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Publication - Consultation Paper

Scottish energy strategy consultation: the future of energy in Scotland

Published: 24 Jan 2017
Part of:
Energy, Environment and climate change
ISBN:
9781786527448

Consultation on draft Scottish energy strategy, setting out Scottish Government’s vision for the future energy system in Scotland, to 2050.

82 page PDF

2.1MB

82 page PDF

2.1MB

Contents
Scottish energy strategy consultation: the future of energy in Scotland
Chapter 4: Transforming Scotland's Energy Use

82 page PDF

2.1MB

Chapter 4: Transforming Scotland's Energy Use

2050 Vision

  • Scotland's domestic and non-domestic buildings have undergone a low carbon transformation - substantially reducing greenhouse gas emissions and delivering a host of economic, social, health and regeneration benefits.
  • Scotland has an energy market that delivers fair outcomes for all consumers - particularly those on low incomes and at risk of fuel poverty.
  • Scotland has successfully managed a widespread shift to a low carbon transport system - by 2032 over 40% of all new cars sold each year are Ultra Low Emission Vehicles.
  • Scotland has achieved a significant improvement in the efficient use of energy - with our manufacturing and industrial sector delivering enhanced competitiveness and improved energy efficiency.

Key Facts

The Amount Of Energy We Use Is Falling - 15.2% Reduction Between 2005-07 And 2014

53% Of Scotland's Energy Is Used To Provide Heat To Buildings And Industry

22% Of Scotland's Energy Is Used To Provide Electricity To Buildings And Industry

25% Of Scotland's Energy Is Used In Transport

Transforming Scotland's Energy Use

148. The consumption of energy in Scotland is predominately in heating (53%), transport (25%) and electricity (22%). However, due to a number of factors, the way we use energy in Scotland has changed over the past decade, with final energy demand now around 15.2% lower (Diagram 15).

149. As we have demonstrated success in meeting our existing energy efficiency target, the draft Energy Strategy consultation provides the opportunity to seek views on a new, more stretching energy efficiency target in line with the European Commission's proposed 30% target for 2030 (see Box on page 56).

150. This changing profile creates opportunities for individuals, businesses and communities across Scotland. The realisation of these opportunities is critical if Scotland is to meet its climate change targets in the most affordable way and deliver wider social benefits including tackling fuel poverty.

Diagram 15: Final Energy demand reduction, Scotland, 2005-07 to 2014

Diagram 15: Final Energy demand reduction, Scotland, 2005-07 to 2014

Source: https://www.gov.uk/government/collections/total-final-energy-consumption-at-sub-national-level

151. The Scottish Government is focused on four priority areas in the short to medium-term:

  • addressing the need to reduce demand and increase energy efficiency through the development of Scotland's Energy Efficiency Programme;
  • helping energy consumers to manage their bills, harnessing smart technology in the home and supporting new business models in the retail energy market;
  • supporting the introduction of viable, lower carbon alternatives across all modes of transport; and
  • delivering enhanced competitiveness and improved energy efficiency in Scotland's manufacturing and industrial sectors.

Setting a 2030 energy efficiency target

The European Commission's Winter Package proposes an EU-wide 2030 energy efficiency target of 30%. The Scottish Government proposes setting a new 2030 energy efficiency target, in doing so we will seek to deliver the same level of ambition for Scotland - setting a new, ambitious pathway for how efficiently energy is used.

The Scottish Government Energy Efficiency Action Plan (2010) set a target to reduce energy consumption from a 2005-2007 baseline by 12% by 2020. In 2014, final energy consumption was 15.2% lower than baseline, achieving the required level of consumption earlier than envisioned.

Energy Consumption Target 12% reduction in total final energy consumption by 2020

In 2014, final energy consumption was 15.2% lower than baseline 2005-2007

Any new energy efficiency target for Scotland, while challenging, should be achievable and consistent with the Climate Change Plan. It is also imperative to be able to monitor progress against the target in a transparent way.

Given the integrated nature of energy systems, we are keen to ensure that the Scottish target is consistent with ambition across the EU energy system, and we would like to seek views on whether we should set a new 2030 energy efficiency and how best to reflect the EU's ambition to implement an EU-wide 30% energy efficiency improvement by 2030.

Although our previous target was based on final energy consumption, we are considering whether it is more appropriate to set a new target that captures changes in the intensity of our energy use which takes account of the effect of, for example, economic cycles, energy prices and weather patterns on our energy consumption patterns [21] .

Addressing The Need To Reduce Demand And Increase Energy Efficiency Through The Development Of Scotland's Energy Efficiency Programme

152. In June 2015, the Scottish Government designated energy efficiency as a National Infrastructure Priority. The cornerstone of our approach will be Scotland's Energy Efficiency Programme ( SEEP).

