive to deliver initiatives to improve energy efficiency across the residential, business and public sectors, utilising major UK programmes, and developing those required to suit Scottish needs. Total funding is currently around £10 million;
• The EU Emissions Trading Scheme, which began in January 2005 has a significant bearing on Scotland's most intensive energy-using industries, particularly energy generators.

Fuel mix and new technologies

5.25 Overall energy policy is reserved to the UK Government and the Scottish energy mix depends to a large extent on economic, structural, and market factors. The Executive supports a shift towards more efficient and lower carbon means of supplying energy, including the development of renewables.

5.26 We recognise that nuclear power is currently a major source of low carbon electricity in Scotland. The Executive's current policy is not to support the development of new nuclear power stations whilst waste management issues remain unresolved. It was not appropriate to revisit this policy as part of the SCCP review given that the UK Energy Review and the Committee on Radioactive Waste Management's ( CoRWM) - which is considering the long-term disposal of radioactive waste - are not due to report until later in 2006.

5.27 We also recognise the contribution that can be made to the energy mix from cleaner coal technologies ( CCT), which can reduce emissions from coal-fired power stations. Carbon capture and storage ( CCS) offers a potentially large growth area in which Scottish businesses could take a lead. This involves capturing CO 2 emissions from power stations and other sources and transporting it for long-term storage in geological formations such as depleted oil and gas fields in the North Sea. A recent report prepared for Scottish Enterprise and the DTI¹⁷ highlights that 'the UK and Scotland in particular are well placed to exploit CCS because they have large sources of CO 2 located within a reasonable distance of geological formations suited for long-term storage'.

5.28 The Executive is considering options for supporting the development of CCS, which could deliver significant long-term savings in carbon emissions. We will also encourage the UK Government to invest further in exploring the feasibility of carbon capture and storage and to build upon the developments announced as part of the 2005 pre-Budget Report, including public consultation and collaboration with Norway on the issue.

Promotion of renewable energy

5.29 With global energy demand predicted to continue rising, the development of cleaner sources of energy is ever more urgent. Energy-saving measures must go hand in hand with the shift towards renewable energy.

Renewable electricity

5.30 We are committed to developing a vibrant renewables industry in Scotland. The Executive has targets to generate 18% of Scotland's electricity from renewable sources by 2010, rising to 40% by 2020. ¹⁸ It has been made clear that the 40% target is not a limit on the development of renewables. Interest from developers is such that we judge there to be enough projects already operational and consented to allow us to comfortably meet the 2010 target, and to set us firmly on the path towards 40% by 2020. It is clear that we have been successful in developing the renewable electricity generation market in Scotland to date.

5.31 The Renewables Obligation (Scotland), or ROS, is the key driver for promoting the development of renewables across Scotland. By placing an obligation on electricity suppliers to provide more of their electricity from renewable sources such as wind, wave, tidal, hydro and biomass, the ROS creates a strong financial incentive for the building of new renewables capacity to meet the resulting demand.

5.32 Although the bulk of development so far has been in onshore wind generation, we are committed to ensuring that as wide a range of technologies as possible receive the support they need to make an increasingly meaningful contribution. The biomass and marine energy sectors present much potential in the future.

5.33 This focus on achieving technological diversity is highly important. There is clearly a finite number of suitable locations available for the siting of onshore windfarms and the output from this source, while cumulatively significant, will be variable. Supporting increased deployment of technologies which are more predictable (wave and particularly tidal) and controllable (biomass), alongside our existing hydro capacity, will be important.

5.34 There is enormous potential to create a world-leading marine energy industry in Scotland. The European Marine Energy Centre ¹⁹ on Orkney is being expanded to add a tidal testing facility, and grant support has been awarded to the development of the Talisman deep water offshore wind demonstration project in the Moray Firth. Scottish Ministers recently announced their intention to examine whether more support might be provided to wave and tidal power by amending the ROS, and further work and consultation on this option is currently under preparation.

