The Scottish Government

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Executive Summary

1. This first Energy Efficiency and Microgeneration Strategy for Scotland sets out the Executive's aims for improving energy efficiency and encouraging a greater uptake of microgeneration. Together energy efficiency and microgeneration can help achieve a low carbon future for our homes and workplaces and this Strategy therefore takes and reflects a more joined-up approach. Delivering the actions contained within this strategy will require effective partnership working between the Executive and partners.

2. This is a draft of the Strategy for consultation. This consultative draft highlights work underway, sets out progress being made, and outlines work that is currently planned for the future. Once the consultation has concluded, the Executive will consider all responses and take these into account when revising the Strategy. All of the existing and new targets and commitments in the final Strategy will be compiled into a single Action Plan which will be published during 2007. The Executive will use the action planning process to set energy efficiency and microgeneration targets. Progress being made against delivering these targets will be monitored through the Action Plan, which will be reviewed and reported on, on an annual basis. The Action Plan will include a summary of the carbon savings associated with the various actions, thus providing an overall picture of the contribution that energy efficiency and microgeneration will make to Scotland's Climate Change Programme targets.

3. The Executive's Sustainable Development Strategy - Choosing Our Future (November 2005) and Scotland's Climate Change Programme - Changing Our Ways (March 2006) provide the backdrop to the development of this Strategy. They both reinforce the need for action to ensure that the vision for Scotland in 2050 as a prosperous and sustainable low carbon economy is secured.

4. There is clear direction from Europe to set ambitious and realistic targets for tackling climate change and improving energy efficiency. The EU Energy Efficiency Action Plans published in October last year and the more recent Strategic Energy Review propose setting targets to reduce greenhouse gas emissions by 30% by 2020, and to improve energy efficiency by 20% by 2020. Scotland has a key role to play in delivering and achieving these European and UK targets and we will make our contribution.

5. The Executive is contributing towards the UK delivery of the Kyoto targets and supports the UK Government's ambitious domestic target - to reduce domestic carbon dioxide emissions by 20% below 1990 levels by 2010, with a longer-term goal to reduce carbon dioxide emissions by 60% by 2050. Scotland's Climate Change Programme demonstrates its commitment to reduce carbon dioxide and other greenhouse gas emissions in the long term by quantifying and setting an ambitious carbon savings target for Scotland to 2010. The Executive's commitment is to exceed Scotland's share of UK carbon savings by one million tonnes.

6. The UK Government is responsible for measures that relate to regulation, appliance labelling, mandatory obligations, and energy services. Although these areas are reserved, the Executive keeps a close eye on them and works closely with the UK Government to ensure that Scottish interests are represented.

7. However, Scotland has significant powers in this area, including the promotion of energy efficiency. Improving energy efficiency is widely recognised as the easiest and most cost-effective means of reducing carbon dioxide emissions. The financial benefits of doing so are clear - industry and society can achieve more with less energy, public services are delivered at lower cost, and fuel poverty is reduced. Better insulated buildings and more energy efficient workplaces cut energy bills for householders and businesses. Reducing demand also puts less pressure on energy supplies.

8. Energy Efficiency will help to reduce carbon dioxide emissions, but not on its own. In order to move to a low carbon economy, more clean energy must be created. Microgeneration can make a significant contribution to tackling climate change, ensuring reliable energy supplies and could help to tackle fuel poverty. It can provide a sustainable source of low carbon energy and help to reduce carbon dioxide emissions from homes, small commercial buildings, and community buildings, such as leisure centres and schools. Microgeneration can also have a wider impact, by increasing awareness and engaging the public in tackling climate change.

9. There are still a number of barriers to overcome before the full potential of microgeneration can be realised. These include financial costs, availability, a limited knowledge of the benefits and cost effectiveness of various technologies, and a range of planning and technical issues. The Executive is, therefore, putting in place a range of measures to encourage the uptake of microgeneration, develop the market and provide significant business opportunities for Scotland.

10. This Strategy identifies how the Executive will encourage more households, the public sector and businesses to take up those opportunities, and outlines a package of policies and measures to drive an increase in energy efficiency and encourage the uptake of microgeneration across these sectors of the economy.

11. The Executive is already taking action to encourage behavioural and cultural changes: by supporting awareness raising campaigns and funding a range of information and advice programmes designed to deliver greater energy efficiency across the domestic, public and business sectors throughout Scotland. In 2005-06, these advice programmes helped over 80,000 householders, over 500 business and public sector organisations, and over 350 SMEs to realise carbon and financial savings. Taken together, these programmes are predicted to produce lifetime savings of over 500,000 tonnes of carbon by 2010.

