Energy Efficient Scotland: strategic environmental assessment

1 Introduction

1.1.1 Energy Efficient Scotland Energy Efficient Scotland (the Programme) is a 15 to 20 year programme aimed at driving energy efficiency and a low carbon energy system in Scotland's homes and buildings.

1.1.2 The Programme will be instrumental in tackling fuel poverty and, in developing the Programme, we will reflect the aims of our new Fuel Poverty Strategy taking account of recommendations made by the Fuel Poverty Strategic Working Group and Rural Fuel Poverty Task Force. A collaborative approach will be critical to delivering our ambitions on fuel poverty and the Programme is paving the way for innovation and coordinated efforts across sectors to find the most effective solutions for households no matter where they live in Scotland.

1.1.3 The Programme for Government commits to investing more than half a billion pounds to the Programme over the four years to 2020/21 setting out a clear commitment to develop this programme with substantial annual funding.

1.1.4 The Programme brings to life one of the six energy priorities as set out by our Scottish Energy Strategy: that of improving energy efficiency. This strategy, published in December 2017 is a ground breaking first energy strategy for Scotland and sets out the Scottish Government's vision for the future energy system in Scotland. This strategy sets a vision to achieve by 2050 'A flourishing competitive local and national energy sector, delivering secure, affordable, clean energy for Scotland's households, communities and businesses'.

This strategy recognises that we cannot be entirely certain what our energy system will look like by 2050, so sets ambitious targets for 2030 which supports the principle of the pursuit of low or no regrets options to set us on the right path to the low carbon future:

• The equivalent of 50% of the energy for Scotland's heat, transport and electricity consumption to be supplied from renewable sources;
• An increase by 30% in the productivity of energy use across the Scottish economy.

The targets set by the Programme feed into our Climate Change commitments. The Scottish Government's world-leading climate change targets require emissions from across Scotland to be reduced by 42% by 2020 and at least 80% by 2050. The Climate Change Plan outlines the steps needed to reduce emissions across the economy, including in the residential and services sectors, which will see their emissions reduced by 23% and 59% respectively by 2032 on 2015 levels.

1.1.5 Achieving these targets will mean that to be fit for the future Scotland's homes, commercial properties and public sector estate will need to be near zero carbon by the middle of this century. Scottish Ministers announced in June 2015 that they would take long term action to reduce building energy demand and remove carbon from (decarbonise) heat supply; designating energy efficiency as a national infrastructure priority. The Programme is the culmination of this thinking.

1.1.6 We recognise that the lowest rates of fuel poverty are associated with higher energy efficiency standards, and underpinning the overarching statutory target we will set ambitious targets that will help us achieve our aim to remove poor energy efficiency as a driver for fuel poverty.

1.1.7 We have also committed to develop, if appropriate, a wider Bill to support the Programme for later in this Parliament. We recognise that for a programme as ambitious as the Programme, it will be necessary to review our existing legislation and to consider what new or amended powers or duties may be needed to underpin the programme. Stakeholders told us in our high level scoping Programme consultation during 2017 that there could be an important role for regulation and standards, supported by legislation.

1.1.8 Once fully operational, the Programme will be a whole system approach to delivering energy efficiency improvements and the provision of low carbon heat. A framework of energy efficiency standards, advice and funding will help create long-term consistency and confidence for consumers and industry, backed up by legislation where needed. The programme will also help support skills and supply chains across Scotland with appropriate protections for consumers.

1.1.9 During the initial phases of the Programme, we are focusing on delivering existing programmes more effectively and developing new pilot schemes to test delivery mechanisms for residential and non-domestic buildings. By 2050, through the Programme, aims to transform the energy efficiency and heating of our buildings so that wherever feasible, buildings will have near zero carbon emissions.

Phase 1: Design	Drafting of Climate Change Plan and the Energy Efficiency Strategy The evaluation of Delivery Scenarios Publication of the Routemap in 2018
Phase 2: Development	Design and development of standards for the energy efficiency of buildings across all sectors and tenures with clear timescales Delivery/funding mechanisms – including a range of funding including grants and loan schemes Advice and information to ensure that both domestic and business customers are able to access appropriate, clear and up to date advice on both their requirements, the options open to them and the potential benefits Phased deployment (including optional and compulsory modifications to standards, funding/delivery mechanisms and advice)
Phase 3: Deployment	Monitored and evaluated on a five year cycle

1.1.10 To move from design to development phase, the Programme now frames its work around a number of key areas:

The setting and implementation of long term standards for both domestic and non-domestic sectors, introduced using a phased approach, with a backstop date of 2040 for all buildings in Scotland;

As part of the broader work on long term standards, the setting of a revised Energy Efficiency Standard for Social Housing ( EESSH );

Local Heat & Energy Efficiency Strategies ( LHEES ) to provide a strategic framework for delivery of the Programme at a local level, and a new approach to regulation of district heating that creates a more attractive climate for investors and consumers with the intention of further expanding this source of heating across Scotland;

A revised approach to heating systems in existing buildings, with the phased removal of support for high carbon forms of fossil fuel heating from 2020;

An Offer to all which will provide a variable rate of advice, information, support and direct delivery for everyone in Scotland. The Offer will be fully mobilised by 2020;

