To address these, we call 1. address the imbalance in pricing for electricity and gas, to better incentivise deployment of zero emissions heating technologies; 2. accelerate decisions on the commit to an expanded programme of demonstration for hydrogen and further funding for carbon capture to enable increased blending of green gas in the gas network. This will support transitional steps, such as blends of hydrogen, for decarbonising the gas network; 4. extend and expand forthcoming able to flexibly take account of regional differences and the needs of a wide range of households, businesses and building types; standards, for example requiring gas boilers to be hydrogen-ready; 6. ensure UK primary legislation for heat networks creates powers for the Scottish Government to appoint a regulator to enforce consumer protection requirements 7. amend the VAT regime so that retrofit receives the 5% reduced rate. 60 Scottish Government frameworks and 3.2.69 Public sector organisations can set a strong example of climate action, and we will support them to take steps to reduce emissions. Our fund of at least £95 million energy efficiency of the public estate will support improvements in energy efficiency, as well as the replacement of existing heating 3.2.70 We will work collaboratively with the public sector to implement buildings standard. In alignment with this standard, public sector buildings should ensure that they are highly energy efficient and that heating is provided using renewable or low carbon systems. collaboratively with partners to facilitate uptake of zero emission heat solutions across the public Scottish businesses and industry 3.2.71 Currently, 50% of non-domestic buildings use zero emissions heat. remaining stock to transition by 3.2.72 We will support Scottish businesses to take measures to improve the energy efficiency of non-domestic buildings, and to replace existing heating systems with low carbon will provide enhanced advice and existing programmes such the Energy Efficiency Business Support scheme. Update to the Climate Change Plan | Buildings 111 3.2.73 To meet anticipated demand, Scottish businesses involved in the low carbon and energy efficiency supply chain will need to scale up the manufacture and deployment of energy efficiency measures and renewable or low carbon heating systems, as well as investing in the skills and workforce needed systems. The rate of acceleration some technologies such as heat 3.2.74 CCC research estimates that over 60% of emissions reductions to meet net zero will be predicated societal behavioural change. In the buildings sector, higher impact savings from behavioural changes are needed, driven by increased emissions reduction, particularly due to low levels of awareness and understanding of the connection support for all building owners and tenants on what delivering a net zero emissions buildings programmes particularly support the most vulnerable in society and households in fuel poverty. 61 3.2.76 The step-change required to meet these emissions reduction targets will see a significant increase in the assessment and improvement of homes, and with this the requirement for robust quality assurance and consumer protection. Clear and effective advice, information and complaints mechanisms are being developed as part of our quality assurance and consumer protection provisions within Energy Efficient Scotland 3.2.77 The Scottish Government believes strongly in international we have already forged Danish Government to benchmark our approach on heat and energy efficiency against best practice, with a focus on regulation and and we are active members of the Advisory Council of the European 3.2.78 We were one of the first Green Buildings Council’s Net Zero Carbon Buildings Commitment in 201861; our proposed approach to regulate to require new buildings to use zero or low emissions heat from 2024 is an important step in

112 Update to the Climate Change Plan | Transport

Update to the Climate Change Plan | Transport 113 3.3.1 There are unique challenges to reaching net zero emissions in transport. It continues to be Scotland’s biggest emitting sector, accounting for 35.6% of emissions essential in enabling people to move around and meet their daily needs. It is a derived where people live, work, learn are all key to the need to travel. Additionally, the technological such as aviation, maritime and heavy goods vehicles, are in the required to bring them to market. However, these challenges reflect of transport and, as a society, target presents an opportunity established by the first fall in transport emissions since 201363, stimulating the economy. It will allow us to instil substantial businesses and individuals, with benefits to health, wellbeing and 62 National Atmospheric Emissions Inventory 1990-2017 (published 2019) 63 National Atmospheric Emissions Inventory 1990-2017 (published 2019) 64 65 Carbon Account for Scotland (P4) 3.3.2 Our National Transport Strategy (NTS2), published on 5 February64, sets our direction for Scotland’s decades and embeds taking climate action as a core priority while also prioritising reducing inequalities, economic growth, and improving our health and wellbeing. NTS2 sets out our vision for transport and is clear about the need to This strategic aim will guide our change, respond to the impacts transition to net zero emissions. 3.3.3 Whilst a key focus will be on technological advances to green vehicles in Scotland, it is self- evident that managing transport demand and embedding behaviour importance. Cars currently account predominance of car use cannot us to look beyond technological developments and clearly states that the Scottish Government will not build infrastructure to cater for forecasts of unconstrained increases in traffic volumes. The for less sustainable transport modes and therefore, following the sustainable travel hierarchy, deprioritising single-occupancy

114 Update to the Climate Change Plan | Transport 3.3.4 COVID-19 has had a profound impact on transport. The reasons travel have been fundamentally transport reduced by up to 95% during lockdown in March to June 202066, resulting in significant support being required for public transport operators as passenger 3.3.5 Ongoing equalities impact people in particular, have been measures67, and future transport 3.3.6 Additionally, low confidence in public transport, the uncertainty over how long that will last, and private car use, present significant challenges.
In Transport Scotland’s 75% of people were very or fairly concerned about contracting or spreading the virus while using public transport, and private car or van has continued to be the Transport Scotland will continue to ensure that mitigation measures are in place to reduce the risk of 66 Transport Scotland, trends in transport and travel in Scotland for first six months of the COVID-19 pandemic, 67 Transport Transition Plan Statutory Assessments Interim Update September 2020, published 12 October 2020, accessible 68 COVID-19 Public Attitudes Survey Wave 10, published 19 November 2020, accessible publication/covid-19-public-attitudes-survey-data-wave-10/ 69 ONS, Coronavirus and Home Working in the April 2020, published July 2020 70 COVID-19 Public Attitudes Survey Wave 10, published 19 November 2020, accessible publication/covid-19-public-attitudes-survey-data-wave-10/ transmission on public transport, understand that concerns around using public transport are likely to remain alongside continuing uncertainties due to COVID-19. 3.3.7 However, amid the disruption, opportunities to live and work differently. There has been a mass professions. ONS’ latest research on homeworking found that 44% of Scotland’s workforce were working from home in April 2020 compared will work from home more often in the future.70 This provides an opportunity to consider how could offer benefits for people in a variety of jobs, while reducing demand for commuter travel. Such trends have been adopted quickly due to the pandemic in certain professions, though evidence is still emerging on the wider implications for some jobs or people’s personal developments closely, and we are already working across portfolios to ensure consideration is given to the potential for increased use of heating and lighting in homes, and reviewing the health and wellbeing impacts of remote working, as well as the potential

Update to the Climate Change Plan | Transport 115 benefits. Sustained remote and promote a better work/life balance and result in less exposure to air pollution, while also causing less congestion71. Reducing congestion, in turn, will allow public transport to run more smoothly and improve repurposing of existing buildings in town centres could also help support a reimagining of city and town landscapes by encouraging more businesses and services to be based there and enabling people 3.3.8 It is not just passenger transport that has seen shifting trends during COVID-19, the logistics and freight sector has also been affected. Public messaging around people limiting their movements and their contact with others to reduce the potential for transmission has seen rises in online shopping. COVID-19 pandemic; however, this restrictions were imposed during the pandemic72, with resultant 3.3.9 We know that the freight decarbonise through the use of models, as well as adapting to changing demands of consumers. markets for heavier zero emission vehicles, such as HGVs, are less 71 Angeliki Karanasiou et al, Assessment of personal exposure to particulate air pollution during commuting in European cities— Recommendations and policy implications, Science of the Total Environment, vol 490, 2014, p.785-797, accessed 20 72 developed than for cars, but are it is vital that we consider the their legacy as Scotland moves out of the pandemic. Scotland’s freight sector is fragmented and privately controlled, and therefore we must work collaboratively to promote solutions. There are ever- developing opportunities to make lower carbon deliveries, such as the introduction of consolidation centres, of pick-up and drop-off points, or the widespread use of e-bikes and cargo bikes. It is key local authorities and the industry review the challenge holistically to develop comprehensive solutions. 3.3.10 We also want to move freight from road to rail where possible. Rail freight has been key in keeping critical goods such as food and medicines on the move during the pandemic, highlighting the role, importance and opportunities of moving freight by rail. In addition, there is increasing interest in the potential to bolster the movement of ‘light’ or ‘express’ freight by rail. We will work to maximise all opportunities for rail freight during our recovery from the pandemic. 3.3.11 The Scottish Government has place-based agenda and support localism, such as the 20 minute Loves Local initiative). Among

116 Update to the Climate Change Plan | Transport where people live, work, learn and access goods and services, reducing distances travelled and the need to travel unsustainably. Moreover, it is key that transport implications are a cornerstone of planning considerations and radically accelerating emissions reduction, including by directing future development to the right locations. On digital access, the Scottish Government has a host of investments and initiatives to support individuals and businesses to promote digital connectivity Programme), digital adaptation, and to tackle digital exclusion, with the Digital Strategy for Scotland currently out for consultation. The Scottish Government implemented programmes to support a shift to sustainable transport modes via the £39 million Spaces for People physically distance, while also keeping them safe from traffic whilst exercising, shopping or commuting. Reduction in car traffic through reduced congestion. The £10 million Bus Priority Rapid the efficiency of available bus levels. Our 2020-2021 Programme for Government outlines legacy funding to build on the momentum of these investments in future 73 UKCCC, Building a resilient recovery from the COVID-19 crisis to Roseanna Cunningham MSP, 6 May 2020, 3.3.12 The transport sector can play a key role in delivering Scotland’s green recovery from the pandemic and ensuring a just transition. The positive long-term behaviours, travel infrastructure73. Ensuring sustainable travel will not only result in fewer emissions, but can also promote healthier lifestyles and better equality of access to transport connections. Helping to give people access to bikes and e-bikes, particularly in areas of multiple deprivation, can drive activity, and there are substantial already in place for us to build on. 3.3.13 People in low income households are more likely to travel by bus, travel by car, a trend that has taking a broad suite of actions to promote bus use and the policies and outcomes in this plan take bold additional steps forward.
The Just Transition Commission the over £500 million committed on bus priority infrastructure the Bus Partnership Fund and are expediting work on reallocation

Update to the Climate Change Plan | Transport 117 usage also tends to be more active than a car journey as travelling by bus typically involves a walk to or from the bus stop. Therefore the resurgence of a healthy bus COVID-19 s vital to securing a just transition and delivering our vision for a sustainable, inclusive, safe and accessible transport system. 3.3.14 In terms of job creation, economic regarding technological innovation. the finance, manufacturing and innovation sectors can help utilise positive change in our efforts to decarbonise transport. The Scottish investment in zero emissions buses is one such example. Moreover, investments such as the Scottish Dennis Ltd being a significant from the global health pandemic. 3.3.15 The CCC recommended that a is set out for Scotland’s future. Transport Scotland has launched Scotland’s Hydrogen Accelerator hydrogen technologies in Scotland. This supports a just transition by growing the Scottish supply chain, developing skills and expertise. We are also funding a joint project with Scottish Enterprise and the University of St Andrews on the cell technology to rail traction. Additionally, the Just Transition Commission recommended that an enhanced and accelerated national plan for charging infrastructure support the electrification of road transport. The Scottish Government already has a firm foundation of bold action, with the actions of this Plan update taking further strides 3.3.16 In keeping with the National climate and improve the lives of future generations by reducing inequalities and improving health. The derived nature of transport exemplifies how critical it is for climate policies to be firmly system to enable people to access jobs, services and opportunities with less need to travel or, when they do, to have easily-accessible 3.3.17 By 2032 our roads will contain passenger railways; and we will have begun to work to decarbonise challenging transport modes, such as HGVs, ferries and aviation. Car kilometres will have reduced by 20%, and sustainable transport will be the instinctive first choice for people. Our research into biofuels and hydrogen will have stimulated

118 Update to the Climate Change Plan | Transport private investment and innovation. By 2032, the pendulum will have of private car use, particularly single occupancy, to a society which has embraced more walking, wheeling, cycling, public transport particularly in urban settings. We will reduce reliance on cars in Scotland to reduce emissions but where people do use private cars, these will predominantly be electric and be in rural settings where public transport is less 3.3.18 By 2045, in line with our vision in NTS2, we will have a sustainable, inclusive, safe and accessible deliver a healthier, fairer and communities, business and visitors. Investment Hierarchies (below) will have informed infrastructure reducing inequalities and the need to travel unsustainably. We will not have catered for unconstrained increases in traffic volumes and will first make best use of existing assets. Consequently, our future transport and planning approaches, better utilisation of space and place-setting, and enhanced digital The Sustainable Travel Hierarchy The Sustainable Investment Hierarchy

Update to the Climate Change Plan | Transport 119 Emissions Reduction Pathway to 2032 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

120 Update to the Climate Change Plan | TransportRoute Map to 2032 £120 million over the next five years for Zero Emission Buses. Update to the Climate Change Plan | Transport 121 3.3.19 Achieving our vision for 2032 and beyond will take cross-sectoral effort which goes beyond transport, reducing people’s need to travel with more local access to goods and services. Likewise, digital connectivity and flexible working approaches will play a key role. The Scottish Government is therefore announcing this new commitment Scotland’s roads through improved transport and planning approaches, better utilisation of space and place-setting, enhanced digital COVID-19 is creating significant uncertainty on future transport trends and people’s behaviours, choices. Therefore, assuming the a phase to allow more certainty regarding future forecasting, a route map to meet this reduction will be published in 2021. This 3.3.20 These actions will support remote working. In keeping with infrastructure for unconstrained traffic demand75, phase 1 of the 74 Our 2020-2021 Programme for Government included a commitment to work with local government to take forward ambitions for 20 minute neighbourhoods where people can live, work and learn in communities close to home, as well as the launch of our Work Local Challenge to drive innovation in work place choices and remote working to support flexible working and our net zero objectives. 75 Commitment announced in our National Transport Strategy (NTS2), published on 5 February 2020 76 Announced in our 2020-2021 Programme for Government 77 Complementing powers in the Transport (Scotland) Act 2019 78 Announced in the 2020-2021 Scottish Budget and reaffirmed in our 2020-2021 Programme for Government second Strategic Transport Project Review (STPR2) will be published in early 2021. It will begin the process of reviewing the best use of existing assets and consider what new infrastructure may or may not need to be built. STPR2 and rail networks, and national support active travel and island connectivity, as well as providing an evidence base for investment decisions. It will also align with spatial plan and planning policies delivering carbon conscious places. 3.3.21 Initiatives to promote active travel and public transport will aid a shift to more sustainable choices and help to reduce reliance on cars. To encourage modal shift we will invest over £500 million in bus priority infrastructure76 to tackle the negative impacts of congestion usage. As part of this, last month we launched the Bus Partnership Fund77 to support local authorities to achieve their ambitions around with bus operators.
We are also progressing work to provide bus priority on the trunk road network, initially via managed motorways remain committed to delivering a National Concessionary Travel Scheme for free bus travel for preparations, including planning, undertaking a consultation, legal

122 Update to the Climate Change Plan | Transport review and due diligence. A review of discounts available on public transport to those under the age of 2679 has also begun, due for completion by the end of this year. Both of these projects will have social benefits and will help to embed positive travel behaviours 3.3.22 To support transformational active travel projects we have boosted our commitments on active travel, with a five year investment of over £500 million80, including infrastructure, access to bikes and infrastructure, we will promote a consolidated approach, aligning measures, to promote a coherent transport network. We want local authorities to develop ambitious joined-up plans across bus and active travel so they make sense as a whole. This will enable the delivery of high quality and safe infrastructure. To build on this we are committing an additional £50 million to ‘Active Freeways’ which will involve identification strategic active travel network, to provide segregated active travel routes on main travel corridors to city and town centres and major trip attractors linking communities throughout Scotland. Education and advocacy to encourage more people to choose active and sustainable travel will also be vital, and we will continue to support the Smarter 79 Announced in 2020-2021 Programme for Government 80 Boosted since 2018 CCP in 2020-2021 Programme for Government 81 Smarter Choices, Smarter Places (SCSP) was rolled out across Scotland in 2015/16. More information can be found 82 Free loans, grants and trials announced in 2020-2021 Programme for Government 83 We are continuing to support the provision of child and adult cycle training, and safety programmes including driver cycling awareness training through Bikeability 84 Announced in 2020-2021 Programme for Government 85 Announced in 2018-2019 Programme for Government Choices, Smarter Places programme offering new support to increase access to bikes for all including the provision of public bike and e-bike share schemes, particularly in areas of multiple deprivation and support the use of e-bikes and adapted bikes through interest free loans, grants and trials82. of child and adult cycle training and safety programmes including driver awareness training83. To help increase confidence in active travel choices, we will publish Scotland’s Road Safety Framework to 2030, ambitious and compelling long-term vision for road safety where there are zero fatalities or serious injuries on Scotland’s roads by 205084. 3.3.23 We will continue to develop and and benefits of shared transport bike sharing, ride sharing and multi-modal journeys. This will Service (MaaS) and promotion of peer-to-peer car sharing85. We are harnessing innovation within our transport system, investing up to £2 million over three years to develop MaaS in Scotland, and to increase awareness of the role and benefits of shared transport and look at the barriers to uptake monitoring requirement for the

Update to the Climate Change Plan | Transport 123 National Transport Strategy set out in the Transport (Scotland) people travel we will invest in data 3.3.24 We will take forward policy consultation in advance of drafting regulations and guidance to enable local authorities to implement workplace parking levy schemes that suit their local requirements86. Transport Scotland will also have local authorities to continue to local transport strategies have proper appreciation of the needs of climate change, as well as the impact of road users, including disabled motorists, cyclists and 86 Included in Transport (Scotland) Act 2019 87 88 Policies announced in 2018 Climate Change Plan, and boosted with further investment announced in 2019 Phase out the need for petrol and diesel cars and vans in Scotland by 3.3.25 We have boosted this target from CCC’s recommendation in its 2020 Progress Report for Scotland87. We are already delivering a range of measures to address the key barriers to Ultra-Low Emission Vehicle (ULEV) uptake, including investing £30 million to establish the fourth largest electric vehicle Transport Loan which continues to transform demand for electric vehicles across Scotland and has already provided over £80 million of funding to support the switch to low carbon vehicles88. Our new focus on used vehicles will help

124 Update to the Climate Change Plan | Transport be put off by the higher purchase price of ULEVs, benefit from the cheaper running costs associated. We will consider and develop new infrastructure in Scotland and are working with the Scottish Futures Trust to do so89. Furthermore, we will continue to promote the uptake of ULEVs in the taxi and private hire sector, promote the benefits of EVs to individuals and fleet operators and invest development of ULEV technologies. forward the initiatives in respect vehicles set out in the Connected 89 Boosted in 2019-2020 Programme for Government 90 91 Boosted in 2019-2020 Programme for Government 92 Boosted in 2019-2020 Programme for Government 3.3.26 We have a boosted commitment phase out the need for any new petrol and diesel light commercial vehicles by 202591 and to create the conditions to phase out the need for all new petrol and diesel vehicles in Scotland’s public sector Switched on Fleets programme has supported the decarbonisation of almost 2500 vehicles in Scotland’s fleets to date. We will continue to support the public sector to lead the way in transitioning to EVs including using public procurement

