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4 Sector profiles

This section presents the sector level results, for each of the 8 sectors. These results are considered further in Section 5, the Cross Sector Analysis. At sector level the results are presented in ktCO ₂eq for ease of reading, the aggregated results across all sectors are presented in MtCO ₂eq (1,000 ktCO ₂eq = 1 MtCO ₂eq).

For each sector the following information is provided:

• A short description of the sector.
• Emissions and trends within the sector.
• Identification of policy options for the sector.
• The emissions reductions and costs - prior to consideration of cross sector effects.
• Acceptability and feasibility of the policy options.

As electricity generation is a separate sector, the emissions data for the other sectors is solely the direct emissions, i.e. emissions from combustion of gas, oil coal etc. Many policies that encourage energy efficiency will reduce direct as well as indirect emissions. All emissions data is in annual terms.

For each sector additional information is provided in Appendixes 3 to 10.

4.1 Electricity Generation

This section covers the electricity generation sector; more details of the results are given in Appendix 3. The potential for additional abatement through the use of Combined Heat and Power ( CHP) is considered separately in Section 4.9. Microgeneration is considered in this Section and also in the Housing Sector, as this term includes technologies that provide heat as well as electricity. Any potential overlaps are dealt with in the cross sector analysis.

The sector currently includes five large centralised plants - Cockenzie and Longannet (coal), Peterhead (gas/oil) and Hunterston B and Torness (nuclear). Scotland's total generation includes a significant proportion of renewable generation, particularly hydro and onshore wind, as well as a number of emerging technologies which could be important in future years (marine, deep offshore wind). Emissions from refineries, and associated mitigation options, are covered by the chapter on industry.

Complexity arises in that electricity generated in Scotland may be used outside Scotland in other parts of Great Britain, through distribution via the transmission network. Therefore, mitigation in this sector in Scotland has an impact on the carbon intensity of the wider UK generation mix - and therefore on the assumed savings that can be attributed to measures in end use sectors. Given that electricity generation in Scotland is transmitted to and used in other parts of the UK, decisions about operation of current generation capacity, and investment in new build is linked to the UK situation as a whole. This is fundamental to how this sector may develop in future years.

4.1.1 Emissions and trends

The starting point for assessing trends in GHG emissions for the sector to 2050 is the Scottish Greenhouse Gas Inventory ¹⁷ ( NAEI 2007). This establishes the current level of electricity generation emissions at around 14 Mt CO ₂/year. Projecting CO ₂ emissions for this sector is not straightforward, particularly in the longer term due to various issues, economic, technical and planning related.

However, a report to the Scottish Government ( AEA 2007b) provides projections for the electricity generation sector to 2030 and considers changes out to 2050 (though only qualitatively). The projections assume that electricity generation is tied into a supply-demand balance that accounts for domestic Scottish electricity demand, own electricity use by the generation sector, transmission losses and export levels. Based on this information, the following emissions baseline has been developed focussed on use of natural gas and coal - as renewable and nuclear plant do not contribute to emissions. Oil is not included specifically - low usage for electricity generation means that associated emissions will be small, within the uncertainty of the overall estimates. In the period up to 2030 all five of the large centralised plant are due to close. Hence the projection shows significant changes up to 2030. Post 2030 the replacement gas fired plant is assumed to be in place, and no further changes in capacity and output are assumed, hence a business as usual position is assumed, with emissions in the baseline after 2030 not changing year on year. These projections do not account for any significant growth in the use of electricity for heating or for charging electric vehicles.

Figure 4 Baseline GHG emissions from electricity generation in Scotland, 1990-2050

4.1.2 Identification of policy options

Emissions from the electricity generation sector can be reduced by:

• Switching from fossil-fuel based generation to lower carbon generation types.
• Carbon capture and storage on fossil generation plant.
• Increased efficiency of generation plant.
• Increased uptake of microgeneration particularly micro-renewables ( PV and micro wind).
• Reduced demand for electricity - through efficiency improvements, consumer behavioural responses, fuel switching, structural changes in the economy.

Decarbonised electricity could also have a knock-on effect on:

• Emissions from use of heating if domestic and business users were to switch to electrical heating, away from fossil fuels.
• Uptake of electric vehicles.

These cross sector interactions are dealt with in Section 5.

The baseline takes into account the following Scottish and UK policies that currently exist or are planned, as these will reduce emissions from electricity generation or changes to energy supply. Given the significant renewables resource in Scotland (hydropower, biomass from forestry, wind / marine potential), much of the emphasis is on the development and implementation of renewables policy.

• Scottish programmes and policies:
  • Scottish renewable electricity targets (31% in 2011 and 50% in 2020).
  • Renewables obligation (Scotland).
  • Biomass Action Plan for Scotland (Scottish Executive 2007).
  • Renewable Heat Strategy (proposed).
  • Energy Efficiency and Microgeneration: A Strategy for Scotland (draft).
  • European Marine Energy Centre ( EMEC).
  • Wave and Tidal Energy Support ( WATES) scheme.
  • SCHRI
  • Scottish Planning Policy 6 ( SPP6) - Renewable Energy.
  • Policy on new nuclear generation.
• UK programmes and policies:
  • EU Emissions Trading Scheme Phase II and Phase III.
  • UK Energy Bill.
  • UKCCS demonstration programme.
  • Amendment to the Renewables Obligation.

A wide range of potential new (or extended) policy options for Scotland have been identified here by considering:

• The possible further evolution of existing policy options in Scotland and the UK.
• What is already being done, or considered, elsewhere in Europe.
• What has been proposed by leading researchers in the field.
• Other ideas proposed by the project team and the stakeholders consulted.

At this stage the net has been cast wide and ideas are included irrespective of concerns on cost-effectiveness or likely public acceptability. The aim was to produce a long list of possible options that could then be assessed against a number of criteria.

4.1.3 Emissions reduction potential, and preliminary assessment of costs

This section on emission reduction potential focuses on centralised supply-side electricity generation, as decentralised electricity / heat generation such as microgeneration are covered in end use sector assessments such as the business and domestic sectors.

Table 3 shows the percentage emissions reduction potential that could be achieved by 2030 and 2050 from each of the main policies or types of policy listed in the previous section, Table 4 shows this in absolute terms. It is not possible to derive the total achievable savings from the sector by simply adding up the savings in the final column because there are overlaps and interactions between policies.

Table 3 Emissions reduction potential from future policy options

* Reduction potentials based on 'revolutionary' type policy. Early shutdown of some thermal generation plants would be required to achieve this. By 2050 this is an alternative to CCS as a way of decarbonising the electricity supply system.

Table 4 Electricity Generation Emissions Reduction Potential in 2050

The above options can be split into two groups - firstly, those that ensure radical reductions in emissions from fossil plant (either through alternative build or CCS) or secondly, smaller reductions resulting due to the alternative generation technologies that do not replace large generation plant.

Many different cost assessments have been undertaken to assess the abatement costs of electricity generation under various options. DTI¹⁸'s Energy White Paper ( EWP 07) provided costs on different abatement options for electricity generation technologies. For those measures where cost data is available, the following figures on costs have been considered.

Table 5 Potential abatement costs for each option

NB. £ 2005 basis

As an established near-free carbon technology, nuclear generation is amongst the most cost-effective, although much depends on the cost assumptions concerning waste and decommissioning, interest payments during construction, capital investment assumed for class of generation etc. The long term waste and decommissioning costs are the subject of particular debate.

The technical performance and costs of emerging technologies such as wave and tidal are likely to improve post-2020 subject to research and experience that improves technology performance.

4.1.4 Acceptability and feasibility of policy options

There are a number of issues concerning public acceptability and feasibility of policy options proposed, especially in the following cases:

• Nuclear power.
• Renewable generation (and associated infrastructure) particularly relating to intrusion on natural landscapes and possible effects on wildlife.
• Carbon capture and storage with respect to uncertainties in assessment of effectiveness and costs and the safety implications of transporting CO _2.

These are set out in Table 6:

Table 6 Acceptability and Feasibility of Electricity Generation Sector Policy Options

4.1.5 Sector Results - Electricity Generation

Based on the:

• abatement potential for the 8 measures discussed above
• costs for these measures
• acceptability and feasibility of these measures

Five policy measures for the electricity generation sector are considered to have a material and practical contribution to make to the 2050 reduction. The following figure shows these five measures plotted in terms of their:

• Abatement potential
• Abatement cost

The amount of carbon dioxide equivalent abated as a result of implementing each policy was assessed. The cost of implementing each policy was also determined. As a result of these considerations, taking into account uncertainties and any secondary impacts, each policy was placed in the abatement effectiveness matrix shown in Figure 5 and assigned a priority. This categorisation was based on the individual policy measure in isolation rather than its impact or cost when implemented alongside other policies. Further details of the categorisation are given in Section 5.

CCS for coal and gas power stations and significant support for emerging renewables are seen to have the highest potential for GHG abatement, effectively decarbonising electricity generation ¹⁹, with CCS at lower cost than greater levels of renewables. Enhanced energy efficiency and increasing renewables uptake both offer medium abatement potential at low cost, while renewable microgeneration is expected to be a high cost measure.

The policy levers for electricity generation are complex and held by the EU, UK Government and the Scottish Government. In addition world energy prices strongly influence investment and operation decisions in this sector. The Scottish Government has a number of policy levers at its disposal including planning, revenue support through the RO and capital grant support schemes.

Figure 5 Summary - Electricity Generation Sector²⁰

4.2 Business

This sector includes emissions from:

• The industrial sector (chemicals, food, paper engineering).
• The commercial sector (offices, hotels, retail etc.)
• Oil refineries (which are considered in this section, as the relevant policies are similar to those that apply to industry more generally).

Emissions from these Sub-Sectors were 17% of Scottish GHG emissions in 2005, falling from 22% in 1990. Emissions from electricity use in the sector are recorded separately under electricity generation. Further information on the policy options for the business sector is given in Appendix 4.

4.2.1 Emissions & Trends

Within the emissions inventory, 98% of emissions from the business sector are CO ₂. The remainder is largely N ₂O from mobile off road machinery (plant at construction sites, quarries etc). As these are transport related and a very small proportion of the total, they are not considered further. Emissions data are shown in Figure 6. Data to 2000 are taken from the NAEI. Figures from 2005 to 2020 are from the Scottish Energy Study. The projections in the Scottish Energy Study take BERRUK level projections adjusted to take account of the different composition of each business sub-sector. The UK projections take into account energy efficiency measures included in the DTI's 2005 energy projections. Figures post-2020 are estimated here by extrapolation of forecast trends for 2005 to 2020 for each sub-sector. The BERR projections include significant economic growth in sectors such as chemicals.