1.1.11 The way in which these are considered by this SEA follows:

Proposal	SEA requirement under The 2005 Act	Reason
Long term standards	√	This is a proposal to improve energy efficiency and is intended to result in the installation of measures with resultant potential to have significant environmental effects.
EESSH	√	This is a proposal to improve energy efficiency and is intended to result in the installation of measures with resultant potential to have significant environmental effects.
Local Heat & Energy Efficiency Strategies and regulation of District Heating ( LHEES and DHR)	√	This is a proposal to improve energy efficiency and heat decarbonisation at local level, and will result in measures being installed on the ground and has the potential to have significant environmental effects.
Heating in existing buildings	x	Comprises two aspects of work: the first is a policy position to vary Scottish Government financial support for heating systems installed in existing buildings which will not have a significant environmental effect in itself, the second is associated with a move to low carbon heating sources, and considered as part of the long term standard, and LHEES and DHR above.
The Offer	x	Is an advice and financial package of work, and does not create a framework for future development consent
Monitoring and Evaluation	x	Is a package of work to monitor progress of a wider programme of work and does not create a framework for future development consent

1.1.12 These projects are set out in the suite of documents which accompany this SEA, launched in May 2018, including a Routemap which provides the current position statement on previously consulted on and agreed policy direction and a timeframe for the delivery of the programme as a whole, and a suite of consultation documents which engage on specific aspects of policy and delivery.

1.1.13 Supporting the Programme will also be new legislative provision. Later this year we will introduce a Fuel Poverty Bill (which has already been the subject of SEA pre-screening ^[14] ) that will set a target relating to the eradication of fuel poverty. We are also consulting on the need for further legislation to support other aspects of the Programme beyond fuel poverty, and have committed to introducing a Bill to support the Programme if needed later in this Parliament, which would provide for the regulatory elements required to deliver the Programme. This is subject of further consultation accompanying the Routemap. As a minimum, as outlined in previous consultations that ran during 2017-18, we are considering the potential for legal provision to create :

• a statutory duty on local authorities to develop a LHEES, setting out how they will deliver the Programme over a 15-20 year period
• wider regulations on the district heating sector, including requirements for licensing of district heating operators, and consenting of district heating projects.

1.1.14 Following conclusion of the consultation accompanying the Routemap, the overall need for legislation will be considered in the light of responses to this and to the earlier LHEES and district heating consultation. If needed, this Bill will be subject to further SEA screening as required once the content is agreed.

1.2 Strategic Environmental Assessment ( SEA)

1.2.1 Strategic Environmental Assessment ( SEA) is the assessment of the likely significant environmental effects that a public plan, programme or strategy will have on the environment if implemented.

1.2.2 The Scottish Government has undertaken a SEA of those aspects of the Programme set out at 1.1.11 which are subject to engagement and consultation, and its findings are set out in this Environmental Report. specifically:

• Proposals regarding the setting of a long tern standard;
• The review of the Energy Efficiency Standard for Social Housing ( EESSH);
• Local Heat & Energy Efficiency Strategies; and
• A new approach to regulation of district heating.

1.2.3 The SEA was undertaken in accordance with the Environmental Assessment (Scotland) Act 2005 (the '2005 Act') and in parallel with the development of these proposals. This iterative process enabled the SEA to inform and influence the development of the documents by considering how the adoption of the policies, policy development milestones and proposals they set out may impact on the environment.

1.2.4 The Scottish Government has undertaken a SEA of those aspects of the Programme set out above, which are subject to engagement and consultation, and its findings are set out in this Environmental Report. The SEA was undertaken in accordance with the Environmental Assessment (Scotland) Act 2005 (the '2005 Act') and in parallel with the development of these proposals. This iterative process enabled the SEA to inform and influence the development of the documents by considering how the adoption of the policies, policy development milestones and proposals they set out may impact on the environment.

1.3 Report Structure

1.3.1 This Environmental Report is set out as follows:

Section 1 – Provides an introduction to assessment and an overview of the SEA process.

Section 2 – Provides background information on the setting and implementation of long term standards for both domestic and non-domestic sectors.

Section 3 – Provides background information on the review of the Energy Efficiency Standard for Social Housing ( EESSH ).

Section 4 – Sets out information on the proposed establishment of requirements for Local Heat & Energy Efficiency Strategies and a new approach to regulation of district heating.

Section 5 – Sets out the approach taken for the SEA of the relevant parts of the Programme, and the consideration of reasonable alternatives.

Section 6 – Provides an overview of the wider policy context and environmental objectives for the 3 proposals described above, including relevant plans, programmes and strategies set out at EU, UK and Scottish levels.

Section 7 – Presents the findings of the assessment including the consideration of potential cumulative and in-combination effects from the draft Plan and 3 proposals described above and proposed mitigation measures.

Section 8 – Sets out how the proposals and their effects will be monitored.

Section 9 – Presents the conclusions and recommendations of the assessment.

Section 10 – Sets out information on the consultation including how to provide views on the Environmental Report and how these responses will be taken into account in the finalisation of the 3 proposals described above.

Appendix A - Details the Environmental Baseline used to inform the SEA, including a summary of relevant environmental protection objectives.

Appendix B - Provides background information on Energy Efficient Scotland

Appendix C - Sets out assessment tables prepared in considering the potential for environmental effects arising from the setting and implementation of long term standards for both domestic and non-domestic sectors

Appendix D - Sets out assessment tables prepared in considering the potential for environmental effects arising from on the establishment of requirements for Local Heat & Energy Efficiency Strategies and a new approach to regulation of district heating

Appendix E - Presents a list of abbreviations used in this Report.

Appendix F - Presents a compliance checklist setting out the sections of this Report that address the requirements of the 2005 Act.