 I welcome you to the 24th meeting in 2014 of the Infrastructure and Capital Investment Committee. I remind everyone to switch off their mobile devices as they do affect the broadcasting system, although having said that, some members may consult their papers on tablets during the meeting. Agenda item 1 is items in private. Can I seek the agreement of the committee to take item 3 in private to consider the evidence that we hear today on the draft budget scrutiny? I should also have said that we have today James Kelly substituting for Mary Fee just for the record. Move on to agenda item 2, draft budget scrutiny. We are going to hear evidence today on the Scottish Government's draft budget for 2015-16. This year the committee is focusing its budget scrutiny on three of the Scottish Government's national performance indicators or figures, namely reducing Scotland's carbon fruit print, reducing traffic congestion and increasing the proportion of journeys to work by public or active travel. In order to assist us in our scrutiny today, I welcome Professor Gillian Anabell, chair of Transport and Energy Demand at the University of Aberdeen, Francesco Asquay, director of the Centre for Business and Climate Change at the University of Edinburgh, Professor Susan Roth, school of the built environment at Heriot-Watt University. I hope that you have got the names right and Professor Michael Rowland. I am known to this committee, chair of the Digital Scotland Working Group from the Royal Society of Edinburgh. Can I welcome you all today? Can we move directly to questions and perhaps start on your views of the impact of the draft budget on greenhouse gas emissions? Can I ask what you consider the likely impact of the draft budget on greenhouse gas emissions? Unfortunately, it would be less than I would like, because of the way the division of the different accounts are organised so that we have a better understanding of the impact of the draft budget on greenhouse gas emissions. I think that unfortunately it would be less than I would like because of the way the division of the different accounts is organised so that we have, for instance, an idea of the exact amounts for different, the relative weightings for different areas being allocated, for instance, to energy to, what have we got here? We've got energy, water, waste and so on. We know percentages of their impacts, but it's very difficult to follow that through the budgeting process. Also, I think that the draft budget might benefit from being more graphically clear so it was easier to understand so that we had graphs of trends rather than pie charts so we could see the relative development or the reduction of particular trends within the system. I don't know if that's been brought up. Another thing is that there is a slight lack of clarity here on some of the impacts of the changes in the accounting methods. We've had a change in the accounting methodologies in Appendix 1 and Appendix 2 so that's resulted from a significant readjustment of the carbon budget figures from what was previously published and trended. It gives us what percentage is responsible for those changes in the published but it doesn't give us the exact extent of how much impact, as a whole, the changes in that accounting method have made. At that point, I'd like to pass over to colleagues. I would agree that it's very difficult to say what the impact of the draft budget is on Scotland's greenhouse gas emissions because of the limitations of the method that's been used to assess the carbon impact. Essentially, the greenhouse gas emissions estimated under the method are roughly proportional to spend and they are based on past sector average emissions for the sectors that the goods and services are being produced by. Really the only way to reduce this measure is to reduce government spend overall or to wait for sectors to be decarbonised and for that to be reflected in the sector averages after a time lag of a few years. I think that actually if we wanted to have a better sense of the impact of the draft budget, you would want to split it into capital expenditure and recurrent expenditure. With the recurrent expenditure on goods and services, what's relevant is not the sector averages of the sectors that produce those goods and services but what we're doing in green procurement to actually procure goods and services that are lower carbon intensity than the sector average. I think the sector average would give you a useful benchmark to say this is the baseline but actually the more important story would be what is the government doing in green procurement across the board and that would have to be measured with a different bottom-up methodology based on what different departments are actually doing in their green procurement strategies. With capital expenditure, the question that I think is important is are we locking in higher emissions over the lifetime of that capital or lower emissions relative to what we might have otherwise spent the capital investment on. Again, that isn't captured by the methodology which only gives you a sector average. What's really relevant is how green are the buildings that we're building. Another limitation of the current methodology is that it only captures some of the emissions associated with the production, the direct emissions from the production of the goods and services and the indirect emissions from the electricity consumed in the production of those goods and services but it misses the hugely important area of what are the emissions associated with the lifetime use of the equipment or the capital item that is being invested in. The example is cited in the report and has been for the last few years of counting the emissions from the manufacturer of insulation but not the emission reductions that results in the building that the insulation is installed in. Likewise, it counts the emissions from the construction of a road but not the emissions from all the vehicles then using that road. I think that to get a better sense of the long-term impact of capital spending, we should be incorporating those lifetime use emissions or emissions reductions as well. We can't look at the budget just in isolation. We've got to look at in relation to documents such as the carbon emissions reduction documents that are huge that the Minister for the Environment publishes every now and again. The Parliament has discussed them as has the committee at length. We can't expect everything to be in a budget document. We have to be looked at in relation to these other documents and see where the direction of travel is surely. That's true and there are a lot of different carbon accounts being produced. I think what's important is whether you can actually draw linkages between them that are meaningful and useful. I struggle to see how the account currently being produced for the draft budget can actually be used. Whereas if it linked directly to the accounts that are done under the RPP, is that the right word? The report on programs and policies. Possibly you could actually produce more meaningful useful information by saying what is the change in budget allocation to these different policies and measures that have been estimated elsewhere. If you've got a change from one year to the next, then you can actually say we are reducing spend in such an area that is producing a lot of emission reductions versus increasing spend in another area that perhaps increases emissions. You'd be able to get a much better sense than if there were these much more explicit links across. There aren't those links at the moment because the two methodologies being used are completely different and incompatible. I think that it would be possible to do a different kind of estimate of the impact of the draft budget by looking across at other accounts that are being done in a more bottom-up way across Government. I think that we have asked for that to be provided before, but it's not happened yet. I don't think... Yes, Professor Off. I think that this is the issue of the second round of missions that they put in the summary there. They said that those impacts are not included. Again, the question is, should they be in a parallel document? Within the data that we're given here, there are some connections between the actual spend in pounds and the carbon impacts of those, which are quite clear. For instance, if you look at what I would call... Well, these are incomes to the budget, which include things like a college operational impact where the Scottish Government has earned money. There are allocated carbon impacts of those monies earned. Very noticeably, in the EU money that has come into Scotland under the rural affairs food and environment, you see typically that the carbon impact of the monies coming in is typically about a quarter, a third, maybe 2% in terms of carbon of the money invested until you get to the EU-supported and related services and you get less EU income. We see that this is on page 19. We have income of £488 million into the Scottish Government. That results through the agricultural policies resulting from that expenditure from the EU in a significant, huge reduction in the amount of carbon emissions from Scotland. We can see that that specific line of EU investment has been really significantly effective in reducing carbon from Scotland, but technically it is not included in the budget because it is income. For some reason, that particular investment was very effective in reducing emissions from Scotland. Across the board and the other figures, I do not know if you found this in transport digital that there is not such a huge visible impact from the expenditure of the Scottish Government to carbon impacts. To comment on the transport, my comments are rather less detailed in terms of budget lines and more observations with regard to the balance of expenditure on various aspects within the transport sector and their impact on carbon. What I mean by that is that, essentially, what you have is a very heavy expenditure on roads, motorways, trunk roads and a very small proportion of the overall expenditure on sustainable travel modes. Right there, what we are seeing is very little overall expenditure on any demand management attempts. The carbon reductions are largely concentrated on vehicle technology, on expenditure, on promoting the uptake of electric vehicles and the carbon accounting that surrounds that policy line, that expenditure line, is very much based on assumptions about uptake of vehicles but also against the projections of vehicle, of car ownership and use in Scotland, which themselves can be questioned in terms of the potential rate of traffic growth and what it is likely to be or what it could be given other types of expenditure. I do think that the type of scrutiny that I would prefer, that I have done, should be considered as much more in relation to whether or not the transport sector is expected to pull more weight than it currently does in terms of reducing carbon, particularly the road transport sub-sector, if you like, which is increasing in terms of the proportion of emissions that it is contributing to Scotland's carbon budget. It will come on specifically to transport in a minute. Can you identify any examples or projects and programmes that will have a positive impact on reducing Scotland's greenhouse gas emissions or its carbon footprint? It is very clear that the built environment plays a huge role in the carbon emissions from Scotland. If you look on page 16 under planning and finance environment sustainable growth, there is a very small amount of money allocated to building standards and it has a very small carbon impact. If I was looking at Scotland leading the world as I always do look to Scotland to lead the world in this field, I would say that we could very reasonably implement and develop, and I know that they are doing this already, a new tranche of forward-looking building regulations and