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TOWARDS A GREEN JOBS STRATEGY
Opportunities for Business
CONSULTATION

MINISTERIAL FOREWORD

A green and prosperous future

Following last year's elections, we made clear in A Partnership for a Better Scotland that growing the economy would be our top priority. Economic growth brings more jobs. Economic growth generates spending power to stimulate further growth, and tax revenues to support improved public services. At the same time, we have made clear our view that economic growth in the 21 ^st century must be achieved on the basis of sustainable development and environmental justice.

We reject the idea that there is always a conflict between economic growth and protection of the environment. On the contrary, there will be increasing opportunities for growth in the next few years precisely because of the demands for more sustainable products and processes. This strategy is about positioning Scotland to take advantage of that market for sustainable development. We also recognise that those worst hit by failure to respect the environment in the past have often been the poorest people. A more sustainable economy will also provide a more just society.

Scotland's economy has changed in many ways over the last twenty years. More change is certain, as we operate in an increasingly global marketplace. We have to work harder to establish and retain a lead in new sectors within that international environment. Our success will depend on harnessing the enterprise of our companies, the new ideas and discoveries of our scientists, the skills of our workforce, and the political will of Scotland's devolved government.

In just the last two years the Scottish Executive has agreed major changes to take Scotland forward to a more sustainable future. Scottish Ministers have made significant commitments towards this aim: to transform Scotland's recycling record - taking it up to 55% of domestic waste - and to supply 40% of Scotland's electricity from renewable sources by 2020.

A long term vision

We know that meeting our waste and energy targets depends on business making the investment to provide the necessary capacity and infrastructure. These targets give our universities the encouragement to develop the necessary technologies and our companies the opportunity to carve out a lead in the marketplace - developing a new generation of green jobs in the process. By setting ourselves tough targets we can create a competitive advantage for Scotland, as more and more countries see the need to adopt similar targets of their own.

Recycling and wind energy are two opportunities with which many people are familiar. And we must make the most of those. But we must not limit our ambitions for a green economy to just the obvious opportunities. My vision is of a Scotland that develops the next generation of clean, resource efficient technologies and commercialises and exports that technology. I also want this technology to be cost effective, allowing the wider Scottish business community to achieve the high environmental standards we expect to see in future, while increasing competitiveness and raising productivity.

We must also recognise and support new markets for sustainable goods and services. This will be vital in the short and medium term - there is no use trying to boost recycling unless there is a market for recycled materials - but it also underpins our longer term vision. We must ensure that Scotland's economic growth in the new century does not perpetuate the environmental injustices of the past. This growth should instead deliver a higher quality of life for all our people.

We cannot sanction a policy of economic development at any cost. If we did, we would simply be mortgaging our future - and the futures of our children - for short term gain. This Executive is not so short-sighted. We believe that by taking steps now to ensure that we develop a sustainable, low carbon economy, we can make Scotland the green enterprise capital of Europe.

Why a Green Jobs Strategy?

This is an ambitious vision, and not one that Government alone can deliver. We need to work closely alongside business, schools and our academic institutions to make that vision a reality.

The Green Jobs Strategy will help us bring together those who can create innovative new products and services for a sustainable future with those who understand how best to market these, and take full advantage of the business opportunities they offer.

This consultation paper contains questions for business that I believe go right to the heart of the matter. What steps should Scotland's devolved government take - using its levers of business support, research and procurement - to develop new, green industries?

Working in partnership with Scottish business, government can deploy its resources through its support for learning, science and research to secure for Scotland the wealth and prosperity that a sustainable future will offer.

I look forward to your input.

THE RT HON JIM WALLACE, QC, MSP
Deputy First Minister and Minister for Enterprise and Lifelong Learning

1. INTRODUCTION

1.1 This document is intended to foster discussion with interested parties, to inform the development of a Green Jobs Strategy. It is by no means intended as a draft of the strategy itself.

1.2 In the coming months we will be organising a series of meetings and seminars at which we would like to hear your views on the issues around a Green Jobs Strategy. We would also welcome written views and have set up an online discussion forum to allow you to make a contribution electronically - further details can be found in section 7.

Growing the economy, achieving sustainability

1.3 A Partnership for a Better Scotland sets economic growth as the Executive's top priority and puts sustainable development at the heart of everything we do. Our commitment to sustainable economic development is unequivocal, and we are determined that this strategy will set a robust framework within which we can deliver strong growth levels and associated employment while reducing our impact on the environment around us. Our key thesis is that the commitment to sustainability can itself create growth and employment opportunities.

1.4 Our Framework for Economic Development ¹, and the enterprise strategy outlined in Smart, Successful Scotland ² established a vision and strategy for raising the quality of life of the Scottish people through increased economic opportunities for all on a socially and environmentally sustainable basis. We are currently refreshing our Framework for Economic Development to ensure it meets the needs of the future and fully takes into account the Partnership Agreement. We are similarly refreshing Smart, Successful Scotland. A key aspect of this refresh is that a Smart, Successful Scotland must be a sustainable Scotland.