Figure 6 Estimated CO ₂ emissions from the Scottish business sector 1990-2050

4.2.2 Identification of policy options

A wide range of policy options have already been developed to reduce energy, and carbon emissions, in business. The impact of these policy options in terms of carbon reduction will be accounted for in the baseline projections of energy and hence carbon emissions. However it is important to consider what these current and planned policy options are. Firstly to avoid any double counting of carbon saving potential and secondly to identify evolutionary improvements to the current policy mix.

Existing and planned policies include:

• Energy Saving Trust and Carbon Trust support for energy efficiency in SMEs
• Energy saving opportunities and microgeneration in SMEs
• UKETS
• Building Regulations
• Carbon Trust
• Climate Change Agreements
• Climate Change Levy
• Enhanced Capital Allowances
• Carbon Reduction Commitment

The descriptions are broad. For example, the Carbon Trust provides a wide range of support and advice to the business sector, this could result in many different energy saving measures being adopted, from staff training, efficient lighting, heat recovery through to biomass heating etc. As the impact of these measures is included in the baseline projections, no further savings can be assumed from these types of evolutionary measures.

There is a wide range of measures of saving energy, and or carbon, available to the business sector now. New or enhanced measures will be available in the future. A review of a wide range of reports and analysis was undertaken to generate a list of technical measures and the associated policy options. From this a long list of policy & technical measures were identified, ranging from standards for carbon reporting, through grants and advice, to novel approaches such as green chemistry.

4.2.3 Emissions reduction potential, and preliminary assessment of costs

Many of the evolutionary measures appear to be included in the baseline projections, hence they cannot be assumed to offer additional carbon savings. In addition, some of the evolutionary measures offer modest reductions in carbon emissions from the items of plant or machinery that they are deployed upon. Furthermore, the persistence of the savings from behaviour change measures will not be as great as savings from larger capital intensive measures. These reductions are worthwhile, but do not reflect the transformation that is required in Scotland's business sector to meet the proposed 80% reduction. To avoid double counting and to make the analysis more practical, the focus has been on the capital intensive measures that offer a more profound cut in emissions. There is a possibility that this will increase the costs of emission reduction, e.g. less investment may be required in biomass if the heat demand has been reduced by evolutionary measures.

Hence the assessment in the business sector has been on the large scale, revolutionary measures that have the potential to make deeper cuts in carbon emissions. These policy options and their abatement potential are shown in Table 7 and Table 8.

Table 7 Business Sector Emissions Reduction 2030 & 2050

Table 8 Business Sector Emissions Reduction 2030 & 2050

In addition to the potential identified above there will be opportunities for additional savings via:

• Biomass boilers in smaller industrial sites ²³.
• Biomass CHP - increasing the carbon savings through electricity generation alongside heat.
• Electric Furnaces - conversion of smaller furnaces in the engineering sector.
• Centralised EfW - AD - collecting waste from smaller sites to increase the number of sites served and hence the carbon savings.

As data on the smaller sites is not readily available, the additional potential has not been included in the projections. Emissions reductions beyond those calculated here are therefore likely.

In addition to the emissions reduction potential in refineries & industry, there are opportunities to reduce emissions in the buildings used in the service sub-sector (banks, retail, hotels etc). The measures are similar to those that apply to public sector buildings, see Section 4.5. The most significant of these is use of the building regulations to reduce carbon emissions when refurbishing existing service sector buildings.

Table 9 Potential abatement costs

NB. £ 2005 basis

4.2.4 Acceptability and feasibility of policy options

For measures in the business sector the public acceptability issues will often be indirect, rather than direct, as the changes will not affect the daily lives of most citizens.

Table 10 Acceptability and Feasibility of Business Sector Policy Options

4.2.5 Sector Results - Business

Based on the:

• abatement potential for the 6 measures discussed above
• costs for these measures
• acceptability and feasibility of these measures

Six policy measures for the business sector are considered to have a material contribution to make to the 2050 reduction. The following figure shows these six measures plotted in terms of their:

• Abatement Potential
• Abatement cost

The amount of carbon dioxide equivalent abated as a result of implementing each policy was assessed. The cost of implementing each policy was also determined. As a result of these considerations, taking into account uncertainties and any secondary impacts, each policy was placed in the abatement effectiveness matrix shown in Figure 7 and assigned a priority. This categorisation was based on the individual policy measure in isolation rather than its impact or cost when implemented alongside other policies. Further details of the categorisation are given in Section 5.

One measure for the business sector is in the Very High priority Group 1.This measure is grant support for biomass boilers. This is relevant to a wide range of sites with low temperature industrial processes at a very low abatement cost. The measure with the largest abatement potential is CCS for Grangemouth, the cost of CCS for these sites is assumed to be higher than that for power station sites. The remaining 4 measures are in the Medium priority group, with the CCS for other industrial sites offering the greatest abatement. There may be some potential to link some industrial CCS schemes, leading to lower costs of abatement.

Figure 7 Summary - Business Sector²⁴

4.3 Waste

This sector includes Municipal Solid Waste ( MSW), Commercial & industrial waste (C&I) and Construction and Demolition waste (C&D). Further information on the waste sector is given in Appendix 5.

4.3.1 Emissions and trends

The main focus for the waste sector is on emissions of methane in landfill gas as a result of biodegradable material from MSW & C&I sources. Legislation on the sector in the last 10 to 15 years, particularly the requirement for recovery of landfill gas has caused a 50% cut in landfill gas emissions.

The requirements of the Landfill Directive, mean that Scotland has to reduce the amount of biodegradable waste it is sending to landfill, to 75% of that produced in 1995 by 2010, to 50% by 2013, and to 35% by 2020. Taking these targets into account, it is forecast that under the baseline scenario emissions will continue to fall, but at a relatively slow rate. By 2050 it is anticipated that landfill gas emissions in Scotland would still be almost 1 Mt CO ₂ eq annually, as shown in Figure 8. It should be noted that emissions from waste incineration get included under waste sector but emissions from other types of waste disposal and recycling will be counted under business.

In January 2008, the Scottish Government announced a new vision for a 'zero waste Scotland' ²⁵. This sets out a number of objectives, including:

• A vision for a zero waste Scotland.
• Increase recycling targets for municipal waste, rising to 70% by 2025.
• Reducing landfill to 5% by 2025.
• Setting high thermal efficacy standards for energy from waste.

The fulfilment of this vision is not reflected in the baseline emissions projection shown in Figure 8.

Figure 8 Baseline GHG emissions from the waste sector in Scotland, 1990-2050

4.3.2 Identification of policy options

The principal option identified here, for further reduction in landfill gas emissions, is to ban the landfill of biodegradable material. The costs of doing so are contained in the alternative treatment, disposal and other routes that would be needed. These may include:

• Waste minimisation (using less resources).
• Alternative materials allowing reuse (e.g. bottle collection, reverse vending machines)
• Recycling back to the original material (e.g. paper to paper).
• Recycling to other materials (e.g. kitchen waste to compost, or paper and other residual wastes to refuse-derived fuel, now marketed under various names).
• Thermal treatment or digestion with energy recovery.

This policy option goes further that the recent Scottish Government policy announcement in Jan 2008, which would reduce MSW to landfill to 5% by 2025.

4.3.3 Emissions reduction potential, and assessment of costs

We have estimated that a ban on sending biodegradable waste to landfill by 2040 would reduce emissions by 61% by 2050. The costs of alternative waste disposal options such as composting, anaerobic digestion, incineration (energy from waste) and mechanical biological treatment ( MBT) vary from <£0/t CO ₂eq to between £35/t and £90/t CO ₂eq depending partly on the market price of products such as compost which are produced. Whilst it is difficult to say with any certainty how these markets will develop over the next 40 years, at present we assume that costs would be towards the higher end of this - say £50/t for 2030 reductions and £70/t for additional reductions to 2050, as in Table 13. Further work on this could therefore identify opportunities to refine these costs.

One complication for this sector is that biodegradable material already sent to landfill would continue to generate methane for many years to come as landfill gas collection technologies are not 100% effective.

Other complications relate to knock-on consequences, in terms of greenhouse gas emissions, of the alternative routes for waste management. While many recycling options lead to a net reduction in greenhouse gas emissions, other waste management options such as incineration may lead to a net increase. The competing effects are, for the purposes of this report, considered to be roughly in balance. The effect of the ban on sending biodegradable waste to landfill on emissions is shown below in Table 11 and Table 12. The relative effect compared to baseline emissions is shown in Figure 9.

Figure 9 The effects of a ban on the landfill of biodegradable material on GHG emissions

Table 11 Waste Management Emissions Reduction 2030 & 2050

Table 12 Waste Management Emissions Reduction 2030 & 2050

Table 13 Waste Management Emissions Reduction Costs 2030 & 2050

4.3.4 Acceptability and feasibility of policy options

There has been much work in recent years on alternatives to, what might be termed, the traditional waste management options of incineration and landfill. Composting schemes, in particular, provide great potential for avoiding the landfill of organic matter. Several European countries already have a ban on landfill of biodegradable waste, so there is a precedent for the policy.

The measure is likely to be broadly acceptable, provided that it can be achieved at reasonable cost. Concern may be expressed if it leads to greater levels of incineration. This should be offset against the availability of alternative treatment routes for material that enters the waste stream and the legislation that now exists, to reduce harmful incinerator emissions, to levels much lower than in the past.

For the waste sector the main policy drivers are EU Directives and the Waste Strategy in Scotland. The Scottish Government can influence how waste is managed through the Concordat with local authorities and the planning system.

This policy will encompass use of suitable waste as an energy source. This will enhance GHG reductions, through the displacement of fossil fuels. The adoption of standards for high thermal efficiency will increase these additional savings

Table 14 Acceptability & feasibility issues for waste management measures

4.3.5 Sector Results - Waste

The following figure shows the policy measure for the waste sector plotted in terms of:

• Abatement Potential
• Abatement cost

The amount of carbon dioxide equivalent abated as a result of implementing each policy was assessed. The cost of implementing each policy was also determined. As a result of these considerations, taking into account uncertainties and any secondary impacts, each policy was placed in the abatement effectiveness matrix shown in Figure 5 and assigned a priority. This categorisation was based on the individual policy measure in isolation rather than its impact or cost when implemented alongside other policies. Further details of the categorisation are given in Section 5.