approaches that would have huge carbon impacts. For instance, I will give you one particular example. Under the European Building Directive, we have a duty to report the carbon emissions predicted to be used in buildings under our standard assessment procedures. What has happened over the last three or four years is that it has become patently clear that the building models they use to model buildings do not reflect in any sense the actual performance of buildings in use. So there is an enormous gap between what the modelers, the engineers or the architects say is going to be how a building performs, which is reflected in the certificate that is placed in public buildings and the amount of energy that these buildings use. For instance, if we were like an MOT, if we had a system whereby the actual energy use every year was reported in a standard format, what they call instead of an energy performance certificate, EPC, under the European Business Directive, if it was a DEC or declared energy certificate where they had to report actual energy use or emissions and feed it back into a central database like you do with the MOT for cars, not too difficult. Some investment was put in that. That, I believe, would lead to quite a significant, a real significant improvement in building performance as actual performance is declared. Does anybody do any countries do that currently? England does it. A lot of European countries do it. Australia does it. Sydney does it. Every single building in Sydney has to report its actual energy expenditure, which is published on a certificate on the wall. Is this an ABCD building? For some reason, the building standards in Scotland decided to use predicted, but I think the credibility of the predicted models using building modelling systems has been in the last couple of years, sort of rather discredited. It's a good indication, but often it's three, four, five times different from what buildings use in practice. Cranking that down, turning that screw, because of course the estate agents and so on often put in pretty strong objections because they don't want to be landed with a basket full of turkey buildings that they can't move on. That's at the expense of the buyer's understanding of how buildings perform. Very helpful, and we can certainly ask the Government Minister about that when they come in on the budget. One other section here is if you look on page 20, we have housing and regeneration. We seem to have some fairly hefty budget lines supporting sustainability. Which have some impact, but it's not very clear in either the budget or the non-budget. That's an example of a significant investment line supporting transitions. What's being invested? There are examples where the Scottish Government is doing fantastic things and can do even more to reduce emissions. I think the biggest sectors would be the built environment, probably transport after that, and then agriculture and forestry. Because energy policy is already fixed, I haven't included that. But you can't infer any of that from these figures. It's simply not visible. The supporting sustainability line that Sue mentioned, it is only showing up as a positive contribution to emissions because it's just measuring the emissions associated with the production of whatever it is that is being spent on. But presumably all of that stuff is producing really good outcomes over the lifetime of the buildings that it is going into. Likewise, on page 19, there's 23.9,000 tonnes allocated to woodland grants. Now I know from my involvement with the woodland carbon code which was developed by the Forestry Commission here in Edinburgh that that program has incentivised over a million tonnes of carbon sequestration. That doesn't show up in the account. All that we see is the emissions from spending the money, planting the trees and so forth. We know there are good stories, we know there are things that need to be looked into further, but it's simply not evident from this particular carbon account. Does anybody else have any further examples or projects that will help reduction? I presume I'm here because of the effect of digital, because I'm not an expert in carbon. On the other hand, there are a lot of things that we see from digitisation that actually do help to reduce energy use and carbon emissions. So changes of transport patterns in particular, people working from home or consolidating orders instead of everyone driving 20 miles to the shop, one van comes and does around and delivers everything. There's smart energy in terms of improving the efficiency of energy usage in the home, which is something that has huge potential according to recent studies I've seen, and there's also the fact that the technologies, the communications and computation technologies that we use are themselves significant users of energy and things like cloud computing can actually make that use of energy far more efficient. So I don't see anything trying to draw those lines out in the accounting that's been done here, and I think that if we were really to understand what the impact of digital could be, there ought to be some more work done to make that linkage. Another example of one of these induced effects that are currently excluded. I just wanted to add one point which is that roughly half of the UK's emissions are controlled under the EU emissions trading scheme, and we actually can't do anything to reduce emissions further from those sectors because any reduction that we could produce within Scotland or the UK would simply allow emissions to be increased somewhere else in Europe because it's subject to a Europe-wide cap. So an incremental improvement that might possibly be feasible with the existing methodology might be to exclude EU emissions trading scheme sectors from the account so that you can actually get a picture of the emissions that the Scottish Government actually could do something about. The obvious sectors would be agriculture, forestry, all the rural things and the built environment and transport. Can I just ask another query? The Sustainable Action Fund at the top of, in climate change, age 19 appears to have fairly low carbon impacts, so that's just something that might be drilled into. Building on what was said by Professor Foreman, I'd just like to bring two new recent developments to your attention. One is that in September we held a carbon accounting conference for cities and communities, and it was terrific hosted here in Edinburgh, but it was very clear that the cities and communities in Scotland were not getting sufficient assistance in providing credible, transparent accounting methods for them. I think this is being looked into now, but they seem to be rather at a loss how to more accurately develop their own accounts at a community level or a campus level if you're a university or something like that. So really I'm not seeing anywhere in the investment streams where you're supporting communities and individuals and building owners and so on to actually do proper accounting or develop the methodologies. Now it's being left to cities like Aberdeen, has just put out a tender to do a carbon account for their whole city. Well presumably that's appearing in the line of the expenditure on local government, but surely if every city has to relearn the tricks of how to accurately account, we should be having some central organisation there or management programme within the government. Where would that sit? Would it sit within building regulations? I'd just like to flag here that communities and organisations need more central support to ensure that they're accounting on comparable lines and that their outputs can be compared so they can actually develop that. So that's one funding stream that's not in here. The second one is that Scotland is, I don't know if you were listening to Question Time the other night from the Welsh Parliament or the Wales where they were talking about energy is one of the biggest drivers of it. The way to decarbonise Scotland is to decarbonise its energy supply primarily while Scotland is leading now on community energy systems where decentralised community energy organisations can use new technologies to use smart control systems to balance supply, local stochastic renewable supply with demand and this is something that looks if it's going to be really effective. I don't know whether that would come out of the climate change policy fund, it's not quite clear or the supporting sustainability fund but it's a way in which we can in Scotland help to also keep the lights on. Do you remember last year we had the whole north of Scotland blacked out for some hours by providing more robust and resilient energy units. So I would just like to flag that there's a lot considerable investment from the energy team I think going to developing community energy Scotland but that is one way. We've proved through research in the north of Scotland where we're leading using European grants that you can have eight step change in emission reductions by managing energy systems locally with smart systems. Just like to say that that's a programme that should be integrated into that. We'll maybe let the Economy, Energy and Tourism Committee know that in their deliberations. Can I just move on to ask if there are any examples of projects or programmes which have a negative impact on reducing our greenhouse gas emissions? I would say that the expenditure or the additional expenditure that we're seeing in this budget from last year on roads and motorways does not appear to be particularly well justified in terms of its potential carbon benefits and therefore potential knock-on carbon reduction benefits. So the motorway and trunk road expenditure makes up the, whilst the overall transport budget has increased, that's largely due to this increase on the road network. And the, as I said before, there does not appear to me to be any discussion or certainly inclusion of any policies to lock in the potential increase in juice traffic that might result from that road building. So what you essentially have with that kind of policy is a slowdown in, I know we're not talking about congestion at the moment, but a slowdown in the rate at which congestion will happen, but congestion will still, without this lock-in, still result. It will just be further down the accounting line, if you like. And the fact that this expenditure isn't balanced well by attempts to mitigate the impact of traffic growth in urban areas means that there's very little in there to reduce carbon from roads other than by reducing the carbon of the fuels and the vehicles themselves. So my recommendation would be to think again about what could be included in terms of traffic management and demand management. Yes. Following on from that, I would like to point out that a lot of the energy, this sort of the people doing the standard energy analysis for Scotland and at a country level systematically ignore the potential for solar energy to decrease carbon emissions from the built environment. And there is a second consideration here that we're not looking at the social impacts, because for every solar home you put on for the fuel poor, for instance, we did a big study in Dundee, you're taking families out of fuel poverty forever by putting hot water and photovoltaics on those houses. And we did a very good study showing that if you put solar energy or photovoltaics and solar hot water on all of the council houses in the deprived areas of central Dundee, you could take the majority of the population of poorer people in Dundee, socially deprived people out of fuel poverty over 2,000 families at a cost of around, for instance, 67 million, which is, I think, a quarter of the cost of the proposed Aberdeen Ring Road, is it? So when you're looking at whether you take entire cities out of fuel poverty and reduce carbon at the same time, significant amounts of carbon, as opposed to developing new roads, you know, you don't have that