 Felly, rydyn ni'n fawr i gael eisiau'r methu i ddechrau yng nghymru yng Nghymru, i gyntafol i ddweud y ffaith i ddweud honi gydaerrau a'r Ffaith i ddweud ar y ddweud yng Nghymru? Mae'r cyd-dredgiau neu'r cyfnod ynghyddiad Calum Blackburn, unig ymddangos yn y cysylltu i ddweud i ddweud y cysylltu i ddweud i ddweud i ddweud eich cyllid yn cyfnodol climate change and land reform committee, which has recently been completed. I welcome Mr Blackburn to the committee meeting. I understand Mr Blackburn, you are going to present your findings for approximately 20 minutes, and we will then open up to questions from members. Thanks very much, convener, and thanks very much for inviting me along today. I am going to read out one bit and the rest of you and me, a bit more free-flowing talking. In the previous parliamentary session, the Environment, Climate Change and Land Reform Committee was interested in the role of environmental fiscal measures, including taxes, levies and other charges as part of its financial scrutiny. The committee undertook some initial work to discuss the process of existing devolved measures and the potential priorities for further devolved fiscal measures in various areas of environment policy. The committee agreed to explore opportunities and risks of making use of new tax powers to change behaviour, and this research was commissioned to support that work. That is a little bit of a background and introduction to it. I understand that you have a kind of a short slide pack. That is really just to keep me on track over the next 20 minutes, so I will just talk to that. The first thing is the overview slide. What I am going to cover in the next 20 minutes is the scope of the research, some overarching issues that could also be called strategic issues, and some learning from six case studies. I am not going to dive into all six. I am just going to pick a couple, but I realise that there are some geopolitical events going on at the moment that might mean more questions around some of those that have become more interesting. The last thing that I am going to cover is a potential strategic approach, which is what the learning from the research can we do to help shape our thinking for the future. Sorry, I must interrupt you, because I neglected to give the apologies of the deputy convener, Daniel Johnson, who was unable to be with us this morning, because he has Covid and is quite unwell, so I apologise to everyone for that and for interrupting Mr Blackburn, but I want to get on that on the record. Without further ado, I will go on to the scope slide to set out some thinking about the issues of the research report and how it is framed. The first bullet point there, if you have got the slides in front of you, is ecological restoration and net zero aim. I suppose that in terms of looking at environmental fiscal measures, the first thing is what are you trying to do, and the strategic aim here has really been to look at the two major crises that we have in terms of ecological restoration and net zero aim. In other words, we have got a biodiversity crisis and we also have a climate change crisis, so the aim is really what measures would help to address those. The second bullet point is the fiscal measures that are considered in brackets, carrot and stick. In the previous sessions that were carried out that I mentioned by the Environment, Climate Change and Land Reform Committee, it was primarily looking at the stick, looking at charges and taxes. In that case, I started with a broader funnel, because I looked at the broadest definition of what a fiscal measure is, which is really an instrument that makes a flow of money happen. We looked at both carrot and stick, which means grants and subsidies, as well as taxes and charges, because both of them will be able to influence the outcomes towards addressing both emergencies. You could argue that there is ample evidence that people respond to even small charges, so there is ample evidence that people respond to fiscal measures in general, but you could also say that the fact that we have got these two crises is probably reflective that the real costs and charges in the markets are not correct and things are not priced properly, so we end up with environmental damage. In a way, the fiscal measures are a way of correcting that and balancing that out. The next bullet point is filtered for relevance. This is not a scientific process. I tried to pick out areas, particularly in the six case studies that are in the report, that are relevant to where parliamentary committees and the Parliament will be looking in the next term. A little bit of focus on things that are in the programme for government, the climate change plan update and things that are pressing in terms of key challenges around the environment, and then considering what the European Union is doing and the policy alignment to that. Drawing on particular areas of evidence of market failure and anything that is relevant for a Scottish context, which is quite subjective, but given the devolved nature of the Parliament, there are things that are probably of more interest in certain areas where we have oversight rather than a UK basis. The last bullet point is measures in development or under consideration. I was aware that there are a lot of things in the pipeline, so I have tried to bring that into the report as well because they are likely to crop up in front of the committee or in the wider Parliament. Here, we are looking at the strategic points that came out of the work. The first thing that I would say is the complexity of the current fiscal measures that we have. In Scotland, we have air passenger duty, although it is not yet applied. We have landfill tax, we have single-use carrier bag charge, we have aggregates tax in the pipeline, we have energy efficiency grants, fisheries, sustainable fisheries payments, forestry grants, agricultural subsidies and business innovation grants around things like circular economy. It is a very complex landscape, and you add on top of that the UK measures, which are fuel, duty, renewable, heat incentive, climate change, levee emissions, trading schemes, contracts for difference, for renewable energy and even variable VAT charges. That is an interesting one because a mainstream tax like VAT can suddenly become an environmental fiscal measure if it differentiates between different products. What you would say is that all of those things are probably doing some very good stuff, but if you were to look at it, I would assume that you would probably find that they are all pricing things at different rates and whether it is biodiversity loss or climate change. I think that one of the key things is to try and get to something that is a bit more consistent in all those measures so that people have clear signals as to what the real cost of things is. What we have is a very complex arrangement, which probably mimics what is often