12. Although this is real progress, the Executive recognises that more needs to be done if we are to meet our ambitious carbon savings target outlined in Changing Our Ways, Scotland's Climate Change Programme. The Executive will:

• Introduce a 'one-stop-shop' approach to advice and support for householders offering a more pro-active, customer focused service, covering energy efficiency, transport and renewable energy.
• Ensure that all local authorities demonstrate leadership in investing in carbon-saving measures by taking part in the Carbon Trust's Carbon Management Programme.
• Help businesses to understand that by reducing their energy consumption through energy efficiency measures they can cut their energy bills and carbon dioxide emissions, and improve business growth, profitability and competitiveness. The Executive will commit up to a further £2 million to loans for small and medium sized businesses to help smaller companies to make upfront investments in energy efficiency. In recognition that energy efficiency is just one part of a wider picture of resource efficiency, the Executive is also reviewing resource efficiency initiatives so that it can take action and make it easier and clearer for business to access advice and support.
• Help everyone to have access to information on the most appropriate and relevant energy saving actions that they can take as quickly and easily as possible. The Executive also wants to ensure that the support it provides and funds is cost-effective and well targeted, therefore, it has commissioned an independent review of energy efficiency and microgeneration support in Scotland to help take action to improve the delivery of support in Scotland.
• Better promote and raise awareness of energy efficiency and microgeneration in schools. Scotland has already achieved the ambitious UN target for 80% of its schools to be registered under the Eco Schools Programme by 2008 - but the Executive wants to see every school registering on the Eco School Programme and striving for the Green Flag award.

13. The Executive is supporting a number of activities to help us gain better access to information on energy use, including:

• The introduction of more accurate billing methods and new technologies, such as real-time displays and smart meters in to homes and across the public sector.
• Raising awareness to help inform consumers about the most energy efficient products, such as the Energy Saving Trust's Energy Saving Recommended; and the ecological footprint of goods and services.
• Work being carried out with manufacturers and retailers across the UK and Europe to improve the energy efficiency of a wide range of products from the domestic and business sectors, including reducing the 'on' and 'standby' power consumption of household appliances.

14. The Executive has already done much to drive this vision forward in Scotland, including:

• Publishing a new statement on Architectural Policy which sets out the Executive's vision for sustainable building design.
• Developing planning policies which set out how energy efficiency, good design and the incorporation of microgeneration form an essential part of new developments.
• Providing support to professionals in the design and construction industry to raise ambition and drive forward standards by developing best practice guides.

15. The Executive recognises that there is more to be done to go that step further and will therefore:

• Introduce new Scottish Building Regulations that incorporate minimum energy standards from May 2007 which will deliver carbon dioxide savings in the region of 18-28% when compared to current standards. It will also investigate the impact of further increasing the energy standards. The revised standards will lead the UK with the most demanding requirements for the thermal insulation of new buildings.
• Require energy performance certificates in buildings when constructed, sold or rented out (including homes, public sector buildings and business premises). This will give better information about the energy consumption and carbon dioxide emissions from buildings and will provide recommendations for measures to improve the energy performance. The Executive believes that these certificates will: encourage the public sector to lead by example and set more ambitious goals for the energy performance of their own estates; and act as a driver for improving energy efficiency in the home.

16. Coupled to energy efficiency, microgeneration could make a significant contribution to tackling climate change, by ensuring reliable energy supplies and providing a powerful visual statement which helps to increase awareness and engage the public into taking action. It can provide a sustainable source of low carbon energy and help to reduce carbon dioxide emissions from homes, small commercial buildings, and community buildings, such as leisure centres and schools.

17. The Executive's Scottish Community and Householders Renewables Initiative ( SCHRI) has been very successful in raising awareness of renewable technologies and stimulating the demand for small scale renewables in Scotland. Since 2002, £16 million has been committed, helping nearly 1700 individual and community projects across Scotland and leading to an increase in the number of accredited installers from 14 in 2003 to 74 in 2007. The Executive is therefore investing an additional £2 million to provide further grant support through SCHRI.

18. However, there are still a number of barriers to overcome before the full potential of microgeneration can be realised. These include financial costs, availability, a limited knowledge of the benefits and cost effectiveness of various technologies, and a range of planning and technical issues. Therefore the Executive is carrying out a significant amount of work to help ascertain what it could and should be doing to support and develop microgeneration in Scotland. All of this work will help to steer future policy developments including the setting of microgeneration targets for Scotland which the Executive will do during 2007. The work includes:

• Revising planning policies to encourage the wider take up of microgeneration.
• Consulting on detailed changes to permitted development rights to make the uptake of microgeneration easier.
• Changes to the Renewables Obligation Scotland from April 2007 which will make it easier for small generators, including householders, to qualify and obtain accreditation for Renewable Obligation Certificates ( ROCs) which can then be sold to electricity suppliers.
• Research to ascertain what form future support might take and how best to target that support.
• The establishment of a high level working group made up of a small number of relevant internal and external stakeholders to help steer future direction of policy support.

19. During the 2002 Spending Review, the Executive set challenging targets to improve domestic energy efficiency by 20% by 2006. Significant progress has already been made - the latest statistics which present 2003/04 data report that the energy efficiency of Scottish housing has improved considerably from 2002 levels. The Executive will report fully on its achievements in meeting the 2002 Spending Review target in 2008-09 when all of the data to 2006 is available. The Executive recognises that more still needs to be done to build on this and will set further, more challenging targets linked to the next Spending Review in 2007.