153. The 2016 Programme for Government confirmed multi-year funding to support this 15 to 20 year programme and to a minimum of £0.5 billion for SEEP over the four years from 2017/18.

154. Our vision is that by 2050, through SEEP, we will have transformed the energy efficiency and heating of our buildings so that, where technically feasible and practical, buildings are near zero carbon. This will make our homes, shops, offices, schools and hospitals warmer and easier to heat, and by reducing energy demand, we can help tackle fuel poverty, help businesses improve their energy productivity and competitiveness and release savings in the public sector.

155. Scotland's Energy Efficiency Programme ( SEEP) has the potential to deliver multiple benefits, including:

  • creation of a substantial Scottish market and supply chain for energy efficiency services and technologies, supporting an estimated 4,000 jobs per annum across Scotland once full operational;
  • measurable health and early years improvements through people living in warmer homes; and
  • regeneration of communities through upgraded building stock.

156. SEEP will radically improve the energy efficiency of Scotland's homes and buildings in the commercial, public and industrial sectors [22] . The programme is further enhanced by the devolution of new powers over energy efficiency and fuel poverty, such as the Energy Company Obligation ( ECO). Over time, SEEP will also increase adoption of low carbon heating solutions.

157. The Scottish Government, and its partners in local government, already manage a range of delivery programmes to support building owners and tenants to improve the energy efficiency and decarbonise the heat supply of their buildings. Some of these programmes, such as Warmer Homes Scotland, operate on a national basis, whilst others, such as Home Energy Efficiency Programme: Area-Based Schemes ( HEEPS: ABS), are supported by national funding, but designed and delivered locally with our partners in local government. SEEP will build on the success of our existing programmes, whilst looking to improve the design and delivery in conjunction with stakeholders where possible.

158. The Programme is characterised by three key phases:

  • a design stage - including the setting of formal targets for the Programme through the Climate Change Plan and Energy Strategy - which is expected to run through to early 2018;
  • a phased development stage in which the key elements of the Programme are developed and deployed over time to create the overall programme structure which is expected to run through until 2021/22; and
  • full deployment stage of the Programme which would be subject to regular review, evaluation and refinement.

159. A crucial next step for SEEP will be to consult on energy efficiency standards for homes in the private rented sector. The programme will also consider phased regulation and standards for existing buildings. Financial incentives which secure private sector investment will be considered as a route to securing the scale of change required. This will be complemented by new heat regulations to support the development of heat networks. An initial consultation on the design of SEEP and a more detailed consultation on heat regulation accompany this draft Energy Strategy.

Actions:

The Scottish Government will:

  • make significant investment and employ targeted regulation to make Scotland's buildings near zero carbon by 2050, in a way that is socially and economically sustainable and supports Scotland's long-term inclusive growth;
  • consult upon district heating regulations and local heat and energy efficiency strategies;
  • consult upon the minimum standards of energy efficiency in private rented sector housing;
  • review the Assessment of Energy Performance of Non-domestic Buildings (Scotland) Regulations 2016, with the intention of further regulations from 2020 to improve the performance of existing non-domestic buildings; and
  • continue to provide funding and support streams to drive domestic, commercial and public sector energy efficiency retrofit.

Helping Energy Consumers To Manage Their Bills, Harnessing Smart Technology In The Home And Supporting New Business Models In The Retail Energy Market

160. The Scottish Government is committed to ensuring all consumers pay a fair price for energy. A summit with utility companies in December 2016 agreed actions that can be taken in partnership with power companies, regulators, and local government to deliver more rapid progress in this area.

161. Although the existing market provides scope for households to save money on their energy bill by switching, a low level of consumer engagement in the market still persists. This may be due to higher levels of customer loyalty to former regional suppliers, although this would not explain why so few customers are switching to best value tariffs with their existing supplier. Consumers that are engaged in the market are typically higher income earners, with access to both a mains gas supply and with Internet access for comparison shopping, and the ability to pay by Direct Debit.

162. Smart systems and new technologies - such as Smart Meters and digitally controlled home heating devices and thermostats - can help address this. In particular, information from Smart Meters could be used to provide tailored energy efficiency solutions and advice. In conjunction with Smart Meters, future innovations in tariffs could also allow consumers to react to changes in prices in real time.

163. Such new technologies and innovative tariffs provide scope for targeted action to empower the most vulnerable consumer groups, and potentially help tackle fuel poverty. However, this will only be optimised with the installation of the next generation of meters, which are better placed to facilitate flexibility in payment options.

164. The Scottish Government is also supportive of the introduction of new retail market participants and innovation in non-traditional business models for energy retail markets, which have the potential to reduce costs for consumers and communities. These include local energy supply companies, not-for-profit models, renewable energy only suppliers, and suppliers for social housing.