referenced by others by a very complex UK tax code, one of the most complicated in the world. We have a lot of complexity. The next point is on carbon tax and emissions trading schemes on the slide. Making a Lord of the Rings reference, if we were looking for one tax to rule them all, it would be the carbon tax. That is basically what a lot of external commentators would like to see happen. There is a clear reason for that because if there was a consistent carbon tax applied across all those measures, businesses and individuals would be able to make really good decisions. They would be able to make a decision in clear transparency in terms of what is the cost for a flight or a train journey or a car journey, and the carbon impact and other impacts should be reflected in any taxation charged on those. That is really a decision for the UK Parliament and there does not seem to be any movement towards that because Scotland itself, I do not think, has the power to introduce a carbon tax. What the UK Government and the EU are moving towards is something that is a proxy for the carbon tax, which is the emission trading scheme. We have the EU and the UK emissions trading scheme. What I would like to point out here is that there is a great doubt as to whether that will actually succeed using trading schemes. They are very complicated. There are lots of loopholes, there are lots of areas of debate in choosing things that might not be right. It has not got the transparency or the desirability of the carbon tax from a clarity point of view, and there are risks that it will not deliver in the long run. I just want to point out that Scotland did have a trading scheme in the past. We had a landfill allowance trading scheme, which was around for a few years and then removed. We have got a little bit of track history in that already. Given that we are not likely to get a carbon tax, the key thing for Scotland is that we need to work with the UK ETS and make it work as good as possible through the UK emission trading scheme. We need to try and maybe get some consistency in the measures that Scotland has some control over so that we are giving clear messages. The next bullet point is the whole Government approach. I have to admit here that what I am referencing here is something that is out of scope for the study, but I feel like it really has to mention it. The whole Government approach is something that has come from a coalition of Finance Ministers for Climate Action, which includes the UK and 64 other countries. What they are saying there is that, if we looked at the consistency of application of trying to get those strategic aims of net zero and ecological restoration, we should be looking at all Government expenditure, so that includes the £12 billion of public procurement here in Scotland, and the other revenue expenditure that we have in other grants. I know that already in the agreement between the current Government that there are plans to look at that for large grants, but I suppose that the move to go further than that could have been extremely beneficial, go beyond even the changes that you could do with fiscal measures because of the sheer amount of spend of Government. However, it is a huge task because it would require enormous capacity building within the Government around finance and understanding climate change and biodiversity issues. It is not an easy thing to do, but the benefits could be huge. That is me mentioning something that is out of scope. I feel that I had to say that. Back to the rest of the study, repurposing existing measures is the next bit of point. I wanted to highlight the urgency that we have here. We have targets to meet by 2030 and ambitious carbon targets. I am not sure what targets will come out regarding biodiversity in the next year or two, but what that means is that we are really looking at two things, using all the existing technologies that we have to achieve those targets and maybe using fiscal measures to help support things that are currently niche, but really need to be mainstream, so that is where some of the grants and subsidies come in. However, the urgency suggests that we really need to focus on repurposing existing measures, so later on I will talk about agriculture, which is an example of where we are in the moment reviewing agricultural subsidies. However, when you look at the timescale to introduce new measures and the engagement that is required with the stakeholder is really quite challenging, so it might be easier to revisit existing measures and make sure that they are really aligned to where we want to get to. The next point is the increasing percentage of overall tax take. Within the report, we highlight that if we really want to succeed at this in fiscal measures, environmental fiscal measures need to be a bigger part of the overall tax take. If we had the same amount of tax collected in the economy, we probably need to see a shift from labour and employment taxes to things that are on resources and resource use. That is challenging. At the moment, I think that it is a relatively small percentage, 6 or 7 per cent in many countries, which are actually resource taxes, but if we really want to have an impact with the fiscal measures, we probably need to make a bigger chunk of the overall tax taken out of the economy, keeping it at a neutral level. If we do that, there are other challenges. It is going to be a much less stable tax base, so employment taxes are very stable and it is very beneficial to reduce employment taxes and maybe switch them to resource use from an employment, encouraging employment point of view, but then your tax base becomes less stable because people can take measures to avoid those taxes. The last point on that slide is local taxes and charges. When you look through the case studies, you will see that this IC is a major area of opportunity. It is very politically challenging to give more powers to local authorities, but, given that the Parliament is constrained by things such as the UK Markets Act and the forthcoming subsidies bill, it could be that some of those local taxes and charges offer some real opportunity to support the aims towards the targets. You will see that if you have time to look through the case studies, you will see that there are quite a few points coming out there in terms of local taxes and charges. Enough of the strategic points then. I am now on to the case study slide. I have listed all six case studies there, but I really want to highlight two, waste management and land management. Given the current situation, there might be more questions on energy, so I am happy to take questions on energy, but I feel that those two, given the parliamentary session and what is coming up, are worth diving into quickly. On waste management, the case study looks at two measures in particular. It is referencing the fact that we have an energy from waste review, a likely consultation