sort of trade-off context where you're looking at bangs for bucks in project by project. That might be a good way of actually showing MSPs how their respective bangs are being spent and how many carbon bucks, I think. Okay, I think we can move on. Adam, would you like to continue the questioning? I think the comparison with Aberdeen Western for if it's not going to go down with some members of this committee. Thank you. Thanks, convener. I think we're all agreed it's rather difficult to evaluate the impact of the budget on greenhouse gas emissions. Would there be something relatively straightforward that could be introduced in the budget in terms of providing a bit more information that would help us with that evaluation in the future? And what might it be? Yeah, I fear I've possibly been a bit negative about the carbon assessment of the budget. And I think it's worth noting and acknowledging that it was really groundbreaking, probably the first government in the world to do it when it was first done, was it four years ago? And that is great, and I'm all in favour of accountability for greenhouse gas emissions and you've got to start somewhere in terms of producing some kind of an account in order to have accountability. But I think it's time now to keep Scotland at the forefront of this area and to develop what we're doing so that it continues to provide a leading example for other countries to look at. The really big question is whether to move away from the economic input-output analysis methodology into something that is more bottom-up. But if we stand back from that big step for a minute, I think that there are some incremental improvements such as it may well be possible within the existing model to separate out sectors that are covered under the EU emissions trading scheme from the other sectors and to differentiate in the accounts, still produce the overall figure, but split it out after that into the emissions from the EU ETS sector, which we can't really do very much about, and those that are not covered by the EU ETS where we could still do further things that would actually show up in a real difference in emissions. That was one thing. The other thing that is incremental might be to focus more on the changes in the budget allocation from year to year. And really to say, well, within a certain portfolio, the change is in the area of such and such, and that happens to be a high carbon or a low carbon part of the budget, and that gives you a sense of where the changes in the money are going to result in some sort of impact in the future. Then beyond that, I think is the question of do you actually start to pull into this assessment some of the bottom-up analysis that has been done elsewhere and make much more effective links across the different carbon accounts that have been produced. And I think that that could also be done in a step-by-step way because we've got all the analysis done for the RPP too. It should also be possible then to say, well, you know, the changes in budget allocation from year to year can be linked to changes in those proposals and policies that have already been estimated in a bottom-up way, and therefore you could make some rough estimates of what the budget changes are likely to result in. To begin with, we've done some studies of carbon emissions in relation to GDP at city level. So if you actually show the trends in how much GDP or expenditure per capita actually is happening in terms of a money line with a graph over time, and then you put alongside it, for instance, for each sector, the carbon emissions, you get a very clear idea of the trends in expenditure and the respective trends in carbon. So you can see where the carbon impacts with increased or decreased expenditure are happening or where you're getting step changes. It makes it very visually, you could quite easily do this for each year since 2006 and with just the carbon emissions, and that would make it much more easy to comprehend. Good. The other question I was going to ask was, you mentioned the carbon accounting methodologies. Is there such a thing as best practice in this area? You mentioned the fact that we ought to be assisting our cities and communities in terms of doing this type of thing. We're very lucky in Scotland to have some really good carbon accounting organisations and companies in the UK as well. I think there are different methods. People make money from carbon accounting, so you go to a particular company and they'll have a black box and you'll feed in your data and they'll come out with an answer that is not transparent or comprehensible really because they've put their own assumptions into the box, but that's because they're selling a product, whether it's city level accounting or community or buildings or companies, but it's quite easy to develop, and we've got the carbon accountants who can do it, who can actually develop transparent accounting things, which would be a Scottish methodology for carbon accounting for communities or cities, which would make Scottish rules for Scottish assumptions because the trouble is with the larger deck accounting systems. They use Westminster-facing assumptions, so you'll have maybe 20 different values for a certain factor you put in for England, and for Scotland you've got one value, and we all know that Edinburgh's very different from Thurso. I mean, I don't know what the others would think about this, but it seems to be a very simple step forward to have first-class transparent, accurate Scottish accounting rules for that the communities and cities and business owners can really apply for accurate Scottish accounting. For instance, Aberdeen City Council has just gone out to Tender, and they've got some very brilliant people tendering for that. What the Scottish Government has done to date already is they have gone out to Tender, for instance, when they first developed this methodology in 2010, but it would be a matter of now just putting together a proposal and you'd get very good people from Manchester, Oxford, Edinburgh, all applying and then you could choose the best team for a particular set of assumptions and rules, and then that would have to be ground-truthed or tested with the whole of the carbon accounting community in Scotland that we agreed, but that's a fairly simple process. Rapidly in all sorts of venues all over the world, and one of the peak bodies is the greenhouse gas protocol, a joint venture between the World Resources Institute and the World Business Council for Sustainable Development. They first came out with the corporate carbon accounting standard that is now the de facto reporting standard for corporations, but since then they've produced a lot, and they're still producing a lot of new standards. One is in the area of community greenhouse gas accounting, and another is in policy and action accounting, so we should certainly keep an eye on those sorts of developments. They develop very dense and very credible and creditable accounting methods, but a local community looking at these documents, which are sort of yay big with very dense technical material in them, really sort of would flounder. So some way of getting an internationally GHG protocol facing, but easily usable, and Scotland-centric accounting methods like communities would be very welcome, I know. Before they've thought it was too hard because they've used a lot of sort of fudges and what-ifs, but I mean it's perfectly possible now that they've produced the GHG community protocol to reinterpret that. That would mean that people involved in bottom-up action planning for carbon reductions could feel confident that they know where they fitted in the larger, different scopes of the accounting process. More strategic Scotland-wide approach that would be adaptable to a more strategic approach as well. Can you create a methodology for Scotland that can be, if you like, trickle down to communities? Is that possible? It's a matter of compatibility because the Scottish Government has already a very good methodology, which they're continually improving, and you'll notice in these appendices, Appendix A and B, they've detailed some of the developments because they've significantly changed and improved certain sections of their methodology. But any sort of bottom-up methodology would be important to ensure that you had compatibility between the top-down approach and the bottom-up approach, and also between sectors. So I'll give you an example in the forestry. What's happening in Scotland now is community groups who account for, say, peat or forests or agriculture and now sitting down around the table and saying, well, actually, what do I need to do? I need a larger state owner to be able to say, actually, I'm having better carbon results to keep it, reinstate the peat or put in forestry or turn it to agriculture. And you have to then integrate the methodology so you can get a compatible reply. So that's happening, I think. So we need compatibility between sectors and we need compatibility vertically between top-down. I agree with most of that, but I think it's important to recognise that it's horses for courses. There is no one single methodology that will work for all the different needs. You have to think about what is the type of decision that you're trying to support with the accounts and then choose an accounting methodology that's appropriate to support that particular type of decision. And we will have accounts that are incompatible with each other because they're being generated to support different types of decision, but it's important to recognise that and foreground that so that people don't expect them to be compatible or don't expect them to add up all the time. This is where the importance of transparency is really important so that it might not quite be compatible, but you have to know what assumptions are made, whether the assumptions are compatible. For instance, are they using the same carbon factors? So I think the movement towards more and more black-box systems is not going to enable people to make perhaps the best decisions. Yes, Professor Foreman. Could I come back to the strategic point because I am slightly bemused by the fact that the words digital and broadband, neither of them occurs once in that carbon assessment of the budget, whereas if you go back to policy documents earlier, we have our low carbon economic strategy sets out how Scotland can secure the transition to a low carbon economy. Digital technologies will be an integral part of that transition by, for example, replacing goods and services with virtual equivalents, allowing more efficient use of energy, offering virtual technologies that allow online shopping, teleworking and access to online public services. So that was there in the strategic documents that's three years ago now that that was published. And yet, we're talking about this as though digital has nothing to do with carbon. And unless we make those kinds of linkages, we're just watching what's happening and we're not going to make any change to what's really happening in the end. It'll just be, well, these houses are slightly more efficient. These cars are slightly more efficient, but basically people are making the same journeys. They're doing the same things. They're leaving their lights on. All of that is just lost. So unless you include it in the assessment, you will lose it, I think. And I think that goes also for other issues that were pointed out like the fact that building roads means more people will go out using the cars so you'll actually put the carbon up by reducing the congestion in the long term, because you'll only reduce it temporarily. Again, this comes down to the transparency of the assumptions that are made. And it's not that some of the predicted traffic growth will not actually include some of the assumptions about induced demand on roads, but it's not always transparent as to what has been included. And the other thing is that