Update to the Climate Change Plan | Transport 125 Bus services are vital to a just transition to net zero. Bus is used proportionately more by people in lower socio-economic groups, a large number of people rely upon bus services for all manner of journeys, and, crucially, a full double decker can remove 75 single occupancy cars from the road. Cars account for 40% of Scotland’s transport emissions93.
We are supporting mode shift from car to bus through over £500 million of long term bus priority infrastructure funding to tackle the negative effects of congestion on bus, so that bus journeys are quicker, more punctual and reliable. The Bus Partnership Fund is also intended to bring forward further action and investment from local authorities and bus operators to provide their communities with an even better alternative to car use. In parallel, the Bus Decarbonisation Taskforce, made up of leaders from the bus, finance and energy sectors, are co-designing the pathway to a zero-emission bus fleet. This year Scottish Enterprise provided Alexander Dennis Ltd with £10 million in R&D grant support for manufacture of ultra-low emission buses, and the Scottish Ultra-Low Emission Scheme is supporting the purchase of 41 new electric buses, of which 35 will be manufactured in Scotland. 93 Carbon Account for Scotland (P4) 94 Scottish Greenhouse Gas Emissions 1990-2018, 2018/#:~:text=Source%20emissions%20were%2041.6%20million,cent%20between%202017%20and%202018. 95 Office of National Statistics - To reduce emissions in the freight industry to understand the most efficient methods and remove the need for new petrol and diesel 3.3.27 Freight accounts for 25% of transport emissions in Scotland94. Additionally, we have seen a rapid increase in online shopping and e-commerce across Scotland during COVID-1995. Therefore, helping to decarbonise the movement of goods and our overall logistics network are central pillars to Scotland’s efforts to reach its emissions reduction targets. Work has begun on this, and we have committed to phase out the need for new petrol and diesel vans by 2030 (as outlined above). To complement this, we have a new policy to engage widely across industries to create opportunities

126 Update to the Climate Change Plan | Transport innovations in logistics, such as consolidation centres, to reduce carbon emissions. We also have a sector investment in zero-carbon automotive sector and Scotland’s innovation community to explore emissions from the freight sector and make a significant positive contribution to the net zero target. establish a Zero Emission Heavy Scottish Enterprise to support innovation in the Scottish supply chain and will invest in a new zero emission drive train testing facility in 202196. We will also continue to deliver on the actions from our Rail Freight Strategy, consolidating and furthering our progress to date demonstrating how a shift from road freight to rail can be an important part of the solution. We are supporting rail freight with innovative regulatory targets to encourage growth and significant investment, including a £25 million ring-fenced fund for the period 2019 to 202497, helping to unlock opportunities for rail freight across the country. Since 2019, freight capacity has been improved across Scotland and the Freight Facilities Grant and Mode remain available to companies; they have already enabled rail freight services to remove millions of lorry miles from our roads. 96 Announced in 2020-2021 Programme for Government 97 Announced 2019: 98 Announced in 2019-2020 Programme for Government 3.3.28 We have also supported various trials and demonstrations of ultra- low emission heavy duty vehicles not connected with freight (such as refuse collections vehicles and gritters). We have established the Zero-Emission Mobility Industry Taskforce, comprised of leaders from the bus, energy and finance sectors, to ensure that the majority of new buses purchased from 2024 are zero-emission, and to bring this date forward if possible. 3.3.29 The Climate Change Plan 2018 policy outcome on ultra-low or boosted and we will work with the bus, finance and energy sectors to ensure that the majority of new zero-emission, and to bring this date forward if possible. Since workshop on opportunities from a just transition of the sector to zero emissions and commissioned whole-life costs of battery-electric also revised the green incentive Grant, run an initial round of the Scottish Ultra-Low Emission Bus

Update to the Climate Change Plan | Transport 127 Decarbonisation Taskforce. The Bus Decarbonisation Taskforce is made up of leaders from the bus, finance and energy sectors and has one year to co-design a pathway to a fully decarbonised bus fleet, remaining hurdles. We recognise chain and over the period of the Climate Change Plan and we will work to align government financial support of £120 million over the next 5 years with private sector investment to decarbonise the bus sector in a way that is good for passengers, businesses, and the workforce, as well as the climate. scheduled flights within Scotland 3.3.30 This new commitment aims to partnership with Highlands and Islands Airports Limited (HIAL)99, including action to decarbonise will also support trialling and decarbonisation, with a view to securing economic opportunities more detailed assessment in the 99 Announced in 2019-2020 Programme for Government 100 Announced in 2019-2020 Programme for Government 101 102 Announced in 2020-2021 Programme for Government forthcoming Aviation Strategy. Moreover, as part of that strategy, to explore options for incentivising aviation fuel, recognising that significant levers in this area are 3.3.31 The Scottish Government will sustainable growth in the recovery from COVID-19. We note the CCC’s management in relation to aviation emissions101, and as we work with the aviation industry to help restore connectivity, we will do so in a way that reduces the environmental effects of aviation growth, both in owned ferries will be low emission 3.3.32 We commit to continue to examine the scope for utilising hybrid and the public sector marine fleet as part of our vessel replacement commitment to work with the UK Government to support proposals Organisation (IMO) to significantly lower shipping carbon emissions in the global sector, including the option of introducing a global levy on marine fuel to fund research in cleaner technologies and fuels102.
128 Update to the Climate Change Plan | Transport By 2032 low emissions solutions will be widely adopted at Scottish 3.3.33 We will achieve this with our new policy to work with individual Association to consider a process practice initiatives for reducing Additionally, we will work with the ports sector and with its statutory consultees through the Harbour Order process to ensure future port developments are environmentally 103 Announced in Rail Services Decarbonisation Action decarbonisation-action-plan.pdf Scotland’s passenger rail services 3.3.34 We have boosted our commitment passenger rail services by 2035103, which will be delivered through (also benefitting rail freight) traction systems. In July this year, the Rail Services Decarbonisation Action Plan, which builds on the significant rail electrification removed a large number of diesel trains across the central belt, and

Update to the Climate Change Plan | Transport 129 freight from carbon-fuelled road- based vehicles to electric rail- based traction. Work is ongoing by industry partners to develop the initial schemes. We will establish an international rail cluster in Scotland to unlock supply chain opportunities using the interest at Longannet as a catalyst. This will be built around existing strengths in rail in Scotland and will seek to enhance the innovation and supply chain in the decarbonisation of our rolling stock and wider network. 3.3.35 Decarbonising the transport sector will require substantial action by the UK Government in areas where key powers remain reserved. In addition to the 2030 ban on the sale of new petrol and diesel cars and vans the UK Government must take action in other areas. The promoting parity with the EU’s car and van CO2 targets following full departure from the EU later this year, and set stretching CO2 targets 2020, requiring a high electric vehicle market share. Additionally to implement policies, including fiscal instruments, to strengthen incentives to purchase cleaner vehicles, including loan schemes. This will enable progression towards a complete discontinuation of new petrol and diesel cars and vans. We are also seeking further investment in public and active travel, including in high speed rail connections to Scotland, connecting communities and decreasing the need for single- 104 3.3.36 Fuel duty has a direct influence on the attractiveness of buying and running a petrol or diesel Commission for Scotland’s 2020 ‘To enable a managed transition to an inclusive net zero carbon economy road infrastructure, the alternative to the existing fuel and road taxation based structure’. welcomed this proposal and the Cabinet Secretary for Transport, Infrastructure and Connectivity has made representations to the UK Government in order to seek to progress on it. To enable reduced private car use, we will continue review options on Fuel Duty and Vehicle Excise Duty, in the context of the need to end unsustainable 3.3.37 If the UK Government joined Scotland in setting stretching targets for emissions reductions from new HGVs, it would address the rise in emissions and enable businesses to exploit opportunities to improve logistics and increase Moreover, we are calling on the UK Government to continue to invest in pilot and early stage roll-out of hydrogen projects and to develop a strategic approach to refuelling infrastructure, as well as continuing to support developments in biofuel technology. This will enable the full decarbonisation of technologically challenging modes, such as HGVs. 130 Update to the Climate Change Plan | Transport 3.3.38 We call on the UK Government to commit to a UK ETS (as discussed in more detail in the Industry chapter) that, together with the international arrangements being developed by the International (ICAO), continues to incentivise decarbonisation of international 3.3.39 The Scottish Government recognises the vital relationship between national, regional and local public sector organisations in achieving transport emissions reductions. We have already been working with local authorities and Regional Transport Partnerships on this, including on the collaborative Transport Strategy (NTS). The NTS provides the strategic context of decision-making that allows local and regional authorities to continue their work to decarbonise transport and reduce transport 3.3.40 Public Sector bodies recognise the level of ambition required to see the scale of change needed on transport, as Scotland’s largest authorities and Regional Transport Partnerships, will be increasingly important to garner support for this shift, delivering local measures that encourage use of active and sustainable transport and reduce car use. Transport Scotland will also work with these key local and regional partners to continue to ensure that local and regional developed or updated, e.g. parking strategies, support transport’s contribution to Scotland’s climate change targets. For example, we authorities to support temporary road space re-allocation for active travel, and we will work with local authorities on permanent schemes where appropriate. We will also work closely with local authorities on the further measures that will necessary to dissuade car use; for example, bus prioritisation in town centres and parking restrictions. 3.3.41 Local authorities can implement most polluting vehicles. Councils local strategies or approaches provisions contained in Part 7 of the Transport (Scotland) Act 2019 provide local authorities 3.3.42 Furthermore, we will continue to support local authorities to green their bus, HGV and other while also considering further additional ways to reach net zero in their localities. This may include infrastructure, such as consolidation centres, expanding electric vehicle

Update to the Climate Change Plan | Transport 131 infrastructure or continuing to help change behaviours through parking regulations or education campaigns. Scotland’s seven Regional Transport Partnerships (RTPs) also have a strategic role to play in the public emissions. The RTPs are listed as relevant public authorities required to publish an annual report on their climate change duties as required by the Climate Change (Scotland) 3.3.43 There are legacy transport and related environmental issues with how our existing cities, towns and wider settlements, including can to support liveable places and employment locations which are accessible by walking, wheeling and public transport, discouraging car use, while continuing to ensure with reduced mobility.
We will therefore support local authorities to consider the implications for planning and land use decisions, strengthening application of the sustainable transport hierarchy patterns, including by applying concept. This includes prioritising development in locations that are well located in relation to existing infrastructure and services, as well as considering where we locate new schools, workplaces, shops and services using a place-based to travel. It is also particularly important that local authorities disincentivise car use in these 3.3.44 We will continue to work collaboratively to ensure that when planning decisions are made they are supported by stronger policies that prioritise accessibility travel, avoiding building-in car embed the vision and priorities of the National Transport Strategy within the development planning process, and will have a positive make them, delivering long-term benefits to air quality, emissions reduction and improving physical Scottish businesses and industry 3.3.45 Achieving Scotland’s emissions reductions targets, both in the transport sector and more widely, is a national endeavour with all sections of society having a role to play. Scottish businesses and industry are vital to our successful economy, and transport connects together. We want to work with businesses and industry to enable them to invest in and implement policies that will help Scotland to reach our targets as part of a green recovery from the pandemic, while

132 Update to the Climate Change Plan | Transport 3.3.46 The CCC has recommended that a green recovery requires businesses to explore and disclose climate risks and to make plans105. We are asking businesses to consider practices where these are viable closely the potential for business travel plans to be developed and implemented. We are also asking businesses to support employees to reduce the number of flights taken for business purposes and to enable digital connectivity meetings. The Scottish Government encourages businesses to consider and to support and incentivise cycling and/or public transport business journeys. Where possible, employees to access zero emission transport to work, and to help address affordability of transport as a barrier to employability. The Scottish Business Pledge106 already exists, and we are asking businesses to take forward the 3.3.47 Businesses in Scotland import, around the country and beyond, including key Scottish exports that are essential to our economy. We ask that businesses consider 105 CCC, Building a resilient recovery from the COVID-19 crisis to Roseanna Cunningham MSP, 6 May 2020, 106 ways to reduce their transport businesses should use rail rather than road to transport goods to market, and support consolidation centres in relation to freight and e-commerce. There are also opportunities around last mile deliveries to electrify van fleets, or to use e-cargo bikes to deliver encourage businesses to welcome encourage people to shop, live 3.3.48 Individuals have a significant reduce emissions from transport. We therefore ask that individuals to consider their transport choices holistically and to consider their need to travel on a daily basis. restrictions are lifted, those use online conferencing facilities, rather than travel for employment When travelling to work, we are encourage individuals to leave the car at home where possible, and use public transport, walk or cycle for those journeys. Similarly, when travelling to school or for leisure purposes, and especially for short journeys, where you can we ask that you take the bus, cycle

Update to the Climate Change Plan | Transport 133 or walk. The Scottish Government work, shop and socialise locally, wherever possible. This will help reduce emissions from driving to other more distant locations, and has the potential to help revitalise local communities. Our recently Framework 4 position statement sets out that a significant shift is required to achieve net zero including removing the need for planning permission for active travel and electric vehicle charging points so that we can roll-out 107 Fourth National Planning Position 3.3.49 We recognise that the Scottish decarbonised without international engagement. Reducing emissions international policy approach. and the International Maritime Organization (IMO) to reduce the environmental impacts of aviation and shipping. For other sectors we will seek to engage with countries and cities around the world in international organisations such as the Transport Decarbonisation Alliance to accelerate collective transport emissions worldwide. 134 Update to the Climate Change Plan | Industry

Update to the Climate Change Plan | Industry 135 3.4.1 There is no doubt that Scottish industry has much to gain from transition to a net zero economy. sector in a just and fair way, that leaves no one behind, will help the sector to grow and compete in the economy of the future, capturing opportunities and sustaining and creating jobs and wealth across 3.4.2 There has been a considerable decline in Scotland’s industrial emissions since 1990, falling by 1990 and 2018. This was driven by the closure of heavy emitting sites, particularly in the steel and paper sectors, but also by the more energy efficient technologies and processes. By 2032, emissions need to decrease by 43% on 2018 levels while Scottish industry remains globally sustainable and 3.4.3 Emissions from industry continue to constitute a large proportion, of activities across a diverse range of sectors, predominantly manufacturing, as well as mining and construction. Combined, these sectors are fundamental to the Scottish economy, contributing £26 billion annually and employing 108 Deep Decarbonisation Pathways for Scottish Industries to be published alongside the Hydrogen Policy Statement in 109 Carbon leakage refers to the situation that may occur if, for reasons of costs related to climate policies, businesses were to transfer production to other countries with laxer emission constraints. This could lead to an increase in their total emissions. The risk of carbon leakage may be higher in certain energy-intensive industries ( Scottish Government commissioned research108 from Element Energy Scotland’s large industrial sites could feasibly reduce by 80% or more by 2045, while maintaining additional efforts to tackle residual emissions, potentially through Negative Emissions Technologies taken in other sectors, could be consistent with a net zero pathway.
3.4.4 Within the Industry sector, because of the balance of reserved and devolved responsibilities, progress is often dependent on UK Government and/or international remains a significant risk that decarbonising faster than the rest of the UK and Europe could lead to carbon leakage109. Both support for investment and a level regulatory playing field is therefore needed. Government is ensuring that the its role in decarbonisation, the opportunities this can bring, and 3.4.5 There are opportunities for the industrial sector; for example, capture and storage (CCS) network achieve net zero emissions as it underpins action for industrial

136 Update to the Climate Change Plan | Industry Scotland is well positioned to capture economic benefits from investment. Globally there are already in operation, including in Norway, USA and Japan, with nearly 40 more in construction and development. CCS is a proven opportunity if commercialised at 3.4.6 Another significant opportunity is the use of hydrogen to displace fossil fuels in industry, requiring development of regional hydrogen production facilities, and also for other sectors such as heat, transport and electricity. The for Scottish Industries report, cited above, reiterates the critical well as electrification and energy 3.4.7 The COVID-19 crisis has had, unprecedented effect on Scotland’s industrial labour market. Workers unplanned shifts can exacerbate inequalities. Interrupted supply chains have highlighted domestic vulnerabilities and the need for local and national resilience. Now, more than ever, we need a just transition that supports sustainable economic growth and jobs, whilst ensuring no one is left behind. 3.4.8 The principal industrial decarbonisation challenges and impacts have been amplified as a result of the COVID-19 pandemic. A primary challenge is the ability and willingness of companies to finance industrial decarbonisation investments at this time of great global, national, financial and social uncertainty. In the current resources are severely limited with many companies prioritising long-term transition to net zero 3.4.9 In supporting industry to recover and retain jobs, we will need to identify and capture green market opportunities, including support for domestic supply chains through smart procurement, and reskilling and retraining skilled workers to access green jobs in the near and 3.4.10 A just transition will be an essential the industry sector. This means supporting industry to transition in a way that is fair and where positioning industry to capture the opportunities from net zero. A just transition must be delivered in partnership between government and industry as well as with places, regions and local communities. Such a partnership approach is being demonstrated, with initiatives such as the Grangemouth Future Industry Board, Scottish Industrial Decarbonisation Partnership, and

Update to the Climate Change Plan | Industry 137 North East CCUS (NECCUS), which will be described later in the 3.4.11 The CCC recognises the challenge of pacing and sequencing policy interventions and decarbonisation timing of industry’s strategic decisions and the capital intensive infrastructure. The Just Transition recovery (July 2020) states that leveraging private investment is an ‘absolute necessity’, and is a challenge in the current economic climate. That is why the Scottish the Scottish Industrial Energy private investment tailored to the particular characteristics of our industrial manufacturing sites, or clusters, and their supply chains. 3.4.12 A key element of securing a just transition is to create and protect employment as we decarbonise our industries. Looking ahead, emerging energy technologies such as Carbon Capture Utilisation and Storage potential to safeguard employment decarbonise industries, as well as gearing up the supply chain in terms of manufactured goods and services. to expand our evidence base on economic assessment of CCUS in Scotland which will consider the associated jobs within a broad range of scenarios for the development 110 Centre for Energy Policy, University of Strathclyde (2019) The economic opportunity for a large scale CO2 management industry in 3.4.13 It is estimated that by 2030 45,000 UK jobs could ultimately be associated with Scotland securing 40% of the carbon storage element market. By 2050 this could rise to between 22,000 and 105,000 jobs, and more as the industry extends to low carbon fuel supply110. Our currently underway will provide us with greater clarity and Scotland- specific job estimates over a broad range of development scenarios. 3.4.14 We have carried out economic impact analysis as part of the Hydrogen Assessment Project. The potential scale of the economic opportunity from the production of hydrogen has been calculated UK and Europe. The gross impacts by 2045 across three scenarios to over 300,000 jobs protected between £5 billion and £25 billion. These figures are based on a range of current views and assumptions and we are treating these figures as illustrative, but nonetheless they depict a significant potential 3.4.15 Scotland’s strategic energy intensive industrial (EII) sites and the skills therein, such as those assets in the energy transition. It is key that a trajectory is set to support business, give confidence