20. In 2007, the Executive will review progress being made by local authorities towards meeting their targets for improving energy efficiency of their respective housing stocks under the Home Energy Conservation Act ( HECA). The latest HECA statistics (2003-2005) shows that steady progress is continuing with an average 17.2% improvement in energy efficiency, and an estimated overall reduction of 3.1 million tonnes of carbon dioxide since the start of HECA in 1997.

21. Through Communities Scotland, the Executive makes a considerable investment in housing - this amounted to £800 million in 2006/07. Their revised 'Sustainable Housing Design Guide' gives guidance to housing associations on how to adopt a low carbon, sustainable development approach for new and refurbished housing. Communities Scotland is currently consulting on proposals for setting an ambitious mandatory target of EcoHomes 'excellent' by 2010, a mandatory energy standard, and to establish, where possible, carbon savings across the building programme.

22. The Executive is working closely with the UK Government and the energy supply companies to deliver better energy efficiency to householders through the Energy Efficiency Commitment ( EEC). The Executive wants to ensure that EEC has demanding goals, is better targeted and that it works more effectively with Scottish Executive fuel poverty and energy efficiency initiatives.

23. The Executive is investigating the barriers to take-up of home energy efficiency and is currently considering a range of options to help householders in Scotland to improve the energy efficiency of their home. This could include, better targeted advice, loans, equity release initiatives and 'green' mortgages, and more comprehensive home energy audit services. The Executive will publish further details during 2007.

24. The Executive will continue its commitment to end fuel poverty by 2016. Significant progress has been made through the Executive's Warm Deal and Central Heating Programmes - fuel poverty has more than halved between 1996 and 2002, from 35% to 13% of households (738,000 to 286,000). The programmes lift households out of fuel poverty by improving the energy efficiency of the home - to date free central heating systems have been provided to over 74,000 homes and over 315,000 homes have been insulated. The Executive has committed a further £108 million for both programmes to 2008. In addition to energy efficiency, the Executive is currently assessing the impact of microgeneration technologies on alleviating fuel poverty.

25. The Executive's £20 million Central Energy Efficiency Fund ( CEEF) is helping public sector organisations to lead the way in energy efficiency. This 'invest to save' fund is being used by local authorities, NHSScotland Health Boards and Scottish Water to invest in energy efficiency projects which bring about energy, cost and carbon savings. CEEF has been successful - as well as delivering financial and carbon savings, it is raising the profile and stimulating behavioural changes across the participating organisations. The Executive therefore recently announced an additional £4 million to extend the fund to Further and Higher Education to enable this sector to realise similar benefits.

26. The Executive recognises that, as an organisation, it must lead by example and it has already delivered major energy efficiency improvements by reducing carbon dioxide emissions by almost 50% on its own estate since 1991. During 2007, the Executive will introduce a single carbon dioxide emissions reduction target to cover all activities, including business travel, energy use and waste production. This will include a commitment to reduce the emissions associated with business travel by at least 25% by 2020 against 2005/06 levels. The Executive wants to show its commitment by investing in microgeneration and is currently investigating which of its current buildings on its own estate are most suitable.

27. The Executive has tasked its agencies and non-departmental public bodies ( NDPBs) with improving their environmental management practice by putting in place policies and challenging targets which will be published and reviewed on an annual basis.

28. Through the Scottish Climate Change Declaration, local authorities have demonstrated their commitment and have signed up to achieve a significant reduction in greenhouse gas emissions from their own operations.

29. One of the Executive's main priorities is to modernise the school estate with well designed, well built and well managed schools. Through significant Executive funding, local authorities are required to consider sustainability as a key aspect of school buildings - not just the initial purchase price of an asset but also the ongoing running and maintenance costs. The Executive wants to encourage and deliver greater energy efficiency and uptake of renewables throughout the entire procurement process and is currently carrying out research to better understand how the energy standards of existing schools stack up and to help identify future action that is needed.

30. Sustainability is a key aspect to NHSScotland property - each NHSScotland body must have in place local policies for sustainable property management, environmental management, construction procurement and design quality. These include targets for reducing energy consumption and greenhouse gas emissions. Over the 19 year period to 2004/05, NHSScotland has made a significant achievement. It has reduced energy consumption by around 36% and carbon dioxide emissions by nearly 39%. NHSScotland has set a national target to further reduce energy consumption by 2% each year until 2010, representing a total saving of almost 50% in energy consumption by 2010 over 1990 levels.

31. It is estimated that, currently, £8 billion is spent per year on public sector procurement. As well as securing Value for Money and adhering to public procurement policy and legislation, energy efficiency is one of the key aspects to good procurement practice. The Executive already promotes best practice across the public sector through a variety of means including guidance, toolkits and training and is currently seeking more ways to further promote energy efficiency and microgeneration through the procurement process.

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