Seòmar agus comataidhean

First, as a caveat, I note that it is Màiri McAllan who is putting forward the heat in buildings bill, so it is for her to answer on the detail of what is going to be in it. She is working on that now.

Is it possible? Yes—I think that it is. When I, or specifically my junior minister, had responsibility for the heat in buildings policy, I was keenly aware of the warnings that fuel poverty might increase as a result of some of the triggers that were mentioned in respect of the previous draft bill.

I know that Mr Ruskell will not agree with me on this, but I had to think about the impact that some of the proposals would have on householders. I highlight the point-of-sale issue as an example. When I was working part time, had two small children and was paying for childcare, my experience of buying a house was of scraping all my savings together and begging, borrowing or stealing—well, not stealing—for deposits and lawyers’ fees. The thought that I would also have had to find money within a very short time to change the heating that was associated with a house that I was barely scrimping everything together to buy would have been dismaying, and I think that that would meet with a lot of dismay from people in general. Buying a house is probably the most financially stretching point of people’s entire life—and that worried me. I worried, too, about what it would mean for people getting mortgages.

Ms McAllan is now looking at the heat in buildings bill, and she will take forward what is going to be in it. I guess that it comes down to the same challenge as we always have in drafting legislation: is it better to have carrots rather than sticks? If sticks are used, what will be the unintended consequences? I was worried that the unintended consequences of the sticks, the triggers and the compulsions involved would be an increase in fuel poverty at a time when we have a cost of living crisis. Putting in sticks also worries me when there is a high electricity price that is still pegged to the price of gas, as we have mentioned.

There was also the issue of someone having to make this sort of outlay at a pivotal point in their life when they are financially stretched. That was my thinking; Ms McAllan may take a different view, but it is up to her to put that forward.

We have many schemes that allow households to make decisions on the type of heating that they put in and which support them with grants and loans; indeed, the offer is probably the most generous in the whole UK. However, I come back to my fundamental point that we need to see action on the cost of electricity, because that will be the game changer for households when it comes to making decisions about decarbonising their heating.

I have said before in relation to reserved and devolved powers that all the levers at UK level are very important in the context of our climate change plan. They always have been, but we have not seen action in the five years to bottom out some of the levers, particularly in electricity, ahead of this climate change plan. We have to keep on making the argument.

The UK Government is now coming to the point where it has to respond to a judgment at Supreme Court level by saying what it is going to do to meet its carbon budgets. It probably has a lot more to do to decarbonise electricity in England, but Scotland has already largely done that. It has that headroom, but that will not be enough. Decisions will have to be made on bringing down the price of electricity so that, for householders, we can eradicate fuel poverty. North Wales has a real problem with fuel poverty, too, so I have a lot of common cause with the Welsh Government. We have to look at everything in the context of reserved and devolved powers.

I am completely open to that.

There is much degraded peatland that has not been dealt with so far, and a huge amount of carbon is being emitted by that peatland. We have about 2 million hectares of peatland in Scotland, and 70 per cent of it is degraded. If we were able to address that, or at least some of it—the majority of it—that would have a positive impact on nature and would make a difference to the amount of carbon that we are taking out of the atmosphere, as well as to the longer-term natural carbon-sink infrastructure that we have.

We do not want to make assumptions based on the trajectory of an industry having less production. We want to work with the industry to make sure that its production is as low in emissions as possible.

Our thinking in the four weeks that we took to decide whether we followed the carbon budgets was very much in that space. If we were not going to take the advice on livestock numbers, where was the reduction going to come from?

We have looked at a couple of areas, such as the ramping up of ambition on decarbonisation of transport as well as on peatland restoration and the planting of trees. In that respect, we have been working with our rural economy colleagues on the associated whole farm plan, and we have been valuing—and, indeed, funding—some of the efforts to increase biodiversity and reduce emissions. That work was going on anyway, but we wanted to look at those areas in that particular light.