5.35 The Forum for Renewable Energy Development in Scotland ( FREDS) has published a number of reports aimed at accelerating the development of technologies such as marine, biomass and hydrogen, as well as examining other areas including skills. These include:

• Harnessing Scotland's Marine Energy Potential (August 2004);
• Promoting and Accelerating the Market Penetration of Biomass Technology in Scotland (January 2005);
• Scotland's Renewable Energy Potential: Realising the 2020 Target (June 2005); and
• Developing Skills for Scotland's Renewable Energy Workforce (September 2005).

Renewable heat and biomass

5.36 Policy support has played a major role in the development of renewable electricity in Scotland and we now need to consider how this can be applied to the promotion of renewable heat. In the residential sector alone, 80% of energy used goes towards heating and the potential to reduce emissions is significant.

5.37 There are a wide range of technologies which can produce renewable heat including biomass, ground source heat pumps, solar water heating, geothermal aquifers, and energy from waste. With our significant forestry and agricultural resources Scotland is well placed to become a major player in renewable heat and biomass production.

5.38 We commit to developing a Renewable Heat Strategy for Scotland by the end of 2007 which reflects Scotland's unique potential and circumstances. This will ensure market development is as successful as it has been for renewable electricity. If appropriate, a target for renewable heat will be included in that Strategy.

5.39 The Executive has accepted the findings of the FREDS report on the market penetration of biomass technology in Scotland which concluded that biomass could supply at least 450 MW of electricity in Scotland and employ over 2000 people. It suggested a funding gap exists for this emerging and more expensive technology and made a number of recommendations on wood fuel supply, demand, infrastructure and regulation. To address this gap, we have identified biomass (including forestry products) as a priority area in terms of support and are currently discussing a range of joined up measures to support the biomass sector in Scotland. Research has been commissioned to consider barriers to the development of a biomass industry and offer ways to overcome any hurdles identified.

5.40 The recent Communication from the European Commission ²⁰ on biomass encourages Member States and regions to develop national biomass action plans to tap into the potential for developing biomass energy from wood, wastes and agricultural crops. We will produce a Biomass Action Plan by the end of 2006. This will ensure that Scotland's biomass resource is properly supported and exploited and delivers additional carbon savings and economic benefits.

Small-scale renewables and microgeneration

5.41 The Executive continues to provide support to small- and micro-scale renewables through its Scottish Community and Household Renewables Initiative ( SCHRI).²¹ Set up in 2002, the SCHRI provides grants and expert advice on small scale renewable projects, including the installation of solar panels and wind turbines at sites such as community centres, schools and individual households. In December 2004, the Executive announced a three-year, £6.6 million extension to the scheme.

5.42 The SCHRI has proved extremely successful to date. It has allocated almost £5 million in grants, funding over 180 community projects and 350 household projects. An independent review of the SCHRI has been completed recently and is informing the Executive's thinking on the scheme's future shape and funding. This will ensure that it remains effective and delivers value for money, both in terms of capacity building and carbon reductions.

5.43 Microgeneration can play an important role in our drive to reduce carbon emissions from buildings, increase energy efficiency, as well as potentially creating employment (manufacturing and installation jobs). We are working closely with the DTI on their proposed Microgeneration Strategy, which is due to be published in April 2006, and the Low Carbon Building Programme ( LCBP), to ensure that Scotland's interests are addressed properly. In Scotland we will be taking a holistic approach - linking microgeneration and renewable heat with energy efficiency.

Renewables and the planning system

5.44 NPPG 6 applies to renewable energy developments in Scotland. It covers a range of renewable energy sources including wind, hydro, biomass (energy crops and forestry wastes), wave and offshore wind. NPPG6 is being revised and when it is published later in 2006 it will include locational guidance to help guide the spatial development of renewables installation.