when it comes to such interventions, such as, say, some of the digital interventions that you'd mentioned earlier, whether it's home working, teleworking, video conferencing, home shopping, et cetera, those are precisely the sorts of interventions that are very, very difficult to evaluate and to predict because of their, well, for one thing, the sort of behavioural changes that are embedded in those take a very long time to materialise, potentially, in the early stages of some types of intervention, the carbon reductions are very small, but the potential for longer-term impacts, particularly cumulatively across interventions, can be very large, can lead to sort of step changes down the line. And so the combination of the scrutiny that's given in the short term to individual interventions versus the need for looking at cumulative impacts over a longer term can be a big problem in accounting, which I haven't seen particularly well addressed in any of the sorts of accounts that I've looked at. And because certainly in the transport sector, and I would say very much in terms of the sort of digital economy, you are actually needing to consider many types of intervention, which are actually small scale, that although the evidence suggests that the sort of value for money in terms of benefit-cost ratios or whatever type of that kind of accounting is included, although that evidence is quite clear that those sort of BCRs can bring very, very good value for money when things other than carbon are included, such as health impacts or economic impacts, that's not the case when scrutinising individual measures for carbon and not looking at cumulative longer term impacts. If I could just go back to your very first question and just add one further answer to it. So the question was, what further changes could we make to the carbon assessment of the budget that we've done at the moment? One thing which I think would be possible using the existing economic modelling would be to think about the fact that government, that it's only representing half of the equation at the moment. So government has an impact in the way it raises money as well as in the way it spends money. And with the transfer of more taxation powers to Edinburgh, that may well be something more relevant in future. I think again it would be a world first to start to actually look at the impact of government taxation on greenhouse gas emissions as well as the way it spends. It will suffer, using that model, it will suffer from all of the same problems and so the same sort of comments would apply that it will only look at sector averages and things like that and it should perhaps be supported by narrative about what is being done to ensure that those taxes are actually greener taxes than might be represented by sector averages. But I think it would be an interesting and feasible for the development. Yes? Yes. Just a quick point is that on page 11, figure three of the carbon budget, for some reason energy, water and waste are lumped together. We had 40% whereas we have mining and quarrying at 1.3%, finance and business at 1.2%. Did you know that the largest single user of electricity in Scotland is the water industry? So I really do think that we need to get to the definition of how much of that is water, how much of that is energy and how much is waste because are we hiding something here? Do we have an underlying problem that is being masked by this being lumped together? Okay, if we move on to transport then Mark, you've got some questions on this. As well as the focus on greenhouse gas emissions, we've also got to focus on the sustainable and active travel budget and the elements of the budget associated with reducing traffic congestion. I'll just kick off by asking if you feel that the current level of funding for the sustainable and active travel projects is adding to that. I think that that's a good question. Is sustainable and active travel projects as adequate and whether that's been delivered to the best effect? My understanding of the budget is that in real terms, the expenditure on active travel and public transport has reduced overall. Looking specifically at sustainable and active travel, the expenditure for the coming budgetary period is £25 million. I've looked at that in the light of work that I've been involved with with respect to smarter choices type interventions. Some of my work has been in Scotland, in England evaluating demonstration type programmes, smarter choices, smarter places programme in Scotland. We're doing some quite detailed analysis of where individual expenditures across providing alternative transport measures versus promoting them, looking at the expenditure per capita and what kind of the optimal balances of expenditure are. There's rarely been a study that I've either been involved with or looked at that has suggested that the expenditure per capita, if you were to look at this, £25 million per capita basis would be so low. Essentially, the expenditure that you're looking at is around 1% just over of the total transport budget. If you follow the analysis forward of the sorts of valuations that we've looked at, it should be more like around 3% for those type of local sustainable transport interventions. As a direct answer to your question, I'm afraid no, I think it looks like a very disappointing level of expenditure and it's particularly disappointing that it actually appears to have reduced. That 3% figure that you mentioned is a more appropriate figure going along with international comparisons? Yes, going along with international comparisons, going along with what we've understood from our evaluation of what works, which is obviously the most important thing. There's all kinds of complications in there in the sense that different levels of expenditure are required depending on geographical area, for instance. And also, according to baseline, where there's already well-established social norms and levels of provision that expenditure could be less in areas such as particularly hard-to-reach areas, such as suburban areas, rather than town and city centres, for instance, that requires a slightly higher level of expenditure on a sort of per capita average basis. But that's just an average going on on studies that have tried to really scrutinise this type of expenditure. Of the money that has been spent, do you think that that's been spent in the right areas? Do you think that the Government's focus is in the right areas or that expenditure should be transferred into other areas? I think that there's been a fairly scattergun approach with fairly limited budget in most recent years. With the smart choices, smarter places type of expenditure, that's a different model of spending that type of funding in as much as it's looking at exemplary projects which does a particular job and did a particular job. We learnt from that. It's now, I think, spread far too thinly and not very strategically. I think it's also very difficult to answer your question in the sense that it's actually not very clear what the expenditure on active travel is going to be, in fact, as far as I can understand what's in there. I think there's, as I say, one route would be to focus on exemplary and strategic type projects, but I don't see that in the budget, but neither do I understand what the delivery model is for spending the money filtered down to the local level. I think expenditure on active travel, local sustainable travel interventions is actually best spent at the local level, except what I would say at the moment is that this national approach, central funding, also needs to exist very much so in the meantime because local authorities don't have, frankly, the skills and people in place to be able to deliver those kind of projects in many instances. So until that's the case, this central kind of budget line is actually quite necessary. At the moment, I find it very difficult to understand what the delivery strategy is for that line of funding. OK. Before you go on, I'd like to come in, Jim, on the... It's just on the, that can be a supplementary on active and sustainable travel. Absolutely take your point about the need to increase investment. That's something that those of us involved in the cross-party group on cycling have been very active in pursuing and promoting. I think that you quoted a bit, but as I understand it, from the budget, is one to two per cent of the overall transport budget on active and sustainable travel. Is your understanding that that includes the match funding from local authorities? Because there are some local authorities, such as the City of Edinburgh Council, which is the coalition between two parties, which is now committed to spending eight per cent of its transport budget on sustainable and active travel. You're absolutely right. I haven't included that in what I've said about the one to two per cent figure. One of my reactions to that, though, is that, because you've brought up Edinburgh, Edinburgh is a place where there have been some good improvements in walking and cycling rates. But when you look at other areas, if you look at the surrounding areas of Edinburgh or other areas of the country, that picture, unfortunately, is not quite as clear. So there's two things there. One, you could take that as evidence, as testimony to the increased level of expenditure that has gone on in Edinburgh and proof that that's what you need to make it work. But it's also the fact that walking and cycling out with those kinds of areas is reducing, is very disappointing. I'd like to pursue the issue of demonstration projects in my own question later. My other question was about the funding available to reduce traffic congestion. Just again, to ask whether you're confident that the budget lines will contribute to reducing traffic congestion if that's been spent in the best areas to do that on a long-term basis. Again, I'm afraid. I'm not very positive. One of the reasons why I don't feel able to be positive is that I don't see any clear targeting of any of the expenditure towards traffic management and demand management measures, for the real congestion hotspots. What I'm seeing is the alleviation of congestion largely through road expansion rather than demand management. As I said before, yes, that will potentially lead to an improvement in the national performance indicator of congestion, but it will only be delaying the problem, pushing the problem further into the future. It depends on what you want to read into the indicator in that sense. Do you see any areas of conflict between the budget line supporting reducing traffic congestion or supporting sustainable active travel and the commitment to reducing greenhouse gas emissions? You've already touched on it in terms of increased road building and the impact that's going to have on the future. Are there any other areas where you're seeing a conflict in that those budget lines are going to see a long-term increase in greenhouse gas emissions? The encouragement of alternative fuel vehicles is a very difficult area in all of this. I think it's very difficult to argue against the idea that we need more efficient vehicles, that we need cleaner fuels. But what that doesn't do is address issues of congestion, certainly. It doesn't necessarily help to... It doesn't help active travel. There is very little for us to go on at the moment to understand how new vehicles will be used in the future. So our modelling, our assessments are undertaken on the understanding that these new vehicles will be used in the same way as vehicles are used now. So it's just kind of a retrospective fitting of current travel patterns with cleaner vehicles. But that's not necessarily what some of the more behavioural intelligence, if you like, would suggest might happen. So the idea that as people sink more money into these vehicles as they are going to be more expensive, they have the potential to be used more. So there is a direct area of