The only policy measure in this sector is judged to offer medium abatement potential at low cost.

Figure 10 Summary - Waste Sector

4.4 Households

This section provides an overview of emission trends, existing policies, future policy options and the costs, benefits and public acceptability issues associated with those options for the Scottish households sector. Further details including references and assumptions are provided in Appendix 6.

4.4.1 Emissions & trends

Figure 11 shows the baseline projection for direct CO ₂ emissions from households ²⁶ in Scotland from 1990 to 2050. Historic data are taken from the Scottish Greenhouse Gases Inventory. The projection to 2025 is based on the latest BERR projection ( UEP30) of growth rates in UK emissions, adjusted to take account of different population trends for Scotland and the UK and taking out the emissions reduction attributed to the zero carbon homes policy (which does not apply in Scotland ²⁷). We have derived the baseline for 2025 to 2050 using Scottish population projections alone; this is somewhat conservative as it doesn't allow for any ongoing impact of policies introduced before 2025.

Figure 11 Baseline projection of CO ₂ emissions from Scottish households 1990-2050

It has not been possible to base the analysis on specific details of the Scottish housing stock, due to a lack of data, but some of the key differences are discussed below.

• Housing age: The Scottish housing stock has fewer older houses than the English stock, which suggests there may be proportionally less potential for solid wall insulation in Scotland. This inference is not backed up by anecdotal evidence from Scottish stakeholders, who believe there are more hard to treat dwellings in Scotland, that are unsuited to cavity wall insulation. It has also been suggested that those dwellings with cavity walls have wider cavities than in England and so the insulation is more expensive to install. Further work would be needed to confirm the potential for cavity wall insulation in Scotland. If it is less than that in England then this means the baseline emissions projection is lower than it should be.
• Housing type: Scotland has a much higher proportion of flats than England. With the exceptions of cavity wall and loft insulation (which are included in the baseline), many energy efficiency measures are equally as applicable to flats as houses. However additional efforts may be required to address the landlord-tenant barrier and the issues around common building areas in multi occupancy tenements. Micro-generation technologies may be less applicable because of the lack of individual roof space to place SWH panels, PV panels or wind turbines. Against this, Scotland has a higher proportion of housing off the natural gas network, where microgeneration (excluding micro- CHP) offers particular advantages.
• Heating fuel: 72% of Scottish households use gas as the main heating fuel compared to 81% in England, reflecting the fact that fewer Scottish homes are connected to the mains gas network. This indicates that there may be a proportionally greater potential for ground source heat pumps and biomass boilers in Scotland, as neither technology relies on gas connection. However further research would be needed to confirm this potential, as other factors such as building design and biomass fuel availability will influence potential uptake. In some cases it may be more cost effective to switch fuels, particularly if the property is close to an existing gas network.
• Climatic differences: There are a number of climatic parameters, e.g. temperature, wind speeds and solar insolation (direct and diffuse), which differ between Scotland and England. These tend to affect the attractiveness of various technologies between the two countries, although this is not an exact science:
  • PV requires direct sunlight to work well so less hours of direct sunlight in more northern latitudes make this technology less attractive.
  • Higher wind speeds generally make wind more attractive the further North, but localised microclimates and specific site parameters are of greater significance.
  • SWH efficiency will be affected by heat loss from the collector due to lower ambient temperatures and greater effects of 'wind-chill', so this technology may be generally less attractive. However, where the hot water makes a contribution to space heating the longer heating season and greater overall heat load through the winter can make the technology more worthwhile at higher latitudes.

These climatic parameters are generally considered to have less effect on uptake in Scotland than other factors such as grant availability and the proportion of housing off the gas network (see above).

4.4.2 Identification of policy options

Table 15 below lists Scottish and UK policies that currently exist or are planned to increase energy efficiency and reduce carbon emissions in the Scottish households sector. The list also includes policies that are primarily aimed at addressing fuel poverty, and which also impact energy efficiency in poorer households. All of these policies are described in the Scottish Climate Change Programme and/or the UK Energy Efficiency Action Plan.

Table 15 also shows the estimated carbon savings in 2020 ²⁸ from each policy to give a feel for the relative importance of each policy to climate change objectives. These estimated carbon savings take some account of rebound effects at the measure level, e.g. savings from efficient lighting, under Energy Efficiency Commitment ( EEC), assume more efficient lighting, will be used more than the lighting it replaces. Even so, it is possible that the full savings from each policy will not be realised because of unanticipated rebound effects.

All of these policies are included in the emissions baseline. The main focus is on improving the energy efficiency of the building stock through tighter building standards for new build housing, applying technical measures such as cavity wall insulation and condensing boilers to existing buildings, through progressively larger scale obligations on energy suppliers, and improving the efficiency of lights and appliances by working with manufacturers. There is also increasing use of behavioural measures such as education, information and advice programmes. Such behavioural measures are seen as important in supporting and enforcing other policy measures, but there is limited information and some doubt about their effectiveness in isolation.

Table 15 Current and planned policies for the Scottish Households sector, including carbon savings in 2020 where data is available

* Total savings from UK fuel poverty programmes.
** Pro-rated from UK savings - no data available on likely Scottish share of Supplier Obligation.
# Figures not available - likely to be less than 0.1 MtCO ₂ savings in 2020.

We have identified a wide range of potential new policy options for Scotland by considering:

• Possible further evolution of existing policy options in Scotland and the UK
• What is already being done, or considered, elsewhere in Europe
• What has been proposed by leading researchers in the field
• Other ideas proposed by the project team and the stakeholders consulted

At this stage a wide range of ideas were considered, being conscious not to discount ideas too early on, for cost-effectiveness or likely public acceptability reasons. The aim was to produce a long list of possible options that could then be assessed against a number of criteria.

We considered potential new policy options in six main categories:

• Technology based policies to reduce emissions from new buildings
• Technology based policies to reduce the emissions associated with (space and water) heating in existing buildings
• Technology based policies to reduce the emissions associated with lights and appliances in existing buildings
• Technology based policies for micro- CHP and microgeneration
• Behavioural measures to support the introduction of lower carbon technologies or reduce the demand for energy services
• Accelerated replenishment of the housing stock ²⁹

Table 16 shows a long list of possible policy options for the Scottish households sector, before feasibility and acceptability issues are taken into account. These are grouped into the six categories listed above. They include some options that are alternative scales of the same overall policy, e.g. different levels of building standards.

Table 16 Future policy options for the housing sector

In the analysis that follows we have focused on the technical measures listed in Table 16 and simplified and shortened the list to twelve specific options (D1 to D12):

There were three reasons for defining and selecting the options in this way. Firstly, these are the technical measures likely to make the biggest impact on emissions. Secondly, it is impossible to quantify the impact, or cost, of a generic policy option, such as a feed-in tariff or an energy label, without a detailed impact assessment. Finally, there is a dearth of data on the impact of behavioural measures and many of the behavioural measures are aimed at supporting technological change, rather than demand reduction per se. For example, Energy Performance Certificates aid the introduction of low and zero carbon homes and appliance labelling supports market transformation. Further work would be needed, to research the potential for emissions reduction, through reduction in the demand for energy services, e.g. through attitudinal change programmes.

A 2006 report by Oxera, for Defra ³⁰, on policies for energy efficiency in the UK household sector, highlighted the importance of underpinning efforts to introduce technical measures with appropriate information provision. This study found that future energy savings are not currently an important factor in a householder's decision to fit insulation or buy efficient appliances. They also found that householders have a poor knowledge of energy efficient measures and will tend to overestimate the costs, and the installation time, of such measures. This helps to explain why measures such as cavity wall insulation and loft insulation, which are very cost effective, have still not reached their technical potential after many decades.

4.4.3 Emissions reduction potential, and preliminary assessment of costs

New build housing

The policy options listed for new housing in Table 16 represent different options for reducing the carbon impact of housing to be built between now and 2050. Several of the options refer to zero carbon homes by a certain date; 2016/17 in the case of the Sullivan report proposals ³¹. It is important to note that this doesn't necessarily mean such housing will have no demand for fossil fuels, but rather that any demand will be balanced by renewable energy generation, whether that be from microgeneration or larger scale renewables deployment on housing developments. The exception to this is the introduction of biomass CHP or district heating, where there may be little or no need for fossil fuel heating.

Table 17 presents emissions savings and costs, for lower carbon new build housing options in Scotland, based on a recent report by Turner & Townsend, which fed into the Sullivan review ³². The final column - cost per tonne of CO ₂ - is not included in the Turner & Townsend report and has been calculated by assuming a 40 year lifetime of measures, a 3.5% discount rate and recent fuel prices ³³. These assumptions are in line with those used by BRE in its calculation of the cost-effectiveness of measures for existing housing (as presented in Table 18). The Turner & Townsend study considered energy efficiency and microgeneration measures that can be combined to produce housing with 20%, 30%, 50% and 75% lower carbon emissions than that meeting 2007 Building Standards. These costs are much higher than those given in the Regulatory Impact Assessment for Building a Greener Future, perhaps reflecting uncertainty in future costs of solar water heating and other microgeneration technologies. Further work is needed to understand the costs associated with these technologies.

Table 17 Emissions savings and costs for lower carbon new build housing in Scotland

Notes: Efficient lighting also introduced in each scenario; MVHR = Mechanical Ventilation with Heat Recovery; marginal capital costs estimated by Turner & Townsend following consultation with suppliers

These four scenarios are estimated to give 2.2%, 3.3%, 5.6% and 8.4% reduction in overall CO ₂ emissions from housing by 2050, respectively. The savings are relatively small because 75% of housing in 2050 has already been built (based on a simple stock model developed by AEA for this study), and because new housing is already significantly more efficient than the average stock. Note, any measure to increase the demolition rate would increase the impact of energy efficient new housing; in this work we have assumed a constant demolition rate of only 0.1% consistent with past trends.

