Scottish Government

Executive summary

This is the final report under the Scottish Government contract CR/2007/53, "Mitigating Against Climate Change in Scotland: Identification and Initial Assessment of Policy Options". This project has been undertaken for the Scottish Government's Rural and Environment Research and Analysis Directorate by AEA, with support from the Centre for Ecology and Hydrology ( CEH).

The Scottish Government has announced its intention for Scotland to take a leadership role in tackling Climate Change. The Government recently consulted on the details of the Scottish Climate Change Bill, which is likely to set a mandatory long-term target to achieve an 80% reduction in emissions by 2050 against 1990 levels. In the shorter term the Government has also committed to reducing emissions in the period to 2011. Both these targets were set out in the Scottish Government's Economic Strategy in November 2007.

This study provides key evidence on the policy options for delivering Scotland's climate change objectives, including the 80% target. The objectives of the study were:

• To generate a range of policy options aimed at achieving reductions in net greenhouse gas ( GHG) emissions in Scotland;
• To conduct an initial assessment of the impacts of policy options in terms of costs and effects in Scotland;
• To conduct an initial assessment of the feasibility, affordability and likely public acceptability of each option in Scotland.

This study has addressed carbon dioxide (CO ₂) emissions from electricity generation, business, public sector buildings, housing, transport and land use, land use change and forestry ( LULUCF), methane (CH ₄) emissions from waste and agriculture, and nitrous oxide (N ₂O) emissions from agriculture. Together these sources represent nearly 90% of current Scottish GHG emissions. Emissions from sources not addressed by this study - mainly offshore emissions and emissions of hydrofluorocarbons - are expected to fall significantly over the period due to industry trends and the effects of policies in the baseline. However these other emissions sources may not fall by as much as 80% by 2050 - in which case the emissions considered by this study would need to fall by over 80%.

Historic and projected baseline GHG emissions from these sources in Scotland are shown overleaf. These baseline projections were developed for this study using information from the Scottish Greenhouse Gas Inventory ( NAEI 2007), the Scottish Energy Study, BERR's projections in the 2007 Energy White Paper and other sources. These projections include the impact of a wide range of existing policy measures. They suggest an overall reduction in GHG emissions from these sources of about 13% from 1990 to 2050, largely driven by anticipated changes in electricity generation, changes in waste management practice and energy efficiency improvements in industry and households. Emissions from transport and net emissions from ( LULUCF) are expected to rise over the period in the absence of further policies.

Baseline projections of GHG emissions in Scotland¹²

The study has identified and assessed a wide range of emissions reduction options for 2050 using information from literature review, consultation with key stakeholders and the authors' own expert knowledge. Many of the more familiar measures that are in place at present, do not feature in the list of options for 2050. This is because many of these measures are assumed to have already been fully implemented by 2050. Hence measures such as grants for cavity wall insulation in homes are not included. Furthermore, over the coming decades to 2050 there are likely to be significant technical developments that will offer additional potential for emission reduction. Hence there will be further policy measures associated with these new opportunities.

The policy options identified in this study have been assessed using a common framework and grouped into Very High, High, Medium, Low and Very Low priority according to their likely abatement potential and likely cost-effectiveness in 2050. This assessment also takes some account of uncertainty, likely public acceptability and other factors such as impacts on fuel poverty. Some of the policies with higher impacts in each group are shown in the table below, along with their estimated emissions abatement potential if implemented in isolation from other policies.

This process leads to definition of a set of scenarios for the assessment of abatement potential and costs:

• 2050 Business as usual / baseline / reference
• Adoption of 'Very High priority measures' (Group 1)
• Adoption of 'Very High' (Group 1) and 'High' priority measures (Group 2)
• Adoption of 'Very High', (Group1) through to 'Medium' priority measures (Group 3)
• Adoption of 'Very High', (Group1) through to 'Low' priority measures (Group 4)
• Adoption of 'Very High', (Group1) through to 'Very Low' priority measures (Group 5)

The policies allocated to each group are set out in Section 5. Having allotted policy options to these different groups, the emission savings can be summed, starting with Group 1, as these are generally the measures that make the most difference to total emissions and are the most cost-effective. Emission savings for each measure are recalculated as they are brought in to avoid double counting emission cuts already accounted for.

To reiterate, this is an initial assessment of possible options and the analysis that follows should be seen in this light. The costs are broad orders of magnitude, not precise estimates. All of these findings will need further work to assess feasibility and firm up the cost estimates.

As shown in the figure below, a very significant cut in emissions by 2050 from 1990 levels appears to be possible, if all the practicable measures identified are introduced and are effective. For the emissions sources considered in this study ³ these policy options have the potential to deliver by 2050 a reduction of over 75% on 1990 levels. Further reductions may be possible from the emergence of additional new technologies or from additional demand reduction measures.