5.45 Further advice is provided in Planning Advice Note ( PAN) 45 on Renewable Energy Technologies which provides information and best practice on renewables development, particularly larger installations such as wind farms and waste to energy plants. Recently, small scale projects, or micro-renewables, have become more feasible due to advances in technology and the economies of scale as demand grows. Planning Advice on Micro-Renewables is being prepared to better inform developers, planners and communities. It supports the development of a mix of micro-renewables in Scotland whilst ensuring any environmental concerns are addressed appropriately. It is due to be published in spring 2006 as an Annex to PAN 45.

Building standards

5.46 The building standards system and Scottish building regulations are devolved to the Executive and policy development and implementation is undertaken on the Executive's behalf by the Scottish Building Standards Agency. Building standards impact on the level of emissions and carbon savings in the business, residential and public sectors.

5.47 The current energy standards for buildings in Scotland were introduced in March 2002. The improvements made represent a 25% saving in energy terms over the previous set of standards. These standards apply when new buildings are constructed and existing buildings are altered and/or extended. Scotland currently has the most demanding levels of thermal insulation for buildings (including conservatories) in the UK.

5.48 A review of the building standards system in Scotland commenced in 2000 and this resulted in the Building (Scotland) Act 2003 and associated secondary legislation. The 2003 Act includes 'furthering the achievement of sustainable development' as one of the purposes for which Scottish Ministers can make regulations. The new system came into effect in May 2005. Some of the procedural changes adopted in the new system have enabled energy efficiency improvements, particularly when the use of existing buildings change.

5.49 A review of the energy standards, with a view to meeting the commitment made in the 'Partnership Agreement', is well underway. Public consultation is due in March 2006 and it is intended that implementation of the resulting revisions will be by May 2007. Proposals include:

• introducing a CO 2 emissions standard for new buildings;
• maintaining the best levels of thermal insulation in the UK, including measures for conservatories that are exclusive to Scotland;
• allowing designers more flexibility with insulation levels in new buildings if they adopt low and zero carbon building integrated energy generating technologies such as wind turbines or photovoltaics, which have low associated running costs;
• introducing low energy lighting for new dwellings; and
• using condensing boilers for replacement and alteration work in dwellings;

5.50 Early indications are that if the proposals are implemented they will deliver carbon savings in the region of 18-25% for new dwellings and 23-28% for new non-domestic buildings, when compared with the current elemental measures. Specific savings will largely depend on the fuel type and the size and shape of each building. In most cases these new-build proposals have the capability to deliver the best carbon savings of any standards in the UK.

5.51 Following the public consultation on energy standards we will launch one on the proposals for implementation of the EC's Energy Performance of Buildings Directive ( EPBD), namely on the Articles where compliance has still to be achieved: Article 7: Energy performance certificates; Article 8: Inspection of boilers; and Article 9: Inspection of air-conditioning systems. Until proposals are finalised, it is impossible to speculate on the potential carbon savings which will result from the measures referred to above, but they will present opportunities for energy conservation improvements.

5.52 In Spring 2006 a report will describe progress by the Executive in the continuation, introduction, or development of measures to further the sustainable development of new buildings, both domestic and non-domestic. It will identify the mechanisms available to control or promote certain aspects of buildings, such as building regulations, water byelaws, planning policy, conditions of public funding, and good practice guidance. It will describe work undertaken to further the sustainable development of buildings with regard to structure, fire, environment, safety and accessibility, noise, energy, amenity, materials, and integrated design. The report will highlight:

• proposals for changes to the Building Standards and guidance on structure, environment, accessibility, and energy (consultation March 2006);
• research work to inform a review of the noise and fire standards and the building regulations on durability and demolition;
• the longstanding role of building regulations in promoting sustainability through safety requirements that promote the robustness and resilience of buildings;
• the contribution of Communities Scotland to the accessibility and security of new social housing; and
• guidance by several parts of the Executive on the sustainable procurement of publicly funded buildings and sustainable design.

Energy Route Map