conflict there in terms of encouraging uptake of vehicles on the one hand that may end up being used more in order to alleviate traffic pressure on the other hand. OK, thank you. OK, Gordon, you want to carry on on the screen? Before I move on to my own questions I was going to ask about traffic congestion. Just to fall on from the point that Mark's raised, how do you measure the impact of cycling on greenhouse gas emissions and carbon reduction? It's precisely another one of the examples of what I was alluding to earlier. It's incredibly difficult because of its incremental nature, the increasing and uptake of cycling. A can be very slow, slow process. B is very difficult to evaluate often to understand whether that cycling is additional or whether it has supplemented car-based travel. It may also be taking away from bus travel, which in a congested bus situation may be a good thing, but overall for bus revenue and therefore for the sustainability, if you like, of the bus system, it might not be. Cycling can interfere with buses. It can reduce running times using cycles and bus lanes, so there are conflicts that can happen. It can be incredibly difficult, but that's why we have to think more in terms of the longer-term picture, what we want our towns and cities to look like, the degree of road space that we feel we could give over to alternative modes and think about the impact on the integrated transport system rather than any individual mode. We have to plan it that way and we have to evaluate it that way in an integrated way. I see many dangers in trying to evaluate the individual interventions in a transport system. It's very difficult to retrofit a road in a city when you're talking about additional space. You could be in a situation where cycling could increase the greenhouse gas emissions because you've got 20 vehicles travelling at 10mph behind a cyclist and they can't overtake because it's one lane either way. That's why we have to think about the longer-term impacts. As we increase cycling, the idea is that it will become more of a norm, more people will cycle, and eventually they may start to reduce the number of cars in their household, but that's the bit that's likely to happen over a very long period. Because of the way we account for carbon reduction, we don't think about the potential for bigger shifts in the future in terms of household car ownership that could take place as a result of increasing these other modes. The questions that I was going to ask was in relation to the Scottish Government's comments that they've got regarding their infrastructure budget. What they've said is that an efficient transport system is essential for enhancing productivity and delivering faster and more sustainable growth. It goes on to say that on-going investment in transport also connects regions and people to economic opportunity. Given the link between housing and transport, along with the need to reduce greenhouse gas emissions, are there any missed opportunities in this budget where we could have developed a more sustainable transport infrastructure? I think as you've just alluded to in your question, the missed opportunities can be in not looking at land use planning policies and our transport policies together. There's a lack of joined-up thinking in terms of where we are developing versus our transport infrastructure. A more specific point in relation to the transport expenditure, it was, again, I'm afraid, a bit disappointing to see the reduction in expenditure on... There wasn't a reduction in expenditure on rail, so I haven't got the figures right in front of me, but there seemed to be a missed opportunity to use some of the savings that are being generated by less expenditure on rail, franchising, and use that to accelerate the capital expenditure programme on rail. Whilst that capital expenditure programme is still healthy and it's still in there, it could have been accelerated. Because in the context of thinking about the relationship between transport and the economy, there are some very interesting changes that are taking place structurally in the transport system and in terms of car traffic in particular. And we've seen, since pre-recessionary times, we've seen some evidence of the increase in car traffic slowing down during the recession, as we would expect. We've seen absolute reductions, and we're starting to see an increase again in car traffic. But the missed opportunity is looking at that trajectory and seeing whether we can lock that in, whether we can try and tap in to some of the changes that had already taken place. Within those aggregate figures of slowing down of traffic, one of the things that's been going on underneath that is a real increase in rail use. Hence my suggestion that that's a real missed opportunity, particularly right now, as we could perhaps be looking at these structural changes and trying to actually push them in positive directions. Yn bryd els yn y panel, wrth gwrs? Well, I'm possibly going to pre-empt something that you might say. I'm not a transport expert, but I would really love to see more evidence of digital smart thinking being invested in the transport sector. Something similar. A few years ago, I wouldn't have dared suggest this in a place like this because it would have really seemed a bit wacky, but driverless cars are a reality now, and we have to start thinking about how we will use them, how we will use shared cars, how we can make it more efficient to go around our cities or along our motorways, because that will happen in many places in the world, and if we want to be a leading nation, we have to think about it. I think I defer to the transport experts on how that will happen, how it will integrate with the other things we're already doing, how the road use has changed, but I think it's something that should be on our agenda right now. Well, I've got your attention. Can I just say something about missed opportunities? We see lots of opportunities for reducing transport use by people having digital connectivity, and we actually see that happening in remote communities quite a lot, but the current investment in digital in Scotland is not going to bring super-fast speeds to a large proportion of the people in the Highlands and Islands. In Scotland as a whole, it won't bring what the... Sorry, in Scotland as a whole, for those who are not currently served, at least 44% of them won't get super-fast speeds according to the current definition from the EU, and the idea is that everyone should have those by 2020. We have invested some, almost £300 million, I think, in broadband over five years. We're investing 800 in rail, 400 in buses and ferries over one year, so I think there's a missed opportunity in saying, this can really change the way things happen if we take it seriously, but I don't believe it's been taken seriously in the UK or in Scotland as yet. There is a section on digital infrastructure coming up shortly, but is there any other... You mentioned Professor Foreman about driverless cars, but is there any other examples of international best practice in relation to a low-carbon transport that is suitable for implementation in Scotland? I think the digital thing has already done quite a lot. I believe, and I'd be interested in comments on this, but I believe the increase in passenger numbers on low-the-in transport owes an awful lot to the buses app because people can tell when a bus is coming and they'll wait for it, and that makes a huge difference. The sort of ability to integrate different transport providers is something we don't do very well as yet, so Glasgow doesn't have an integrated transport app the way that Edinburgh does. It has individual ones for different companies and that's missing a trick because for the user, you just want a bus. You don't actually care who's turning up with the bus. You want to know when it's going to turn up. So I think there's a lot to be done in making the information available to people to make the public transport option more attractive and digital can help a lot with that. We led the way and to a certain extent was the Edinburgh City Car Club, which is now City Car Club all over the UK and there's many other similar car sharing schemes around the world. I think it's a fantastic initiative. I was a founding member of it. Cars are just incredibly inefficiently used assets. We have millions of them just sitting around doing nothing most of the time. So I think that there's got to be huge potential to expand schemes like that maybe by using smart technology to enable people to actually donate their own cars into the scheme. You just have to put a little box into your car and then all the time that it's sitting there and you don't need it, other people could be using it. I think if I can comment on both those things. Firstly, on the car clubs, I think that that is something I would congratulate the Scottish Government for in their support to car clubs in Scotland. I'm afraid I got a little bit confused to where it's sat in any of the budget lines. I think it's in the Future Transport Fund and extra money has actually been given to car clubs to roll them out. There's been some very innovative thinking about the size of settlements that car clubs could be appropriate for with initial support but thinking longer term, thinking about how they can actually help promote alternative to fuel vehicles, electric vehicles in particular, how they can be connected into the grid in island communities and so on. I would say that's something that's really very progressive and ticks a lot of the boxes about integration across digital, across transport, energy and thinking very much about social exclusion issues as well. That's quite important. On the comments made about real-time information in transport, I don't think it's overstating it to say that the biggest revolutions such as there has been any in transport in recent decades have been digital. So the idea of information, the idea that people are now much more looking to use their travel time productively and that's one of the reasons behind the resurgence of train travel. It's also a main reason why, not necessarily the main reason, but a significant contribution to why younger people are delaying car use and we're seeing more walking because you can listen to music while you're walking. This is all evidence-based coming out of recent studies really trying to understand why young people are delaying their uptake of car licensing and owning cars. A lot of the reason is because they want to stay connected on the move. Again, it's just to underline the importance of joining up these genders. I was just going to say that I don't know if you're aware that under the Scottish building regulations a modern office block will fail if it's naturally ventilated and pass if it's air conditioned. So when we're talking about transport we're talking about the entire quality of air and pollution levels in city centres too. So this big move, so when you're creating visions of future Scotland we really do have to look at this link between air quality, noise, transport approaches for city centres and the nature of the buildings in cities because this, by removing anything but sort of more public transport approaches in the city centres, you're enabling, for instance, designers to open the windows if you notice today here. So there are huge knock-on effects on the vision of what we think our transport futures should be and there's another thing too which is climate resilience of transport systems and commuting patterns and what we saw during the recession when the middle-class, as they say, evaporating as wages aren't going up and yet costs of living are going up the cost of petrol at the pumps has a huge impact and commuters who are commuting in from Fife were beginning to, in their sort of like SUVs and so on, were beginning to be extremely squeezed in terms of monthly expenditures as the £120 a tank went up