The Scottish Government

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2. Why renewable energy?

• Renewable energy is identified as a priority in the Strategy for Economic Development since it offers significant potential for helping deliver the Scottish Government's key purpose of sustainable economic growth.
• The Scottish Government's proposals for an ambitious Scottish Climate Change Bill include setting a challenging statutory target of reducing Scotland's emissions by 80% by 2050.
• The Scottish Government has identified support for the EU Energy Policy for Europe as one if its 5 main priority areas under its European Action Plan.
• The Scottish Government is committed to work towards the achievement of 20% of total Scottish energy use coming from renewable sources by 2020, in line with the overall EU approach.
• There is opportunity to harness considerable natural resources and leverage considerable comparative advantage from those resources and the strengths of our Academic and Engineering base.

2.1. Economic development

2.1.1. The Scottish Government has set out in its Strategy for Economic Development (the Government Economic Strategy) its key purpose:

to focus the Government and public services on creating a more successful country, with opportunities for all of Scotland to flourish, through increasing sustainable economic growth.

2.1.2. Energy is identified in this strategy as a priority sector. Within this renewable energy offers opportunities for growth, while also contributing to carbon emissions. Our natural resources, research base and wider energy strengths which give opportunities for transfer of technology and expertise, together provide competitive advantage. We have the opportunity to:

• provide reliable, locally produced sustainable sources of energy;
• generate greater and more widely shared employment;
• create more highly skilled and better paid jobs;
• foster a self-sustaining and ambitious climate of entrepreneurial advance;
• encourage economic activity and investment across Scotland, thereby sharing the benefits of growth;
• bring a culture of confidence and personal empowerment to Scotland; and
• secure a high quality environment today and a sustainable legacy for future generations.

Amount of Electricity Generation from Renewable Sources as Proportion of Whole Demand (2006)

2.1.3. Scotland's oil and gas industry demonstrates how we can prosper, with a cluster of supply-chain companies developed at peak periods of production now evolving into a critical mass of high-value, internationally-orientated activities. Scotland has the opportunity, in marine and offshore energy in particular, to develop a similar economic strength. Scotland has an opportunity, in marine and offshore energy in particular, to develop clear economic benefits at home as well as pushing forward the boundaries of research with a world-wide impact and benefit. In addition to a range of support available for renewable energy development, the Scottish Government has announced the £10 million Saltire Prize, the largest single innovation prize in the world. The Saltire Prize will be open to entrants from across the world, will focus on marine renewable energy and will raise Scotland's profile as a leader in innovation and in renewable energy in particular. The Saltire Prize will make Scotland a world leader in the development of marine renewable technology. The challenge for the Saltire Prize will be announced in December 2008.

The Saltire Prize was announced by First Minister Alex Salmond in Washington DC in April 2008.

Simply put, innovation prizes are successful when people want to win them. We want the Saltire Prize to achieve the profile that will engender the kind of return on investment that makes innovation prizes successful .

The key elements of the Saltire Prize are:

• capturing imaginations: challenge that can inspire a revolution in green energy
• global challenge: high profile prize open to teams from across the world
• relevant to Scotland: relevant to area in which Scotland has strong natural resource and can be demonstrated in Scotland
• capitalises on Scotland's expertise: challenge will reflect area in which Scotland has strong technical expertise and people already working
• achievable in the short-medium term: challenge ideally achievable within a 2-5 year timeframe

With over 16 per cent of electricity already generated by renewables, Scotland is a world-leader in alternative energy. The Saltire Prize capitalises on Scotland's strengths and carries the potential for Scotland to advance its own economy and energy independence while making a substantial contribution to the world's most pressing challenges www.scotland.gov.uk/saltireprize

2.2. Climate Change

2.2.1. Climate change is one of the most serious threats facing Scotland and the world. The most severe global consequences include famine, drought and the extinction of species. The scale of climate change occurring at present is unprecedented and evidence points to this being caused mainly by human activities. Scotland continues to emit greenhouse gases at a rate disproportionate to our size, and our consumption patterns are unsustainable. The chart below shows net emissions of both carbon dioxide and all greenhouse gas emissions between 1990 and 2005 in Scotland, as recorded in the Greenhouse Gas Inventories for England, Scotland, Wales and Northern Ireland ².