1.5 While a refreshed Smart, Successful Scotland will, as now, set out broad priorities, we need a Green Jobs Strategy to take a more detailed look at how we can exploit the business opportunities arising from a commitment to sustainable development. The Green Jobs Strategy should reflect the three main themes of Smart, Successful Scotland - growing businesses; skills and training; and global connections. The Green Jobs Strategy will thus supplement the strategic direction given to our main economic development delivery agents - the Enterprise Networks. But it will also be relevant to, among others, Scotland's science base and education sectors.

1.6 The overall aim of the Green Jobs Strategy is to encourage the creation of jobs through the promotion of sustainable growth. The prize will be to develop new sectors of the Scottish economy which capture for Scotland a leading, global role. We want to ensure that Scotland can:

• develop technologies, products and services and market these successfully within and outside Scotland; and
• increase productivity through all businesses improving their environmental performance and resource use.

1.7 To achieve this we will have to make sure that the support we offer Scottish businesses is as effective and relevant as possible. We have to make sure that the full range of business support services offered by the Enterprise Networks, and by the public sector more widely, are used to their full potential.

1.8 This discussion paper therefore lays out what we see as the business opportunities emerging from our commitment to sustainable development. The paper asks whether we have correctly identified those opportunities, what barriers might exist to exploiting them and how we can overcome those barriers.

2. GREEN JOBS ACROSS THE ECONOMY

2.1 Business opportunities will range widely in nature and encompass primary production, manufacturing and service sectors. There is significant potential for creating new jobs across the manufacturing sector - an area of the economy hit hard in recent times despite generally strong employment levels across the Scottish economy as a whole. We are keen to see Scotland capturing leading edge manufacturing jobs, and also to see more traditional areas of the existing manufacturing and engineering sectors benefiting from supplying the newer 'green' industries (for example, manufacturing wind turbine blades and generator components).

2.2 The main focus of Smart, Successful Scotland is on developing high value, high skill jobs and industries in Scotland. We want the Green Jobs Strategy to fit within this overarching theme. A strong research base and involvement in product development is important if we are to capture and maintain competitive advantage. We want to take full advantage of Scottish science and ingenuity and break into new areas of technological development. We want Scottish companies to be able to expand into new markets in which this country is well placed to make 'big wins' - markets such as renewable energy, recycling and resource efficiency, where research conducted on behalf of the Scottish Executive by Optimat ³ suggests that there are significant global market prospects:

Global market prospects

* World Offshore Energy Report 2002 - 2007, Renewables UK
**Global Environmental Markets and the UK Environmental Industry - Opportunities to 2010, JEMU

2.3 Smart, Successful Scotland also highlighted the importance of rural development as a cross-cutting theme in our work to strengthen the Scottish economy. There is considerable potential for 'green' industries to have a real impact in rural areas, leading to more high quality job opportunities while helping to reduce damage to the natural environment. Supporting rural economic development is one of the four priorities of the Executive's rural policy as outlined in Rural Scotland: A New Approach⁴.

Renewable energy

2.4 Scotland has massive potential natural energy resources in the form of wind, hydro and marine energy - estimated to be almost 60 gigawatts, or three-quarters of the entire UK installed electricity generation capacity. The Executive has set a target for 40 per cent of Scotland's electricity requirements to be generated from renewable sources by 2020. This provides a solid base for Scottish business to develop innovative new technologies and win a meaningful share of the global export market - creating manufacturing jobs, particularly in remote and rural areas of the country. In addition, the proposals for a British Electricity Trading and Transmission Arrangements (BETTA) will give independent generators a new opportunity to sell electricity to a GB-wide market.

2.5 Denmark has been a pioneer in the wind power industry during the past 25 years and today hosts some of the largest wind turbine makers in the world. Danish wind turbine companies supply half the world's market and have a turnover of 3 billion euros. In 2002, manufacturers experienced growth in both sales and employment for the 10 ^th consecutive year. Wind turbine manufacture, maintenance, installation and consultancy services account for some 16,000 jobs in Denmark, while component supplies and installation of these Danish turbines currently support another 8,000 jobs worldwide.

2.6 Danish success in this field is due to a complex mix of factors - world-leading technology; early government targets for renewable electricity generation; government incentives for private investment; a social structure that encouraged small private ownership of wind generation; a tax regime that rewarded wind generation; and very importantly, the 1970s oil crisis - which led to ready markets in other countries, in particular in California. It is important for Scotland to learn from Denmark's experience, but it is equally important for us to understand that these circumstances cannot simply be duplicated in today's markets.

2.7 Marine energy is an area in which Scotland has the potential to lead the world in developing and manufacturing commercially viable technology. We are already home to some of the world's leading innovators in the field. Scotland's Renewable Resource ⁵ estimated that that we have a potential 14 gigawatts of wave energy and 7.5 gigawatts of tidal energy at our disposal. That amounts to over twice the current total electricity generating capacity in Scotland.