Existing housing

The measures shown in Table 18 have been considered for the existing Scottish housing stock. Cavity wall insulation is not included because it is assumed this cost-effective measure will already be introduced to its full technical potential through successive supplier obligation programmes. This is consistent with information provided in the Call for Evidence on the Household Energy Supplier Obligation published by Defra in June 2007 ³⁴. However, it could be questioned whether the supplier obligations will reach all hard to treat housing, of which there is a higher proportion in Scotland. Similarly all boilers are assumed to be A rated condensing boilers by 2030. This list is not comprehensive and excludes many measures with lower but still significant emissions reduction potential, such as improved heating controls, more efficient cookers, hot water cylinder insulation and more energy efficient televisions. Further information on these measures is included in BRE's report "Reducing Carbon Emissions from the UK Housing Stock", which was the main reference for this section.

The replacement of inefficient incandescent lighting with compact fluorescent lamps ( CFLs) is included as an additional measure for 2030 in BRE's analysis and our own. Defra agreed a voluntary agreement with manufacturers to phase out incandescent bulbs by 2011 in September 2007. The impacts of this agreement are therefore not in the Energy White Paper projections upon which our baseline was based.

Table 18 Emissions savings, cost and cost-effectiveness of measures for existing housing

[1] Range of costs reflects high & low purchase cost, DIY vs. professional installation and marginal vs. full cost. Costs estimated by BRE based on information from suppliers; costs in 2030 assumed equal to costs in 2020 as no other information available.
[2] Potential reduction in Scottish CO ₂ emissions, based on 8% of total UK savings (see comments below).
[3] Cost-effectiveness based on average of low and high costs.

The potential emissions savings and costs in Table 18 are mainly derived from analysis of the UK housing stock. No such analysis is available specifically for Scottish housing but factors discussed in Section 4.4.1 will result in some differences between the impact on UK vs. Scottish housing.

Options for new and existing housing

Table 19 shows the abatement for each measure in 2050. The three most significant measures are: ground source heat pumps, further insulation measures for existing homes and biomass boilers. Measures that reduce electricity use in the home, such as photovoltaics, have zero CO ₂ reduction potential in 2050 because we are only dealing with direct emissions here. Indirect emissions from electricity supply are addressed in the electricity generation section ( Section 5).

Table 19 Household Sector Potential abatement 2050

The cost of abatement in 2050 is shown in Figure 17, showing a wide range, from very low cost measures such as Micro- CHP and insulation for existing homes, through to very high cost measures such as Photovoltaics and 75% CO ₂ reduction in new homes. The figures for micro- CHP are based on the assumption that the additional cost of micro- CHP over a condensing boiler will fall from £1500/unit today to £600/unit by 2050, due to technological advances and volume manufacture. They also assume that households with micro- CHP units will be able to sell electricity back to the grid at the price they pay for their electricity. Clearly there are considerable uncertainties on these figures, as would be expected when projecting costs and performance 40+ years ahead for technologies that have yet to emerge fully from the R&D stage.

Table 20 Household potential abatement costs in 2050

NB. £ 2005 basis

4.4.4 Acceptability and feasibility of policy options

Table 21 provides a summary of some of the main public acceptability and feasibility issues for policies in the households sector. Some of these issues relate to the particular technology employed while others relate to the nature of the policy. Public acceptability will also be influenced by the potential of the technology or policy to contribute to policy objectives other than climate change mitigation, e.g. fuel poverty alleviation.

Table 21 Acceptability & feasibility issues for housing measures

4.4.5 Sector Results - Households

The following figure shows 12 specific measures in the households sector selected from the options described above and plotted in terms of their:

• Abatement potential in 2050
• Abatement cost in 2050

The amount of carbon dioxide equivalent abated as a result of implementing each policy was assessed. The cost of implementing each policy was also determined. As a result of these considerations, taking into account uncertainties and any secondary impacts, each policy was placed in the abatement effectiveness matrix shown in Figure 12 and assigned a priority. This categorisation was based on the individual policy measure in isolation rather than its impact or cost when implemented alongside other policies. Further details of the categorisation are given in Section 5.

In general the measures for new housing are less cost-effective, as are microgeneration technologies. However, as explained in the previous sections, there is considerable uncertainty over the costs associated with these options. The most cost-effective option appears to be more efficient lighting, although this only has a small impact on total emissions. Improved insulation (largely solid wall insulation), micro- CHP and biomass boilers all give significant potential savings at low or medium cost. As stated above, this analysis has been based on the UK housing stock and further work would be required to confirm the potential and costs of these options in Scotland.

Compared with other sectors, Scotland has relatively strong policy levels in the households sector. Planning matters are devolved, as are building standards, and Scotland operates its own grant schemes and social programmes aimed at reducing fuel poverty. On the microgeneration side, again Scotland can influence planning through permitted development and can provide grants and adapt the Renewables Obligation. Some policy levers are held elsewhere, such as Energy Performance Certificates ( EPCs) and the labelling of appliances. Even proven and relatively cost-effective technical measures such as loft, cavity and solid wall insulation face many barriers and it has been suggested by the Environmental Change Institute and others that progressive levels of Supplier Obligation will not be sufficient to tackle these. Instead they recommend a regulatory approach, supported by grants for poorer households, whereby houses have to meet minimum energy efficiency standards before they can be sold or let, with this standard progressively increasing. These standards could be based on the categories in the EPCs, e.g. phasing out F rated housing. A less stringent version of this concept has been considered by UK Government, whereby minimum standards are required for the whole house before planning permission is granted for a modification. It is not clear whether Scotland has the policy levers to implement this sort of minimum standards approach unilaterally.

Figure 12 Summary - Households ³⁹

4.5 Public sector

This section addresses the emissions from fuel use in public sector buildings, emissions from electricity and transport are dealt with in the relevant sections of this report. Fuel consumption in the public sector has a small but important impact, generating around 2% of Scotland's CO ₂ in 2005. The public sector also has an important leadership role, demonstrating carbon and emission reductions by example.

The Public Sector in itself is a broad and diverse sector that includes a number of different services. For the purposes of this study it is taken to include:

• Central Government both UK (including BERR, MoD, HMCE etc.) and Scottish Devolved Administrations
• Local Authorities - there are 32 Local Authorities in Scotland
• NHS Health Boards
• Police, Fire and other service bodies
• Educational bodies
• Community sites
• Religious sites and historic buildings

As some of these service areas have similarities with those in the commercial sector it is clear that there will be overlaps with the policy suggestions. Therefore the main focus of this section is on the performance of public sector buildings.

Further detail on emissions savings for the public sector is provided in Appendix 7

4.5.1 Emissions & trends

Understanding and predicting the potential in the public sector is not straight forward as each sub-sector has a different baseline, characteristics and energy demand. Only by understanding the specific needs and existing conditions with each of the sectors is it possible to predict the full potential. Fortunately, much work has been done in each of these public sector areas and information relating to each has been broken down in the following sub sectors:

• Central Government both UK (including BERR, MoD, HMCE etc.) and Scottish Devolved Administrations
• Local Authorities
• NHS Health Boards
• Educational bodies

A range of measures are already in place to reduce emissions from public sector buildings. These include: building regulations, loan funds and grant support. Hence there is a gradual downward trend in the baseline emissions, due to the gradual impact of these measures.

Figure 13 Baseline GHG emissions from the public sector in Scotland, 1990-2050

4.5.2 Identification of policy options

Reduction in carbon emissions in the public sector can be generated in a number of ways by introducing new requirements, new technologies and new processes.

These can be grouped to include:

• Building Standards
• Procurement processes
• Behavioural aspects
• Institutional change

In 2007 the Scottish Government published its proposed environmental policy stating its targets and how, within the public sector, it would reduce its carbon emissions. The proposed targets are:

• Reduce CO ₂ emissions caused by energy use in public sector buildings by 12.6%, from 1999/2000 levels, by March 2011.
• Reduce CO ₂ emissions caused by energy use in public sector buildings by 30%, from 1999/2000 levels, by March 2020.

To meet these proposed targets a number of routes were set out, including;

• Maintenance of plant and machinery to ensure optimum efficiency.
• Effective management of heating plant.
• Ensure new build and refurbished premises meet appropriate energy efficiency levels.
• Encourage staff to save energy.
• Procure electricity from renewable sources, investigate options for off-setting emissions from other energy use.
• Adopt the Carbon Trust's Carbon Management Programme.
• Investigate options for on site micro-generation using renewable energy technologies.
• Continue to research new products, methods and technologies for conserving energy.
• Develop an energy action plan.
• Display the 'operational ratings' (actual energy performance) at target buildings.

There are a wide range of new policy options available to the public sector. A long list of nearly 50 options were identified. Emphasis is largely on the refurbishment of the existing estate as current construction rates for the sector are low as a proportion of the total estate, and new build is in any case much better addressed through existing mechanisms. A sample of the options, collated under 4 headings, are listed below:

• New Public Buildings
  • Tighter Building Standards as recommended by the Sullivan report.
  • Tighter planning controls and use of sustainable energy, including district heating.
• Existing Public Buildings
  • Tighter Building Standards as recommended by the Sullivan report for refurbishment etc.
  • Centralised recording of buildings' energy performance, analysis and rankings.
• Procurement and Finance
  • Target setting and performance measures sustainability in current .procurement practises.
  • Ring fencing for sustainability funding and measures for LA.
• Influencing
  • Training of staff on sustainability and integration into buildings.

Most of these measures would be implemented via the Building Standards, Carbon Management and the CEEF, providing regulatory and fiscal investment incentives to encourage uptake. Hence the focus will be on enhancing or extending these existing measures, to extend their scope, and reach and therefore increase the potential impact.

For example CEEF funding for energy efficiency investments is currently restricted to projects, which have a payback period of less than 5 years. This is restrictive for a number of new technologies that are unable to demonstrate sufficient payback. By extending the payback period to 7-10 years it would allow the CEEF programme to become more flexible and provide greater coverage. Recently this approach has been partially adopted through the extension of CEEF to allow for renewable energy projects with a payback of up to 7.5 years.

The Carbon Management programme provides support for 1 year to a Local Authority, NHS Trust or Education Body to enable development of an implementation plan, which looks to the following 5 years. This provides a good strategic platform for change and uptake of measures applicable under the CEEF funding and other behavioural change aspects. To date no Carbon Management programme has come to the end of its 5 years but there is hope that once a programme and strategy becomes embedded into existing policy it would continue and therefore offer greater savings than initially estimated.