Figure 3

2.2.2. The Scottish Government was represented at official level, as part of the UK delegation, at the third meeting of the Parties to the Kyoto Protocol in Bali in December 2007. The conference achieved an historic breakthrough in agreeing a roadmap to achieve a global deal by the end of 2009. The roadmap recognises that deep cuts in global emissions are needed. The conference agreed to address the four 'building blocks' of mitigation, adaptation, technology and financing. Agreements were also reached on addressing deforestation, work to accelerate investment in technology, and a fund to support adaptation in developing countries.

2.2.3. Before the launch of the climate change and energy initiative in 2007, the EU had committed to reducing its collective greenhouse gas emissions by 8% compared to 1990 in order to contribute to the Kyoto Protocol target of 5.2% overall. The UK share of the EU collective target was 12.5%. The key plank for achieving the EU target is the EU Emissions Trading Scheme ( EUETS) which began in January 2005 and is the largest greenhouse gas emissions trading scheme in the world. The scheme is mandatory for large emitters, covers around 50% of Scottish net CO ₂ emissions and is designed to ensure that emissions reductions are made where they are most cost-effective.

2.2.4. Against this background and taking a strong lead, the Scottish Government has consulted on proposals for a Scottish Climate Change Bill, including a target to reduce emissions by 80% by 2050 - further details can be found at: http://www.scotland.gov.uk/climatechangebill . The Bill will set a clear, long-term legal framework thereby allowing businesses, organisations and individuals to invest in energy and carbon saving technologies with certainty. The consultation on the Bill closed on 23 April 2008. Over 21,000 responses were received and a report on the analysis of the consultation responses was published on 20 August 2008. The Scottish Government plan to introduce the Scottish Climate Change Bill into Parliament before the end of 2008.

2.3. Scotland in Europe and in the United Kingdom

2.3.1. Further developments have been taking place at a European level. At the Spring European Council on 8 and 9 March 2007, EU Heads of Government agreed an ambitious unilateral binding target to reduce Europe's greenhouse gas emissions by at least 20% by 2020 (compared to 1990 levels) and to increase this commitment to a 30% reduction if an international agreement is reached. In parallel with this decision a new Energy Policy for Europe was agreed, which set a number of objectives including the following key targets:

• an improvement in energy efficiency in order to save 20% of the EU's projected energy consumption in 2020;
• a binding target for renewable energy to make up 20% of overall EU final energy consumption ( i.e. not just electricity) by 2020;
• a binding target for renewables to make up a minimum of 10% of transport petrol and diesel consumption by 2020.

2.3.2. The Commission published on 23 January 2008 a package of measures to help implement these targets, including a draft comprehensive framework directive for renewable energies ³. It covers the three energy sectors: electricity, transport, and energy used for heating and cooling. It aims to provide a framework for increasing the share of renewable energy to 20% of final EU energy consumption, including sharing out this target amongst Member States, and (within this target) a 10% share of renewable energy in transport petrol and diesel consumption. It addresses standards and requires national action plans to be prepared for each Member State by 31 March 2010. The national action plans shall set out Member States' targets for the shares of energy from renewable sources in transport, electricity and heating and cooling in 2020, and adequate measures to be taken to achieve these targets, including national policies to develop existing biomass resources and mobilise new biomass resources for different uses, and the measures to be taken to ensure issues such as access to the grid and the environmental sustainability of biofuels. The Council and Parliament have begun consideration of the draft directive and expect consideration to be taken forward during the French Presidency of the Council in the second half of 2008.