2.8 We have set up a Forum for Renewable Energy Development in Scotland (FREDS) to drive forward the development of, and overcome barriers preventing Scottish business from breaking into, the renewable energy industry. Nowhere in the world is there yet any commercially viable marine energy technology - and this creates an opportunity for Scotland. FREDS' work includes producing an action plan on the future development of the marine energy industry by summer 2004 (in conjunction with the new Energy Intermediary Technology Institute, ITI-Energy). The marine action plan will set out the measures which will be required to grow a thriving indigenous marine energy industry in Scotland. In addition, FREDS intends to produce an action plan in the autumn, aimed at accelerating the development of biomass technology in Scotland.

2.9 ITI-Energy (based in Aberdeen) will examine the potential for commercial exploitation of greener energy, including renewable energy technologies. ITI-Energy will play an important part in developing strong and profitable links between dynamic Scottish businesses and our world class academic institutions. It will contribute significantly to the long term development of Scotland's energy sector, including the exploitation of emerging global markets. We are backing it's work with 150 million over the next 10 years.

2.10 Scotland therefore has a powerful combination of factors in its favour - a huge marine and wind energy resource, ambitious targets for increasing use of renewable energy, significant investment in research (with industry and government working in partnership), and high quality marine energy test facilities. These factors create both a supportive environment for the development of new viable renewable energy technologies and a ready market for the exploitation of those technologies on a major scale.

2.11 The Renewables Advisory Board (a DTI-sponsored NDPB) also commissioned a study- led by the DTI's Renewables UK, the Scottish Executive, Scottish Enterprise and Highlands & Islands Enterprise - to look at the potential future growth of the renewables industry ⁶. The study estimated that around 1,500 jobs in Scotland were directly sustained by the renewables industry (excluding large scale hydro-electric schemes), most of these in the wind energy industry. Based on the Energy White Paper's target for the UK of 20% electricity generation from renewable sources the study conservatively estimated that the UK's renewable energy industry could sustain 17,000 to 35,000 jobs by 2020, although peak job numbers could be significantly higher. With the measures described elsewhere in this paper we expect that a substantial proportion of these jobs would be located in Scotland. It is worth noting that the above figures do not take into account penetration of export markets which would arise from creation of world leading technology in a field such as marine energy.

2.12 We are also keen to support community renewables projects. Such projects can help contribute to local economic and social development and foster a wider acceptance of renewable energy technology and initiatives. As a result we are funding schemes like the Scottish Community and Householder Renewables Initiative (SCHRI) - jointly delivered by the Energy Saving Trust and Highlands & Islands Enterprise - to provide a one-stop shop that offers help to communities at every stage in the development of a renewable energy project.

Recycling and recyclates

2.13 The National Waste Plan (March 2003) is transforming waste policy in Scotland, setting targets of 25% recycling and composting of municipal waste by 2006, and 55% recycling and composting of municipal waste by 2020. This will lead to around 1.8 million tonnes of recyclates, including compostable materials, being extracted from the waste stream - a huge potential resource for Scottish businesses. We want to help Scottish companies and entrepreneurs to take full advantage of these resources. We believe that Scotland can be well placed to develop world class recycling technologies and services, and design and manufacture innovative new products from waste materials.

2.14 The common perception tends to be that employment in the waste and recycling sector involves exclusively low-paid, low-skill work. This, however, is not the whole truth. There is real potential for a wealth of highly skilled technical and professional jobs in the sector, developing and manufacturing innovative products such as using glass in building materials to create novel designs. There is also increasing potential for jobs in waste awareness and education, as we move towards more sustainable waste management, regarding waste as a useful resource rather than simply rubbish.

2.15 The booming recycling industry in the United States offers some excellent examples. Ford Motor Company used more than 60 million 2-litre plastic drinks bottles in the manufacturing of grille reinforcements, window frames, engine covers, and car boot carpets. In 1999, this effort accounted for 7.5 million pounds of plastic. The inherent value-adding nature of the recycling and re-use industry was demonstrated in a study commissioned by the US Environmental Protection Agency in 2001 ⁷. This found that the industry consisted of approximately 56,000 establishments, employed over 1.1 million people, generated an annual payroll of nearly $37 billion, and grossed over $236 billion in annual revenues. Recycling is a significant force in the US economy and clearly makes a major contribution to job creation and economic development.

2.16 The United States is the biggest single market in the world, in which very different legal, financial and social considerations apply. However there are clear opportunities here in Scotland for companies seeking to expand into the recycling sector. For example, glass recycling in the UK is expected to increase from 927,000 tonnes in 2002 to over 1,700,000 tonnes by 2008. Scottish-based businesses, which already reprocessed around 107,000 tonnes of glass in 2001, are well placed to take advantage of this expected growth. Opportunities include increasing the collection and processing of glass from household and commercial premises, collecting and processing flat glass from construction and demolition activities and processing the glass from waste electronic equipment, such as televisions and computer monitors, and from used cars.