4.5.3 Emissions reduction potential, and assessment of costs

Table 22 shows the emissions reduction potential that could be achieved by 2030 and 2050 from each of the main policies or types of policy listed in the previous section. It is not possible to derive the total achievable savings from the sector by simply adding up the savings in the final column because there are overlaps and interactions between policies.

Table 22 Emissions Reduction potential Public Sector 2030 & 2050

Table 23 Emissions Reduction potential Public Sector 2030 & 2050

Many of the public sector buildings that are in use now will remain in use in 2050. Hence the focus is on measures to reduce the emissions from these existing buildings. As well as considering the policy mechanism to ensure this reduction, it is worth giving thought to the technical solutions that will provide the basis for such a reduction.

Much has been done in the domestic sector in terms of carbon reduction associated with building fabric through initiatives such as EEC and the forthcoming CERT, however in public sector buildings the same characteristics often apply but are not corrected. Similarly there is little in the current Building Standards requiring improvement of an existing building when refurbished at any level. We would therefore expect the technical solutions reflected in the Standards to include a number of the traditional energy measures, from Cavity Wall Insulation and Double Glazing to Solar Shading.

The CEEF funding goes someway in supporting some of these traditional solutions. However there are to date limited options in some areas, for example there is still a need to understand what the best options are to increase the U-value of an existing solid wall.

Estimated costs are shown in Table 24.

Table 24 Estimated costs of measures for the public sector

4.5.4 Acceptability and feasibility of policy options

The contribution of public sector buildings to Scottish GHG emissions is small. However, the sector as a whole has a clear role for taking a lead to demonstrate to others what can be achieved. Many outside of the sector with responsibilities for reducing emissions elsewhere are likely to consider it unacceptable for the government not to take proportionate action of its own, including adoption of emerging products and solutions.

For this sector many of the policy levers are directly in the control of the Scottish Government, even areas such as EU legislation may be enacted via regulation that is interpreted and administered in Scotland. Hence all four of the proposed measures for the Public Sector are fully in the competency of the Scottish Government.

Table 25 Acceptability and of Public Sector Measures

4.5.5 Sector Results - Public

Based on the:

• The abatement potential for the 4 measures discussed above
• The costs for these measures
• The acceptability and feasibility of these measures

All four policy measures for the public sector are considered to have a material contribution to make to the 2050 reduction. The following figure shows these four measures plotted in terms of their:

• Abatement potential
• Abatement cost

The amount of carbon dioxide equivalent abated as a result of implementing each policy was assessed. The cost of implementing each policy was also determined. As a result of these considerations, taking into account uncertainties and any secondary impacts, each policy was placed in the abatement effectiveness matrix shown in Figure 14 and assigned a priority. This categorisation was based on the individual policy measure in isolation rather than its impact or cost when implemented alongside other policies. Further details of the categorisation are given in Section 5.

All of the measures considered have Medium abatement potential, with expansions and revisions to building regulations achieved at lower cost than further extension of CEEF or Carbon Management. This assumes that changes to building regulations are implemented in early years so that a larger number of buildings standing in 2050 have been built to these improved standards.

Figure 14 Summary - Public Sector

4.6 Transport

More detailed information on the transport sector is provided in Appendix 8.

4.6.1 Emissions and trends

CO ₂ emissions from transport in Scotland have been rising since 1990, and are projected to rise further in future years (see Figure 15). For the years between now and 2025, projected emissions for each mode of transport in Scotland have been based on the emissions projections developed by BERR and estimates for changes in transport activity, split by mode of transport, based on projections from the Department for Transport's (DfT's) National Transport Model. For the years between 2025 and 2050, projected emissions estimates have been developed using transport activity projections data and vehicle efficiency improvement estimates from the UKMARKAL model. Using these datasets, by 2030, emissions are forecast to be 24% higher than in 1990 under the business-as-usual scenario, and 33% higher in 2050. The road transport sector is the dominant source of transport emissions, accounting for over 80% of transport CO ₂ emissions in Scotland in 2050. This is a similar contribution to overall emissions seen in 2005. Emissions from aviation have more than doubled since 1990 and are forecast to increase further. This graph does not include indirect emissions from the generation of electricity used for rail transport, which are covered under the electricity generation sector. The main driver for the anticipated increases in emissions is the projected significant growth in demand for all modes of transport, including increases in the number and length of commuting, leisure, and freight journeys. Significant growth in demand is projected at both the UK level and for Scotland - for example, the Scottish Government's Transport Delivery Report estimated that road traffic volumes would rise by 27% by 2021 against 2001 levels.

Figure 15 Historic and projected business-as-usual CO ₂ emissions for the transport sector in Scotland

The transport sector is also a contributor to emissions of N ₂O. N ₂O emissions from transport in Scotland were about 0.47 MtCO ₂eq in 2005, which represents a rapid increase since 1990 (see Figure 16) but is still less than 4% of total GHG emissions from this sector. Because of the relatively low contribution to overall GHG emissions (less than 1%), we do not consider N ₂O emissions from transport further in this report. It is possible that N ₂O emissions from transport will increase further in future years, due to technical abatement options being applied to road transport to reduce emissions of NO _x⁴⁰. It is important to note that N ₂O emissions are not included in the definition of NO _x emissions.

Figure 16 Trends in N ₂O emissions for the transport sector in Scotland

4.6.2 Identification of policy options

For the transport sector, there are already a number of policies at the UK or European level that are concerned with reducing emissions of CO ₂ - these policies have had, and will continue to contribute towards reducing emissions from the transport sector in Scotland. These policies can be split into supply-side measures (i.e. those that influence the uptake of low-carbon technologies) and demand-side measures (those that influence the demand for travel, or encourage mode-switching to transport modes with lower CO ₂ impacts). A list of existing policies, including future planned policies already included in the 2007 Energy White Paper analysis of business as usual emissions projections, is provided below:

Existing policies include:

• Fuel Duty escalator
• Car manufacturers' voluntary agreement on CO ₂ emissions from new cars
• European Commission proposed regulatory replacement for the voluntary agreement on new car CO ₂ emissions
• Company car taxation system
• Graduated Vehicle Excise Duty
• Emissions reduction policies in Scotland's National Transport Strategy (measures focused on freight)
• Renewable Transport Fuels Obligation
• Inclusion of aviation in the EUETS from 2011
• Increased uptake of transport biofuels, reflecting the EU's binding target of 10% for the share of biofuels in petrol and diesel for each Member State by 2020. The Gallagher report ⁴¹ provides an important source of analysis on the potential indirect impacts of biofuels on carbon emissions via land use change and the impacts on food production.

A wide range of further new policy options for reducing GHG emissions from the transport sector have been identified, and can broadly be split into supply-side measures (technology measures), and demand reduction measures. The main technologies of interest are:

• Biofuels
• Hybrid-electric technology
• Battery-electric technology
• Hydrogen

Potential demand side measures include, amongst others:

• Encourage uptake of "Smarter Choices" measures ⁴²
• Restrict growth in aviation sector.
• Road pricing with emissions element e.g. emission-related congestion charging or national road pricing scheme.
• Eco-driving (training drivers to drive more efficiently).

For this study, biofuel options have explicitly been excluded from the analysis because there are currently a number of questions around their global sustainability impacts. In particular, there is evidence to indicate that demand for biofuels is leading to increases in food prices in some countries. Another key issue concerns changing land use patterns whereby forests are being cut down in certain regions of the world so that land can be used for growing biofuel resource feedstocks. Land use change of this nature leads to the release of sequestered greenhouse gas emissions, and also leads to the removal of a CO ₂ sink. For these reasons, this study has not considered potential further increases in the uptake of biofuels beyond the levels already agreed for the Renewable Transport Fuels Obligation. The UK Government carried out a high-level review of the indirect impacts of biofuels during 2008, and the findings of which are now available ⁴³.

4.6.3 Emissions reduction potential, and assessment of costs

The full list of the abatement options that have been assessed for the transport sector is shown in Table 26 below, while Table 27 provides initial estimates of the impact of each measure on annual CO ₂ emissions along with estimates of cost effectiveness. Data on the costs and cost effectiveness of different measures have been taken from recent research in this area, including (amongst others) the King Review of Low Carbon Cars, and the Commission for Integrated Transport's 2007 study on Transport and Climate Change. Potential CO ₂ savings from electric and plug-in hybrid vehicles are based on the assumption that grid electricity will be low carbon by 2030, which is consistent with the analysis of the power generation sector in this study. Where appropriate, we have taken unit cost data and emissions abatement performance data for specific transport sector measures from these previous studies, and used this information to conduct further analysis in order to calculate cost effectiveness values for each measure. More detailed data on costs and emissions (including references) are provided in Appendix 8.

The potential future implementation of technology policies will be driven by the availability and maturity of each specific technology. For the transport sector, this means that advanced petrol engine technologies and hybrid-electric options could be considered over the short-to-medium term (between now and 2020), whilst battery-electric technology is further from maturity and can only be considered as a potential medium term option for widespread introduction (potentially 2020 onwards). Hydrogen is even further from maturity and can only realistically be considered as a long-term option (post 2030 for widespread uptake). It must be stressed that even though many of the technology options are medium-term or long-term options, much pre-policy work can be initiated in the short term to pave the way for the future introduction of these potential low-carbon technologies. In particular, developing national-level strategies for transport technologies such as battery electric or hydrogen vehicles could be carried out over the short term.

Table 26 Emissions abatement options for the transport sector

Table 27: Estimates for 2030 and 2050 of the isolated abatement potential and cost effectiveness of options for the transport sector

Note: negative costs indicate that reductions in operating costs outweigh any increases in capital costs, and hence there may be overall reductions in the costs faced by consumers or vehicle operators.

There are potentially many interactions between these possible measures, e.g. a vehicle can either be battery electric or hydrogen fuelled but not both, and so many of the options fall out when considered in series (see Section 5). The measures with the greatest potential impact are plug-in hybrid and electric vehicle technologies. The technical potential figures are based on the assumption that up to 100% of cars and vans, 50% of buses and 20% of HGVs could conceivably be electrically powered by 2050. These figures implicitly assume major advances in the technology to increase their range and/or cut recharging times. Similarly the maximum deployment of plug-in hybrids is assumed to be 100% for both cars and vans by 2050.