138 Update to the Climate Change Plan | Industry protects employment and allows for growth. Doing otherwise will undermine or restrict the ability of Scottish industry to compete in global markets, with the risk operations to other countries with less ambitious climate measures. EU to be at risk of relocating, predominantly in manufacturing, Scotland, have an annual turnover of around £19 billion, and account 3.4.16 Scotland’s Future Skills Action Plan will also ensure the continued of skills across the industrial sector, necessary to support a low carbon transition and to safeguard jobs. The National Manufacturing Institute Scotland is included in this broader Action Plan, and will establish a Manufacturing Skills Academy to develop a catalogue of advanced manufacturing modules. 3.4.17 The Scottish Government is Skills Alliance, a newly created and cross energy collaborative group established to develop an integrated skills strategy for a vibrant, net zero energy industry.
The work streams mapping Career Programme; delivery of an integrated energy apprenticeship scheme by 2022; and longer-term aligning all energy training and 3.4.18 Negative Emissions Technologies remove greenhouse gases from the atmosphere on a permanent basis through the use of carbon capture 3.4.19 The Industry sector provides a waste gasification with CCS is a heat, steam and oxygen to convert biomass or waste to hydrogen for industrial use, and where carbon can then be sequestered. Utilising can be used to manage emissions from distributed sources. DAC is a complementary technology, and not an alternative, to traditional 3.4.20 Delivering NETs in Scotland as part of our pathway to net zero has the potential to deliver substantial benefits. Existing industries, which are currently some of Scotland’s largest carbon emitters, may be business model, actively reducing 3.4.21 NETs in industry is, however, applications. We describe these, our plans to better understand their potential, and our ambition

Update to the Climate Change Plan | Industry 139 St. Fergus is currently the location where 35% of the UK’s natural gas is brought to shore. In the next decade, projects planned at St Fergus could see it transform to a centre for Scotland’s industrial decarbonisation, demonstrating and scaling emerging new technologies, and generating opportunities for new markets. These activities could unlock and enable decarbonisation in other industrial centres across Scotland; creating an integrated network to support Scotland’s industrial sector in its Utilising existing offshore transport infrastructure, Acorn CCS will create Scotland’s first carbon capture plant, capturing and storing CO2 at the St Fergus gas plant. The project aims to be in operation from 2024 and could remove 340,000 tonnes of CO2 per year. Although initially a relatively small project, Acorn CCS will act as a major clean growth catalyst. By commercialising CCS, it will establish the technology and open up opportunities to access and capitalise on Scotland’s vast offshore storage developing in parallel to Acorn CCS, will reform North Sea natural gas into clean-burning hydrogen. It is expected to be operational in 2025, creating a low carbon fuel which presents various market opportunities. A high proportion of the CO2 emissions created from generating the hydrogen will be safely removed and stored using Acorn CCS infrastructure. The to blend with existing natural gas, initiating decarbonisation of heat and industry across Scotland, or to provide Aberdeen Vision is a project led by Scottish Gas Network (SGN) that would take the hydrogen produced at St Fergus, transported via a new 100% hydrogen pipeline, to the gas network in Aberdeen City, introducing an initial 20% hydrogen blend to support the city’s decarbonisation. Utilising projects on Scotland’s North East Coast could see this contribution increase to 100%. The project could, thereby, provide a route for decarbonisation in the region, while supporting the oil and gas industry to transition to the production of blue and green hydrogen. Hydrogen is also an exportable product, with potential markets development at Peterhead Port with good transport routes to St Fergus could open up international shipping routes for the export of hydrogen and the complementary import of CO2 from Europe, which would be stored by Acorn CCS in the North Sea. The international trade in the gases would generate income in Scotland’s North East and anchor St Fergus as an internationally renowned centre for

140 Update to the Climate Change Plan | Industry Establishing CCS infrastructure will provide opportunities for further negative emissions technologies to be developed, initially at St. Fergus, where there is potential for the UK’s first Direct Air Capture (DAC) plant, and then across Scotland, as CCS transport infrastructure projects develop. decarbonisation being taken at St. Fergus though the co-location of emerging technologies and infrastructure, will demonstrate what can be achieved in other industrial centres across Scotland to increase the options for industrial decarbonisation and maximise the economic opportunities these locations present for our net zero future. 3.4.22 By the early 2030s, Scottish industrial sites will be global exemplars on a sustainable growth trajectory, having benefitted from energy efficient technologies, and a supportive public/private appropriate infrastructure will decarbonisation, including through deployment of CCS technologies, electrification or operational production and utilisation of green 3.4.23 Our industries will be competitive in global markets for low carbon products produced in Scotland, supports low carbon industrial innovation and maximises export businesses will have access to cement, chemical and glass sectors. support the delivery of low carbon energy, transport and buildings to society, as well as the transition to North Sea Midstream Partners (NSMP) Limited

Update to the Climate Change Plan | Industry 141 3.4.24 This transition will be managed to ensure that Scottish industry and businesses will maintain and grow their global competitiveness skilled jobs and ensuring that sustainable industrial innovation. energy generation, highly skilled 3.4.25 The extensive potential for renewable energy generation, the presence of major subsurface CO2 storage sites, and the availability infrastructure in the North Sea, opportunity to develop a Scottish and aims to develop into a much storage network, bringing with it significant economic potential, not least from the shipped import of CO2 via Peterhead Port by as early as 2025 from Scotland’s industrial central belt, other UK regions and European nations where CO2 3.4.26 In 2045, the industrial sector world leader at the forefront of innovation, skills, and fair, quality Emissions Reduction Pathway to 2032 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

142 Update to the Climate Change Plan | IndustryRoute Map to 2032

Update to the Climate Change Plan | Industry 143 3.4.27 Policies to deliver industrial process efficiencies, given the and the communities where they are located.
A properly sequenced decarbonising Scotland’s industrial sector offers the chance to position Scottish industries and supply Emissions Trading Scheme (ETS)111 3.4.28 The key mechanism to decarbonise the Industrial Sector has been the EU Emissions Trading System preference is to establish a UK ETS jointly with the three other UK administrations, which is linked the EU ETS and maintains a carbon price that incentivises industrial 3.4.29 As announced by the four transition for industry112. The UK ETS will have an interim emissions cap 5% lower than the current EU ETS cap, and this will be reviewed following the CCC’s advice on the Sixth Carbon Budget, and amended by January 2024 at the latest. 111 Boosted in June 2020 announced in joint Government response to consultation on future of UK carbon pricing (publishing.service.gov.uk) 112 Joint Governments’’ Response on UK ETS June 2020: uploads/attachment_data/file/889037/Government_Response_to_Consultation_on_Future_of_UK_Carbon_Pricing.pdf 3.4.30 The Scottish Government’s preference is to link the UK ETS to the EU ETS, to continue to provide a level playing field for Scottish industry and protection against caps reduce (both in the UK ETS and the anticipated tightening of the EU ETS cap following an EU 3.4.31 We will also continue to work with the UK Government on future evolution of the UK ETS, which could include expanding the scope in future phases, and urge the UK Government to remain aligned to future EU developments in carbon Support for commercialisation of Carbon Capture Utilisation and 3.4.32 CCUS is essential to reach net zero emissions, as identified by the CCC, and is a key to industrial decarbonisation. It is expected decarbonisation technology for key sectors of Scottish industry. 3.4.33 The commercialisation of CCS is also necessary for NETs, which are needed to reduce emissions at the rate necessary to meet our climate change targets. We will take action to better understand the potential of each of these technologies in commissioning detailed research. that the market and regulatory systems are in place to support

144 Update to the Climate Change Plan | Industry 3.4.34 Scotland’s vast potential for offshore CO2 storage, and legacy oil and gas infrastructure and skills, provide internationally significant enable us to remain internationally CCS Project located in the North East of Scotland at the St. Fergus uniquely placed to be the least- cost opportunity to deploy a full chain CCS project in the UK and also provide carbon management 3.4.35 Acorn CCS is anticipated to be operational by 2024 and is well placed to attract support from the UK Government’s £1 billion CCUS Infrastructure Fund. Once the CCS infrastructure has been established, the Acorn Project will enable an economic opportunity for the deep water Peterhead Port and become a catalyst for clean blue hydrogen production aligned 3.4.36 Further support and investment in of a number of stakeholders and advisory bodies, including the CCC, Climate Emergency Response 3.4.37 We are announcing a new Fund of £180 million that will development of NETs in Scotland. projects in line with our Hydrogen Policy Statement, and a further £80 million of this funding will be directed to projects supporting the development of a CCS transport further enable NETs projects to develop in Scotland. This funding will help to deliver emissions reductions, and sits alongside our ambitious innovation and energy transition programme including within the marine environment. Industrial Cluster Representation 3.4.38 The Scottish Government has industry-led alliance drawn from industry, academia, membership organisations and private sector industrial cluster with an aim development, and to secure the first UK CCUS project in Scotland. 3.4.39 NECCUS has used its position as a Scottish industries representative (SNZR), attracting over £800,000 of funding from the UK Industrial Decarbonisation Challenge Fund to

Update to the Climate Change Plan | Industry 145 Carbon Capture and Utilisation 3.4.40 We will work with our agencies to develop a £5 million Carbon Capture and Utilisation Challenge and innovations that can capture and create value in CO2, reduce emissions and develop new income streams for Scottish businesses in this emerging market. Priming a utilisation market supports the acceleration of carbon capture in the industrial sector by supporting as well as providing markets to sell into. The Carbon Capture and Utilisation Challenge Fund will require industry match funding investment into cost reduction. 3.4.41 Scotland has the opportunity and capability to produce large the emerging hydrogen sector in Scotland114 and to maximise the ‘new industry’ benefits that the production of hydrogen itself may 3.4.42 We will work with the major assess applicable decarbonisation solutions, including opportunities for fuel switching to hydrogen and the opportunities that large scale industry, particularly in the cross- sector nature of hydrogen systems. 113 Announced 2020-2021 Programme for Government 114 Boosted in 2020-2021 Programme For Government and Hydrogen Assessment and Policy Statement (2020) 3.4.43 The Hydrogen Assessment Project is now complete; results will be published alongside our helping to confirm that Scotland has an abundance of the natural resources needed to produce both blue and green hydrogen at scale and enough hydrogen production potential to serve our own needs and service an export market as 3.4.44 Recognising Scotland’s natural advantages, including our existing oil and gas skills, capabilities and competence and Scotland’s large onshore or offshore wind resource, we will consider the consenting for the construction of large- scale offshore wind to hydrogen (commonly referred to as power-

146 Update to the Climate Change Plan | Industry Scottish Government have provided £6.9 million funded support towards the cost of this ground breaking £27.7 million project. Other funders partnering in this project include Ofgem (Office of Gas and Electricity Markets), SGN, Cadent, Northern West Utilities (WWU).
The H100 Fife Project is recognised as a key building block in the strategic ‘Gas Quality Decarbonisation Pathway’ set out by UK gas distribution network operators and adopted by the Energy Networks Scottish Gas Networks (SGN) will partner with other UK gas operators in this project to ensure the delivery of a world-first demonstration of an end- to-end 100% hydrogen energy system, to evidence the role that hydrogen can play in decarbonising heat, using the gas network. The project will construct and operate a hydrogen heat network system in Fife able to service around 300 houses and will be of UK-wide significance, offering an important validation of the evidence base carried out by the UK Government in their The project will connect with the existing ORE Catapult 7MW offshore wind turbine, situated off the coast of Leven in Fife, to directly supply power to the electrolyser for hydrogen production, evaluating the opportunity for grid integration systems between renewables and hydrogen production, and demonstrating the business case opportunities that offshore wind can offer for production of hydrogen at scale. The H100 Fife project is part of a larger phased programme proposed by Phase 1 - H100 Fife (the project described above) will enable the decarbonisation of 300 homes saving 662 tonnes of CO2/annum. Only phase Phase 2 will offer opportunities to expand H100 Fife to 1000 properties providing annual emissions savings totalling 2,208 tonnes of CO2/annum. Phases 3, 4 and 5 progressively grow the hydrogen production capability to convert wider domestic, industrial and commercial gas demand of up to 5GWh in the region to eventually reduce emissions by 860,000 tonnes of CO2/

Update to the Climate Change Plan | Industry 147 3.4.45 We are investing £100 million to help businesses create new, green jobs via the Green Jobs Fund115. provide £50 million to businesses which provide sustainable or low to help them develop, grow and create jobs. A further £50 million will help to ensure that businesses and supply chains across Scotland can capitalise on our investment in low carbon infrastructure such as the decarbonisation of heating and 3.4.46 We will continue to support innovation throughout the industry sector, developing solutions that can be scaled up and contribute to a pipeline of projects and leading to wider benefits for jobs, place 3.4.47 The Scottish Industrial Energy projects at industrial sites for decarbonisation. For the next five years, via match-funding, SIETF will leverage asset-based private capital into this vital productive part of our economy and support the readiness of business cases for investment. 3.4.48 The £26 million Low Carbon infrastructure. This fund will help drive up project standards, 115 Announced in the 2020-2021 Programme for Government 116 SIETF and MLCF announced in the 2020-2021 Programme for Government create efficient and sustainable manufacturing practices, and better enable firms to enter low carbon (SIDP) will strengthen existing engagement with energy-intensive industrial (EII) manufacturers. Linked to the First Minister chaired Scottish Energy Advisory Board, this partnership will foster mutual expectations to decarbonise in line with our economic recovery together strategic initiatives. 3.4.50 SIDP will facilitate dissemination of industrial decarbonisation best practice and advise on the practical sequencing of policies or projects, informed by evidence, including how to reach net zero. It will feed into capital infrastructure budget planning that supports industry to set strategic and ambitious net 3.4.51 We will facilitate a number of to incentivise Energy Intensive Industry (EII) to compete in low- margin markets. The Managers will be embedded in their organisations collaborate as a cohort to ensure consistent knowledge capture and

148 Update to the Climate Change Plan | Industry Scottish industries that invest to 3.4.52 A key part of successful industrial and incentivising forward-look investment. The CCC’s Net Zero Report (2019) called for a policy approach to decarbonising industry that includes a suite of measures covering procurement, consumer behaviour and product standards to drive change. A study has been started that will contribute to to influence market conditions for Scottish manufacturers who produce relatively lower carbon products than their competitors and contribute to the circular Seizing the Economic Opportunity 3.4.53 A key aspect of decarbonising the economy is to help industry measures both it and its customers require in order to decarbonise. We will work across government, strengths that can be built on as part of the decarbonisation Ħ The Clyde Mission provides an opportunity to bring together a range of low carbon investments and circular economy thinking, coherent and systematic way to deliver sustainable and inclusive Ħ The Scottish Government will bring manufacturing prototyping procurement with manufacturing capabilities and supply chains. 3.4.54 We have already ensured that the transition to the future low carbon economy is at the heart around advanced manufacturing, Manufacturing Institute Scotland and the Advancing Manufacturing recovery as a part of a broader This will utilise the framework Scotland’s Future’ Programme for manufacturing, which will support the delivery of net zero emissions strategy aligned to low carbon of low carbon technologies for Ħ identifying and leveraging low skills and thinking in the future

Update to the Climate Change Plan | Industry 149 3.4.55 ‘Making Scotland’s Future’ will carbon manufacturing techniques and work with partners to ensure the successful delivery of the £60 million Scottish Government investment in a Scottish Industrial (£34 million) and a Low Carbon 3.4.56 The Grangemouth Future Industry that brings together key decision Government, Scottish Enterprise and Falkirk Council, with a focus on Scotland’s key manufacturing cluster.
It will strengthen alignment and co-ordinate activity to ensure the significant opportunities for low carbon economic growth are 3.4.57 The board will focus on specific and agreed workstreams that will shape efforts to unlock potential investment and identify policy levers that can support sustainable growth, and advance the circular competitiveness and just transition will be at the heart of the board’s 3.4.58 The Climate Emergency Skills central to our ambition to create support our transition to a net 117 New policy announced in 2020-2021 Programme for Government 118 Announced June 2020: Manufacturing Institute Scotland is included in this broader skills action plan, through the Upskilling and Retraining theme, as it will establish a Manufacturing Skills Academy to develop a catalogue modules. This will support skills efficiency and productivity across the manufacturing and industrial 3.4.59 The £62 million pound Energy Transition Fund (ETF) is a package of investment for the North East that will support our energy sector 2045118. The projects that will be Ħ an Energy Transition Zone based 3.4.60 We want to protect existing jobs and create new jobs in the North East, and across Scotland, harnessing private sector funding as companies move from oil and gas to low carbon and renewable

150 Update to the Climate Change Plan | Industry 3.4.61 The CCC analysis of the balance responsibilities lists industry as one of the areas where progress is most dependent on UK Government and/or international policy119. Vital powers in regulation of the energy market and fuels (namely oil, gas, coal, electricity), are reserved to the UK Government. Crucially for the decarbonisation of industry, hydrogen and aspects of CCUS are also reserved, limiting the Scottish change where we want and need to. 3.4.62 As noted above, there remains a significant risk carbon leakage if Scotland decarbonises faster than the rest of the UK and Europe, and therefore support for both investment and a level regulatory 3.4.63 The Scottish Government calls on UK ETS policy between the four administrations, in particular on changes to the cap for net zero, take into account the different 119 Reducing UK emissions Progress Report to Parliament (June 2020) Page 167 regulatory frameworks required published their response to their models, further clarity on this is needed to bring forward the investment decisions for critical decarbonisation infrastructure. This must include the creation hydrogen and for CCUS, in order to build confidence and enable CCUS facilities in the UK to be Strategy. Scotland will input into credible trajectory for getting industry to net zero emissions. participation in disseminating the conclusions of this strategy Ħ Support and Enable large scale systems, including the creation necessary to drive investment. Update to the Climate Change Plan | Industry 151 3.4.64 Our Enterprise Agencies are transition. Scottish Enterprise have begun to map key industry supply chains to better understand where Scotland has a comparative 3.4.65 The Infrastructure Commission infrastructure and the move to low carbon. Close engagement with this work will be important as we seek to maximise the economic benefits 3.4.66 Working with agency partners, including SEPA, we will develop efficiencies of some key energy intensive industrial processes agreements that focus on practical action to deliver environmentally sector plans, specifically those relevant to manufacturing, will through their regulatory role and by taking opportunities to work Scottish businesses and industry 3.4.67 The Scottish Government Ħ review their energy intensive processes, pursuing all energy efficiency options available to them, working with the Scottish Ħ further explore innovative and cutting edge solutions to remove Ħ investigate embedding carbon potential higher cost associated with low carbon production; and Ħ work in partnership to support commercial risk in production of 3.4.68 The majority of the UK’s consumption of energy, whether that’s driving cars, manufacturing goods or simply boiling a kettle. Decarbonising and diversifying Scottish Industry will benefit individuals by offering low carbon energy and goods from Scottish support this transition through goods and services, for example by switching to low carbon fuels. industry section will help to ensure