to £130, £140 and so on. So I think these issues are something that where would they be covered in the future? A transport fund or? But really, this importance of creating a vision of a low-carbon society and a climate resilience society and also a cost of energy society has got to be integrated into the thinking, I think. Okay, anything else on that? Before we move on to emissions and housing I think we should have a very short comfort break so less than five minutes if anybody wants to move. Okay, if we can resume and go on to emissions and sustainable housing James, you've got some questions on that. Okay, thanks a lot, convener. Before going on to emissions and sustainable housing if I could just move you go back to some of Professor Rhofe's initial comments on accounting methodology you commented on the fact that the accounting methodologies had changed and expanded about it and provide some clarification on that. Sorry, this is from the carbon assessment of the 2015-16 budget, right? What they did was they've made a number of changes to the method that they used on this page 4 calculating the input-output figures and they say they've used an improved methodology and they give us and that's in annex I'm sorry, annex A details of the methodology and they've got a number of ways in which the methodology changed and they say that in terms of the changes it had relative impacts so for instance the new UK SIC-07 analytical tables they changed the tables and that had a 16% impact on the actual pushing up the figures of the Scottish Government and then the revisions to the greenhouse gas emissions ratios pushed up the actual emissions for Scotland in the method by 25% and then they had an industry-fixed product scale increased it by 2% and the production of the closed economy of the UK tables that increased it by 67% so they used different tables so they've changed the tables they used for the method and they've included a couple of other additions or developments and so they say how much change it had to the overall step increase that resulted in our carbon emissions but they don't actually tell us what the percentage of the step increase was so we know what it's composed of but how big is that actually has it had a million tonnes impact or five million tonnes impact so this is where we need clarification on that so we need more methodology's been changed we've got some figures on it but we need more detail to properly understand the impact we just need to know how much of a shift change that's resulted in so if they'd used the old methodology 8.8 million tonnes or would it have been 6.5 what scale of that change did you notice that one? No Kate, thanks for that explanation just in terms of housing and regeneration I know we've covered some of this as we've gone through the questions but what was your general overview in terms of the impact of the budget as outlined in the draft budget document in relation to the objective of reducing greenhouse gas emissions? It seems to have spent an awful lot of so the bulk of the money has gone on increasing the housing growing the housing supply 628 million and then they've got a figure for and the impact of that was 187 1,000 tonnes of CO2 equivalent resulted from that increased spend but supporting sustainability they spent 90 million pounds on supporting sustainability in the housing sector but it wasn't really clear that's resulted in an increase of CO2 of 27,000 tonnes so surely I mean if you're having a huge investment on supporting sustainability in the housing sector wouldn't you actually expect that to result in a decrease in emissions not an increase of emissions? I take the point that you make and just kind of fallen on from that in relation to good practice you gave some really good examples throughout your contributions in terms of building standards the solar panels and Dundee and the air conditioning example that you gave just before the break in relation to specifically to housing associations are there any examples that you can draw on either in Scotland or throughout the international community that you think would be good particularly in relation to housing associations? Very much there has been over the last 10 years we've been pushed from Brussels to do something called passive housing standards which I think very much sort of 1990s thinking increase the insulation get rid of the drafts better windows get rid of cold bridging so you're not leaking heat out of buildings but the passive house movement puts in heat recovery and recirculation systems so the passive house movement sort of started with fixing the windows so you can't open the windows and housing and having a lot of the the heat apparently the heat from buildings being taken by ducks through the ceiling put through a heat exchanger which is supposed to grab the heat back from the air you're exhausting and mix it with the incoming air with a fan while these systems cost about £5,000 to £7,000 each probably about £7,000 to install in housing and they actually usually ducked air behind the ceiling behind the plaster of the ceiling and you've already lost the heat anyway to the roof space so they're not actually regaining much air at all and this move to have fixed windows in housing has been really for Britain which is quite a damp temperate climate it's really not suited to it so housing associations have actually moved into putting these heat exchange systems in housing and even in places fixing windows so you can't even open a window for natural ventilation to get fresh air in or so on and putting in sort of huge windows that are very difficult to open anyway you get a lot of modern flats here in Edinburgh with lightweight timber structures sort of west-facing large glazed areas you probably see some over there which are suffering from significant overheating as well but for £7,000 you could put for nowadays you could put four kilowatts of photovoltaics of solar electric plus a solar hot water system or three kilowatts on the house so for the same price you could have a house that never actually pays for only 20% to 30% of their hot water in the year and can really generate most of their electricity free so this move Joseph Rowntree Trust has just taken out 425 heat recovery systems out of the houses cos they were creating such poor air quality so when you put sustainable investment here £90 million all my hope is that it's going you know definitely into putting sort of renewable energy systems on the buildings rather than these heat exchange systems that are failing in large numbers in Britain and if you notice on page 19 of this document in the climate change of the rural affairs you've got a land managers renewables fund and that has resulted in significant investment into renewables on agricultural estates or in forest estates and if we could think about that in housing because the only way you're going to take people out of fuel poverty is give them the means of generating the energy they need on their own roofs and hopefully putting some storage you see energy water storage tanks do you remember in the old water storage tanks we have 25 million homes in Britain well that water storage the hot water tank was storing heat so if the lights go out or you couldn't afford to pay for the heat to be on all day that would store that heat for you in 10 million homes in Britain they've taken this water storage tank out of the house and put in combi boilers so you've got no heat storage at all so I would say that you know we've got a fair chunk of money here let's putting it into making sure that people have heat storage in the home and the opportunity to generate their own energy from their own roofs rather than rather flawed mechanical systems which are being pushed very much by industry okay I think those are points of well made and good practical examples which I'm sure the committee will take on board just finally a question for Professor Foreman just that you spoke about the importance of digital infrastructure investment and the potential opportunities that that can give again in relation to areas of social deprivation where there's not a big digital uptake and there's obviously a great opportunity there if we can get people to uptake on digital the information and the opportunities in their lives are tremendous what do you think can be done to encourage digital uptake in areas of social deprivation where there's not a big digital uptake a very good work going on by the Glasgow Housing Association where they're piloting in fact in partnership with BT in this instance they're piloting basically bringing one supply into a multi occupancy building and then sharing it out between all the occupants in a way that does give them substantial access but quite different from the standard way that it's done in the UK of everybody having their own line back to the cabinet this is one line to the building and then it's shared within the building that reduces the costs substantially and I think the results are very good on that and I think Glasgow Housing Association is working to expand that over it's tens of thousands of premises so that's excellent the investment that is being made has done huge things or is doing huge things to bring fibre to some of the remote parts of the Highlands and Islands and that's also excellent with the current investment it will bring normal services such as we have here to people who are close enough to the cabinets but of course in the Highlands and Islands many people aren't close to the cabinets at the moment is any clear idea of how third parties other than BT will be able to use that infrastructure to provide locally and to do things such as have been done by the Glasgow Housing Association to say we'll have one big pipe and then we'll share it out the access to that infrastructure is still at best unclear okay thanks a lot for that okay Alex do you want to move on to digital infrastructure I was going to cover the area of digital infrastructure and of course we've touched on that many times and I'll try and go through this fairly briskly not cover all the ground I've heard what you have to say and I think I've got the message to be perfectly honest but I wonder if the panel has any views on where digital proposals or digital infrastructure proposals in the budget actually have a positive effect on the targets that have been set for greenhouse gas emissions on the greenhouse gas emissions I would say anywhere where you give people the opportunities not to travel because they're doing things virtually where you give businesses the opportunities to use cloud computing that can be provided by energy efficient data centres rather than trying to do it themselves it's very easy to build yourself a lot of computers or even a fairly small number of computers to consume a lot of electricity and do that locally you can get much more efficient use of the computation or power if you have good connectivity to a well engineered data centre which can use energy much more efficiently we've talked about the impacts on transport those are certainly there so I think rolling out digital is going to help but the problem is that our rollout will not be complete with current plans in other words not everyone in Scotland will have the opportunities to do those things you mentioned the issue of transport and of course we all know that in an ideal world everybody will take the chance to work from home rather than commute but what do you see in the budget proposals to change forward I didn't see anything specific in the budget proposals that would drive that kind of change there is work going on on digital literacy there's work going on with SMEs to encourage the use of digital so I think those will indirectly drive that kind of change but I don't think I've seen anything that I could say this is targeted at using digital to reduce carbon emissions so I'll now ask the open question to which we've had some answers so far