For a number of the options for the transport sector, there may be limited scope for the Scottish Government to act independently of the UK Government, or in some cases independently of the European Commission. For example, options T1, T2, and T3 concern the introduction of low carbon technology options based on a policy driver of stringent CO ₂ targets for passenger cars. The European Commission is currently in the process of developing legislation that will regulate CO ₂ emissions from new passenger cars. Under the Scotland Act, responsibility for representing the interests of all regions and nations of the UK with regard to potential EU legislation remains with the UK Government, and hence Scotland cannot independently set its own targets for vehicle manufacturers. Additionally, whilst the Scottish Government has devolved powers for a number of areas, including transport, the UK Government retains reserved powers over fiscal and economic policy. This means that the Scottish Government cannot, independently of the UK Government, use the taxation system in new ways to encourage a shift to more sustainable transport options. This may be important with regard to new vehicle technologies (e.g. battery-electric or hydrogen fuel cells), where previous experience in the UK and abroad has shown that either legislative measures or significant fiscal incentives are necessary in order to stimulate significant levels of uptake.

4.6.4 Acceptability and feasibility of policy options

Table 28 provides a summary of some of the main public acceptability and feasibility issues for transport policies.

Table 28 Acceptability & feasibility issues for transport measures

4.6.5 Sector Results - Transport

The following figure shows 14 specific measures in the transport sector selected from the options described above and plotted in terms of their:

• Abatement potential in 2050
• Abatement cost in 2050

The amount of carbon dioxide equivalent abated as a result of implementing each policy was assessed. The cost of implementing each policy was also determined. As a result of these considerations, taking into account uncertainties and any secondary impacts, each policy was placed in the abatement effectiveness matrix shown in Figure 17 and assigned a priority. This categorisation was based on the individual policy measure in isolation rather than its impact or cost when implemented alongside other policies. Further details of the categorisation are given in Section 5.

The figure shows that improvements to vehicles, such as start-stop technologies, give medium or high abatement potential at very low cost. Full hybrid and battery electric technologies give higher abatement potential still, but at medium cost. Behavioural measures such as demand reduction and driver training offer medium abatement potential at low to medium cost. The other measures listed are less favourable, offering low or medium abatement potential at medium or high cost.

As with other sectors, the policy levers in the transport sector are controlled at various levels of authority, including EU-level, UK Government level, and Scottish Government level. The Scottish Government cannot independently set the rate of transport fuel duty, vehicle taxation levels, or set Scotland-specific targets for average CO ₂ emissions performance of new vehicles, all of which are policy measures that could have a significant impact on reducing emissions from the transport sector. However, the Scottish Government could put in place grant support schemes to encourage the uptake of low CO ₂ vehicles - such schemes could be strategically targeted to specific modes of transport, if appropriate. Scottish local authorities can also use planning policies and other demand-based measures such as work-place travel plans and improved public transport services in order to reduce the need for private transport in urban areas.

Figure 17 Summary - Transport ⁴⁶

4.7 Agriculture

This section presents the results of the assessment for agriculture. More details of the policy options for agriculture are presented in Appendix 9.

4.7.1 Emissions & trends

Figure 18 shows historic and projected GHG emissions from the agricultural sector split by gas. This shows direct emissions from the agriculture sector using the NAEI definitions, i.e. excluding emissions associated with land-use change or transport. Emissions of methane (CH ₄) and nitrous oxide (N ₂O) are much more significant than CO ₂ emissions in this sector. Both CH ₄ and N ₂O have considerably greater potential to retain radiation and warm the atmosphere than CO ₂; the GWP for CH ₄ and N ₂O are 21 and 310 respectively. Total agricultural emissions of GHG for 2005 were reported as 8,013 kt CO ₂ eq, a decrease of 13% since 1990.

Figure 18 Trends in GHG emissions in Scotland from 1990 to 2050

Although there have been significant reductions in agricultural GHG emissions since 1990, the downward trend is not expected to continue under business as usual projections. The reductions in N ₂O emissions reported since 1990 have been due to:

• Decreases in livestock numbers, mainly as a result of poor financial returns. This was exacerbated for beef and sheep by withdrawal of support following CAP reform.
• Decreasing Nitrogen fertiliser use. This has decreased mainly because the price of N fertiliser has gone up while the returns from crops have gone down.
• The need to reduce nitrate leaching to watercourses has also lead to some reductions in fertiliser-N use, mainly as a result of making better allowance for the N supplied by livestock manures and crop residues.
• The decoupling from production of direct support to agriculture following the 2003 CAP reforms.

The reason emission reductions are not expected to continue to decrease is mainly due to the response to Common Agriculture Policy ( CAP) reform working its way through the system by about 2015. After that date the surviving livestock industry should be of the size that the market can support. Similarly N fertilizer use is not expected to further decrease as crop prices have increased recently, due to increased global demand, a demand that is likely to be maintained in the foreseeable future. Table 29 shows the main sources of direct emissions.

Table 29 Direct emissions from agriculture as % of total direct emissions from agriculture, 2006

Emissions of N ₂O from livestock production are from grazing (14.7% of total) and manure management (10.6%), mainly following application of manures to land.

There are significant uncertainties with respect to the longer-term impacts of CAP reform and changes to World Trade arrangements. Short-term protection from the impacts of CAP reform is assured by use of the Beef National Envelope in Scotland and dairy farmers exiting farming through beef production. However it is likely that these will level off, as the environmental benefits associated with maintaining a minimum stocking density for cattle will be supported through the Rural Development Programme. The expected relative increase in beef prices may offset the costs of any further cross compliance requirements but worldwide competition will lead to a small continual decline in numbers.

While proposals for further reform may be expected in 2008, and were submitted in 2007, the final outcome to the subsequent consultation are still unknown. Furthermore, socio-economic changes under the CAP Health Check (such as phasing out milk quotas) may have an indirect impact on land use and management.

Globally we are entering a new phase where agricultural politics is at the top of the agenda. While this is unlikely to result in short-term legislative changes (at least in the EU) the new emphasis on food security has the potential to shift focus away from environmental management and back to food production which is likely to further affect land use and management.

4.7.2 Policy options

Over half of the direct GHG emissions from agriculture arise from enteric fermentation. Methane is an unavoidable by-product of microbial processes in the rumen, up to 10% of the carbon ingested can be transformed into CH ₄. However, methods have been proposed and evaluated to reduce CH ₄ emissions from the rumen. Proposed measures may be grouped into:

• Changes to the diet to reduce the intake of substrates for CH ₄ emissions.
• Direct manipulation of rumen conditions to reduce the populations of methanogenic microbes.
• Systematic changes within the livestock industry to maintain livestock output with fewer ruminant animals (reduce emissions of CH ₄ per kg of product).

Estimated abatement reductions for CH ₄ emissions are shown in Table 30. These are shown as percentage reductions in CH ₄ and will apply from whatever year they are introduced. The potential measures cited in this table overlap and hence the potential reductions quoted are not cumulative. Costs for these options have not been provided as we are currently uncertain about how current the values provided in the analysis of Jarvis et al. (2001) ⁴⁷. Within these tables, those policies that are considered in more detail later in this section are given a reference no, A1, A4, etc.

Table 30 Potential emissions reductions for enteric CH ₄

Emission of N ₂O from the soil is a by-product of the addition of N to soils as mineral-N, manures or excreta deposited during grazing. Bacteria use N compounds as a substrate for energy production. Under anaerobic conditions bacteria obtain energy from nitrate (NO ₃) ions (denitrification) while under aerobic conditions other bacteria oxidise ammonium ( NH₄) ions to NO ₃ (nitrification). In both processes N ₂O emissions are only a small proportion of the N applied (1-2%). However, the large GWP of N ₂O makes these small emissions significant.

Proposed measures to reduce emissions of N ₂O may be grouped into:

• Changes to livestock diets to reduce N excretion and hence N applied to soils.
• Measures to reduce fertilizer-N applications.
• Measures such as nitrification inhibitors to reduce the proportion of N lost as N ₂O.

Estimated costs and efficiencies of measures to reduce N ₂O emissions from agriculture are shown in Table 31 and Table 32.

Within these tables, those policies that are considered in more detail later in this section are given a reference no, A2, A3, etc.

Table 31 Potential abatement efficiencies to reduce emissions of N ₂O from Jarvis et al. (2001)

Table 32 Potential abatement efficiencies to reduce emissions of N ₂O from manure management Jarvis et al. (2001) and Moorby et al. (2007) ⁵⁰

The use of anaerobic digestion of manures for manure management also has the potential to reduce methane emissions by up to 90%, but at a high cost.

4.7.3 Radical policy options

The following measures are included here to illustrate the extent of change that would be needed to achieve further and significant reductions in emissions from agriculture. The three options would each require a major restructuring of Scottish agriculture, with potentially very serious implications for the rural economy. The measures would require profound changes to patterns of personal consumption. Without those changes reducing production within Scotland could merely shift the burden of GHG emissions to other producing countries.

A11: Replace red meat with white: Pig and poultry production emits significantly less GHG per kg of product than the production of meat from sheep and cattle, and dairy production. A simple scenario analysis indicates that if pork and poultry are substituted for beef and lamb, according to the current ratio between pork and poultry production in Scotland, this could lead to a reduction in the direct GHG emissions from agriculture of c. 65%. To accurately quantify the potential impacts of such a change, the emissions from changing land use, e.g. tilling grasslands to produce cereals for pig and poultry feeds, need to be estimated. In addition long-term changes to N inputs also need to be taken into account and a proper net GHG budget prepared. For example, while CO ₂ emissions from soil will increase following conversion of grassland to arable, the availability of N from soil organic matter will lead to reduced emissions of N ₂O from N fertilizer application.

A12: The marginal livestock rearing approach: In this option land would only be made available once land requirements have been met to optimize crop production in Scotland, meet feasible biomass targets and maintain or enhance biodiversity. Ruminants would be fed only on the grass grown on the surplus land, while no crops would be grown solely for consumption by pigs and poultry; those livestock would be raised only on waste. Land currently used directly or indirectly for livestock farming could be freed up for other purposes, such as carbon sequestration. This is a complex scenario and would require a detailed study to elicit an accurate assessment of potential reduction in GHG emissions. However, since under this scenario the emphasis would be on raising livestock on land surplus to other requirements, the most appropriate livestock would be ruminants. Since enteric fermentation is responsible for >50% of agricultural GHG emissions in our opinion it is unlikely that this scenario would achieve an 80% reduction in emissions, although 40-70% might be possible. Such an approach is likely to lead to a substantial reduction in livestock production, including that of milk.