152 Update to the Climate Change Plan | Industry 3.4.69 Our research into improving relatively low carbon goods will investigate consumer behaviour and preferences. It will identify opportunities for green labelling to inform purchasing decisions for a range of energy intensive products produced in Scotland, including 3.4.70 Following the passage of the Consumer Scotland Act 2020, we are in the process of establishing Ministerial body that will advocate the views of Scottish consumers and that will be able to address consumer issues and opportunities in this area. It will build on the closely with other stakeholders within the consumer landscape to ensure that consumers are able to make informed choices and issues of detriment are identified for 3.4.71 The Scottish Government, as European Co-Chair of the Under2 Coalition, is participating in the (ITP) alongside several regions of Europe and North America. This policy solutions that are relevant for decarbonising energy intensive industry across the regions taking part, and focuses on developing regional hydrogen-based strategies for industry. It already benchmarks activities, as well as influencing our potential to work in close ongoing international engagement, international relationships post-EU Exit. It will conclude in Brussels in International Engagement Plans 3.4.72 Hydrogen and CCUS are key areas collaborations increase our attractiveness to international Scotland’s reputation; and promote 3.4.73 International activity on hydrogen is growing at pace in Europe and promptly to ensure Scotland is engaged in the developing hydrogen economy. A coordinated plan of international engagement activity has been developed to help advance our ambitions for international 3.4.74 Our international engagement on including Ministerial and official- with partners at various levels.
The engagement plan will highlight Scotland’s strengths in offshore wind and hydrogen, the potential for green hydrogen export, and possible areas for collaborative development 3.4.75 This includes extensive engagement at strategic, sectoral and company level, participation in webinars and seminars to promote Scotland’s potential, and ensuring Scottish companies are aware of international opportunities in the

Update to the Climate Change Plan | Industry 153 3.4.76 Further details of the Hydrogen International Engagement Plan can be found in the Hydrogen Policy 3.4.77 In a similar fashion there are international opportunities for CCUS supporting decarbonisation efforts in Europe and in the export ambition to be an early mover in CCUS. We are currently engaging with key industry partners and will be developing a strategy to steer our engagement in this area in 3.4.78 Scotland’s vast storage potential provides an opportunity for the European carbon capture projects, opening up the potential for a CO2 transportation economy. An international revenue stream via shipping of CO2 to projects such as Acorn CCS will support our own industrial decarbonisation efforts emitters in Grangemouth of a long term solution for their industrial 3.4.79 CCUS presents a significant Scotland; for this to be realised supported by a strong international 3.4.80 Scotland is the best placed CCUS on a commercial scale, and we want to ensure our potential and experience is increasingly recognised internationally. Our CCUS will focus around Scotland’s significant storage potential, our practical expertise, and our ambitious plans to develop the sector. A priority for this activity, in the European context, will also be to raise the profile of Scottish activity and ensure visibility

154 Update to the Climate Change Plan | Waste and the Circular Economy

Update to the Climate Change Plan | Waste and the Circular Economy 155 3.5.1 Scotland’s progress in reducing resources sector over the past 20 years has been striking. Recycling is now a more established part of our everyday life, and we recycle over 60% of Scotland’s waste. The amount of waste going to landfill in Scotland is at its lowest since records began. In 2018, waste and resources sector emissions were 3.5.2 However, we still have a significant challenge ahead in order to meet our ambitious emissions reduction targets. Emissions in the sector are currently around 1.9 megatonnes per year; our aim is to reduce these emissions to 1.2 megatonnes by 2025, and 0.8 megatonnes by 2030. Achieving these milestones will require meeting our ambitious targets, ending landfilling of biodegradable municipal waste and significantly reducing food waste; accelerating efforts to closed landfill sites; and ensuring a more rapid transition to a fully circular economy in Scotland. This process will require radical and transformational changes, and we will work with partners to ensure that these changes are delivered in 120 3.5.3 The COVID-19 crisis has had, and continues to have, a significant impact on the waste and resources sector. These impacts have been felt differently across the sector, with changes in business leading to reduced demand for commercial collections, as well as reduced quantities of materials for sorting and reprocessing; and changes in household behaviours affecting managed by local authority waste 3.5.4 It is too soon to understand the full impact of the COVID-19 crisis on our recycling targets in Scotland, and we are undertaking further work to explore this. There are business behaviour has reverted to a preference for single use/ disposable items, which in some cases has been a necessary step to prevent transmission of the virus. and Resources Action Programme survey conducted in April 2020, their food better under “lockdown”, 3.5.5 As a result of the pandemic’s impact on our legislative agenda, we took the difficult decision to delay introduction of our Circular Economy Bill. However, we remain committed to achieving circular continue to work with stakeholders

156 Update to the Climate Change Plan | Waste and the Circular Economy 3.5.6 As we move towards our recovery support consumers and businesses to maintain positive behaviour changes. Our priorities include preventing waste by encouraging more sustainable product design, reducing consumption of single-use items, promoting reuse of products, infrastructure. We also have an opportunity for renewed impetus in building a fully circular economy materials up the waste hierarchy use for as long as possible. This will also stimulate job research has shown that 10,000 tonnes of waste can create 1 job in incineration, 6 jobs in landfill, 36 jobs in recycling or up to 296 jobs 121 “take, make and dispose”. We take resources from the ground, air products and structures; then we dispose of them. We need to move to a circular economy where we reduce the demand for raw material and repairs through responsible production; and recycle waste and energy to maximise the value of any The circular economy represents an enormous economic and industrial contributes directly to a green recovery. It tackles emissions design, manufacturing and waste and resource management, and is a vital part of sectors delivering their net zero aspirations. It can improve productivity and open up new markets, while also benefiting providing local employment and lower priced goods. A circular economy also contributes to a range Goals, including ensuring sustainable consumption and production patterns. Update to the Climate Change Plan | Waste and the Circular Economy 157 3.5.7 As has been recommended by a number of stakeholders, including the Advisory Group on Economic Recovery, the Decoupling Advisory Group and Scottish Environment economy principles into our wider green recovery, prioritising areas with the biggest construction; agriculture/food and procurement; skills and education; 3.5.8 Our approach to delivering inclusive. We will consider the potential impacts on different identify any barriers to fair access and ability to adopt new circular 3.5.9 By 2032 (and before) we will fundamental shift in how we use and re-use materials. We will be fully circular economy approach, which is designed to reduce, reuse, repair and recycle.
Recycling will households, with clear product labelling, effective communication, enhanced collection infrastructure, and more consistent approaches to 3.5.10 By 2045, as well as improving our position in the global market, we will produce many more goods that are bought, used and regenerated or recycled right here in Scotland. reasons why we will have moved completely from a ‘take, make and dispose’ linear economy to a fully circular economy. Our vision is that by 2045 Scotland’s cultural, social and business norms will be driven Ħ Responsible Consumption, where which respect the limits of our natural resources. Unnecessary waste, in particular food waste, will be unacceptable in Scotland. Ħ Responsible Production, where a circular economy is embraced by the businesses and organisations that supply products, ensuring from the natural resources used energy is harnessed efficiently. If you can’t prepare for reuse, then ... If you can’t prevent, then ... If you can’t recycle, then ... If you can’t recover value, then ...

158 Update to the Climate Change Plan | Waste and the Circular Economy Emissions Reduction Pathway to 2032 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

Update to the Climate Change Plan | Waste and the Circular Economy 159Route Map to 2032

160 Update to the Climate Change Plan | Waste and the Circular Economy 3.5.11 We are boosting our commitment to building a circular economy, Scotland and Scottish Environment address emissions associated with production, consumption and waste promote resource efficiency. Zero Waste Scotland will also continue to develop tools and resources for 3.5.12 Through our work on the fourth planning policies to reflect the new opportunities arising from a shift towards a circular economy. Planning can support development which reflects the waste hierarchy, prioritising the reduction and reuse of materials, and helping to facilitate the delivery of new infrastructure required to achieve 3.5.13 We have boosted our efforts to tackle food waste by leading collaborative efforts to deliver Scotland’s landmark Food Waste Reduction Action Plan, supported by Zero Waste Scotland, in order to help deliver our ambitious target to reduce food waste by one third against a 2013 baseline by 2025122. 122 2018 Climate Change Plan commitment to reduce food waste by 33% boosted through the Food Waste Reduction Action 123 Announced in the 2020-2021 Programme for Government 3.5.14 This will involve improving our monitoring and infrastructure by considering a mandatory national food waste reduction target and mandatory reporting of Scotland’s food surplus and waste by food businesses. We will also break down barriers to food recycling by consulting on the current rural 3.5.15 We will work closely with the promoting leadership, innovation, development and implementation of an NHS Scotland national action plan on food waste. In partnership will also carry out a sustained and communications to enable the public to make sustainable choices Reducing waste sent to landfill 3.5.16 We will end landfilling of biodegradable municipal waste by 2025, reduce the percentage of all waste sent to landfill to 5% by 2025 and recycle 70% of all waste by 2025. We will develop a route map to outline how we will deliver our waste and recycling targets in a way that maximises carbon 3.5.17 We have committed significant investments to deliver on these targets, including £70 million to improve local recycling collection Authorities (COSLA) in the coming

Update to the Climate Change Plan | Waste and the Circular Economy 161 year to evaluate the Household its Code of Practice as key steps in developing a future model of recycling collections that promotes high quality recycling and helps make the right choices easier for 3.5.18 In line with EU Commission’s Circular Economy Package, we will also consult on requirements to separately collect garden waste (by 2023), textiles and hazardous elements of household waste (by 2025). These measures have the potential to further promote reuse 3.5.19 In response to the Committee biodegradable municipal waste to landfill to include biodegradable non-municipal wastes, subject to appropriate consultation and work to provide assurance around some 3.5.20 We will take steps to improve waste data by working with the governments, and agencies such as SEPA, to develop and implement implementation in Scotland. This step change in the quality and underpin the key building blocks required to reduce emissions and drive delivery on existing waste 124 All announced in the 2020-2021 Programme for Government 125 First announced in the 2019-2020 Programme for Government 126 Boosted through Low Carbon Fund 127 Boosted through Low Carbon Fund Reducing emissions from closed 3.5.21 We will accelerate our landfill gas capture and landfill legacy management. Working closely with SEPA and waste operators, we will scale up the existing landfill gas capture programme to mitigate the negative effects of landfill and the environmental impact of closed 3.5.22 We will double the number investigative or development work (from 12 to 24 sites) by 2025 and will provide additional funding to support this. This will harness the energy generated from landfill gas capture and maximise circular Promoting efficiency of energy 3.5.23 In line with the waste hierarchy, our primary focus is on preventing of materials. However, we still residual waste while we make the transition to a circular economy. In the context of the latest CCC on progress already made by the sector, we will consider measures to ensure new energy from waste how waste infrastructure can be ‘future-proofed’ for carbon capture 3.5.24 We have a new action to work with local authorities and the administrator(s) to explore options

162 Update to the Climate Change Plan | Waste and the Circular Economy investments, including pricing and incentive schemes, to create jobs and a ready supply of recycled material for new packaging128.
3.5.25 Banning problematic single consulting on banning a number of problematic single-use plastic items, such as straws and cutlery, identified in the EU’s Single Use Plastics Directive, with a view to introducing legislation in 2021, and considering how we will give effect to the wider requirements of 3.5.26 Packaging We will continue to work with the UK Government and other devolved administrations extended producer responsibility deliver improved funding for local 3.5.27 Environmental We will introduce measures to encourage people to shift toward reusable products and to encourage more example, we will take further steps to consult on a charge on single and will introduce legislation to increase the carrier bag minimum parliamentary session131. In recent public research, we found that supported by 82% of the public. 3.5.28 Several of the measures outlined increase fiscal incentives for 128 Announced in 2020-2021 Programme for Government 129 130 Announced in 2020-2021 Programme for Government 131 Boosted in 2020-2021 Programme for Government waste hierarchy. Examples include Responsibility schemes and our proposal to introduce a charge on single use beverage cups. However, if we are to meet our ambitious then further, and likely more far- reaching fiscal incentives will be needed, alongside the other policy interventions set out in this chapter. As part of our work to develop a route map to 2025, specific and focused piece of work to examine the range of fiscal measures used by other countries to incentivise positive behaviours and to develop proposals to go 3.5.29 We recognise that significant and changes will be required in this area if we are to meet our targets in 2025 and beyond. Therefore, we will work with partners to develop a post-2025 route map to identify how the waste and resources sector will contribute towards Scotland’s journey towards net zero in the 3.5.30 The Scottish Government is taking action on policy measures that lie within devolved competence, but some of the policy measures required to drive the transition to a fully circular economy are action. The CCC’s December 2019 progress report made clear that

Update to the Climate Change Plan | Waste and the Circular Economy 163 did not match that of the Scottish Government, and challenged the UK Government to “step up” in areas where key powers are reserved. The CCC’s latest Scottish Progress report notes that the UK Government has only delivered one of the CCC’s 16 key reserved policies that unlock 3.5.31 We are already working with reform of the packaging producer responsibility system to reduce waste and boost recycling. This sustainable packaging design and effective collection services. 3.5.32 We welcome the UK Government’s plans to introduce a ‘plastics tax’ to incentivise the use of recycled However, there are a number of key areas that require futher UK Government action. For example, introduce new fiscal measures to influence behaviour; reduce material; boost the competitiveness of recycled materials; and bring 3.5.33 Public sector leadership is vital to achieving our emissions reduction targets in the waste and resources sector. We are therefore working with the public sector to embed circular economy principles into and to accelerate reduction and 132 133 ban on landfilling biodegradable 3.5.34 Food waste is a significant contributor to emissions that come from the public sector, and our Food Waste Reduction Action Plan132, published in 2019, highlights the need for our public sector to reduce food waste throughout its buildings and services. Key agencies, including SEPA and Food Standards Scotland, will provide the regulatory oversight, support, and infrastructure to drive change and help deliver Scotland’s 3.5.35 SEPA have a vital role to and resources sector in Scotland. regulation, whether that be on pollution prevention, producer responsibility, waste exports or landfill tax. We will continue to support SEPA with the appropriate funding and support it needs to 3.5.36 We are also working closely efficiency, including in the waste example, over the last 5 years Scottish Water has delivered 19 and aims to deliver a further 20% includes a wide range of action to minimise emissions across all aspects of its activities to meet, and go beyond, their target of net

164 Update to the Climate Change Plan | Waste and the Circular Economy 3.5.37 We also expect Scottish Water to continue to invest heavily in Scotland and to deliver additional heat from sewers projects, building Scottish businesses and industry 3.5.38 The second largest sector source Manufacturing (25%)134. Reducing this will involve transformative throughout the food supply chain. The Scottish Government’s Food highlights the need for the Scottish food and drink industry to show leadership and drive innovation to reduce waste throughout the supply chain, as well as to drive changes in labelling and in food businesses’ corporate behaviour. 3.5.39 The Scottish Government and Zero Waste Scotland provide a range of advice and business support to promote the adoption of circular economy practices and to support are doing so already through a range of voluntary initiatives, including the UK Plastics Pact and signatory of. The Circular Economy Investment Fund is the most high profile of the Scottish Government’s financial support measures, and we will continue to ensure the right strategic interventions are in place to provide maximum economic and emissions reductions benefits in the 134 p.21 135 p.21 136 3.5.40 Key priorities for businesses and Ħ continuing to actively increase Ħ putting in place alternative deliver the forthcoming ban on to landfill by no later than 2025; Ħ scaling up existing landfill gas the negative effects of landfill and the environmental impact of Ħ taking further steps to maximise efficiency of energy from waste proofed’ for CCS technology; and Ħ ensuring that the waste supply waste that has reached the end 3.5.41 The largest sector source of food waste in Scotland is Household Scottish households threw away and drink waste. Household food million tonnes of carbon dioxide equivalent emissions; this is 2.1% of Scotland’s carbon footprint136.
Update to the Climate Change Plan | Waste and the Circular Economy 165 3.5.42 To support and enable required including a second phase of our marketing campaign planned for 3.5.43 We encourage people in Scotland to purchase products and services limits of our natural resources; particular avoidable food waste, reuse and recycling into everyday behaviours. We regularly engage attitudes towards waste, as we seek to help make the right choices 3.5.44 As we recover from COVID-19, we will support consumers to make positive decisions to tackle climate example, we encourage the use of washable, reusable face coverings and a move from ‘fast fashion’ clothing choices more generally; implement the deposit authority recycling collection infrastructure; and consult on a charge on single use disposable 137 Recent examples include the public consultation on single-use plastic items ( introducing-market-restrictions-on-single-use-plas/) and engaging with island communities to identify potential impacts from the introduction of the deposit return scheme for single-use drinks containers ( deposit-return-scheme-scotland-islands-communities-impact-assessment/) 138 139 3.5.45 An estimated four fifths of currently linked to the production, consumption and waste of products of promoting a circular economy is therefore a global challenge. Many of the products that Scotland consumes are produced overseas importance of waste reduction if we are to reduce Scotland’s global resource/emissions footprint as well as domestic emissions. There is a risk of ‘offshoring’ a significant proportion of Scotland’s waste not accounted for under our own 3.5.46 A number of EU frameworks relevant to Scotland, including (CEP) which introduces a revised legislative framework on waste, credible long-term path for waste adopted a new Circular Economy lifecycle of products, including bringing resources back into the economy138. As outlined in the UK is committed to maintaining or standards after we leave the EU139. 166 Update to the Climate Change Plan | Land Use, Land Use Change and Forestry

Update to the Climate Change Plan | Land Use, Land Use Change and Forestry 167 3.6.1 Land is key to Scotland’s history, culture, and identity. Our landscape and natural environment is one of our greatest national assets, economy and society. How we use our land matters to our collective 3.6.2 We are rightly proud of our world- renowned, diverse and rich nature and landscapes. They have a vital role to play in our future, not least in supporting us to meet our ambitious climate change targets and ambitions. The importance of our land in delivering Scotland’s emissions reduction targets has been highlighted by the UK Climate Change Committee. The capacity that our land has to deliver nature- based solutions to climate change, including through increased tree cover and restoration of degraded peatland, is unique within the UK. Scotland has a positive story to tell in these areas but we have not always fully understood that what we do on the land, and to the land, can have far reaching impacts, some of them intangible 3.6.3 For example, it is estimated that around 80% of Scotland’s peatlands significant progress over recent years, Scotland remains heavily European countries, and imports significant quantities of timber and timber products. Our soil quality is poor and some native species are finding it hard to survive in our 3.6.4 Changing these outcomes is both a challenge and an other pollutants, increase the levels of carbon dioxide being absorbed and locked up in timber our biodiversity, derive other co- benefits such as flood mitigation and climate adaptation, and also support clean, new jobs as part of 3.6.5 We must now act urgently and make real and substantive progress make large scale and rapid changes in the way we use and manage our land to help reach our statutory net-zero targets. This will require out of farming as we currently understand it into forestry and peatland, and require those who sustainable practices (such as those set out in the agriculture chapter 3.6.6 Increasing woodland creation and peatland restoration on this scale, and over this number of years, will result in significant changes in the iconic landscape and environment which has evolved over centuries and for which Scotland is globally renowned. We need to ensure that the people of Scotland understand particularly those individuals and