2.17 There may also be new business opportunities in the recovery and reuse of Waste Electronic and Electrical Equipment (WEEE), particularly once the WEEE Directive (targeted at reducing the waste from electronic and electrical equipment and increasing the re-use, recycling and recovery of WEEE) takes effect in Autumn 2005. For example, about 2.7 million PCs are disposed of each year across the UK, of which about 20% are refurbished, leaving some 2.4 million PCs available for dismantlement and the recovery of valuable materials. There could be opportunities here for both the private and not-for-profit sectors - indeed, some businesses and community bodies are already working together in the collection and refurbishment of electronic and electrical equipment.

2.18 The Joint Environmental Markets Unit (JEMU) estimates that turnover in the recycling sector will increase to over 9 billion by 2010, double the market size in 2000. Scotland has the chance to be at the forefront in supplying this expanding market, and we are already thinking about how to help make this happen. The Partnership Agreement committed the Executive to creating significant opportunities for new products manufactured from waste. The Waste and Resources Action Programme (WRAP), which operates at a UK level, and REMADE Scotland work to create stable new markets for recycled products. We expect the Enterprise Networks to work alongside these bodies to ensure that entrepreneurs who want to use waste materials receive appropriate support.

Resource efficiency

2.19 Among the underlying, structural challenges facing the Scottish economy is the issue of comparatively low productivity levels. One response is to address labour productivity by bringing in measures to improve the skills base. We can (and do) encourage innovation to ensure that Scotland is producing high value products and services. We can also improve productivity through getting the maximum effective use from resource inputs while minimising waste. By using resources better and by reducing waste in the first instance, businesses can cut production costs, improve productivity levels, increase competitiveness, sustain existing jobs and create new ones.

2.20 Such a focus on resource productivity would contribute directly to improved economic performance. It would also provide opportunities for companies whose products and services will be required if businesses are to be able to make the best use of their resources - such as environmental auditors and producers of energy saving equipment. There is therefore a significant opportunity here for Scottish businesses to secure a growing global customer base by developing a range of innovative goods and services that satisfy the increasing interest in resource efficiency.

2.21 We already know there is huge scope for improving resource efficiency. The Scottish Energy Efficiency Office estimates that unproductive use of resources costs the manufacturing sector in Scotland around 0.3 billion every year. When added to the estimated 1.3 billion lost to the Scottish economy annually through energy wastage it adds up to a significant waste of resources that could be used to make existing jobs more viable, as well as creating new jobs.

2.22 A major study, "Scotland's Footprint" ⁸, was funded by the Scottish Executive and the Institute of Civil Engineers with a grant from Biffawards. It includes a resource flow analysis that will help to identify key areas where consumption of energy and materials could be reduced, and where recycling rates could be increased, and thus where market opportunities exist for new products and services.

2.23 Energy efficiency measures are expected to contribute half of the UK's objective of a 60% reduction in carbon emissions by 2050. Many businesses are already responding to measures that impact on their energy costs eg fiscal measures (such as the Climate Change Levy) and regulatory and policy measures (such as Integrated Pollution Prevention and Control, or EU Emissions Trading). This business response is increasing company profitability through improving resource efficiency - reducing energy bills and cutting out waste.

2.24 Improving resource efficiency may be required, in some cases, by regulation but the key point is that it is also an opportunity for businesses. However, smaller businesses in particular can find it difficult to establish more effective waste management processes or carry out energy efficiency upgrades, often considering resource efficiency measures to be unaffordable. While advice and support is available, businesses are not always aware of it. Some businesses may also be unsure about which body is best placed to provide them with help. We want to ensure that advice is easily accessible.

2.25 The Scottish Executive promotes energy efficiency and environmental best practice through the work of the Scottish Energy Efficiency Office (SEEO). The SEEO (with a budget of 10 million) directly funds and supplements major UK programmes run by the Carbon Trust and the Energy Saving Trust to improve energy efficiency in the business and domestic sectors respectively. The Executive's Warm Deal initiative provides additional support for improved energy efficiency in the domestic sector. SEEO also promotes take-up of the principal UK waste minimisation programme, Envirowise.

2.26 The SEEO, Envirowise and the Federation of Small Businesses in Scotland have produced a resource efficiency toolkit for small business ⁹, designed to inform and educate on how energy, waste and water bills can be reduced. In addition, the SEEO last year commissioned 750 energy audits and waste minimisation visits to Scottish businesses to identify cost and carbon savings, identifying potential financial savings in excess of 12 million. This equates to carbon savings of around 175,000 tonnes of CO ₂ or 550,000 MWh of energy - enough to power 27,000 homes for a year.

2.27 The Executive has also launched a new 20 million fund to help improve energy efficiency across local authorities, health boards and Scottish Water. In total, this should generate 70 million of savings over the next five years and 30 million every year thereafter. The public sector has a key role to play in leading by example - demonstrating to the public and business community how cost-effective energy efficiency measures can quickly deliver practical, tangible benefits. These measures will also act over a number of years to stimulate the Scottish market for energy efficiency advice, products, and services.