As stated above, a detailed study would be required to accurately forecast future production. A likely consequence of reduced domestic production, unless there is a commensurate reduction in demand, would be an increase in imports, with the attendant GHG emissions being produced elsewhere.

A13: Adoption of Vegan diet: From Table 29 it can be seen that 84% of emissions from agriculture result from livestock production, with only 16% associated with fertilizer for crops. Hence adoption of a vegan diet could potentially offer an 84% reduction in GHG emissions. Less meat consumption and production could also mean reduced emissions of GHG from tillage land as more land would be available for crops for human consumption which could then be grown with less fertilizer-N giving further reductions in N ₂O emissions. There are two aspects to this.

First, at present much of the arable area is given over to growing crops for livestock, and this is not just relevant to pigs and poultry, cattle are also fed cereal and other arable crops to supplement their diet. The efficiency of conversion of feed protein to animal protein varies. It can be up to 40% for pigs and poultry, but is only 10% for grazed beef and sheep, with c. 25% for dairy produce. The argument is that the land now used to grow cereals and legumes fed to livestock could instead grow crops to feed people and supply their protein requirements, and given that modern bread-making wheats contain >10% protein, and legumes c. 25%, the land needed to supply protein through grain and legumes directly would be less than that currently used to do it via livestock. This may be less so for Scotland, where a greater proportion of livestock production (although not necessarily consumption) is from ruminants, which only graze.

A second argument comes into play that even if some grassland is ploughed out for crops (and it would only need to be a small proportion) that would lead to a short-term spike in CO ₂ emissions, but veganism would lead to a permanent cessation of methane emissions from livestock production. It is acknowledged that this is a very drastic approach, but the potential is there. However, the marginal approach to livestock production does seem more reasonable as it would allow meat production from food wastes and on land unsuitable for crops but of little value for wildlife. Hence, with more land available, an increase in the production of cereals and vegetables might be achieved, from more extensive production, and not lead to increases in GHG emissions from those sources. In addition, relinquished grassland could be used to enhance carbon sequestration through afforestation, increasing forest area is a policy in Section 4.8.

Table 33 Agriculture Sector Potential abatement 2050

4.7.4 Acceptability and feasibility of policy options

Table 34 provides a summary of some of the main public acceptability and feasibility issues for policies in the agriculture sector.

Table 34 Acceptability & feasibility issues for agriculture measures

4.7.5 Sector Results - Agriculture

The following figure shows 13 specific measures in the agriculture sector selected from the options described above and plotted (where possible) in terms of their abatement potential and abatement cost in 2050.

The amount of carbon dioxide equivalent abated as a result of implementing each policy was assessed. The cost of implementing each policy was also determined. As a result of these considerations, taking into account uncertainties and any secondary impacts, each policy was placed in the abatement effectiveness matrix shown in Figure 19 and assigned a priority. This categorisation was based on the individual policy measure in isolation rather than its impact or cost when implemented alongside other policies. Further details of the categorisation are given in Section 5.

The potential policy levers for agriculture are held by the EU, the UK Government and the Scottish Government. World food prices will also influence purchasing by the public and investment decisions in this sector. Nevertheless, the Scottish Rural Stewardship scheme provides a potential lever to introduce measures that can reduce emissions directly from farming activities, while public information programmes could be used to encourage changes in diet.

Figure 19 Summary - Agriculture ⁵¹

4.8 Land use, land use change and forestry ( LULUCF)

Further information on emissions, policy options and timescales is available in Appendix 10.

This sector is significantly different to the others considered here in that it is capable of removing carbon from the atmosphere and locking it into ecosystems. Most awareness of the importance of this sector is focused on the role of forestry, though other areas are also important, including the way that agricultural land is used and planning policies that address urban spread and derelict land.

4.8.1 Emissions and trends

Emissions and removals of carbon dioxide due to activities in the LULUCF sector are reported in the UK Greenhouse Gas Inventory, as well as emissions of methane and nitrous oxide (although these are not significant compared to the overall emissions of these gases). The LULUCF sector within Scotland is a net sink of carbon dioxide. The size of the sink has increased from around -3,000 to -5,000 kt CO ₂, between 1990 and 2005, although this trend is projected to reverse in the future (returning to -3,000 kt CO ₂ by 2020). Net emissions/removals in Scotland are dominated by the large forest sink, although emissions from historical land use change to cropland are also significant. These "legacy" emissions will diminish over time, assuming no further land use change. The baseline afforestation rate, used in these projections, is 10 kha/y for 2008-2020, and zero thereafter. This is made up of 5 kha/y conifer, 4 kha/y broadleaf, and 1 kha/y short-rotation coppice willow. This is a different accounting approach to the Kyoto protocol, which accredits all afforestation since 1990, within capped limits.

Projections for the sector are available to 2020, but not beyond.

4.8.2 Policy options

Twenty possible policy options for improving carbon uptake by land were identified and quantified in terms of potential carbon sequestration between 2008 and 2050. For each option, a range for sequestration potential was initially considered, based on best estimate, conservative and maximal assumptions. In each case we have used the best estimate value. The combined effect of policy options is then estimated over the same range, noting that some options are mutually exclusive, or have a multiplicative rather than additive effect. Further information on these options is given in Appendix 10. The forestry cost estimates were based on Mason ⁵² and other cost estimates were based on Smith ⁵³.

Options 1 to 7: Expand forest area

L1 represents a 'top-down' approach to specifying an increase in forest area. Options 2-7 represent a 'bottom-up' approach, aimed at identifying particular target areas or activities within this sector, and would be components within (rather than additional to) L1.

L1 Increase forest area. In this option, the afforestation rate of 10 kha/y is continued for 2021-2050. Total cost assumed to be £4,700 ha ^-1, comprising the value of the land, assuming permanent pasture at £3,500 ha ^-1, plus planting and maintenance costs (£1,200 ha ^-1). The same costs are assumed in the other forestry options, though land purchase is assumed to be unnecessary in the cases of L2, L3 and L4.

L2 Afforestation of road/rail network. Transport Scotland estimate that there are 3,024 ha available for planting on Scottish road network sites with little or no opportunity cost. A further 2,000 ha is estimated to be available on the Scottish rail network. Cost assumed to be £1,200 ha ^-1.

L3 Afforestation of derelict land. It is estimated that there are 10,000 ha of derelict land in Scotland, mainly on disused industrial and mining sites. Here, planting is assumed to take place between 2008 and 2017 on 50% of the available area. Cost assumed to be £1,200 ha ^-1.

L4 Expansion / management of hedgerows. Cost assumed to be £1,200 ha ^-1.

L5 Prevent further deforestation. Deforestation accounted for emissions of 24 kt C y ^-1 in Scotland in 1990. Here, it is assumed that the deforestation rate could be cut by 50 %. Cost was estimated as a mean value for forested land (£3,212 ha ^-1).

L6 Expand short rotation coppice ( SRC). A recent report (Hardcastle et al, 2006) estimates potential to expand SRC to between 50,000 and 90,000 ha, although only 200 ha were currently in operation. Here it is assumed that SRC could be expanded to 75,000 ha. Cost assumed to be £4,700 ha ^-1.

L7 Expand short rotation forestry ( SRF, 15-y rotation). Using the same procedure as in option 6, it is assumed that SRF could be expanded to 75,000 ha. Cost assumed to be £4,700 ha ^-1.

Options 8 to 10: Forest management

For these options, modelling assessed the effects of changes to forest management on carbon sequestration. All the simulations used the baseline projections for future forest area (see 4.8.1).

L8 Increase forest rotation length. To give conservative, best, and maximum estimates, rotation length was increased by 30 years from the current default of 59 years. It is assumed that only 30% of the forest area in Scotland is windfirm - hence this measure is applied to this proportion of the forest area. The cost was estimated as the value of the foregone timber production, assuming a standing sale price of £12 m ^-3 for merchantable timber. The foregone timber production was calculated as the reduction in harvested wood products between 2008 and 2050, compared to the default rotation length.

L9 Increase forest productivity. The procedure here was the same as in option 8, except yield class was increased by 2 YC (yield class) units, from the current default of YC 12. The cost estimate was based on the cost of fertiliser addition, estimating that 20 kg N ha ^-1 y ^-1 would be needed to achieve this increase in growth rate.

L10 Switch wood products to long life uses. By switching wood products to longer lifetime products (e.g. construction timber) product lifetime was assumed to increase by 30 years from the current default of 59 years. Costs have not been estimated for this option.

The rotation length measure, L8, and the increased timber market option, L10, interact (as through extended rotations and deferred harvesting, less timber products would be available).

Options 11 to 13: Agricultural land use

L11 Convert cropland to grassland. Modelling assessed the mean annual change in soil carbon stocks over 42 years (2008-2050) for converting crop land to grassland, estimated as 100% of the existing set aside area. Cost assumed to be £5,950 ha ^-1.

L12 Convert leys to permanent pasture. Again, this conversion shifts agriculture to sequestration through promoting an increase in soil carbon content. The area that could potentially be converted in this way was estimated as 50% of the area currently in <5 year grassland rotations. Cost assumed to be £1,730 ha ^-1.

L13 Prevent conversion to cropland. Conversion of land to cropland is a significant driver for Scottish emissions. This option considers prescribed reductions 50 %. Cost assumed to be £5,950 ha ^-1, the estimated difference in the value of cropland and grassland.

Options 14 to 17: Agricultural land management

L14 Improve cropland management. Mitigation potentials for cropland activities were taken from Smith et al. (in press). These were applied to the area of arable land with mean values used to estimate the range. The cost was estimated at £82 ha ^-1.

L15 Improve grassland management. The impact of changes to grassland management were quantified in the same way as for option 14, except annual mitigation potentials for grassland practices were used, and applied to the total grassland area for Scotland. The cost was estimated at £49 ha ^-1.

L16 Reduce lime application. The effect of reducing lime application was estimated via a prescribed reduction of 50 %. The cost was taken as £200 ha ^-1.

L17 Manage field margins. The mitigation potential of this option in Scotland is estimated based on its effectiveness and uptake under Environmental Stewardship in England. It is assumed that uptake in Scotland is 100% of that in England, relative to the arable area in the two countries. The cost is estimated as £5,950 ha ^-1.

Options 18 and 19: Management of organic soils

L18 Prohibit horticultural peat extraction. A prescribed reduction of 50 % was assessed. The cost estimate was based on wholesale price of peat.