168 Update to the Climate Change Plan | Land Use, Land Use Change and Forestry impacted. To do that will require dialogue between different groups people with us in understanding key parts of our landscape are that we don’t assume nor accept that radical reform of land use necessarily means fewer people living in rural the aim should be to use land use change 3.6.7 Achieving land use transformation on this scale will require a major increase in the size and capability of the workforce. This significant expansion of an already important sector of the rural economy is an opportunity for more people to work and live in rural Scotland. rural housing and more planning flexibility in the provision of that 3.6.8 This chapter sets out the policies Government is taking to enable, support and drive these land use changes. We are also determined to ensure that we transition in a just way, and in a way that also supports our wider ambitions and Ħ investing in the natural capital that underpins our economy and Ħ providing a platform for the sustainable production of high Ħ providing a source of other long- term sustainable products like Ħ prioritising nature-based solutions to societal challenges, including quality, flood risk management, climate mitigation and adaptation affordable and energy-efficient 3.6.9 Scotland’s forthcoming third Land Use Strategy (due for publication in spring 2021) will demonstrate how these priorities and the actions of the Scottish Government come sustainable land use vision and 3.6.10 Expanding the area of Scotland’s contribute to reduced greenhouse generate an important commercial biodiversity and provide spaces created over 22,000 hectares of years, and we will continue to invest to increase overall forest cover in Scotland.
As part of the Scottish Government’s Low Carbon Fund, Scottish Forestry will receive increase new planting and Forestry

Update to the Climate Change Plan | Land Use, Land Use Change and Forestry 169 and Land Scotland will receive an additional £30 million to expand Scotland’s national forests and land. We will also provide £20 million to further increase tree nursery capacity, investing in new and redeveloped facilities This investment will enable us from the current level of 12,000 hectares in 2020/21 up to 18,000 hectares in 2024/25, ensuring that forestry and woodlands play an important role in cutting emissions 3.6.11 Peatlands are a key part of the Scottish landscape, our cultural and natural heritage, forming more than 20% of Scotland’s land cover. In good condition, they actively the atmosphere, support habitats and species and help to improve water quality and manage flood risk. When degraded, peatlands no longer provide these benefits and emit more carbon than they remove, becoming a net source of 3.6.12 The 2018 Climate Change Plan established an annual peatland hectares (noting that using an area target is a proxy measure extent of restoration will vary considerably according to the mix of land type). Since 2012, over peatlands have been put on the road to recovery through projects that is funded by the Scottish Government. This includes around 6,000 hectares annually over the past two years. Although feasibility studies have been carried out since (including nearly 75,000 hectares annually in the past two years), the extent of restoration achieved thus far over 8 years illustrates the scale of our challenge. It also highlights that achieving peatland restoration at scale requires a considerable step change in the approaches need to be explored. 3.6.13 Earlier this year we announced a £250 million ten-year funding package to support the restoration of 250,000 hectares of degraded peat by 2030. We are currently and others involved across the public, private and third sectors coming years, and to identify and develop solutions to any current barriers. These include the need for multi-year funding, enhanced contractor capacity, as part of developing a peatland restoration sector, and improved awareness among land owners and managers of the opportunities and benefits of peatland restoration. We will large-scale restoration projects 3.6.14 Modelling shows that in order to envelope of this update, annual peatland restoration would need to be far higher than the current 20,000 hectare annual target. As highlighted at the start of this

170 Update to the Climate Change Plan | Land Use, Land Use Change and Forestry chapter, meeting these challenges will require fundamental change in the way land is used and managed, How to achieve this change will require careful thought; there are and uncertainties to overcome. public sector and other delivery managers, farmers and crofters to continue to encourage protection, maintenance and restoration of all peatland types and will explore opportunities to restore more of the land that offers the highest 3.6.15 Determining the optimal mix of land use involves a complex set of interlinked considerations and goals that are at times in tension. We have commissioned research to map the location of land that offers the greatest emissions savings potential and to understand its current use and tenure in order to inform targeted action. We have better understand landowner and land manager motivations for, and attitudes towards, undertaking standard for generating verified carbon credits through planting new woodlands, enabling businesses to compensate for their residual market in order to attract additional investment into woodland creation by verifying that woodland carbon sustainably managed to national standards. An updated and expanded carbon registry, the UK Land Carbon Registry, was launched in November 2020 and now also includes peatland restoration credits generated under Peatland Code. Over 250 woodland projects have been validated under the Woodland Carbon Code to date. These are predicted to sequester over 5 million tCO2 in the future, benefits for the environment and over 225 hectares of former low quality hill grazing land in the Yarrow Valley, Scottish Borders, will generate over 70,000 verified carbon credits. Situated adjacent to the Minch Moor drove road and the Southern Upland Way, the woodland also offers recreation benefits for the surrounding area and supports flood mitigation and biodiversity ground areas. The code is a UK wide scheme and more information can be found

Update to the Climate Change Plan | Land Use, Land Use Change and Forestry 171 3.6.16 During the COVID-19 crisis, and the restrictions necessary in our people right across Scotland, in cities and rural areas alike, connect with nature and the environment Nature has provided a source of comfort, strength and solace at a time of national and personal crisis, and has itself benefited from reductions in air and noise 3.6.17 Many of the actions set out in this Climate Change Plan update opportunities. The expansion of peatlands will improve important natural habitats for a range of opportunities to support public through recreation and increased 3.6.18 Scotland’s land and the natural capital it supports will play a fundamental role not only in our response to the climate crisis, but also in our green recovery from the required scale will provide opportunities, offer public health benefits, help to address rural depopulation and provide social benefits to communities across Scotland. This will in turn help secure a just transition to our sustainable future. The LULUCF sector will therefore form a key plank of our green recovery from 3.6.19 Government cannot fund this on its own, we need everyone to get involved. Both public and private investment in Scotland’s natural capital will be essential to deliver on our emissions reduction targets, not least to support people and businesses to make the changes we need on how they use and manage land. It will also be necessary to ensure long-term sustainable management of restored peatland remains locked up in the long term.
£250 million of funding over ten years, we are working to attract 3.6.20 For example the Woodland businesses to purchase and report creation and peatland restoration. Scottish Forestry oversees the through our grant funding via our delivery partners we contribute to the development and management working with the IUCN to promote it more widely to land managers 3.6.21 In the future we will work to Woodland Carbon Code, Peatland our delivery partners. A shared carbon registry has been set up

172 Update to the Climate Change Plan | Land Use, Land Use Change and Forestry in 2020 for the Woodland Carbon complexity in the carbon market and facilitate increased private sector investment in nature-based solutions to tackle greenhouse gas emissions and improve wellbeing. 3.6.22 We will also explore the Restoration Standard to ensure 3.6.23 Scotland’s forestry sector currently across Scotland, including among creation is particularly needed, such as in rural and remote areas and among younger age categories. Scottish Forestry is doubling its recruitment of assistant woodland officers and Forestry and Land Scotland is doubling the number of opportunities for young people (including modern apprenticeships, student placements, etc.) creating high value, high skilled jobs often in remote locations in the natural private forestry sector will grow in response to our more ambitious and increasing domestic timber production, which is forecast to increase by over a third during the 3.6.24 Similarly, peatland restoration offers further potential to create skilled green jobs across rural Scotland. It is estimated that over 3-5 years starting in 2021-22, peatland restoration associated 140 On the basis that every £1 million of investment in peatland restoration is estimated to create around 10 contractor/ delivery jobs. This would actually comprise a higher number of contractor posts on a part-time basis due to the seasonal nature of the work on the ground (i.e. the need to work outside severe winter conditions and the bird breeding season). 141 Fourth National Planning Position Statement - with our existing commitment to invest around £25 million annually will build to supporting around 200 FTE contractor and delivery 3.6.25 In addition to direct employment, chains associated with forestry and woodland creation, and peatland restoration. There will also be spill over benefits in the wider rural economy for rural and island 3.6.26 As well as increasing the pace and extent of restoration of degraded peatlands, we also need to protect activities including commercial alternative growing materials, including undertaking research to understanding the issues around transitioning to alternatives. Our Position Statement on National Planning Framework 4 confirmed our current thinking that through the planning system we will not support applications for planning peat extraction for horticultural we will help facilitate restoration

Update to the Climate Change Plan | Land Use, Land Use Change and Forestry 173 3.6.27 By 2032, land use will have already changed significantly. Since trees need to become established before they begin to sequester carbon significantly, we need to plant in this decade to deliver to 2045 targets. Increased forestry cover along with the restoration of degraded peatland and changes in the management practices of other land based industries will sustainably. We will have raised awareness of the importance of better understanding and valuing the resources it offers. People and communities will accept why landscapes are beginning to look different, businesses will welcome change has created, and our rural communities will be recognised opportunities and high-quality 3.6.28 By 2045, Scotland will be internationally recognised for potential, attracting investors from international and domestic business organisations who want to play their part in delivering a more sustainable future. Our landscapes will be a mosaic of integrated land uses featuring a range of nature based solutions sustainably, to deliver a vibrant and enriched natural environment inclusive nation with a thriving Emissions Reduction Pathway to 2032 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

174 Update to the Climate Change Plan | Land Use, Land Use Change and ForestryRoute Map to 2032 Opportunities to attract private finance into peatland restoration are developed and promoted, including through supporting increased use of Establishment of Regional Land Use Partnership pilots and publication of Scotland’s third Land Use Strategy. Delivery plan and timetable for phasing out horticultural peat developed and produced following Draft Fourth National Planning Parliamentary consideration in late 2021: we anticipate that it will strengthen the role of the planning system in not supporting applications for planning permission for new commercial peat extraction for horticultural purposes. It will also look at strengthening controls

Update to the Climate Change Plan | Land Use, Land Use Change and Forestry 175 3.6.29 We have boosted our policy outcome on woodland 3.6.30 The 2020-2021 Programme target of 18,000 hectares per year by 2024/25, together with £150 million of funding support through increased state nursery production of Scotland’s national forests 3.6.31 Scottish Forestry and Forest and intermediaries to increase private investment in new woodlands in order to increase the woodland carbon market by at least 50% by 2025. Building on almost 4 million validated credits (each equivalent in March 2020, this will require the validation of approximately 400,000 credits a year between 142 Boosted in the 2020/2021 Programme for Government. 3.6.32 Scottish Forestry Ħ provide strategic and technical Ħ work with market intermediaries and liquidity in the buying and selling of carbon credits in order Ħ further develop the Woodland private investment in woodland creation, building on the launch in November 2020 of a new UK Land Carbon Registry in conjunction 3.6.33 Forestry and Land Scotland will attract carbon investment with a view to acquiring more land o support a diverse forest estate including continuous cover and native woodlands on Scotland’s national forests and land for the benefit of future generations and to optimise carbon sequestration. Plant and seed supply strategy 3.6.34 We have a new policy to support the forestry sector to develop a plant and seed supply strategy to help meet the increased planting targets.
A programme of technical innovation to develop and adapt modern horticultural practices will and increase nursery production. available through the Harvesting and Processing grant which is now open to forest nurseries across GB

176 Update to the Climate Change Plan | Land Use, Land Use Change and Forestry 3.6.35 Working with the farming sector, we will boost our work on forestry and farming and develop models to increase woodland creation on both tenanted and owner-occupied farms, increasing the scale and Capacity building and awareness 3.6.36 We have maintained our policy on capacity building in the forestry the sector through the Scottish Forestry and Timber Technologies have supported the development of a skills action plan to encourage new entrants into forestry and to increase the skill sets of those already working in the sector. 3.6.37 We are carrying out a series of training and awareness events, including through the Institute of Chartered Foresters, to build sector and develop opportunities in the woodland carbon market. 3.6.38 We are building our staff resources, creating employment opportunities Scottish Forestry is doubling its recruitment of assistant woodland officers and Forestry and Land Scotland is doubling the number of opportunities for young people (including modern apprenticeships, student placements, etc. ), both of which provide an important entry route for future careers in the 3.6.39 Through the Scottish Forestry Improvement Programme, we will continue to invest in streamlining and digitising our grant application and regulatory processes, ensuring that they are as efficient and simple as possible. By delivering an efficient and customer-focused service, we will make it easy for those who wish to engage in land 3.6.40 We will identify opportunities Land Scotland land acquisition state-owned forestry and peatland Capacity building and awareness 3.6.41 We have boosted our commitment to significantly increasing the pace and extent of peatland restoration. In 2019-20 we increased funding by £11 million to a total of £14 million and in February 2020 we announced a commitment to invest more than £250 million over 10 years to support the restoration of at least 20,000 ha of Scottish peatland annually, towards a total of 250,000 hectares by 2030. This will support at least 200 new skilled green jobs across rural Scotland. 3.6.42 Going beyond this level of opportunities and challenges. We will undertake new research to inform our understanding of these and will boost work to develop opportunities to attract private finance into peatland restoration, increased use of the Peatland Code. 3.6.43 To support our ambitions, we have launched with our key delivery partners a new review of peatland restoration support mechanisms increased restoration in the coming years, and to identify and develop

Update to the Climate Change Plan | Land Use, Land Use Change and Forestry 177 solutions to barriers. A virtual peatland summit with stakeholders across the public, private and third sectors held in December will inform this review and help raise awareness of opportunities, characterise barriers to peatland restoration and identify solutions, particularly around multi-year funding and contractor capacity. 3.6.44 In our 2019-20 Programme for commitment to seek to phase out the use of peat in horticulture by increasing uptake of alternative understand transitional challenges, improving the uptake of alternatives plan143. We will consider approaches to raising public awareness of these issues, and work with the UK 3.6.45 We are strengthening the role of the planning our Position Statement on National Planning the planning system we will not support applications for planning peat extraction for horticultural also that we will help facilitate development rights (which will undertake peatland restoration and thus help streamline the approval peatland restoration projects)144. 143 Commitment made in 2019-2020 Programme for Government, and restated in this Climate Change Plan update. 144 Fourth National Planning Position Statement - 3.6.46 We will explore how to involve Scotland’s crofters and crofting communities more in our mission to deliver more restored peatland. Common Grazing land in Scotland, some of which is degraded peat and part of which is owned by the Scottish Ministers. We will also explore how best to restore all degraded peat in the public estate and also within formally designated nature conservation sites, including 3.6.47 We intend to undertake research economic benefits across society derived from peatland restoration, and how such considerations can 3.6.48 We will also explore the potential restoration programme, ensuring peatlands are replaced with new forest planting on suitable land. programme of land acquisition to directly replace hectare for hectare land restored to peatland from 3.6.49 How best to incentivise and reward high value nature farming, including peatland restoration and agro-forestry will be considered and included in our policy and approach to future rural support, which will also include sustainable reduction, production of biofuel crops and appropriate land use

178 Update to the Climate Change Plan | Land Use, Land Use Change and Forestry 3.6.50 The above areas where our policy and approach will be developed will help enable us to achieve our current emissions reduction targets and they have the potential, in time, to help deliver the expanded 3.6.51 In developing the fourth National we recognise that nature-based including tree planting and peatland restoration, and tackling emissions related to soil disturbance and agricultural land use, will be from our land and increase carbon sequestration. We expect that our spatial strategy will explore how we can promote nature-based solutions protect and restore biodiversity and Regional land use partnerships Regional Land Use Partnerships Partnerships which enable national owners, stakeholders and local communities to work together to meet regional priorities, whilst also supporting our national endeavour to end Scotland’s contribution to climate change from land use. By established pilot Regional Land Use Partnerships to test our approach, and by 2023 each Partnership will have developed a Regional Land Use Framework that strategically identifies where resource can have the most positive climate impact.
Update to the Climate Change Plan | Land Use, Land Use Change and Forestry 179 3.6.53 We require urgent clarity from the it will provide after EU Exit to replace the EU funding element We also need to understand how proposes to deliver the ambitious woodland creation and peatland restoration targets it has adopted at a UK level; and we will continue to look to UK Government funding forestry and peatland restoration 3.6.54 To ensure a coordinated approach to the phasing out of horticultural peat where levers and risks exist at the UK level, we will continue the UK Government and the other 3.6.55 We will take forward the statutory duty, established by the Forestry (Scotland) 2018, for all public authorities to promote sustainable forest management in exercising their functions. In particular, we sector organisations to develop existing woodlands on publicly relevant public sector bodies to adopt a ‘team Scotland’ approach to supporting our enhanced tree planting commitments, including ensuring an optimum approach is adopted to applying any advisory 3.6.56 Key public sector delivery partners will work collaboratively with the Scottish Government to identify innovative solutions to the barriers currently limiting the pace and extent of peatland restoration. Scottish businesses and industry 3.6.57 In the forestry sector, supply chain businesses, including nurseries, contractors and land managers, need to scale up to ensure that enough capacity exists to deliver woodland creation at increased scale and pace. In the construction advantages of using sustainably sourced wood fibre and make more

180 Update to the Climate Change Plan | Land Use, Land Use Change and Forestry 3.6.58 We will also work to encourage private investment in woodland creation, peatland restoration and mechanisms such as the Woodland Carbon Code and the Peatland Code which provides the quality and reliability assurances that investors innovative opportunity will need. 3.6.59 Scottish Forestry and Forestry and Land Scotland are developing public and private land, leading to benefits in health, recreation management of existing forests. 3.6.60 The policies within this Climate Change Plan update will lead to construction and other sectors. benefits of this in their purchasing decisions will allow a greater and faster development of sustainable 3.6.61 We will also develop a greater understanding of the benefits that to mitigate climate change and support significant biodiversity importance, as well as delivering further benefits to members of the public though assisting with flood 3.6.62 Many countries, including but not only in the EU, have established Government seeks opportunities to share experience with these exchange visits. Scotland has also made international commitments Challenge to contribute, through creation, to wider global goals to 3.6.63 We will engage internationally nations with similar interests and ambitions before, during and after COP26 in order to showcase our achievements and expertise,

Update to the Climate Change Plan | Land Use, Land Use Change and Forestry 181 A clear opportunity for recovery and renewal in Scotland lies in our massive marine zone - six times the size of Scotland’s land mass. Our rich marine natural capital has the potential to help drive Scotland’s green recovery from COVID-19. The Organisation for Economic Cooperation and Development forecast the global blue economy to double from 2010 to 2030145. The ocean absorbs over a quarter of the CO2 produced by humans, and produces over half of our oxygen. Scotland’s marine carbon stores are vast – research indicates that our marine sediments may contain eleven times the amount of carbon stored in Scotland’s peatlands given the vast marine area we’re responsible for146. In recognition of the importance of the marine environment for naturally storing carbon, we have committed over £570,000 to our Blue Carbon Research Programme. We are also developing Scotland’s Blue Economy Action Plan, which will provide leadership through collaboration and innovation, maximising the impact of public investment and developing better regulation to help manage the shared use of the seas by Scotland’s marine sectors, communities and ecosystems. We will optimise opportunities in order to unlock the significant inclusive growth potential of Scotland’s marine space whilst supporting a transition to net zero. This will take sustained joint working across government bodies, industry and NGOs, stimulated, stimulated by government leadership, throughout which we will draw on international learning and experience, maintain pace and momentum, and secure engagement with a well-supported robust whole-systems approach. Near term initiatives which we expect to deliver very soon include the key building blocks for the development of our Blue Economy Action Plan, such as our strategy on future fisheries management, our sectoral offshore wind plan and the Scottish Over the next 6-9 months we will engage widely across government and the wider public sector to develop a strategic approach to marine-related policies and actions. We will also undertake engagement with key marine industry and environmental sectors to ensure that they can meaningfully input into the development of an Action Plan that adds value and gains traction. Longer-term, we will work to further develop and improve the Action Plan, and embed the approaches and mechanisms needed to benefit emissions reductions, as well as broader interests in years to come. We expect the outcome of the national marine plan review next spring to help inform that longer-term vision. 145 146