2.28 Improved use of resources is stimulating a growing and significant demand for energy efficiency products, advice and other services. There is a real opportunity for Scotland to tap into that demand and carve out for itself a significant market share of the global market. Our efforts in this area can stimulate the market for Scottish product manufacturers and distributors, as well as the consultancy sector whose technical expertise is an increasingly valuable and tradable resource.

Other business opportunities

2.29 There are a range of activities in a number of other sectors that also support the overarching aims of the Green Jobs Strategy. The strategy will aim to complement the Executive's existing sectoral strategies in areas such as tourism and agriculture.

Tourism

2.30 Tourism is one of Scotland's major business sectors, providing direct employment for 215,000 people and generating visitor spending of more than 4.5 billion every year. Among the key assets that attract thousands of visitors to Scotland from all over the world are the quality of our natural environment in both urban and rural areas and the diverse range of species and habitats that exist within it. By taking measures to safeguard that environment and limit the impact of economic activity upon it, we are increasing the attractiveness of Scotland as a tourist destination, thus increasing the number of visitors, and helping to create new jobs and sustain our tourism industry for years to come.

Construction, architecture and design

2.31 Scotland has the opportunity to become a world leader in developing and implementing ecologically sound building design techniques. Working with the building industry will be critical as it plays a key role in promoting sustainable construction and design. We believe strongly in the importance of good building design - both in new build and refurbishment - to achieving our objectives.

2.32 The amount of energy produced from non-renewable sources, and consumed in building services, accounts for about half of the UK's CO ₂ emissions. The energy consumed in the manufacture and transport of building materials accounts for around 24% of the total energy consumption of UK industry ¹⁰. Sustainable construction and design can help enhance quality of life and will offer the flexibility to cater for changing user requirements in years to come. Adopting sustainable design principles into new and refurbished projects will also help to create new markets and stimulate demand for products that contribute towards sustainable construction.

Agriculture

2.33 The agricultural industry can be a leading player in the protection and enhancement of our environment. Agriculture plays a significant role in Scotland's rural economy already and, with the growth of sectors such as organic produce and biofuels, has the potential to diversify into new areas and expand its place in the economy as a whole.

2.34 Demand for organic produce is increasing, but only an estimated 35% of organic produce sold in Scotland is currently provided from domestic resources (as opposed to around 70% for non-organic products). In our Organic Action Plan ¹¹ we said that we wanted to see the Scottish organic sector meet at least 70% of overall Scottish consumer demand for organic products that can be sourced in Scotland. The plan includes a commitment to support specific action aimed at the effective marketing of organic produce, by prioritising assistance towards projects that help organic producers exploit market opportunities.

2.35 The agriculture sector may also benefit from the growth of an indigenous biofuels industry, which would offer increased opportunities for producers of agricultural crops to take advantage of sustainable economic development. Work is ongoing to examine the potential for developing the biomass industry in Scotland. The Forum for Renewable Energy Development in Scotland (FREDS) aims to produce an action plan in the autumn on how to accelerate the development of biomass technology in this country (see paragraph 2.8). The current view is that there is considerable potential for real growth in Scotland through the cultivation of energy crops, and especially through the use of the existing and expanding forestry resource.

2.36 There are three main types of biomass fuel - forestry materials (see paragraph 2.39); energy crops, such as short rotation coppice (SRC), willow or miscanthus, where the crop is grown specifically for energy generation purposes; and agricultural residues, such as straw or chicken litter. Biomass fuel in the form of pelleted sawdust is already an internationally traded commodity.

2.37 Biomass energy production is largely carbon neutral, produces heat as well as electricity and can be stored and used on demand, offering a controllable energy source. Biofuels have the potential to reduce transport emissions, facilitate greater provision of sustainable transport and energy, and reduce waste. Other countries, such as Sweden, Denmark, Austria and New Zealand, are already establishing thriving biomass industries.

Forestry

2.38 There are potentially significant business opportunities in the supply of softwood in Scotland, which is set to almost double to some 10 million m ³ by around 2020 (Scottish Forest Industries Cluster, 2003). Industry statistics show that at present Britain imports some 60% of its paper and board (including nearly 90% of the higher quality printing and writing grade papers used), almost 80% of its solid timber and over 50% of its wood based panel consumption. Recent studies ¹² suggested that an expansion of processing capacity in Scotland could lead to a marked reduction in the quantity of timber and timber products imported, with a resultant significant increase in related employment opportunities.

2.39 New markets are also growing for wood products through the development of biomass energy projects, as highlighted in a recent report from the Royal Commission on Environmental Pollution ¹³. There are a growing number of projects throughout Scotland where wood chips are used to generate heat, for both industrial uses and the provision of heat for houses, with many other projects under consideration. As highlighted above, opportunities also exist for the production of transport biofuels from forest and agricultural products, as well as the generation of electricity or combined heat and power from biomass. Together these offer a good opportunity to protect and enhance Scotland's outstanding natural heritage while creating sustainable business and job opportunities.