L19 Peatland restoration. The effect of peatland restoration on net greenhouse gas balance is potentially very large but highly uncertain (even down to the sign of the net effect). Our conservative estimate was simply zero, whilst the maximum estimate was based on the information from Smith et al ⁵⁴. This was applied to an estimate (fairly conservative) of the area of peatland undergoing restoration in Scotland (150,000 ha). The best estimate was based on a typical value for peat accumulation in intact bogs.

Option 20: Urban expansion

L20 Prevent urban expansion. Conversion of land to settlement accounted for 2.9% of emissions in 2005. A prescribed reduction of 50 % was applied. The cost was estimated as the value of the land, assuming a mean for residential land in Scotland of £800,000 ha ^-1.

4.8.3 Impact on carbon sequestration by the sector

Figure 20 shows the impact of these policy options on carbon sequestration, through land use change, reflecting specific conditions within Scotland. The trend line for policy options in Figure 20 never crosses into net emission, whilst in the baseline scenario, the sector becomes a net source in 2030. A substantial fraction of Scotland's fossil fuel derived emissions could be sequestered in 2050 if all LULUCF options were combined to maximal effect. However, greatly restricting timber harvesting via extended rotation lengths is unlikely to be an acceptable policy when viewed in the wider context. The use of wood as a sustainable building material has wider benefits and great potential for carbon sequestration. By substituting for concrete and steel, which use substantial fossil fuels in their production, emissions are abated whilst simultaneously removing carbon from the atmosphere. Reductions in locally-grown timber may be replaced by increased imports from Scandinavia and the Baltic states, leading to increased transport costs. Given that timber harvesting is likely to continue, the best estimate of the achievable level of sequestration is ~10 % of the 1990 fossil fuel emissions.

The trend line for policy options, shown in Figure 20, never crosses into net emission, whilst in the baseline scenario, the sector becomes a net source in 2030.

Figure 20 Changes in carbon sequestration through land use under the baseline and policy option scenarios from 1990 to 2100 (negative figures here indicate the take up of carbon by ecosystems).

Table 35 shows the carbon sequestered by these policy options and the estimated costs incurred. The impact of policies L2 through to L7 have been included in the total abatement for policy L1.

The three options with most potential (in terms of absolute saving and cost-effectiveness) are improving grassland management, increasing forest area, increasing forest rotation length.

Of the measures considered, the potential for peatland restoration is particularly uncertain. At its maximum, this could contribute almost 8 % of the 1990 fossil fuel emissions; at worst, the effects of CH ₄ emission could cancel out completely or even outweigh the effect on CO ₂ sequestration. Compared with others, the basic science underpinning this option is highly uncertain; there are very few UK studies on which to base estimates of the current carbon balance of UK peatlands and even fewer which quantify the effect of restoration work. More research is clearly needed here given the potential magnitude of savings and the cost effectiveness of this carbon sink. Accordingly this measure was deemed too problematic to be carried forward into the overall analysis.

Table 35 Potential abatement and abatement costs for each option

4.8.4 Acceptability and feasibility of policy options

Table 36 Acceptability and Feasibility of policy options.

4.8.5 Sector Results - LULUCF

The following figure shows the measures identified for the LULUCF sector plotted in terms of their:

• Abatement potential in 2050
• Abatement cost in 2050

The amount of carbon dioxide equivalent abated as a result of implementing each policy was assessed. The cost of implementing each policy was also determined. As a result of these considerations, taking into account uncertainties and any secondary impacts, each policy was placed in the abatement effectiveness matrix shown in Figure 21 and assigned a priority. This categorisation was based on the individual policy measure in isolation rather than its impact or cost when implemented alongside other policies. Further details of the categorisation are given in Section 5.

From this analysis the most promising options appear to be afforestation measures and improved grassland management, which offer high potential abatement at low cost. Converting cropland to grassland and converting leys to permanent pasture offer medium abatement potential at high cost, while the other options are either higher cost or offer lower abatement potential.

Figure 21 Summary - LULUCF

4.9 Cross Sector Reduction Opportunities

Some opportunities do not readily fit in one sector alone as they affect several opportunities. The main sources of direct emissions in the end use sectors (business, households & the public sector) are the use of fossil fuels for heating.

District Heating with Combined Heat and Power

The main cross sector example is District Heating ( DH) with Combined Heat and Power ( CHP). The CHP options considered in the earlier sections were for individual sites where the heat load for the site was sufficient to make CHP a viable option. Many sites have insufficient heat use to be suitable for CHP. District Heating can link up heat loads that are different in scale, duration and profile. This should create a more constant heat load that suits CHP, increasing the potential.

For the reasons set out below these additional savings from DH have not been assessed in this study, however there will be additional potential by combining heat loads.

Combined Heat and Power represents an opportunity to provide heat and power in a highly efficient manner, recovering heat that is normally lost in the production of power.

In 2006 there were 87 good quality CHP schemes in Scotland generating over 3 GWh of electricity and 8 GWh of heat. This represents 6% of power generated and 8% of heat use in Scotland. These CHP schemes mainly serve large process sites in the petrochemicals, chemicals and food sectors, with some smaller installations in the public and service sectors, hospitals, swimming pools, hotels etc.

The development of CHP systems is closely linked to the heat loads that they serve. In Scotland and the UK the main model has been CHP serving individual sites. To achieve attractive investment returns these sites have high levels of heat use throughout the year - e.g. the examples above. These sites are limited in number and this model restricts the potential for CHP development. In many other countries the model has been to develop CHP in conjunction with District Heating systems. The DH system comprises heat mains transporting heat from the CHP to heat consumers in all sectors. In these systems the fuels used include biomass and waste materials, as well as fossil fuels.

There is no existing evaluation of the potential for CHP and DH for Scotland that would inform this assessment of the contribution that could be made in 2050. For DH this is particularly complex, as a spatial analysis of heat use is required. However, there is likely to be a contribution, over and above the assessment that has been made here, at sector level. In 2050 the form of CHP is likely to be biomass or waste fired, combined with a District Heating system with very low heat loss. Hence the heat supply from CHP/ DH in 2050 will have zero or low carbon emissions.

The impact of additional savings from CHP will fall in three of the sectors, business, public and households. In qualitative terms the likely impacts are:

Business Sector - The measures considered in the business sector include use of biomass to supply heat and AD to convert waste streams to energy. The AD potential is in the form of CHP, as the most cost effective means of converting biogas to energy is via a CHP system. The biomass potential was considered as a heat only technology. If these schemes were to be developed as CHP, they would provide zero carbon electricity as well as heat. Hence the impact would be on the electricity supply sector, reducing carbon in this sector not the business sector. The cost of biomass CHP may be lower than other forms of zero carbon electricity, reducing the policy cost in the electricity supply sector. Biomass CHP would require significantly higher volumes of fuel, adding to acceptability and feasibility issues regarding supply of biomass.

The analysis considered if use of biomass was suitable for the 44 sites with the highest direct carbon emissions in Scotland, option B1. The sites with more modest heat demands may be suitable for connection to a CHP/ DH scheme, providing that they are located close to other suitable heat consumers. This would increase the potential carbon savings in the business sector.

Household Sector - In 2050 the carbon emissions of new homes will be zero, in compliance with existing plans for development of the building standards. Hence the potential for additional saving via CHP & DH will be in existing homes. These may be the older properties of traditional construction. These have a high level of heat use. In tenements with solid wall construction and shared lofts, cavity wall insulation and loft insulation have limited impact. Given the presence of stairs, lack of fuel storage and the urban setting, the opportunity for low carbon heat, via individual biomass boilers or ground source heat pumps, is also limited. With large numbers of these properties in urban areas, DH with CHP may offer an opportunity for low carbon heating that cannot be achieved by other means. Hence the additional benefits will be greater carbon saving potential, at a cost that is lower than individual low carbon microgeneration solutions.

Public Sector - The additional carbon savings from CHP & DH in the public sector will include potential in hospitals, schools, Higher Education Institutes and office buildings. As a heat customer with long term commitment and a leadership role in combating climate change, the public sector is seen as a key stakeholder in the development of CHP & DH. The impact of CHP & DH in the public sector would be to increase carbon savings, by offering more sites zero carbon sources of heat, at a cost that is lower than individual small scale biomass systems.

Fuel Resources for CHP - Currently most CHP schemes use natural gas as the fuel. The high efficiency of CHP means that this offers a carbon reduction compared to separate production of heat and power.

To offer greater carbon savings, the future contribution of CHP will require significant increases in the use of low carbon fuels. Hence increasing biomass CHP or biomass heat may be constrained by the fuel supply chain. Suitable biomass resources include:

• Forestry and related industries (e.g. co-product or round wood)
• Energy crops (e.g. short rotation coppice)
• Waste streams (e.g. waste wood, food waste etc.)

The forestry biomass resource in Scotland is substantial, but there are many other potential uses for forestry biomass that are already commercially viable. As well as diverting the resource from existing end uses, there may be a need to increase the resource. Hence there are cross sector issues with the policy measures on land use, particularly L1 - Increase forest area and L8 - Increased forest rotation.

Energy crops at present are in limited supply and the economic and wider impacts of energy crops are currently being reappraised.

Finally, initial assessments of the energy potential in waste streams show that there is a significant resource, which merits further investigation to establish the economic potential for energy recovery. This has a cross sector link with policy measure W1 - Zero biodegradable waste to landfill.

Suitable biomass resources are also available from outside Scotland and can be imported - through bulk transport. The experience of the market, in co-firing biomass in power stations, shows that the necessary infrastructure can be set up quickly, if the market conditions are attractive.

For all types of biomass resource, the economics and the overall environmental impact of the resource, and its life cycle impact should be carefully assessed.

Centralised Anaerobic Digestion

The analysis includes estimates for the potential for Anaerobic Digestion ( AD) to treat liquid effluent in industry (B6) and agriculture (A10). The scale, and hence economics, of AD can be enhanced if Centralised AD ( CAD) is used to treat effluent from several sources, at a single centralised site (normally a site that has significant heat and electrical loads). The potential for CAD requires more detailed consideration of the geographical distribution of suitable liquid waste streams (food industry, agriculture & public sector), along with the potential location of the CAD scheme at a suitable energy intensive host site. As a result, CAD would offer greater abatement potential than the separate impact of policies B6 and A10.

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