182 Update to the Climate Change Plan | Agriculture

Update to the Climate Change Plan | Agriculture 183 3.7.1 In 2019 Scotland’s agriculture industry contributed around £1.3 billion worth of GVA towards to the Scottish economy, employed 67,000 people (making it a key employer in rural Scotland) and around £3.3 billion. The Scottish Government supports Scotland’s targets of doubling the value of the food and drink sector by 2030 to £30 billion. This ambitious target has encouraged growth in the sector amongst small, medium and large businesses. That positive messaging on Scotland as a land of food and drink must be maintained but increasingly combined with an added narrative that we also have ambitious climate change targets. 3.7.2 Agriculture and food production rely on natural processes, and livestock will always emit some greenhouse gases.
Therefore, a ensure greenhouse gas reductions continues to produce high quality and sustainable food. Brexit also presents key challenges around trade, potential tariffs and the loss of the security of EU support. 3.7.3 However, we do believe that with its temperate climate, reliable rainfall, and permanent grassland, Scotland has a climate ideally suited to livestock farming. We also believe practices, we have a sustainable future as one of the places in the world most suited to producing high quality meat, but with our farming approach altered so that this is done in accordance with best practice in emissions reduction. Moreover, were Scotland to cease to produce high quality food, and in particular meat, then that production would simply take place elsewhere, effectively resulting in no change to global emissions and with the potential that our carbon foot print would be 3.7.4 The majority of the emissions in the agriculture sector come from livestock, however, it is important that all farmers and livestock, continue to adopt the currently exist, as well as those that become available in the future through technological advances. These can also support our wider environmental for example, techniques can reduce the need for fertilisers and pesticides which has a positive impact on biodiversity. 3.7.5 Farmers, crofters and land tend to take for granted and which underpins our tourism success. In fact the scenery is the factor most commonly mentioned when people describe why they decided to visit Scotland. That scenery rests on their active management of the land and for that they deserve our 3.7.6 We know that these landscapes will evolve as we respond to climate through the restoration of our peatlands as well as an increase in land for growing biomass. We see

184 Update to the Climate Change Plan | Agriculture this as an approach founded not only on nature based solutions but one with people at its heart. Our farmers crofters and land managers must have access to the benefits, both economic and social, that these changes will bring. We also recognise the need to maintain support for existing activities such as mixed livestock production, benefit biodiversity. Without that land use, land tends to revert to scrub, bracken, thistles, rushes and wasteland with negative visual 3.7.7 It is also important that our soils and grassland are managed farmers and crofters play a key role in this. For example, poorly managed soils can become degraded and release carbon, while under clover can help reduce the need for fertilisers and soils can actively sequester carbon. It is important supported in positive management production, as a carbon store and to support biodiversity restoration, particularly in high nature value 3.7.8 There are multiple pressures on agricultural land use. Food production, forestry, peatland restoration, bio-energy, feedstock production and habitat restoration are all competing, meaning it is important to consider optimal land use, as discussed in the LULUCF chapter (Part 3, Chapter 6). There is no doubt, however, that we will want to continue to support rural population growth, including by keeping people on suitable land to produce food as the basis for a thriving Scottish food and drink repopulate parts of rural Scotland where the local population has dwindled and fallen and revitalise our communities by encouraging and enabling more people to live there. Encouraging more localised and regionalised supply chains can build resilience to disruption and provide market support to high quality sustainable food production. 3.7.9 We have taken forward a range of actions in the agriculture sector was published in 2018. We have increased the provision of advice, research and knowledge transfer farming and to help develop our technologies and the opportunities they present for Scotland; we have efficiencies and therefore reduce the integration of trees on farms and crofts; and we have secured improvements on how agriculture that is already being undertaken by farmers and crofters to reduce emissions, and have encouraged peer to peer support through our Monitor Farms. With support from local forestry advisory initiatives, each year are already creating new farm woodlands and diversifying their farming businesses to include

Update to the Climate Change Plan | Agriculture 185 Farming for a Better Climate helps farmers and land managers identify low or no-cost greenhouse gas mitigation measures for everyday activities on the farm. Delivered by SAC Consulting and funded by Scottish Government, the Farming for a Better Climate initiative has worked with 12 volunteer climate change focus farmers and their discussion groups, showcasing practical measures and sharing ideas as they work towards improving farm efficiency and reducing the farm carbon footprint. Farming for a Better Climate is currently exploring soil regenerative agriculture techniques with the help of five arable farmers in the North East of Scotland, charting their experiences and activities to protect and enhance farm soils, and the accompanying benefits for the business. The Farming for a Better Climate webpage and social media accounts help to promote and share ideas, highlight what other farmers are doing and provide a hub of information for farmers and land managers looking to reduce their farm carbon footprint and respond to the climate challenge. More info at 3.7.10 We have directly supported managers to play their part in delivering wider bio-diversity and environmental benefits, with a third of Common Agricultural Policy (CAP) schemes providing 3.7.11 This work has laid the foundations, (Emissions Reduction) (Scotland) Act 2019 means that the urgency has increased. There is now an opportunity, as we support farmers and crofters alongside wider land and Brexit, towards agricultural and support for transformation is reflected in the new policy below. We are already working in partnership to develop new rural support measures that will result in a rapid and widespread uptake, to transition to a sustainable explicitly supports our climate and environmental ambitions. We will 3.7.12 The multi-dimensional nature of farming, crofting and land use means that this is complex and challenging.
We will work with and support farmers, crofters and land managers through this transition, recognising that the existing work underway to consider wider future rural policy must be allowed to

186 Update to the Climate Change Plan | Agriculture 3.7.13 The COVID-19 crisis has created drink sectors. Yet it has also localism and connecting people with nature, reminding us why we must tackle the climate emergency reconnecting people with their food producers. Consumers increasingly value sustainability and resilience high animal welfare standards, transparency in the food supply chain. The crisis has also reminded us about the need for food security and producing our own food given the fragility of international food chain supply arrangements, and 3.7.14 The agricultural sector, as part of the critical national infrastructure for food, has played its part in continued to operate throughout the COVID-19 crisis, particularly in rural and remote areas. It is too early to formally assess the overall impacts of COVID-19 on agricultural businesses but the recognition of food production as being critical, alongside continued EU funding, has maintained the sector. The pandemic highlighted agricultural businesses to have live contingency plans in place, so that in emergency situations animal food production can continue. The Scottish Government is committed to delivering a green recovery from the pandemic, with farming and food production and the wider agricultural supply chain playing a 3.7.15 We must build a sustainable food production sector for future increasing carbon sequestration, biodiversity, air and water quality and allowing households access to fresh and affordable local Scottish 3.7.16 There is an opportunity to work alongside agriculture and land new policies aimed at delivering improving water, soils and air quality; and encouraging natural climate adaptation to facilitate a sustainable future for farming. nature and, where appropriate, the important role that farmers, crofters and land managers play as custodians of our rural landscapes. 3.7.17 Partnership is key to achieving a fair transition. The proposals set out in this Climate Change groups, working with farmers and crofters and other stakeholders in the food and drink sector. The aim is to support farmers, crofters and agricultural businesses to cut their emissions to the lowest level carbon, sustainable farming. We will achieve this by progressing

Update to the Climate Change Plan | Agriculture 187 appropriate policies, developing providing appropriate advice and support to secure further positive 3.7.18 This will also allow us to build further on the levels of innovation we have already seen across the sector, with farmers, crofters and a range of approaches to reduce their businesses, as well as the potential to maintain and enhance 3.7.19 At the same time, we must optimise crofters to produce food for people and livestock more sustainably, appropriate land to support carbon sequestration and storage through peatland. We will also encourage them to farm products which can contribute to renewable energy ambitions, and to take a whole- farm approach to their emissions. We will work with the industry to consider the complex issues around multi-faceted land use and decisions that impact on them, while we identify the best way to ensure delivery of these outcomes. As reflected in the LULUCF chapter, we need to take people with us as our land use changes and we will initiate a conversation with communities, particularly those likely to be most impacted, to ensure people understand what we 3.7.20 We must also recognise the role that farmers, crofters and land managers play in supporting our thriving natural capital, landscapes food production. These can all offer opportunities for upskilling and diversification, which will such opportunities are maximised. 3.7.21 The scale of the change necessary will also present opportunities for some farmers, crofters and land streams either through established industries such as tree planting such as growing bioenergy crops. We will work with the sector to ensure farmers crofters and land rural and island communities share the benefits that come from these 3.7.22 By 2032, the agriculture sector in Scotland will have adopted and be competently using all available such as maximising efficiencies, minimising inputs and maximising optimal slurry and manure usage and storage. There will also be increased innovation in areas such as feedstuffs and use of fertilisers, making a significant contribution to meeting our climate change targets as well as wider environmental and biodiversity impacts for the

188 Update to the Climate Change Plan | Agriculture 3.7.23 Through partnership working between government and industry, agricultural businesses will have the skills and access to training that they need to shift to low emissions and sustainable farming. support to the industry, farmers and crofters across Scotland will benefit from increased climate- retailers. In addition, there will James Hopkinson is one of five farmers working together as part of the Soil Regenerative Agriculture Group under Farming for a Better Climate. James is a partner and founder of Cloud Farming and Arable Ventures, combining the family farm Lindertis and Walker- Munro Farms, growing winter wheat, spring barley, winter barley, oats, peas, To protect and improve farm soils, James and his team have moved away from conventional ploughing across to direct drilling, non-inversion & shallow scratch tillage, causing less disturbance to soils and keeping soils covered under permanent cropping, stubbles or suitable cover crops where possible. James knows that he must first have healthy soil to support the farm to move away from the use of chemicals and synthetic fertilisers. James said “I believe that it is becoming rapidly unviable to consider only treating the symptoms of poor soil health, such as pests & diseases, and that we need to be addressing the root causes which are poor soil structure, restore chemical balance and improve biological activity. I hope that this project will help us gain a clearer understanding on how to change and improve soils on our farms and work towards reducing our farm carbon This is just one example of an in agriculture.
More info about

Update to the Climate Change Plan | Agriculture 189 3.7.24 In 2045, our agriculture industry will have been transformed into integrated food production system nature, restoring biodiversity and 3.7.25 This will have been achieved through widespread adoption of all applicable low emission farming practices, with these existing as usual practice, rather than technologies will have emerged, to reduce the greenhouse emissions associated with food production, and these will be readily taken up by farmers and crofters. A whole- farm, low carbon approach will be the standard, and farmers will grow more biomass crops for both 3.7.26 Farmers and crofters will quality, sustainable food, but professional development will be the norm so that farming practices new technologies as they emerge. value of high quality, sustainably Supply chains will be stronger and more localised, and value will be 3.7.27 The trees planted in the years since 2011 will have matured and be sequestering carbon at scale. will be followed by restocking to begin repeating the process, where appropriate. Farmers and crofters will have facilitated peatland along with the growth of crops for 3.7.28 As outlined in the LULUCF chapter, land use will provide health benefits, help to address rural depopulation and provide social benefits to communities ensured that farmers and crofters opportunities with new, additional sources of income and investment

190 Update to the Climate Change Plan | Agriculture Emissions Reduction Pathway to 2032 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

Update to the Climate Change Plan | Agriculture 191Route Map to 2032

192 Update to the Climate Change Plan | Agriculture 3.7.29 The agriculture policies outlined support for farmers, crofters and land managers to meet Scotland’s and environmental benefits and continuing food production. We will take a co-development approach, increased uptake of low emission advisory support. Assistance will also be provided for farmers and crofters who wish to retire or leave the industry with dignity by providing an opportunity to consider alternative land uses or alternative agricultural uses. We recently consulted on a package for the conversion of agricultural measure will help to encourage the re-use of surplus buildings and the provision of much-needed housing in rural areas, including in support 3.7.30 We believe that the best way ambitions in agriculture is to persuade farmers, crofters and land managers to change the way they produce food and farm the countryside. The work of the farmer led group is aimed as the objective of devising a new deal for them and a new deal based on a clear vision of a Scottish farming sector which produces high quality food for itself and for export; but which does so in a way which seeks to make emission reductions and thus tackling climate change a key objective. These shall be the two twin imperatives that drive our policy and will guide us 3.7.31 For that vision to be able to become a practical reality, it is provide regular reliable income crofters; but in exchange for that farm in different ways in order to reduce emissions. We see this as a social contract with our farmers and crofters and through provision levels we will recognise their hard work and effort in food production and environmental stewardship. 3.7.32 In delivery of this vision, the input of advice, expertise and experience of farmers and crofters (alongside scientists and others) will help us secure the support crofting communities. In order to transform this vision into a series of pragmatic programmes, crofters to accept conditionality, principally in emissions reduction but also in biodiversity. We will work with farmers and crofters and their representative bodies to implement these programmes in a way that provides the time, advice, and capacity to be effective, and over a reasonable transitional period move towards making such

Update to the Climate Change Plan | Agriculture 193 3.7.33 Alongside initiating transformation of the agriculture sector, we will continue to develop an altered approach to rural policy, having left the EU Common Agricultural Policy (CAP). Our approach will build on the programmes brought by the work of farmer led groups, to include and combine this with forestry, peatland restoration emissions. We will also open a discussion on optimum land uses production to multi-faceted land use including forestry, peatland restoration and management and 3.7.34 In recognition of the need for agricultural transformation, we (detailed in Annex A) for a more productive, sustainable agriculture sector that significantly contributes environmental outcomes, through an increased uptake of climate mitigation measures by farmers, crofters, land managers and other 3.7.35 Under this outcome there will be will help transition and begin the food production. These are listed below, along with new and boosted policies under the existing five outcomes in the Climate Change Plan (shown in context in Annex A). 3.7.36 In the future farmers and land managers shall be able to access 147 Announced at Agriscot, November 2020 148 Announced in 2020-2021 Programme for Government 149 Announced in 2019-2020 Programme for Government 150 £10 million pilot Sustainable Agricultural Capital Grant Scheme announced in 2020-2021 Programme for Government positive land stewardship that contributes to tackling climate new policy proposal to develop rural support to enable, encourage require the shift to low carbon, emissions reduction, sustainable biodiversity, planting biomass crops and appropriate land use change, developed in line with just transition principles.
This will consider how a policy specifically for Scotland can be introduced to replace the existing EU CAP New agricultural support measures 3.7.37 A new commitment to develop support low carbon, sustainable farming, including through the Suckler Climate Group147 and other farmer-led groups on arable, dairy and high value, nature farming and crofting which will report in 3.7.38 A new commitment to scale up the Agricultural Transformation policies, including monitoring to assess the effectiveness of the pilot Sustainable Agricultural Capital Grant Scheme that will enable farmers and crofters to purchase equipment that should assist in reducing their greenhouse gas emissions, and support practice

194 Update to the Climate Change Plan | Agriculture 3.7.39 A new policy proposal to introduce environmental conditionality in the agriculture sector from 2021 via implementation of the Beef Suckler Climate Report and more review of existing CAP Greening, which will extend the requirements to all farmers and crofters to undertake environmental actions. Further provision of advice for 3.7.40 A new commitment to work with stakeholders to provide advice, crofters who wish to step back by providing an opportunity to consider alternative land-uses or alternative agricultural uses. We also consider that transition of use and succession of outgoing farmers will be a process that can be facilitated by a more relaxed 3.7.41 A new and expanded peer to peer based on the success of our Young Climate Change Champions work, whilst also incorporating wider environmental interests. This will allow peers to raise awareness of the issues, opportunities and best practice for low carbon farming along with wider environmental 151 Boosted in 2020-2021 Programme for Government 3.7.42 Since the 2018 Climate Change mitigation measures in agriculture through a range of communication methods, utilising technology and all media to best effect. This advice and knowledge transfer is essential and we will develop this through a new policy to realign and enhance and initiatives such as the Farm Advisory Service, the Knowledge create a more cohesive approach to ensure advice and support is focussed on helping the industry to professionalise and support sustainable farming. This will also boost a range of existing policies in 3.7.43 Policies on nitrogen use have been boosted though the development Reduced emissions from the use and storage of manure and slurry 3.7.44 A new policy proposal to review application of organic materials such as silage, slurry and liquid digestate, including what support may be required to ensure best practice. It is also boosted through slurry store covers under the pilot

Update to the Climate Change Plan | Agriculture 195 3.7.45 We have boosted our policies on livestock emissions intensity through finalising research into the practicalities and feasibility of using feed additive methane inhibitors at scale in Scotland; reduction including in areas such as methane capture and breeding for low emitting livestock. This research will allow consideration, further development and uptake of emerging technologies in Scotland. 3.7.46 A new policy proposal to explore options for land-use change to optimise uses beyond traditional farming and food production to multi-faceted land use including forestry, peatland restoration 152 Demonstrator network announced in this Climate Change Plan update, £1.5 million announced in Summer 2020 3.7.47 Boosted existing support and and croft tree integration based additional £1.5 million to further support the integration of small woodlands on farmers and crofts across Scotland152. A new policy proposal, building on the successful work integrating woodland with agricultural holdings, particularly in the tenanted sector who want to engage in woodland creation, including exploring the potential 3.7.48 A new policy proposal to work with stakeholders on options to increase peatland restoration on suitable agricultural and crofting policies in the LULUCF chapter. We will map peatland against this land which will allow modelling options for land-use change and inform opportunities for targeted support of peatland restoration

196 Update to the Climate Change Plan | Agriculture 3.7.49 The Scottish Government has for funding to support this work as a contribution to delivery of UK climate change targets. The level of that support must reflect the large contribution Scotland’s land mass has to offer in sequestering and storing carbon, not only to meet our climate change targets, but to help the whole of the UK meet theirs. The Scottish Government also expects the UK Government to uphold commitments to provide replacement EU funding to ensure managers and rural businesses can 3.7.50 We have also asked that the UK Government ensures that future environmental standards delivered by Scottish farmers. The Scottish proposals for the next 5 years in its stability and simplicity paper aimed at providing farmers with financial certainty in the face of Brexit. We are working to ensure that sustainability and inclusion lie at the core of future trade policy and we want the emission intensity of agricultural goods, and livestock in particular, to be a consideration when assessing future trade deals. 3.7.51 The support and expertise of public sector partner organisations will be vital as we take forward the policies and proposals included in this Plan update and a new rural support policy. It is important and public sector partners must also engage farmers, crofters and land managers and owners in the formulation and delivery of new 3.7.52 We will therefore continue practice, for example through our collaborative work with public NatureScot and Forestry and Land Scotland, particularly on land use change and delivery of outcomes at a landscape scale. One example Approach in Scotland. Another is the work that FLS are doing on the restoration of the damaged industrial landscapes of the Central and the extractive industries, with the aim of returning to a productive countryside that people can enjoy. This is an exciting and transformational, landscape scale set of interventions truly aimed at community payback and 3.7.53 Regional Land Use Partnerships owners, stakeholders and local communities working together to meet regional priorities, whilst also supporting our national endeavour to end Scotland’s contribution to Scottish businesses and industry 3.7.54 Scottish businesses and industry decarbonise the agriculture sector.
continue to work in partnership to highlight solutions, as well