3. SUPPORTING BUSINESS IN ACCESSING NEW OPPORTUNITIES

3.1 There is considerable scope for both new and existing businesses to expand into green sectors. Although many businesses and entrepreneurs have already been successful in accessing such opportunities we need to ensure that there is full awareness of the considerable potential of these developing industries.

3.2 Scottish Enterprise's mapping exercise of the environmental sector in Scotland - completed in April 2004 - will help to identify areas of existing and potential strength. The information gathered will help inform the Green Jobs Strategy and will be shared with key stakeholders and partner organisations to help determine how best to support the future development of these industries ^.

3.3 We also need to look at how we support businesses in exploiting new opportunities. The range of public support available to new and expanding businesses in green and other sectors is wide-ranging. Both Scottish Enterprise and Highlands & Islands Enterprise provide a wide range of support, as does the Scottish Executive. This can all be accessed via Scottish Enterprise's Business Gateway and Highlands & Islands Enterprise's single entry points for business. The extent of support available depends on the nature of the individual project (ie the opportunity presented and the need for support), and will range from information, through initial advice, signposting to, and/or support for, more specialist advice and financial assistance.

3.4 The SMART:SCOTLAND, SPUR, SPUR ^PLUS and SCORER&D programmes are grant schemes for small and medium sized enterprises (SMEs) that aim to promote innovation. They encourage existing companies to enhance their products and processes through innovation, and help to facilitate the formation of new leading edge businesses. The environmental impact of projects is assessed as part of the assessment of applications carried out by the Scottish Executive. Only projects that involve sustainable technology and have a neutral or beneficial impact on the environment are supported. For example, in the 2002 round of SMART awards Envirogene Systems Ltd, based in Helensburgh, was awarded a grant to help fund the development of 'intelligent' environmental tracers for use in a variety of environmental applications such as measuring and monitoring the dispersion of solid and liquid wastes discharged into the environment.

3.5 Regional Selective Assistance (RSA) is a national grant scheme aimed at encouraging investment and job creation and safeguarding in the areas of Scotland designated for regional aid under European Community (EC) law (the Assisted Areas). Businesses of all sizes can apply for RSA provided the project concerned will take place within an Assisted Area in Scotland and it meets all of the scheme's criteria. Over recent years the RSA grants have supported a number of green sector projects that met the scheme's criteria by adding genuine value to the economy. These projects range from the handling of clinical waste to tyre and plastics recycling. In December 2003, Argent Energy Ltd received an RSA offer of 1.2 million towards an 8.3 million project at Motherwell to process animal waste into biodiesel and electricity. The Executive has also recently introduced a requirement that all applicants for larger RSA grants must engage constructively with the Scottish Energy Efficiency Office on the environmental, waste and resource issues connected with their projects.

3.6 Highlands & Islands Enterprise is involved in a wide range of projects which promote sustainable development while strengthening local communities. Its Community Energy Unit provides support for locally based projects across the Highlands and Islands, from a wind-powered community centre in Orkney, to a community recycling centre on Bute.

3.7 Scottish Enterprise is working hard to embed sustainable development firmly into its wider economic development activity. It has a network of sustainable development champions who work together to identify and disseminate good practice examples across the Network. These cover all areas of their operation: business development, infrastructure, and skills and learning and Scottish Enterprise is aiming to build on this work. WRAP offers a business development service for recycling companies, including advice on business plans and on attracting commercial investment.

3.8 Although there is quite wide-ranging support available to businesses we will be looking to ensure that the various forms of support are fully aligned with the objectives of the Green Jobs Strategy, and that we make best use of existing schemes in developing the strategy.

4. SKILLS

4.1 We are keen to mainstream properly sustainable development into all areas of government policy. Sustainable development has to be an integral part of policy development - not a side issue or subsidiary priority. This is why we intend our Green Jobs Strategy to be a refinement and development of themes outlined in Smart, Successful Scotland - firmly plugged into our economic development policy.

4.2 We must therefore ensure that Scotland has the necessary skills and knowledge base to take full advantage of the opportunities presented by the developing 'green' sectors. Our workforce must have the skills that will allow us to design and manufacture new technologies and to develop and deliver new services. And we must promote understanding of sustainable development, including the opportunities it presents to entrepreneurs and companies across the country. As in all aspects of skills development, there are responsibilities for the public sector, but also for business which needs to invest in appropriate training.

4.3 The Enterprise Networks have a role in promoting training and its delivery. Scottish Enterprise and Highlands & Islands Enterprise both carry out training needs analyses with businesses and can facilitate access to, and provision of, training. Through their programmes they can support new recruits and existing employees, especially in SMEs, to upgrade their existing skills or gain new ones. They can also support management development which in turn has an important role to play in supporting the implementation of a Green Jobs Strategy, ensuring leadership in encouraging environmental awareness in business.

4.4 We will work with the Enterprise Networks to look at how to include energy efficiency and waste minimisation awareness in vocational training programmes. We will also work with Future Skills Scotland (FSS) to identify possible skills gaps and shortages. For example, the increased cost of waste disposal is likely to lead to rising demand from business for specialists in waste minimisation, while growing awareness of the need for effective environmental performance will increase demand for expertise in developing and manufacturing cleaner technologies.