2.3.3. The Scottish Government has identified support for the EUs' Energy Policy for Europe ( EPE) as one of its 5 main priority areas under its European Action Plan. It aims to position Scotland as a leader in the development of green, sustainable energy and to influence the development of EU policy to support this aim. This will not only assist climate change objectives but help the growth of energy as a key economic sector in Scotland.

2.3.4. The Scottish Government is committed to work towards the achievement of 20% of total Scottish energy use coming from renewable sources by 2020, in line with the overall EU approach. In this context it is:

• working with the UK Government and European partners on the implications of the proposed renewables directive, including the ways in which Scotland can meet the 20% target and the implication of the directive for our long term plans to export some of our vast renewables potential to our European neighbours;
• intended that this proposed Renewables Framework should contribute to the Scottish element of the UK National Action Plan for renewable energy, which will be required under the proposed EU directive;
• working with the UK Government and European partners on parallel proposed directives on Carbon Capture and Storage and Emissions Trading;
• taking forward, with support from the European Energy and Research Commissioners, the establishment of a Scottish European Green Energy Centre. This will develop networks and partnerships with research and deployment bodies for green energy in like minded countries designed to promote the deployment of green energy technologies and contribute towards the new targets of the EPE. It will disseminate throughout Europe the results of this work, and hold seminars and conferences for academics and practitioners.

2.3.5. Scottish Ministers have a range of powers which they may use to promote the development of renewable energy (while taking into account other considerations such as protecting the environment). But aspects of energy development - and in particular market issues relating to electricity generation and transmission - are regulated under policies set by the UK Government. The Scottish Government is committed to seeing the market develop in way which provides a robust and fair framework for renewable energy development and removes barriers in its way while providing a fair deal for consumers and energy users more widely. The Scottish Government therefore maintains a close dialogue not just with Departments of the UK Government but also with UK wide bodies working in the energy field such as Ofgem Further details are given in relevant sections in this document.

2.4. Sustainable economic growth

2.4.1. We could become Europe's biggest exporter of renewable energy if we take robust advantage of our potential. Scotland's emissions, and the potential to reduce emissions in Scotland, are different from the rest of the UK. As well as our wind and marine potential we have in our forests both a contributor to biomass energy and the ability to absorb CO2. The majority of the UK's forest area is in Scotland and the Scottish Government proposes expanding forest cover from 17% of the land area to 25%. In this context we will look carefully at how the public estate can contribute further to renewable targets.

2.4.2. The Strategy for Economic Development includes a national performance framework, covering all public sector bodies in Scotland including local authorities, against which progress towards the overall Government purpose should be judged. This includes an overall interim target of reducing emissions by 2011 and a longer term target to reduce overall emissions by 80% by 2050. It also includes a national indicator to achieve 50% of gross electricity consumption from renewable sources by 2020, with an interim target of 31% by 2011. Our objective is that actions to achieve these targets should, as far as possible, also contribute to achievement of targets for growth of the economy, to raise Scotland's GDP growth rate to the UK level by 2011 and to match the GDP growth rate of the small independent EU countries by 2017.

2.4.3. In seeking to achieve the objectives of energy policy we need good evidence. For the benefit of all policy areas we are currently developing tools and guidance that will help policy makers to assess the carbon impact of policies in a manner consistent with national and international obligations. This will enable the identification and quantification of specific carbon impacts and timescales during policy evaluation and will therefore ensure that climate change impacts are considered as part of the policy development process. This applies to renewable energy in the same way any other development; for example the impact of wind farms on peatlands is one of the issues that are now taken into account in considering new applications for consent. ⁴

2.4.4. Developing a comprehensive approach to renewable energy provides opportunities to meet climate change targets, demonstrate our commitment to shared European and international objectives and contribute to sustainable economic growth in Scotland. It also provides a real platform to develop the industries of tomorrow in matters as diverse as electricity generation and heat and insulation technology which can place Scotland at the leading edge of countries which are making the most of the opportunity to deliver both sustainable economic growth and carbon targets at the same time. This framework will provide the basis for investment in our country's future.

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