165. Examples of such models include:

  • Our Power: a community benefit society established by Scottish social housing providers, with the aim of reducing heat and fuel costs by passing benefits from the energy sector to our communities; and
  • the Tower Power project in Edinburgh: by aggregating electricity use from a whole tower block in Dumbiedykes, the residents will be able to purchase their energy as an industrial load - securing cheaper rates. A community company is being set up to run the project, in the interest of the local residents.

166. The Scottish Government supports further tariff and innovation, but will seek to promote a market that works equally well for all Scottish energy consumers. In such a dynamic environment market regulation needs to adapt to complement the market while ensuring consumers are effectively protected. The energy regulator, Ofgem, is currently undertaking a widespread review of its consumer regulation framework, to rely more on principles in the way it regulates the retail energy market [23] .The Scottish Government will closely monitor these developments over the coming year.

Actions:

The Scottish Government will:

  • engage with UK Government, Ofgem and consumer groups to secure effective regulation of the retail energy market;
  • support the development of robust new business models that offer reduced costs to energy consumers, through existing support mechanisms;
  • work collaboratively with energy suppliers to explore ways of helping low income households with their energy bills;
  • explore opportunities to achieve synergies between energy efficiency programmes and the Smart Meter roll out; and
  • support Home Energy Scotland to improve consumers' understanding of their consumption patterns and help reduce energy bills, to enhance the consumer experience of Smart Meter roll out.

Supporting The Introduction Of Viable, Lower Carbon Alternatives Across All Modes Of Transport

167. Transport is estimated to account for 25% of Scotland's total energy use. The split of energy used to transport people and goods on the roads is around 60:40 respectively.

168. As set out in the draft Climate Change Plan, by 2035 we envisage a significant decarbonisation of road transport, with emissions reduced by 5 MtCO 2e or more compared to today. Air quality in urban areas will have noticeably improved; and our population will be enjoying the social, health and economic benefits from these improved transport systems.

169. Encouraging people to change their travel behaviours to switch away from cars to active travel and public transport options, as well as greater use of vehicle sharing mechanisms (e.g. car clubs and lift-sharing) and journey replacement with video/tele-conferencing, will begin to reduce emissions for these journeys. However, these measures alone will not bring about the emission reductions prescribed by the Climate Change (Scotland) Act 2009.

170. The reduction in transport emissions and associated energy demand will also require increased efficiency of petrol and diesel vehicles and widespread adoption of low emissions car and van technologies.

171. New car and van efficiency limits are set by the EU and the current set of targets are set up to 2020-21. With the EU and UK, the Scottish Government will negotiate stretching emission standards for new cars (and vans) beyond 2020 (2021), and negotiate an emission standard for Heavy Goods Vehicles from 2025. In addition, by 2032 the proportion of ultra-low emission new cars and vans registered in Scotland annually is expected to reach or exceed 40% by 2032.

172. The proposed increase of Ultra Low Emissions Vehicles ( ULEVs), such as electric cars and vans, in the market will place an increased demand on electricity supply and has the potential to put a strain on local distribution grids. Research funded by the energy regulator Ofgem, My Electric Avenue [24] , demonstrated that demand side response solutions such as smart charging, can help to ease this strain cost-effectively.

173. Transport Scotland and Urban Foresight published an ' EVs & Energy Systems' report in 2016 [25] which concluded that large numbers of EVs across Scotland will offer an invaluable resource to support 'whole system' energy solutions, providing significant and distributed energy storage capacity, able to absorb intermittent loads from renewable generation, help integrate more micro-generation, increase energy efficiency and potentially be a source of grid power input when required.

Actions:

The Scottish Government will:

  • fund active travel infrastructure and behaviour change programmes at record levels until at least 2021;
  • refresh 'Switched On Scotland - A Roadmap to Widespread Adoption of Plug-in Vehicles' by Spring 2017;
  • with the EU and UK Government, negotiate stretching emission standards for new cars (and vans) beyond 2020 (2021);
  • with the UK Government, negotiate vehicle excise duty differentials between ultra low emission vehicles ( ULEVs) and conventional vehicles support and encourage the take up of ULEVs;
  • enhance the capacity of the electric vehicle charging network (ChargePlace Scotland);
  • provide interest-free loans through the Energy Saving Trust to enable the purchase of EVs by both consumers and businesses until at least March 2020;
  • with local authorities, review licensing regulations and consider introducing incentives to promote the uptake of ULEVs in the taxi and private hire sector, with loan funding for vehicle purchase until at least March 2020; and
  • promote the benefits of EVs to individuals and fleet operators and increase awareness and confidence in the viability of EVs as an alternative to petrol and diesel vehicles.