4.5 FSS's work informs the priorities of others such as the Funding Councils for Further and Higher Education, the Sector Skills Councils (SSCs) and Careers Scotland. SSCs (including the cross-sector boards) are responsible for setting national occupational standards and have a particular role to play in shaping relevant provision in schools, colleges, universities and the workplace. We are also keen to engage with the STUC, employer groups and other organisations with an interest in the skills agenda to ensure that the relevant training opportunities are available across Scotland ^.

4.6 It is just as important that - in addition to ensuring that the Scottish workforce is able to acquire the new skills needed to succeed in the environmental industries - we build on and develop our existing skills base. We have a strong tradition in industries like manufacturing and engineering where the skills and expertise that have been built up over generations can be refocused on new markets and new business opportunities, such as manufacturing components for wind turbines or developing cleaner and more efficient motors and engines.

5. ROLE OF GOVERNMENT

5.1 The way in which Scotland's government transacts its business can have a significant impact on mainstreaming sustainable development principles into national economic activity. We can:

• Lead by example: ensuring that we get our own house in order and that Scotland's devolved government is run in as sustainable a way as possible
• Stimulate demand: using our role as a major customer of Scottish industry to give impetus to the market for 'green' products and services

Leading by example

5.2 The Executive has a good record on environmental performance. For example the Environmental Management System (EMS) at Victoria Quay, our flagship building in Edinburgh, has continued to achieve the internationally recognised standard, ISO 14001 since it was first awarded in 1998. This has placed the Executive at the forefront of Government action in this area.

5.3 Our "Greening Government" policy has targets relating to energy and water use, reducing office waste and recycling. The Partnership Agreement indicates that the Executive will use public purchasing rules to enhance the status of recycled goods and those capable of reuse. We will have discussions with other public bodies about including the use of recycled material in contract specifications when work is put out to tender. We are committed to improving energy efficiency in the public sector - and in March 2004 we announced that we are making a 20 million fund available to all local authorities, health boards and Scottish Water to help realise this commitment (see paragraph 2.27).

5.4 We have also commissioned work to integrate biodiversity across our estate, particularly through the introduction of environmental management systems, and we will continue to seek ways of improving our environmental performance.

Stimulating demand

5.5 Government procurement can play a significant role in stimulating demand for the products and services of the 'green' sectors. The Scottish Executive, its agencies and NDPBs are subject to a duty of Best Value, which requires them to improve by striking a balance between quality and cost, whilst continuing to have regard to the principles of economy, efficiency and effectiveness, and in doing so to contribute to the achievement of sustainable development. This duty is designed to encourage public sector bodies in Scotland to focus on through-life costs and to take a more holistic view of what represents value for money.

5.6 The major investment in Public Private Partnership (PPP) programmes offers significant opportunities to promote 'green' procurement. In July 2002 the Office for Government Commerce (OGC) produced guidance on 'Green Public Private Partnerships', describing how to ensure sustainable construction and design principles are included in all future PPP projects.

5.7 Procurement is not the only lever open to Government to stimulate demand for sustainable products and services. The latest amendments to building standards regulations are providing Scottish companies with new opportunities. For example, thermal insulation requirements are now the best in the UK, and waste storage requirements have been relaxed. Under the new Scottish Housing Quality Standard all properties in the social rented sector will be required to meet high levels of energy efficiency including effective insulation, double glazing where appropriate and full thermostatically controlled heating systems. All of these are measures which create opportunities for new and existing Scottish companies.

5.8 Many of our regeneration activities, co-ordinated by Communities Scotland, have helped disadvantaged communities to address environmental concerns. Last year the Social Inclusion Partnerships spent approximately 1 million on a variety of environmental projects, varying in scale and nature according to community priorities. Community regeneration initiatives like these improve the local environment and can contribute to job creation and skills development. We are also committed to supporting the 'social economy', which has a strong record in developing community based green businesses, including recycling businesses.

5.9 Government investment in the national infrastructure - in planning, transport and the water network - is also important in creating a sustainable Scotland. The Partnership Agreement outlines our clear commitment to sustainable transport by building a transport system that meets the needs of businesses and communities while minimising the environmental impact. By the end of 2006 the lion's share of this investment will be targeted specifically on improving and extending the public transport network. This again provides opportunities for suppliers.

6. MEASURING IMPACT

6.1 We are determined that we produce a Green Jobs Strategy whose overall impact we are able to measure accurately and transparently. We believe that economic growth and sustainability are the key indicators of that impact.

6.2 The Executive's main suite of sustainable development indicators is outlined in Meeting the Needs (April 2002). We are committed to reporting against these indicators on an annual basis. For the economy, our key performance measures are outlined in Measuring Progress Towards a Smart, Successful Scotland (March 2002). We issue regular reports on performance against these. In the next report we will include new measures, in line with those contained in Meeting the Needs, to assess sustainability in the economy with a likely focus on productivity.