Update to the Climate Change Plan | Agriculture 197 the development of future rural sustainable Scottish agriculture sector. For example, we encourage businesses to support farmers, investing in high quality Scottish produce, promoting sustainability within the agriculture sector. chain also has a role to reduce their emissions and enable the quick adoption of new methods, equipment, tools and products. 3.7.55 The private sector also has a role in supporting investment in nature based solutions, bringing forward accounting investment vehicles that farmers and land managers 3.7.56 The Scottish Government has healthy diet, and Food Standards Scotland have a well-established set of guidelines on how to achieve the need for a healthy level of consumption of red meat and dairy products and a marked increase in the consumption in fruits and 3.7.57 The Scottish Government and would further encourage the people of Scotland to consider the positive impacts of eating locally sourced food and, crucially, minimising food waste. Through buying high quality local Scottish produce, including red meat and dairy products, we can work with ensure it is produced in a truly simply off-shoring emissions to other countries. Creating greater security and resilience in our food supply chains will also create opportunities for innovation, skills and jobs in the wider food and 3.7.58 As has been highlighted within the waste chapter (Part 3, Chapter 5) of this update, reduction of food waste also has an important role to play in driving emissions reductions within Scotland, and can result in significant cost saving for

198 Update to the Climate Change Plan | Negative Emissions Technologies

Update to the Climate Change Plan | Negative Emissions Technologies 199 3.8.1 Our pathway to net zero is from across Scotland’s economy. However, we also need to bring forward key technologies which need technologies which will not just store emissions resulting from energy or industrial processes, but deliver a net reduction in Committee (CCC) has highlighted Emissions Technologies (NETs) in meeting net zero across the UK, and the relatively greater potential we have in Scotland to remove and 3.8.2 The use of NETs can remove achieved in two firstly, its sequestration (for example emissions by plants and trees); and secondly, its capture and long term storage. The two primary options for sequestering carbon discussed in the chapter are through the growth of biomass and through the direct (technological) capture of carbon from the atmosphere. There are also other ways of removing of forestry, which are covered in the LULUCF Chapter of this Plan update (Part 3, Chapter 6). This chapter focuses on the removal of carbon via technologies, rather 3.8.3 NETs pathways with the potential Ħ Bioenergy with Carbon Capture this involves the use of biomass to generate electricity and Storage (CCS) to prevent the generating electricity, the process results in negative emissions, bioenergy crops when they grow Ħ Biomass/Waste Gasification and Carbon Capture and Storage for high temperatures to produce a syngas rich in hydrogen, which then be upgraded and separated to sequester the carbon via CCS, Ħ BECCS in in addition hydrogen or electricity, there BECCS applications linked to the production of industrial heat or Ħ Biofuel production with Carbon conversion of biomass resources further pathway for the use of bioenergy, which in combination

200 Update to the Climate Change Plan | Negative Emissions Technologies Ħ Direct Air Carbon Capture and Storage (DACCS): this is not an it is a process that is run for from the atmosphere in order to safely and permanently store it. 3.8.4 As this list shows, CCS is an essential part of any NETs project. Our strategy for delivering NETs will be built around our support for a flexible and adaptable CCS system in Scotland, capable of transporting carbon from industrial or electricity generation sites in Scotland to 3.8.5 We have already made substantial development of CCS in Scotland. The Acorn project in North East Scotland, supported by the Scottish detailed delivery plan for major CCS infrastructure based at St. and begin capturing and storing potential to capture and store This will involve the development of a carbon storage site in the North Sea capable of storing over 20 Gt of carbon in total and the repurposing of a North Sea gas pipeline to deliver carbon to the site. Further storage sites mean the total storage opportunities in Scottish waters is estimated at 3.8.6 This technology is supported by the work of North East CCUS decarbonisation. NECCUS will lead the development of the Scottish SNZR will identify pathways and opportunities for decarbonisation, including Hydrogen production and fuel switching, and how the Acorn project will enable emissions to be captured in the wider Scottish 3.8.7 With the exception of DACCS, understand the implications, scale resources should be focused on each of the possible pathways, and how this interacts with other uses 3.8.8 For example, where we use impacts on our agriculture and land use sectors. Where we import to do so in a way that supports efforts to tackle the global climate emergency, which means adopting elsewhere, and considering the growing importance of bioenergy as a pathway to decarbonisation in Markets, regulation and revenues 3.8.9 Developing market structures require substantial changes in carbon pricing arrangements and the development of appropriate

Update to the Climate Change Plan | Negative Emissions Technologies 201 3.8.10 These developments can build on existing success stories such as Contracts for Difference, which have driven the continued growth and development of renewable electricity reducing the cost of energy. It is also important that market structures recognise and reward the real value, in captured carbon, and build this into mechanisms that value and 3.8.11 As discussed in the Industry chapter, we support the implementation of a UK ETS once the UK leaves the EU, to maintain the carbon price signal provided by the EU ETS.
Through this we will work with ways to value and reward negative emissions as well as pricing positive needs to recognise the variety of technologies that will need to come together, and the composite and 3.8.12 The potential for developing NETs in Scotland, and the role that they will need to play in meeting our targets, represents a substantial sets out that we expect to begin atmosphere through NETs by 2030, as an important part of meeting 3.8.13 There are significant opportunities in both electricity generation and industrial processes that can be brought forward during the 2020s, together with wider opportunities to support the decarbonisation 2030s and 2040s. Our first step will therefore be to identify the most efficient and effective NETs St Fergus Gas Plant, site of future Direct Air Capture project. North Sea Midstream Partners (NSMP) Limited. 202 Update to the Climate Change Plan | Negative Emissions Technologies 3.8.14 This will mean identifying which locations and sectors are best can be brought together with a coordinated CCS system. We will gather this information, starting feasibility study next year. This will give us the strongest platform and body of knowledge possible for accelerating the delivery of NETs projects during the rest of 3.8.15 A strong and urgent focus on NETs provides an opportunity for Scotland to be at the forefront of developing new technologies to tackle climate change, one that can build on existing our natural resources, expertise, as well as the developing pipeline of 3.8.16 The use of BECCS for electricity to deliver substantial negative CCC highlights this as the biggest contributing application in 2050 in its net zero report. A major retrofit of CCS to an existing bioenergy power station at Drax in Yorkshire substantial negative emissions by 2030. The development of BECCS in Scotland, building on the work described in this chapter, which will enable us to better understand implications, has real potential to turn electricity generation in Scotland from an emitting sector 3.8.17 BECCS also has deployment potential in industrial settings, where there are fewer alternatives produce negative carbon industrial electricity has the potential to make substantial inroads into what is currently our highest emitting 3.8.18 Making early decisions on where technology options and the place based options. Our initial focus will be on looking across Scotland at which sites provide opportunities for either electricity generation or industrial applications of NETs and, working with industrial partners, carrying out high level feasibility studies which link closely to the 3.8.19 This work to identify feasible sites will be carried out in parallel with our review of bioenergy so that by 2023 we will have the evidence to focus our resources on bringing forward and developing specific Research and development, trial 3.8.20 Many of the technologies needed to deliver NETs already exist. A key challenge will be how to integrate each component into an efficient and commercially viable process. Alongside our focus on developing scale NETs projects, we will also focus innovation and industrial

Update to the Climate Change Plan | Negative Emissions Technologies 203 support onto projects which raise the technological readiness of each of the NETs pathways. This will leverage our existing support for CCS, along with the substantial expected from the UK Government 3.8.21 We have provided £300,000 of start-up and support funding to the industrial decarbonisation this will identify and highlight opportunities for carbon reduction, including NETs, and will form a key part of our initial feasibility work. We have directly supported CCS planning to date at St. Fergus through the Acorn project with 3.8.22 We have announced a major The Scottish Industrial Energy projects at industrial sites for decarbonisation, including working feasibility and conceptual studies 3.8.23 We are also announcing a £100 million funding commitment for hydrogen, as part of a wider new Fund of £180 million to support and CCS, and which will add new 3.8.24 Whilst DACCS is an emerging trial and demonstration direct air capture plants operating in Europe, the USA and Canada. For example, the CarbFix project in Iceland is currently capturing dissolving it in water for injection and underground storage. There are already opportunities to scale up this technology. The Canadian developing a large-scale direct air capture plant in the USA that could capture up to 1 MtCO2e each year. 3.8.25 We believe that the potential exists to bring forward a DACCS demonstration plant in Scotland during the 2020s, subject to the planning processes. The recent and Acorn CCS is consistent with Gas removal technologies, and has also confirmed plans to open a call for evidence on these issues. offshore transport and storage infrastructure of the kind being developed in North East Scotland. 3.8.26 NETs have the potential to secure existing jobs as well as delivering new ones. If successful, existing industries, which are currently some of Scotland’s largest carbon emitter will be able to move to

204 Update to the Climate Change Plan | Negative Emissions Technologies actively supporting and reducing Scotland’s emissions with every closer to net zero as their output Industry chapter, jobs in the CO2 management industry, a core facet of the Carbon Capture Utilisation estimated to reach between 7,600- 105,000 by 2050, if Scotland is successful at securing 40% of the 3.8.27 The criticality of CCS to NETs means that there will be growing opportunities to repurpose and help transition the skills and across the Oil and Gas sector. This will help secure work, jobs and income for a major sector of the Scottish economy, which currently supports approximately 100,000 3.8.28 The need to develop NETs research to move quickly to larger scale roll out, will represent a major investment in our green economy, 3.8.29 By 2032, there will be major NETs projects operating in capable of generating clean energy emissions from our atmosphere.
The demonstration and early roll- out of CCS achieved during the 2020s will build the foundation for unlocking negative emission potential across industrial and CCS infrastructure in north east Scotland will be able to capture technologies as well as NETs. Roll- demonstration and trial projects developed during the first half of the 2020s, and operational for 3.8.30 By 2045, we expect Scotland informed and guided by a detailed evidence base, taking place in Scotland. It will also support sustainable international trade, bioenergy resources are available to countries around the world. 3.8.31 There will also be potential for technologies which are currently less well developed or understood to make an impact. For example, the use of gasification and/or the production of biofuels may, if the evidence shows that this is an efficient use of bioenergy, in Scotland. This could create buildings, services and transport, as well as industry and electricity. 3.8.32 DACCS is likely to have been deployed in Scotland in a focused and specific way, to ensure that it can counterbalance any further

Update to the Climate Change Plan | Negative Emissions Technologies 205 Pale Blue Dot Energy, the developers behind Acorn CCS and Acorn Hydrogen Project located at St Fergus Gas terminal in North East Scotland have entered into a partnership with Carbon Engineering, a leading provider of Direct Air Capture (DAC) technology that captures carbon dioxide out of the The companies have announced their intentions to work together to deploy commercial DAC projects in the UK and have signed a Memorandum of Understanding to collaborate on the development of facilities that will contribute towards the removal of millions of tonnes of CO2 from the atmosphere each year. This agreement marks the first partnership between a DAC technology company and a UK development partner and signifies the next step towards establishing a UK DAC industry that will create significant environmental and economic benefits. One of the locations being considered by the partnership for their first UK DAC plant is close to the Acorn CCS project at St Fergus. The proposed DAC facility would deliver permanent carbon dioxide removal by capturing significant volumes of CO2 from the air and then safely and permanently storing it deep below the seabed in an offshore geological storage site. Pale Blue Dot Energy are currently developing the offshore Acorn CO2 storage site, which was awarded the first UK CO2 appraisal and storage licence by the Oil and Gas Authority. From a pilot plant in British Columbia Canada, Carbon Engineering has been removing CO2 from the atmosphere since 2015 and converting it into fuels since 2017 and is now engineering its first large-scale commercial plant in the United States that will capture one million tonnes of atmospheric CO2 annually – equivalent to the work of 40 Acorn is aiming to be operational from late 2024 and the first DAC project could be operational approximately two years later. These types of greenhouse gas removal projects can help accelerate Scottish and UK efforts to reach net zero emissions by compensating for sectors of the economy that are challenging to decarbonise directly, such as aviation,

206 Update to the Climate Change Plan | Negative Emissions Technologies Emissions Reduction Pathway to 2032 Negative Emissions Technologies (NETS) 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 St Fergus Gas Plant, site of CCS Project. Shell

Update to the Climate Change Plan | Negative Emissions Technologies 207Route Map to 2032 First tranche of funding available from the £180 million Emerging Ħ 2026 – Shipped imports of CO2 for storage in the Acorn store; Ħ 2026 – Direct Air Capture and Storage operating from St Fergus. 208 Update to the Climate Change Plan | Negative Emissions Technologies 3.8.33 We are announcing a new Fund of £180 million that will make £100 million available to million of this funding will be directed to projects supporting the development of CCS and NETs in Scotland. This funding will help to deliver negative emissions, including innovative marine energy 3.8.34 We will publish a Bioenergy bioenergy in the energy system and setting out in more detail how 3.8.35 In 2021 building on the Bioenergy Bioenergy Expert Working Group to consider and identify the most appropriate and sustainable use for bioenergy resources across Scotland. It will also assess the within Scotland, and confirm the level of import that we believe is compatible with a sustainable 3.8.36 By 2023, in time to inform the will publish a Bioenergy Action Plan, incorporating the learning developed by the expert working group and our understanding of the options to use Bioenergy in both NETs and other applications. 3.8.37 The Industry chapter of this Plan update (Part 3, Chapter 4) provides more detail and outlines commercialisation of CCUS within Building on this, our funding and technology for delivering NETs, will ensure that the development of carbon transport and storage infrastructure is designed and developed to support the delivery 3.8.38 We will ensure that Scotland’s NECCUS and our support for the focus on developing a flexible CCS system in Scotland capable projects across north east and central belt of Scotland. This Utilisation challenge fund that will operate between 2022 and 2024. Update to the Climate Change Plan | Negative Emissions Technologies 209 3.8.39 In 2021/22, we will carry out a detailed feasibility study of NETs in Scotland, ready for the early 2030s.
This will identify specific sites and applications of NETs, including developing work to support policy on Direct Air Capture and its role within NETs in 3.8.40 From 2022, based on the outcomes of this feasibility work, we will provide support for commercial proposals, including initial design 3.8.41 We will put in place a continual development and progress against indication of which technologies and applications are being taken forward, we will be able to re- allocate the negative emissions to specific individual sectors in the 3.8.42 If new evidence indicates that reassess the scale and role of NETs in the next Climate Change Plan, including any need to re-allocate emissions reductions across other 3.8.43 The UK Government needs financial frameworks, required to build confidence and enable the of the first CCS facilities in the UK 3.8.44 This will require urgent clarity on the steps that the UK Government will take to support and deploy negative emissions technologies and capacity within the electricity sectors. As part of that, the UK number of characteristics of NETs commercial investors. It will be Contract for Differences (CfDs) on the output (e.g. electricity) of a NETs installations provide return on investment are agreed

210 Update to the Climate Change Plan | Negative Emissions Technologies processes in a coordinated way. or electricity generation means complex processes, for example converting from fossil fuel to transport and store the carbon positive emissions, the role of will be to reward NETs for the atmosphere. It is important that options for valuing and pricing 3.8.45 In December 2020 the UK consultation and call for evidence take this opportunity to engage with stakeholders on the issues raised, and to submit a measured 153 3.8.46 The UK government must also set out its view, advice and plans for the role of bioenergy in the energy Scottish businesses and industry 3.8.47 The development of NETs Scotland to pioneer ways which sustainability. To deliver this, we need Scottish business to commit deliver NETs. By doing so they will be developing world-leading technologies and processes, giving 3.8.48 We need business to work with support is needed to bring NETs investment forward. Through our will provide substantial financial support to developing projects. In return we need business to engage constructively, helping us identify potential projects, and showing how these can fit within the wider development of CCS infrastructure,