Delivering Enhanced Competitiveness And Improved Energy Efficiency In Scotland's Manufacturing And Industrial Sectors

174. Scotland's industrial sector accounts for over half of Scotland's exports and total business research and development expenditure. The sector also sustains a significant number of high-value jobs across Scotland.

175. Industry in Scotland plays a leading part in the collective European and UK efforts to decarbonise. Scottish industry is increasingly adopting sophisticated IT and automated technology, and investing in the deployment of modern and more energy-efficient equipment, reutilising waste heat, and reducing costs through improved competitiveness and enhanced productivity. These advances make factories smarter, safer, more efficient and environmentally sustainable.

176. Reducing the use of energy in our industries is critical to the achievement of our climate change goals, and is a key priority in Scotland's Manufacturing Action Plan [26] alongside the circular economy priority which is promoting reuse, remanufacture and use of recycled materials - also reducing energy demand. However, the Scottish Government is also committed to protecting domestic industries at risk of relocation overseas where climate or energy regulation is less stringent (referred to as 'carbon leakage'). These dual objectives will require co-ordinated and sustained action by industry, government, and other key stakeholders, and our draft Climate Change Plan sets out in detail our policy outcomes and supporting policies for decarbonisation of industry.

177. Comparative effort from other major economies such as the US, China, India, Brazil in reducing their industrial emissions under the Paris Agreement will be essential to avoid carbon leakage, achieve large-scale improvements in productivity and maintain competitiveness.

Scottish Water

Scottish Water is one of Scotland's largest users of electricity, requiring around 445GWh to provide essential services to 2.49m households and 152,000 businesses from over 4500 operational sites.

Scottish Water has focussed on renewable energy generation and energy demand management to reduce costs and lower its carbon footprint.

Energy initiatives across the business over the last five years have cut base electricity consumption by 4.5% and doubled Scottish Water's renewable generation capacity to over 54 GWh since 2013. Renewable capacity is generated from hydro turbines, wind turbines, solar schemes, biomass plants and combined heat and power plants alongside third party owned wind turbines hosted on Scottish Water land which generate a further 223 GWh.

In just three years Scottish Water has raised the annual financial benefits from its energy programme to over £7 million, cut carbon emissions by 15% since 2006-07 and facilitated over £0.3bn of private investment on its estate, making a significant contribution to national economic, carbon and renewable energy targets. By the end of 2016/17 Scottish Water will be generating and hosting more renewable energy than it consumes annually, and over twice by 2018.

Adopting this approach is beneficial to customers. Over 70 of its water and wastewater treatment plants are either self-sufficient or partly sufficient in their power requirements over the year leading to lower operating costs and a more sustainable business.

178. There are potential co-benefits for business competitiveness and energy productivity of investment in industrial energy efficiency, which reduces operating costs and can protect against any rise in energy prices, and industrial heat recovery, which could provide an income stream. These enhancements in the competitiveness and productivity of Scotland's manufacturing sector will contribute to the Scottish Government's wider objectives of sustainable economic growth, and will ensure that high quality manufacturing jobs continue to be located in Scotland, benefiting all people across Scotland, in both urban and rural areas.

Actions:

The Scottish Government will:

  • support business, industry and public sector collaboration through working with Scottish Enterprise, Highlands and Islands Enterprise, Scottish Environment Protection Agency and the Scottish Manufacturing Advisory Service - providing a platform to explore ways to improve industrial competitiveness and productivity, as a key route to decarbonisation;
  • provide new incentives and packages of business support to help facilitate industrial decarbonisation, through Scotland's Manufacturing Action Plan and SEEP;
  • seek to provide leadership and advice to industry through the Scottish Energy Advisory Board, and associated leadership groups, pooling expertise from the key industrial sectors in Scotland and providing a strategic framework for managing this transition;
  • work with the UK Government and EU institutions to minimise the impact of Brexit on progress towards industrial decarbonisation - maintaining a level playing field on regulation; and
  • enable local authorities to take a strategic approach to decarbonising heat and improving energy efficiency at local level, including identifying and developing opportunities to reduce or utilise energy waste from industrial processes.

Consultation questions

  • What are your views on the priorities presented in this chapter for transforming energy use over the coming decades? In answering, please consider whether the priorities are the right ones for delivering our vision.
  • What are your views on the actions for Scottish Government set out in this chapter regarding transforming energy use? In answering, please consider whether the actions are both necessary and sufficient for delivering our vision.
  • What ideas do you have about what energy efficiency target we should set for Scotland, and how it should be measured? In answering, please consider the EU ambition to implement an energy efficiency target of 30% by 2030 across the EU.

Contact

Email: Jenna Williamson