but I'll ask it anyway in case there's more because I don't want to miss this opportunity and that is that what are the missed opportunities in terms of digital infrastructure within this budget there's no new investment so it's now I think well documented that we're going to be left with a residual problem when the current step change program is finished the amount of investment in dealing with the pieces that step change won't reach is minimal I think of the order of five million maybe a little bit extra now but it's tiny and the numbers of households that you need to reach in the order of 400,000 and actually I think that number probably needs to be up to rather than lowered given what we we're beginning to know about how many people have long couple lines and so won't benefit from the speeds even though they're connected to the fiber network have we come to that stage where we all know what could be achieved through digital infrastructure expansion but we don't seem to be doing much of uncary and on the programs we've had for a number of years on the programs we have we have a strategic goal to be world class by 2020 but I haven't seen I see no mention of investment beyond the current plans which are all part of what was around a few years ago and which is don't do a lot of good stuff but won't complete the job I'll caveat what I'm about to say this is not an area that I know a great deal about but I'm wondering if the committee might want to try and get some evidence on this in a different way but a lot of the digital discussion so far but also I think maybe the way I saw it presented in the budget is very much about role and targeted towards homes I think but certainly if we take the crossover between digital and transport much of the potential lies in logistics and green logistics and so with businesses and in terms of green freight and so all I'm just sort of suggesting recommending that perhaps just to try and dig around in that a little bit and understand whether that's something that is being targeted at all through the policies and expenditure I think that's absolutely right the current programs are pretty much exclusively targeted domestic access though they will have some side benefits for business access but if you look at the benefits they're not about being able to stream video in the home it's not that there will be poor people in the Highlands who it takes longer to download a TV program it's about businesses being able to access cloud computing it's about being able to have sensor networks to tell you what's going on it's about transport networks being able to communicate effectively with efficiencies in transport so those kinds of things and at the moment we don't treat the digital infrastructure as an infrastructure in the same way as we do with roads and rail and ferries we think of it as a service to the home and oh yeah businesses get it too but we don't think of it as an integrated infrastructure that actually enables communication between two points and where there's a very open market for all sorts of innovative things that we haven't yet thought about and we're missing out on that opportunity of making it open to innovation Thank you there's one other issue I wanted to ask you about which is slightly different and that is what are the panel's views on the transfer of funding for the next generation digital fund to the rural affairs food and environment portfolio and what do you think this does in terms of affecting the ability of infrastructure and capital investment and the effectiveness of current and future digital infrastructure programmes? I think it takes it away from the limelight and somehow devalues its importance doing that it certainly doesn't allow somebody to look at it and say this is actually a national infrastructure we're talking about it's saying well there's a problem at the end of the line but I don't think that's the right way to think about the problem Because the world has changed you very rapidly we've got things like energy prices fluctuating we've got climate change issues coming up energy is becoming scarcer and energy security much more important and whole new industries are emerging in the wake of it it's what we call I don't know sort of energy energy approaches but what that really means is that traditionally you took work to energy so you would take the grain to the mill or you'd take the logs to the mill by the water or the grain to the mill on the hill or something nowadays where we've got huge energy users and the biggest one is data servers so now there's a whole new movement major data servers north of the Arctic Circle and what they do is they move the data servers that have huge amounts of heat and so Thurso is another one where huge cloud potential we have phenomenal potential in the north of Scotland for a whole new generation of cloud servers and services and we were discussing this the other day because what you need is you need energy storage so you have constant energy which is going to increasingly go off in the south of Britain so they chose Thurso because they're investing with North Chydro on tidal energy so you've got constant tidal energy, you've got cold and you've got potential huge amounts of fairly predictable energy also from wind but what's going to be and for instance you probably know that in Lochaber in the north west of Scotland 93% of all the energy there is used by the Alcan plant which has got a huge reservoir constant water and so we have opportunities to open up whole areas of Scotland for industries that want secure areas to develop with constant energy good schools, good working good travel communications but one of the things that's missing is that assured digital connection so it's a major revision of how we see what we can offer industries by looking at the infrastructure in that context Major competitor to us in that particular market is Iceland as you said because they not only have cold to cool the thing down but they're thermal to produce the electricity and they're halfway between Europe and America and they've got very good connectivity with fibre so that you put data centres there that are actually closer to Europe and closer to America than one in London is to America or one in New York is to London and that really helps when you're doing arbitrage on the stock market so that their data centres are very important we have fibre coming from Iceland telecom in at Durness if you try to get a connection between Durness and Edinburgh you find no-one wants to sell you one because there's a monopoly and selling one would actually open things up in a way that the current owners don't want to do so it's very difficult to look at the whole of this infrastructure without understanding also the market if we look at roads anybody can take a truck on the motorway and go once you built the motorway we haven't ensured that that happens but we're going to ways that we're building for our digital infrastructure so the fibre that's going in in the north west is available for others to join at the end to provide to domestic premises but as I understand it it's still not opened up for connections to business premises and until it is that means that very few people will want to go and invest because the money can be made and it will be a national infrastructure that provides connectivity between 82 points it should be the case that once there's a fibre there we can get a decent price between Edinburgh and Durness between here and Oben the whole lot and there's a lot of fibre going in but it won't be as open as it should be Would it be fair to say that extending the digital infrastructure into every corner of the country doesn't make it rural it's still mainstream it needs to be still mainstream and what's more if it's there and it's properly opened up it will enable everyone to play the same kind of game as people in Edinburgh can play or as people in Shoreditch can play Ardman animations the people who do Wallace and Gromit are based in Bristol their big thing is they need good connectivity so they have very fast pipes the states and stuff so they need good connectivity to the people who they farm work out to because the way they do these things is they have illustrators and so forth working so they're very concerned to be in an area where not only they have 100 megabits per second and in fact they probably have a gigabit a second now but where the people they're working with have 100 megabits a second because the size of these files that they're pushing back and forth are enormous now if you have a fibre connection those people could be in the north of Scotland they could be in the south you might be able to re-invisage say the Black Isles and the Moray coast as being you know digital highway it really it's not about some folksy little kid getting a connection in a rural farm no it's not about that but it's not just getting the stuff there it's making sure everyone has the right to use it and in the 19th century there were issues with the rail network exactly the same an act of parliament had to make it possible for people to move from one train line to another because people built their train line so their stations didn't interconnect because they didn't want their competitors to take their business so it had to take an act of parliament to push those things together and we hadn't done that here for the digital thank you fascinating stuff and cold is becoming important amazing anybody else got any questions on digital infrastructure I think the problem is which parliament would have jurisdiction over this matter seriously the the access and the openness of these things is regulated by OFCOM there are European union conditions on the openness to publicly subsidised infrastructure I do not myself understand how what OFCOM is currently doing complies with some of the openness requirements in the state aid approval that was granted for the BDUK project which includes the step change so I believe that at the moment that's an issue for Westminster but parliaments can do what parliaments so who knows I'm tempted as I am to tease out that response I'll move on to the question I've got a couple of questions just to wrap up what I think has been an incredibly valuable session the first one is about emission targets and the second is about innovation so I can ask you firstly about how confident you are that the current programmes and funding allocations that the Government is committed to will actually contribute to Scotland meeting its ambitious climate reduction targets of 42% by 2020 and 80% by 2050 and also whether you feel that the shortfall that has been in reductions which arise from the failure to meet our targets in the years 2010 to 2012 is something that we can make up ground on I do think that it hasn't been taken seriously enough and I do think that a language for carbon accounting for everyone from school kids to communities to businesses we really need to develop a better means for accounting for everybody to take part in it so I think that we haven't had enough expenditure in Scotland on that although we've got sustainability and lots of other things funded that I think if we really want to do it we need to develop a Scottish language and Scottish methods to account for that as an outsider to the carbon debate so I found the document on the carbon impact of the Scottish Government's activities fascinating but actually it doesn't tell us about the impact of the Scottish Government's activities on Scotland's carbon outputs and it specifically says that the emissions are not recorded in this assessment and without that certainly someone like me fine that's an interesting thing it's nice to see that the Government is doing a good job or maybe not doing a good job we do similar things in the university but what one needs in order to inform the budget in terms of the goal of reducing Scotland's emissions is some kind of document that's how it looks to