Update to the Climate Change Plan | Annexes 211

212 Update to the Climate Change Plan | Annexes Annex A – Policies and Proposals in Outcome 1: The electricity system will be powered by a high penetration of renewables, aided by a range of flexible and Support the development of a wide range of renewable technologies by addressing current and future challenges, including market and policy barriers. Support improvements to electricity generation and network asset management, including network charging and access arrangements that encourage the deployment and viability of renewables projects in Scotland. Publish a revised and updated Energy Strategy, reflecting our commitment to net zero and key decisions on the pathways to Develop and publish a Hydrogen Policy Statement by the end of 2020, followed by a Hydrogen Action Plan during 2021. A new renewable, all energy consumption target of 50% by 2030, covering electricity, heat and transport. Maintained Introduce a new framework of support for energy technology innovation, delivering a step change in emerging technologies funding to support the innovation and commercialisation of renewable energy generation, storage and supply. Renewed focus on developing local energy projects and models, including through CARES, supporting the achievement of 1GW and 2GW of renewable energy being in Local Community ownership by 2020 and 2030. We will carry out detailed research, development and analysis during 2021 to improve our understanding of the potential to deliver negative emissions from the electricity sector. Update to the Climate Change Plan | Annexes 213 We will continue to review our energy consenting processes, making further improvements and efficiencies where possible, and seeking to reduce determination timescales for complex electricity generation and network infrastructure applications. We will deliver the actions from our Offshore Wind Policy Statement, published in October. These actions, ranging from support for supply chain, planning, innovation and skills, will support the development of between 8 and 11 GW off offshore Accelerate our work with aviation, energy and other stakeholders to ensure that all radars are wind turbine tolerant/neutral during the coming decade. Review and publish an updated Electricity Generation Policy Statement ahead of the next Climate Change Plan. Outcome 2: Scotland’s electricity supply is secure and flexible, with a system robust against fluctuations and interruptions to supply. Support the development of technologies which can deliver sustainable security of supply to the electricity sector in Scotland and ensure that Scottish generators and flexibility providers can access revenue streams to support investments. Press the UK Government for market mechanisms and incentives which recognise locational value, both for energy and for security of supply, and which do not create undue barriers for investment in Scotland. Collaborate on actions to support investment in new pumped storage hydro capacity. Maintained Work with all parties to secure maximum benefits from the move towards smarter and more flexible electricity systems and networks, as set out in the UK Smart Systems and Encourage and support increased interconnection which can enhance Scottish system security while considering effects on domestic capacity and investment. 214 Update to the Climate Change Plan | Annexes Launch a call in 2021 for evidence and views on technologies that can transform our electricity system, including energy storage, smart grid technologies, and technologies to deliver sustainable security of supply. This will help ensure that our funding and interventions support world leading activity in Develop a series of whole system energy scenarios to guide infrastructure investment decisions for Scotland. Ensure that sustainable security of electricity supply is included as a priority within future Scottish Government energy innovation funding programmes.
Outcome 3: Scotland secures maximum economic benefit from the continued investment and growth in electricity generation capacity and support for the new and innovative technologies which will deliver our decarbonisation goals. Press the UK Government to further reform and maintain the CfD mechanism in a manner which better captures the economic benefits and total value added for the Scottish and Introduce new requirements for developers to include supply chain commitments when applying to the ScotWind leasing process run by Crown Estate Scotland. Identify and support major infrastructure improvements to ensure that Scotland’s supply chain companies and facilities can benefit from the continued growth of renewable energy. Update to the Climate Change Plan | Annexes 215 Outcome 1: The heat supply to our homes and non-domestic buildings is very substantially decarbonised, with high penetration rates of renewable and zero emissions heating Outcome 2: Our homes and buildings are highly energy efficient, with all buildings upgraded where it is appropriate to do so, and new buildings achieving ultra-high levels of fabric efficiency Energy Company Obligation (ECO) requires obligated energy supply companies to deliver energy efficiency measures in homes – mainly insulation-based measures and boiler Energy Efficient Scotland Delivery Ħ Area Based Schemes and Warmer Homes Scotland. Ħ Home Energy Scotland Advice Service and Loans. Ħ Home Energy Scotland cashback scheme for zero emissions heating technologies and energy efficiency measures - Ħ SME Advice Service and Loans. Ħ SME cashback scheme for zero emissions heating technologies and energy efficiency measures - boosted. We will review existing Scottish Government funding schemes to ensure that they support the deployment of low and zero emissions heat. We will expand the provision of loans to the SME sector, and enhance the wider energy efficiency and heat advice service and provision of tailored start-to-end support. Procure a new national delivery scheme, to replace the existing Warmer Homes Scotland contract, to open in 2022. Energy Efficiency Standard for Social will be met by social landlords by 2020. Maintained 2024 New Build Zero Emissions from Heat requiring new buildings to have zero emissions heating systems. 216 Update to the Climate Change Plan | Annexes Review of energy standards within building regulations. The review investigates the potential for further, significant improvement on 2015 standards and how building standards can support other carbon and energy policy outcomes, including our decarbonisation of heat agenda. Heat in Buildings Put in place regulation to increase uptake of zero emissions heating systems and improve energy efficiency standards across all tenures, prioritising the raising of standards for households living in fuel poverty. Re-introduce revised regulations to the Scottish Parliament requiring mandatory minimum energy efficiency standards for the Private Rented Sector, to come into force from 2022. Low Carbon Infrastructure Transition Programme (LCITP) - supports investment in decarbonisation of business and the Expanded £1.6bn Heat in Buildings capital funding over the next parliament Building on the Low Carbon Infrastructure Transition Programme (LCITP) and existing energy efficiency and zero emissions heat support programmes. Non Domestic Public Sector Energy Efficiency (NDEE) A four year framework launched in March 2016, designed to support public and third sector organisations to procure Energy Efficiency retrofit work. The Framework will continue for a further four years commencing in 2020. NDEE Support Unit accelerates the number of projects and delivery timescales of public sector energy efficiency projects using the NDEE Framework and supports our wider ambitions around energy demand reduction. The Renewable Heat Incentive (RHI) - a GB-wide scheme created by the UK Government (with the agreement of the Scottish Government). UK Government is extending both the domestic and non-domestic RHI out to 2022. UK Green Gas Support Scheme - a GB-wide Green Gas Scheme is planned to come into force in 2022, stimulating biomethane UK Clean Heat Grant - a GB-wide Clean Heat Grant is planned to come into force in 2022, supporting uptake of heat pumps (and limited biomass boilers) via up-front grants. Support for Heat the District Heating Loan Fund helps address the financial and technical barriers to district heating projects by offering low interest loans. Update to the Climate Change Plan | Annexes 217 Implement the provisions of the Heat Networks (Scotland) Bill to create a strong regulatory framework to support delivery by Continue to support the Heat Network Partnership - a collaboration of agencies focused on the promotion and support of district heating schemes in Scotland. Net Zero Carbon Public Sector Buildings Standard will be introduced in 2021 and progressively rolled out across the public sector, as announced in the Programme for Government Local Heat and Energy Efficiency Strategies (LHEES) will be in place by the end of 2023, setting out preferred heat solutions zones, guiding building owner decision making about replacement heating systems, and forming the basis for local delivery plans targeting heat and energy efficiency investment. Assessment of Energy Performance and Emissions Regulations (Non-Domestic Buildings) - The Assessment of Energy Performance of Non-domestic Buildings (Scotland) Regulations 2016 require assessment of the energy performance and emissions of larger non-domestic buildings (those over 1,000 m²). A review programmed for 2021 will investigate and consult upon amended scope of standards and more challenging improvement targets to create a viable pathway for all existing non-domestic buildings to deliver the level of energy demand and emissions reductions needed. Support for community low and zero emissions heat projects Salix financing facility to support investment in non-domestic buildings retrofit. Maintained Work with social landlords to bring forward the review of the existing Energy Efficiency Standard for Social Housing (EESSH2) with a view to strengthening and realigning the standard with net-zero requirements.
Work with our partners, including the UK Government, local authorities and utility providers to determine the best approach to heat decarbonisation for buildings currently Review the system of building assessments and reports on energy performance and heat to ensure a system that is fit for purpose in meeting net zero emissions objectives for heat in

218 Update to the Climate Change Plan | Annexes Work with stakeholders to further understand and support the application and use of low and zero emissions heating within designated historic environment assets and hard to treat Develop and introduce future regulation for non-domestic buildings and launch a consultation on these proposals. Undertake work to identify the capacity and output of renewable electricity generation required in Scotland to support the projected roll-out of heat pumps. Consider whether to extend Permitted Development Rights for zero-emission heat networks and micro-renewable Undertake work to better understand the impact on electricity networks of projected heat pump deployment. Work with the Distribution Network Operators through the Heat Electrification Partnership to build an evidence base to Work with industry and networks to understand need for heat pumps systems to be smart enabled, and identify options to integrate smart systems into our delivery programmes; and to explore how innovation can help to improve the consumer Support heat networks Introducing a Non-Domestic Rates Relief for renewable and low carbon heat networks until 2023/24. Working to identify how new buildings in Heat Network Zones could be made ready to connect to heat networks. Including district heating within the Permitted Development Through National Planning Framework 4, ensuring that local development plans take account of where a Heat Network Zone Explore how local tax powers could be used to incentivise or encourage the retrofit of buildings, and commission further analysis to identify potential options. Design future delivery programmes to ensure significantly accelerated retrofit of buildings, with new programmes to be in

Update to the Climate Change Plan | Annexes 219 Outcome 3: Our gas network supplies an increasing proportion of green gas (hydrogen and biomethane) and is made ready for a fully Hydrogen for heat demonstrator – providing £6.9m support for SGN’s H100 hydrogen for domestic heat demonstrator. Work with UK Government on product standards, with a view to making new gas boilers hydrogen-ready. Outcome 4: The heat transition is fair, leaving no-one behind and stimulates employment opportunities as part of the green recovery Develop a long-term public engagement strategy in 2021 and begin implementation of early actions. New Smart Meter All homes and businesses will be offered a smart meter by 2020 under a UK Government initiative, providing the opportunity for a greater understanding of final energy consumption. Work with the Scottish Cities’ Alliance and the seven cities on the opportunities to accelerate activity on heat and energy Provide capital investment for Scottish colleges for equipment to deliver training for energy efficiency and heat. Respond to the recommendations of the Expert Advisory Group on a heat pump sector deal for Scotland, by Q1 2022. Bring forward and support demonstrator projects, such hybrids and high temperature heat pumps; the use of hydrogen for space and water heating; projects to understand the impact of heat transition on existing energy networks. Publish a ‘Heat Network Investment prospectus’ in 2021/22 - a first-cut of HN Zones across Scotland, combined with information on decarbonisation needs of existing networks. Establish a short life working group on finance for the heat

220 Update to the Climate Change Plan | Annexes Establish principles to underpin our commitment to ‘no-one being left behind’ in the heat transition, ensuring our approach neither increases the fuel poverty rate nor increases the depth of existing fuel poverty. This will include the effective design and targeting of our fuel poverty and heat in buildings Ensure Local Heat and Energy Efficiency Strategies are developed through extensive engagement with local Continue delivery of energy efficiency investment to support fuel poor households and conduct further modelling and analysis to better understand the potential impact of the heat transition on fuel poor households and the scale of, and options for, mitigation that may be required. Urge the UK Government to rebalance levy costs on energy bills to make gas and electric systems relatively more cost

Update to the Climate Change Plan | Annexes 221 Outcome 1: To address our overreliance on cars, we will reduce car If the health pandemic has moved to a phase to allow more certainty on future transport trends and people’s behaviours – and work and lifestyle choices future forecasting – we will publish a route-map to meet the 20% reduction by 2030 in Commit to exploring options around remote working, in connection with our work on 20-minute neighbourhoods and COVID-19 has impacted on how we work. We launched a Work Local Challenge to drive innovation in work place choices and remote working to support flexible working and our net zero We will work with the UK Government on options to review fuel duty proposals, in the context of the need to reduce demand for unsustainable travel and the potential for revenue We will work with local authorities to continue to ensure that their parking and local transport strategies have proper appreciation of climate change, as well as the impact on all road users, including public transport operators, disabled motorists, cyclists and pedestrians. To support the monitoring requirement for the National Transport Strategy set out in the Transport (Scotland) Act 2019, and to further our understanding of how and why people travel, we will develop a data strategy and invest in data. Continue to support the Smarter Choices, Smarter Places (SCSP) programme to encourage behaviour change. Continue to support the provision of child and adult cycle training, and safety programmes including driver cycling awareness training

222 Update to the Climate Change Plan | Annexes Support transformational active travel projects with a £500 million investment, over five years, for active travel infrastructure, access to bikes and behaviour change schemes.
Enabling the delivery of high quality, safe walking, wheeling and cycling infrastructure alongside behaviour change, education and advocacy to encourage more people to choose active and sustainable travel. Support the use of E-bikes and adapted bikes through interest free loans, grants and trials. We have re-purposed almost £39 million of active travel funding for the Spaces for People; this is enabling local authorities to put in place the temporary measures such as pop-up cycle lanes and widening walkways that are needed to allow people to physically distance during transition out of the Support increased access to bikes for all including the provision of public bike and e-bike share. Mobility as a Service and increased use of peer to peer car sharing which will help reduce the number journeys made by car. To do this we are harnessing innovation within our transport system through investing up to £2 million over three years to develop ‘Mobility as a Service’ (MaaS) in Scotland. We will grant funding CoMoUK to increase awareness of the role and benefits of shared transport and looking at the barriers to uptake of car clubs. We will provide support for travel planning through Travelknowhow Scotland, which is an online resource which offers employers access to sustainable travel planning tools to develop and implement workplace Travel Plans and encourage ride-sharing in order to start changing travel behaviour within organisations. We will work to improve road safety, ensuring people feel safe with appropriate measures in place to enable that. We will publish Scotland’s Road Safety Framework to 2030, following consultation on an ambitious and compelling long-term vision for road safety where there are zero fatalities or serious injuries on Scotland’s roads by 2050. We are committed to taking forward policy consultation in advance of drafting supporting regulations and guidance to enable local authorities to implement workplace parking levy schemes that suit their local circumstances. We will bring forward a step change in investment with over £500 million to improve bus priority infrastructure to tackle the impacts of congestion on bus services and raise bus usage. We will launch the Bus Partnership Fund in the coming months to support local authorities’ ambitions around tackling

Update to the Climate Change Plan | Annexes 223 We remain committed to delivering a national concessionary travel scheme for free bus travel for under 19s, and have begun the necessary preparations including planning, research, legal review and due diligence. We are also carrying out a review of discounts available on public transport to those under the age of 26 – due for completion end of December 2020 (with consultation planned on young people’s views on the impacts of COVID 19 and post lockdown measures on public transport usage and behaviour). Delivery of our first Active Freeways - segregated active travel routes on main travel corridors connecting communities and Outcome 2: We will phase out the need for new petrol and diesel We will consider and develop new financing and delivery models for electric vehicle charging infrastructure in Scotland and working with the Scottish Future Trust to do so. We have invested over £30m to grow and develop the ChargePlace Scotland network which is now the 4th largest in the UK. We will continue to develop the capacity of the electric Our Low Carbon Transport Loan has provided over £80m of funding to date to support the switch to low carbon vehicles. We will continue to support the demand for ultra-low emission vehicles (ULEVs) through our Low Carbon Transport Loan scheme, which is now being expanded to include used electric We will continue to promote the uptake of ULEVs in the taxi and private hire sector. Maintained Continue to promote the benefits of EVs to individuals and fleet operators (exact nature of promotion to be decided We will work with public bodies to phase out the need for any new petrol and diesel light commercial vehicles by 2025. We will support the public sector to lead the way in transitioning to EVs, putting in place procurement practices that encourage EVs. In the Programme for Government we committed to work with public bodies to phase out the need for any new petrol and diesel light commercial vehicles by

224 Update to the Climate Change Plan | Annexes Create the conditions to phase out the need for all new petrol and diesel vehicles in Scotland’s public sector fleet by 2030. We will continue to invest in innovation to support the development of ULEV technologies and their adoption. Maintained Take forward the initiatives in respect of connected and autonomous vehicles set out in A CAV Roadmap for Scotland. Maintained With local authorities and others, evaluate the scope for incentivising more rapid uptake of electric and ultra-low Outcome 3: To reduce emissions in the freight sector, we will work with the industry to understand the most efficient methods and remove the need for new petrol and diesel heavy vehicles by 2035. To support businesses we will establish a Zero Emission heavy duty vehicle programme and will invest in a new zero drivetrain testing facility in 2021. Explore the development of green finance models to help business and industry to invest in new road transport We will engage with industry to understand how changing technologies and innovations in logistics (including consolidation centres) can help to reduce carbon emissions, particularly in response to the increase in e-commerce. Continue to investigate the role that other alternative fuels, such as hydrogen, and biofuel can play in the transition to a decarbonised road transport sector. Consider the scope for testing approaches to alternative fuels infrastructure and Launched the new Hydrogen Accelerator Programme to attract technical experts to help scale up and quicken the deployment of hydrogen technologies across Scotland.
Update to the Climate Change Plan | Annexes 225 Outcome 4: We will work with the newly formed Bus Decarbonisation Taskforce, comprised of leaders from the bus, energy and finance sectors, to ensure that the majority of new buses purchased from 2024 are zero-emission, and to bring this date We have introduced a revised green incentive of the Bus We launched a £9 million Scottish Ultra Low Emission Bus In the context of the National Transport Strategy Delivery Plan and Transport Act, we will examine the scope for climate change policies, in relation to buses, across the public sector in high-level transport legislation strategies and policies. We will work to align government financial support of £120 million over the next 5 years with private sector investment to Outcome 5: We will work to decarbonise scheduled flights within We will aim to create the world’s first zero emission aviation region in partnership with Highlands and Islands Airports Limited (HIAL). This will include taking action to decarbonise airport operations in the HIAL region. We will begin trialling low or zero emission planes in 2021. New The Scottish Government will continue to engage with Aviation sector to encourage sustainable growth post COVID-19. Explore the potential for the purchase of zero/low emission aircraft by the Scottish Government, for lease back to operators, with more detailed assessment in the forthcoming Explore options for incentivising the use of more sustainable aviation fuel as we develop our Aviation Strategy, recognising that significant levers in this area are reserved. 226 Update to the Climate Change Plan | Annexes Outcome 6: Proportion of ferries in Scottish Government ownership which are low emission has increased to 30% by 2032. Continue to examine the scope for utilising hybrid and low carbon energy sources in the public sector marine fleet as part of our vessel replacement programme. Working with the UK Government to support proposals at the International Maritime Organisation (IMO) to significantly lower shipping carbon emissions in the global sector, including the option of introducing a global levy on marine fuel to fund research in cleaner technologies and fuels. Outcome 7: By 2032 low emission solutions have been widely Working with individual ports and the British Ports Association to consider a process for encouraging shared best practice initiatives for reducing emissions across the sector. Working with the ports sector and with its statutory consultees through the Harbour Order process to ensure future port developments are environmentally underpinned. Outcome 8: Scotland’s passenger rail services will be decarbonised Our commitment to decarbonise (the traction element of) Scotland’s railways by 2035 will be delivered through investment in electrification and complementary alternative traction systems. Transport Scotland has published the Rail Services Decarbonisation Action Plan (July 2020) which will be updated as appropriate. Work is ongoing by industry partners to develop the initial schemes. We will establish an international rail cluster in Scotland to unlock supply chain opportunities using the interest at Longannet as a catalyst. This will be built around existing strengths in rail in Scotland and will seek to enhance the innovation and supply chain in the decarbonisation of our rolling stock and wider network. Continue to deliver our Rail Freight Strategy. Maintained

Update to the Climate Change Plan | Annexes 227 Outcome 1: Scotland’s Industrial sector will be on a managed pathway to decarbonisation, whilst remaining highly competitive and on a sustainable growth trajectory. Emissions Trading Scheme (ETS): following EU Exit we will work with UK Government and other devolved administrations on maintaining carbon pricing that is at least as ambitious as the EU ETS. The Scottish Government’s preference is to establish a UK ETS will have an interim cap 5% tighter than the EU ETS, and will be reviewed for consistency with Net Zero in 2021. Deliver an Energy Transition Fund (ETF) to provide support for a sustainable, secure and inclusive energy transition in the Establish and deliver a Scottish Industrial Energy Transformation Fund (SIETF) – to support the decarbonisation of industrial manufacturing through a green economic Making Scotland’s multi-faceted programme will boost manufacturing productivity, innovation, and competitiveness, supporting manufacturing businesses to make the transition to net zero and realise the opportunities of a low carbon Low Carbon Manufacturing Challenge to support innovation in low carbon technology, processes and infrastructure. Will be based on successful delivery of ERDF funded Advancing Manufacturing Challenge Fund. The Renewable Heat Incentive (RHI) is a GB-wide scheme created by the UK Government (with the agreement of the Scottish Government). UK Government is extending both the domestic and non-domestic RHI out to 2022. Scottish Industrial Decarbonisation Partnership (SIDP): Scottish Government -convened cross-sector energy-intensive- industrial (EII) stakeholder forum with representatives from manufacturing sites. Initial bring together other initiatives; build a shared narrative between government/ industry on decarbonisation; and disseminate best-practice. 228 Update to the Climate Change Plan | Annexes Deliver a Net Zero Transition Managers Programme to embed Managers in organisations tasked with identifying, quantifying and recommending decarbonisation opportunities for the Establish a Grangemouth Future Industry Board (GFIB) – forum to coordinate public sector initiatives on growing economic activity at the Grangemouth industrial cluster, whilst supporting its transition to our low-carbon future. Develop policy on providing market-benefit for Scottish industries that invest to decarbonise production. Green Jobs Fund, to help businesses create new, green jobs, working with enterprise agencies to fund businesses that provide sustainable or low carbon products and services to help them develop, grow and create jobs. Further funding will help to ensure that businesses and supply chains across Scotland can capitalise on our investment in low carbon infrastructure such as the decarbonisation of heating and green transport.