The issue is the time associated with peatland restoration, the fruition of carbon sequestration and stopping the carbon leaking out of depleted peatlands. Obviously, that sort of thing takes a lot longer—you cannot do it in five years. However, we have looked at where we have done quite a lot of restoration and at areas where we can ramp things up and give more certainty in terms of the policy direction on peatland rewetting. It will mean that people will not be saying, “We don’t know whether this activity will be funded year on year”; there will be a trajectory of certainty in policy. I have also pointed out some of the areas in Ms Hyslop’s portfolio where action on transport decarbonisation is being ramped up.

That is the assumption that the CCC is making now, in the current conditions, although it may change with some of the market reforms that we would like to see. There might be a bigger role for electrification, but everything ties back to the cost of electricity. If we do not see reform in the price of electricity, there might be a ramping up of some of the other technologies instead. The CCC gives advice to the UK Government on the electricity price and on what it needs to see to prompt action from the market. I hope that its projections are right, because there is a big role for electrification, as it is probably the simplest transformation of technology that can take place.

We know that we are going to have a grid infrastructure that has more capacity and that we are going to have excess electricity. I disagree with the projection of a 5 per cent increase in hydrogen, as I think that it will increase by more. I am more positive and ambitious about that, but I am also mindful that there has not been the action on the price of electricity that I would have expected to come out of REMA. It has been a missed opportunity. I am talking not only about the current Government’s decision on it, but about all the things that were thrown out of consideration by the previous Government. The issue needs to be looked at again and addressed.

A lot will depend on price. Businesses have a bottom line and they make investment decisions based on that bottom line, thereby making themselves competitive. However, they also make decisions based on their public reputation. It goes back to the point that businesses are under a great deal of pressure from their customers to decarbonise. If they access Government funding, there are conditions around that.

The CCC has said that negative-emission technologies are going to play a vital role in offsetting residual emissions in certain areas, and I would also point to the climate change plan update in 2021, in which further research was pledged into the scale and timescales for NETs in Scotland. This is an area of innovation in which Scotland could have a real economic and reputational boost. Thinking about investment in the negative-emission technologies, I would suggest that, if they were produced in Scotland, the sector could become world-leading, and we could be exporting those technologies to other countries, too.

I have mentioned Denmark; I was told recently that Copenhagen had gone further by becoming a net zero city. Out of that policy direction came innovation and companies that are now the experts in the field and which are exporting their expertise to China and Japan. If we stand by those who are developing NETs in Scotland and factor them into our climate change plan, we might have a similar situation, and we could be exporting that technology and innovation to the rest of the world, as well as contributing to carbon capture.

Do we need a separate plan? We always need a plan, and I will set out the figures and projections that we have identified for NETs in the climate change plan.

There are two challenges there. On the one hand, we still need to know how to deal with residual waste; our efforts have been focused on reducing that waste as much as possible. That is why planning permission has been given for the building out of new energy-from-waste plants—it is so that we can deal with that trajectory. There is always going to be a certain amount of residual waste. On the other hand, we have the circular economy legislation, Scotland’s zero waste plan and all our other waste reduction policies.

I am interested in your point about linking into CCUS networks. That will be absolutely fundamental, and it brings me back to the importance of the decision on the Acorn project and the development of the Scottish cluster. After all, an awful lot of the energy-from-waste plants and infrastructure are going to be in that pipeline’s pathway. As I have said, you have made a really good point, and we should be looking at decarbonising as many of the emissions associated with energy-from-waste plants as possible.

You also made an important point about heat networks and their links with energy-from-waste sites. Indeed, there is one in Aberdeen that is looking at expansion; it is across the River Dee in Torry and Altens. It is already delivering heat to council properties and schools, and it is looking to expand under the river and into the other side—that is, the more substantial part—of the city. I think that it is a hugely exciting project.

We are—if you will pardon the pun—going to be putting a lot of energy into developing heat networks. There are already some great heat networks across Scotland, but there will also be an opportunity for some of the existing networks that use fossil fuels to change the fuels associated with their running.

We want to reduce waste; we have the landfill ban coming in at the end of the year, and we have to deal with residual waste. Councils have been working very hard to reduce their own landfill waste, and have done very well, but it is in the commercial sector that we need to see a real ramping up of effort. The amount of residual waste associated with the private and commercial sectors is the biggest area for improvement. The problem is not local authority waste but commercial waste.