6.3 We must be clear that the Green Jobs Strategy is aimed at the medium to long term - we should not expect overnight success. It will take time for the effects of the strategy to feed through to actual numbers of jobs. For example, the Executive commissioned a study into the opportunities for marine energy in Scotland ¹⁴ which suggested that, in the long term, Scotland has the potential to create a significant and thriving marine energy sector. However the report also stressed that employment gains over the next few years would be very limited, even taking into account the most optimistic projections.

6.4 Some commentators have placed a lot of emphasis on the potential number of jobs that could be created. This is a tricky and complicated area. First, there are straightforward problems of data collection. Even assessing current levels of employment in the environmental sectors, and examining the scope for these to increase, is no simple task. For some sectors, like waste management, the process would be relatively simple but for others, like tourism or 'cleaner' technologies there is no guarantee that reliable estimates could be produced. For example, it is extremely difficult to make any clear distinction between two separate companies, who operate in the same sector and manufacture exactly the same product (often not particularly 'green' in itself) but for different markets - one with a 'green' end product, the other with a more traditional output.

6.5 This is why we consider that a strong focus on overall economic impact - on growth and sustainability - is the best and most reliable way to determine how successful Scotland has been in taking advantage of the opportunities outlined in this paper. However we do not pretend to have all the solutions and would be happy to look at all reasonable and reliable alternatives.

7. NEXT STEPS

7.1 A full list of those organisations and people to whom we have sent this discussion paper is attached at Annex 1. We would be happy for you to copy this paper more widely.

7.2 The next stage in developing the strategy will be a series of seminars and meetings to discuss further the issues raised in this paper, including how to measure progress against our aims.

7.3 A number of discussion points have been highlighted and they are listed below for ease of reference. Please do not feel obliged to respond to all these points, nor feel restricted to only responding to these questions. If you would like to comment on any other aspect of the proposals, we would welcome your views. Please complete and return the Respondee Information Form attached at Annex 3 with your comments.

Green jobs across the economy

Q1 In which sectors do you see most scope for development?

Q2 Do you agree that the three "big wins" for Scottish business will be renewable energy, recycling and resource efficiency?

Q3 What further opportunities are there for manufacturing businesses to use recycled materials in their production processes?

Q4 Are there other business opportunities we should explore?

Q5 Is there sufficient awareness of the support and advice services already available to businesses on resource efficiency?

Q6 How best can we raise awareness in the business community of the savings and productivity gains to be had in improving resource efficiency?

Supporting business in accessing new opportunities

Q7 Is there sufficient awareness of developing opportunities?

Q8 How can we best ensure that businesses are aware of these opportunities?

Q9 Are there barriers to businesses wanting to expand into, or start up in, the 'green' sectors?

Q10 What support do businesses need to overcome these barriers?

Q11 Are there gaps in existing support?

Q12 How can Government best support companies wishing to explore these opportunities?

Skills

Q13 How can we best ensure we have the necessary skills within the workforce to develop and excel in green sectors?

Q14 What generic and specialist skills do you see as being required, and what level of qualification?

Q15 Where, when and on what scale are skills gaps and shortages likely to arise?

Q16 How can we best support the development of skills and knowledge in resource productivity within business?

Role of government

Q17 Are we using the levers at our disposal effectively enough to lead by example and help stimulate demand for the products and services offered by the 'green' sector?

Q18 Is there more we could be doing to help stimulate demand?

Measuring impact

Q19 Do you agree with our suggested approach - a focus on measuring overall economic impact in terms of growth and sustainability?

Q20 Can you suggest realistic alternatives for assessing the impact of the Green Jobs Strategy?

Contact details

7.4 The consultation period will run to 30 September 2004. Please e-mail your response to greenjobsstrategy@scotland.gov.uk or send it to the following address by 30 September 2004.

Green Jobs Strategy Team
Scottish Executive
Enterprise, Transport and Lifelong Learning Department
4 ^th Floor, Meridian Court
5 Cadogan Street
Glasgow
G2 6AT

Telephone: 0141 242 5991
Fax: 0141 242 5794

7.5 We have also set up a discussion forum to facilitate wider discussion. This can be found on the Scottish Executive website at:

http://www.scotland.gov.uk/about/ETLLD/EN/00018320

Confidentiality

7.6 Copies of all responses received will be placed in the Scottish Executive's library and will be available to the general public. Responses will also be made available to the public at the Scottish Executive web-site. The views expressed by respondents may also be quoted or referred to in any future review of responses.

7.7 If you do not wish your responses to be made public, please ensure that you indicate clearly that all or part of your response is to be treated as confidential. Confidentiality will be strictly respected. We will still count confidential responses in any statistical analysis and your views will, of course, be taken into account in the same way as for non-confidential responses.

Electronic publication and additional copies

7.8 This publication is available via the internet at:

http://www.scotland.gov.uk/about/ETLLD/EN/00018320

7.9 Additional paper copies of this consultation paper are available from the address above.

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