me maybe I'm just being naive but that's how it looks to me I've made that point too You're referring to the overall Scottish carbon account right not the draft budget it's whether the allocations in the draft budget will allow us to fulfil the targets that have been set by the Parliament can be achieved I think that we would probably all agree that there is more that can be done there are so many different sectors we've talked about buildings, transport digital infrastructure etc where more can still be done so is there the possibility of meeting the targets I would say yes I'm not really able to comment on how confident I am because that's about predicting the future and it depends on the effort and leadership that's put into that Can you continue to do what we're committed to doing will we be successful or is there a significant step change If I add to this I'll only really be repeating what I've just said sticking to transport which is what I know I don't see how transport sector can pull its weight with respect to achieving the climate reduction targets there are there is a big reliance on very uncertain policies and that's mainly around vehicle emissions and vehicle efficiency that technology is coming along and leaps and bounds but the rate of uptake and how it will be used is very uncertain and one of the one of the reasons we always say that the transport sector is such a difficult sector to try and do anything with in terms of carbon reduction is because it's a you know we've locked ourselves into car dependency we've infrastructure that takes a very long time to change the problem is we're perpetuating that with the policies that we are investing in and although some of the some of the policies that we've discussed in terms of active travel, behaviour change, smarter choices in and of themselves they appear to have a very small impact on total carbon reduction the point is the degree to which we are going to be able to rectify any rectify the situation quickly if we continue to not reach our targets and what we need to think about is building in flexibility into our systems and I mean that from everything from you know people, their competencies, their ability to have the choices that they need, that they need to have even if they're not exercising at the moment to infrastructure that we can adapt quickly you've I think probably gathered from some of the things that I've said that my expertise lies on the behavioural side the sorts of work that I've done has shown very clearly that people who currently are for instance much more model, less car dependent are able to react to things like disruptions whether it's winter weather disruption or system breakdowns or whatever their own personal resilience is much greater and that's the kind of thinking that we need to build into our systems more generally is thinking about even if we're not expecting people to change now if we needed them to change much more quickly in the future I think we should put it in the global context of not being on track anywhere nearly on track to meet the maximum of two degrees of warming we're much more likely to be looking at a world of four degrees of warming and therefore we should be realistic about the fact that the kind of changing of the system the kind of changes that we need to achieve over the longer term are radical completely unprecedented and therefore yes relative to relative to really the business as usual or the world where we don't care about the climate targets it really is a huge step change that we have to achieve but in terms of sort of year on year achievement of targets there's a lot of uncertainty and volatility in the data it depends on economic growth to a large extent it depends a lot on imported emissions from the rest of the world because the imported emissions part of the total carbon budget for Scotland is the most volatile bit so I wouldn't be too worried about missing a particular year's target as long as the actual underlying actions are in place it's much more important for example to be locking in lower emissions lowest possible emissions in long lived assets like the built environment infrastructure and in future the digital infrastructure then it is to meet a short term target meeting these targets I mean Scotland we're producing nearly 50% of all our energy the energy we use with renewable energy systems distributed right one problem is that while the demand is and supplier out of sync we're not actually maximising the carbon benefits of the energy we generate we should be leading the world in carbon emission reductions what we need is storage so we can put storage and that's storage at all scales so whether it's we've got mountains we can use for double pumped hydro every house if we could introduce storage into the house so we reduce the need for very frisky energy so I would say that the one way to decarbonise an economy is to run it on renewable energy so efficiency has been a great god in the past but actually it's how you generate the energy to do the work that matters so I would say that at every level, at building level building integrated solar systems electric and hot water community integrated renewable energy systems and regional but this again we've got a lot of the interests of the the big six who run our energy systems but I think Scotland if they could emphasise getting maximum capacity and using the buildings to do it getting maximum energy storage into the system there's no reason why we can't meet the targets because there is nowhere virtually in the world that's more blessed with free energy than we are in Scotland and eventually markets industries to areas where you have cheap energy and that's what we can do we can lead that too with the right digital infrastructure thank you that's fascinating I wanted to finish just by asking if each member of the panel could provide and possibly have already in the answers to previous questions answered this question but provide the one innovation be it in terms of policy development infrastructure investment or good practice that you think will have the biggest impact in reducing our greenhouse gas emissions and I know obviously Professor Annabelle you talked about demonstration projects Professor Roth you've given us a myriad of examples from decentralisation of renewable energy supply at a local level to solar panels and deprived housing and deprived communities and tackling more forward looking building regulations that capture the actual emissions and have that on the certificate and Professor Foreman you've alluded to infrastructure investments in the digital economy but is there one thing out of all of the issues that have been discussed this morning that you think will have the greatest impact on reducing our greenhouse gas emissions and I could go from left to my left to right okay okay I actually think this thing of opening up the fibre infrastructure we now have an internet exchange in Edinburgh but if you're in the west of Scotland and you want to connect to that internet exchange you will pay an arm and a leg because it's a long way away and you pay a distance based charge if we can have a way that from anywhere in Scotland you could connect to that exchange and then exchange data with other people that would change the digital economy in Scotland and it would allow all these kinds of things to happen changing the digital economy will have wider effects but it will also allow these various things that we've talked about in terms of reducing carbon to happen locally What's the investment part to do that? I think it's more a matter of regulation or cojoling than investment people round the table and say we need Scotland to have this kind of a market where people can access these things freely and competitively rather than putting in more stuff right now because we've done a lot of putting in stuff you will then find that there are other places that want to connect but the business case for making those connections will be stronger because there will be more people able to use the connections Thank you I would put a simple solution I would make sure that every house in Scotland has a solar hot water system on the roof plus a hot water tank because solar energy on a house not only provides free energy in perpetuity but it changes mindsets so it changes the way people see energy but also thirdly and that would reduce by about total energy demand of Scotland just to make everybody have their own heat but it also means that the people like I know here in Gorgie or Stenhouse or wherever who never actually turn their heating on the real fuel pool usually the elderly who never turn their heating on in winter would have some reserve of heat in winter that they wouldn't die of cold which they didn't because they couldn't turn their heating on The same question to you what would the level of investment required be to draw that out 500,000 sorry over four I can't give it off the top of my head but I could give you a figure OK thank you OK I'm tossing up between two things I mean We'll allow you to have two examples Well first of all I think we do have to change our mindsets in transport around what it is we're aiming for and actually most of the transport innovations to fix transport are not in the transport sector but in the interest of answering the question directly I think we need to think about rolling out car clubs more widely I think so the sort of change in mindset there is thinking about promoting access to cars and not ownership of cars it sounds quite simple and in many ways it is the growth in car clubs where they are now happening Aberdeen has had the fastest growing car club faster than Edinburgh was the pioneer but now where they're being put in the rate of growth is actually quite phenomenal obviously from a very small base I think it is something that we're doing already that I would like to see taken further no I'm not going to do that I will think about it and I'll come back to you I'm not prepared to put a number to it quite at the moment if that's OK I'm going to duck the question slightly because because there is no one thing that does it all we could completely we could have all zero carbon buildings across the country that wouldn't be enough we could decarbonise the electricity supply sector that wouldn't be enough so we have to have innovation across the board so I guess that leads me to saying that maybe the thing is in catalyzing innovation and knowledge around this I don't know what number what sort of figure of investment to put upon that but really to make Scotland Scotland is already at the forefront a lot of this stuff Can you be a bit more specific? Really making Scotland a silicon valley of locum solutions for the rest of the world to look to and I think that we are already doing that in many different ways Perhaps offering the University of Edinburgh as a laboratory for that We are doing a lot at the University of Edinburgh for sure but I think just really investing in the knowledge around low carbon innovation I think is one of the things that would connect up the many different silver bullets that are needed in all the different sectors One of those institutions there's some in the rural college there's the carbon capture and storage there are various centres but actually I'm sure that none of them would object to spending more money and getting more brain power onto these things and it might be worth doing Research It's about quick short pathways from research to implementation and really getting much closer connections between the business community innovation in the business community innovation in the academic community Excellent, that's been very helpful Thank you Anyone else got any final questions? I'd like to thank the witnesses very much That's been very informative and very useful and I suspend the meeting to allow the witnesses to leave the room and to allow the committee to move into private session Thank you