Cumulative effect of measures in each group compared to 1990 emissions, the 2050 baseline and an 80% cut in 1990 emissions

The cost in 2050 of achieving an emissions reduction of 63% by implementing Group 1-3 measures is estimated to be about £1.7 billion ⁴ expressed in 2005 prices. This impact covers just the cost of implementing the identified measures and does not taken into account the wider economic and societal costs and the wider potential benefits. It is not possible to give a reliable estimate of the additional costs of measures to achieve a reduction of more than 63% as many of the measures in Groups 4 and 5 are very uncertain at this stage. These costs need to be set against the benefits of reducing not just GHG emissions, but also emissions of other air pollutants such as fine particles, SO ₂ and NO _x that will also fall as a result of decarbonisation. Research for the European Commission has demonstrated that these co-benefits of climate policy can be very significant.

Emissions savings and costs are subject to increasing uncertainty over time, particularly for emerging technologies. It is expected that costs will reduce as new technologies become more available and mass-produced, and this has been factored in where the information is available. The assessment does not include costs to develop and demonstrate the new technologies that underlie some of the policy options - these are difficult to assess and in any case these will not all be borne in Scotland. We have not taken account of all costs that may be significant, for example those associated with electricity grid upgrades linked to a widespread expansion of renewable electricity generation and with plant decommissioning. These are complex matters that are linked to the combination of generation and demand in a specific grid zone. In addition these costs are not included in BERR's assessments that accompanied the Energy White Paper. Hence the assessment does not account for all of the potential costs.

It has not been possible to fully account for inter-linkages, interactions and trade-offs between sectors, e.g. decarbonised electricity and the implications for choice of measures in end use sectors. Further analysis would be needed to address these issues, perhaps using an energy model such as the IEA's MARKAL model.

The result provides details of one way in which Scotland could achieve a very significant GHG reduction by 2050. This is not the only way by which this could be achieved, but the result serves to illustrate that a wide range of measures will be required and that the cost will progressively rise as more measures are put in place. Alternative ways by which a significant GHG reduction could be met, may feature different technologies and hence different policy measures, or may feature different views of feasibility or public acceptability.

This study has given a flavour of the sort of major emissions reductions that could be possible and the policies that might play a part in achieving them. Further work will be needed to develop and implement policies in each sector, to understand the likely implications of different choices at different times and to explore interactions between different sectors. Priorities for research are likely to include:

• Technical research to reduce the uncertainties associated with promising emissions reduction options and mapping out when and how they might best be introduced. Research topics might include:
  • Further assessment of the potential for Carbon Capture & Storage, including power stations and major industrial installations in collaborative schemes, e.g. sharing storage and pipeline facilities.
  • Assessment of the prospects for new vehicle technologies including plug-in hybrids and battery-electric vehicles, including their suitability for Scotland's rural population.
  • Assessment of the future demand for biomass (for housing, business, public sector and transport), and identification and prioritisation of sources of supply.
  • Mapping of opportunities for District Heating and Combined Heat and Power ( CHP), to assess the additional potential for GHG reductions by providing low carbon heat and power from local sources.
  • Assessment of the constraints and costs associated with expansion of the electricity grid to accommodate distributed (low carbon) electricity generation.
• Improvements to the Scottish Greenhouse Gas inventory so it can be used more effectively as a basis for Scottish emissions projections and the analysis of Scotland-specific policies. For example, the development of more rigorous energy balance data for Scotland, including more fuel-specific and more end-user consumption data by commercial, domestic and industrial sub-sectors, perhaps even to include fuel consumption by technology.
• Behavioural research, e.g. to assess how individuals can be encouraged to adopt efficiency measures or to change their lifestyles. Behavioural change programmes will be key to the successful introduction of new technologies and may lead to additional emissions reduction opportunities not quantified in this study. Behavioural research could also be used to explore how Scottish citizens are likely to respond to different scenarios of economic growth and climate change awareness/action, e.g. would a move to greener electricity make people more likely to leave the lights on or buy a bigger television.
• Further analysis of the long-term emissions reduction potential across all sectors with particular emphasis on the emissions reduction trajectory, i.e. which technologies should be introduced when, and how will this affect costs. A Scotland-specific GHG projection model building on the UKMARKAL model would be a possible starting point for this.
• Analysis of the emissions and abatement options associated with the minor emitting sources not addressed in this study, such as emissions from offshore oil & gas activity, CH ₄ emissions from natural gas distribution, and N ₂O emissions from transport.