on a route map to meet the waste targets and a circular economy bill all in the pipeline. The first measure is about the fact that we are having to deal with the consequence of the success of the landfill tax. The landfill tax has been really successful at pushing material out of landfill and into recycling, but now we have the situation where energy from waste now that landfill is becoming so expensive as a more attractive option, but we are also finding from a technical perspective that energy from waste might create more emissions than landfill going forward. The reason for that is that we have very good at extracting the food waste and the paper and the card out of that residual waste stream, and so it is now mainly plastics and fossil fuels, so it is equivalent to a quite strong energy emission that we would get from more fossil fuel-based gas stations, etc. There is an issue that we need to address, and I am sure that that will come up in the review going forward. However, there are a few other countries that have already introduced energy from waste tax in the Netherlands and in Flanders, and I think that this is something that we will probably have to do to prevent all the material just moving from landfill to energy from waste. There are other measures, though. If the Scottish Parliament does not want to go down that route, there are other ways of trying to change that, and I have highlighted those in the report. The second point under waste management is recycling systems. One of the issues here is that all our recycling systems that we have rolled out over the years to households are all based on good will. In practical terms, a local authority has very little powers to actually make you comply with that system. The end product of that is that we find that 50 to 60 per cent of the material that is in landfill bins, if you like, at household level is recyclable or compostable. At the moment, it is really about awareness and good will, but what has happened is that local authorities are obviously struggling financially, and the only thing that they can charge for in that waste system is the green waste collection due to previous legislation. So what we are now having now is either local authorities removing compostable green waste collections or charging householders for them. Now we are getting a distortion, almost like a negative distortion in the market, because we are charging for something that is beneficial and not charging for something that is landfill bin that is not beneficial. In this case study, I have looked at countries like Germany and Belgium where they have introduced direct variable charging. They have put a proportion of what is currently collected in council tax as a charge on to the recycling and waste collection, and it allows them to incentivise people to put things in the recycling bins rather than in the landfill bin. That seems like a very sensible thing to do to help councils invest, but it is a political challenge in changing that from council tax to a charging system. Those are the two things that I want to highlight in the waste management. The last one that I want to look at is land management. Again, a very strong pipeline coming up in the Parliament in terms of the work to change the current subsidy regime. There is a biodiversity strategy in the national environment act, which is planned as far as we are as well. I really want to highlight here that the main challenge here is that we are, in terms of agriculture, we are going to have to make agriculture a lot more environmentally friendly from a wildlife perspective and also a lot of agricultural land is going to have to be used to meet our forestry targets. There are a couple of examples that I have highlighted here from Sweden and Costa Rica, who have both been very successful in trying to change the way land management subsidies work to a positive way. For example, in Sweden, there are payments made for Wolverine and Wilinx on land that is being managed by people in a recognition that those predators are going to cause damage, but rather than paying for the damage that is caused, they actually pay for the amount of predators on the land, so changing that relationship in terms of a positive thing. Similarly, we have many countries now moving to camera trap technology, so if you get a predator or a beaver or something that is potentially not good for the farmer or the landowner, if it is witnessed in a camera trap, they get a payment every time that happens, so it is like positively encouraging them that you have this thing on your land. It is really beneficial to us all, and we want to make sure that you are paid for it. Moving away from a compensation culture, that is going to be important moving forward if we are going to increase the biodiversity across what is a huge amount of agricultural land in Scotland. The second thing is the ecosystem service payments that they have in Costa Rica. Costa Rica has been fantastically successful at restoring lost forest, and it recently won the earth shop prize for that. What they have done is moved to payments that are based on ecosystem services, so forestry recognising the carbon impact of the forestry, recognising the wildlife benefit, recognising the flood management benefit of forestry and other land management techniques. That sort of thing has to be incorporated, I suppose, in the new subsidy regime, if we are going to be successful at getting more forestry in the land and, again, seeing the benefits of some of the wildlife that we have. The last point that I was going to make here was that there is an interesting local tax option that I have covered, which is a proposal from the John Muir Trust, which is looking at a natural carbon land tax. The reason why I mention that is because it is something that could be done at a local level, perhaps through incorporation into business rates or something similar. It is meant to be a neutral tax. Basically, the idea is that people who have land that is producing a lot of carbon would compensate those who are not producing very much carbon and their land. It is kind of like, if you can imagine, an age-efficiency-label system that they have when you go and buy an appliance and you get an A to G rating and the money would flow from the G raters to the A raters, so there is no overall increase in the tax take. It is an interesting proposal, but I think that it is something that is worth considering within the subsidy review at the moment. The reason why I say that is because people historically always respond to a charge much more strongly than a subsidy. The subsidies are significant in the agricultural sector and they can change behaviour, but a charge can do the same. Last slide. I have taken all the data for a potential strategic approach from the research work and put it into what is a simplistic model with fiscal measures that I think are the most relevant ones. We would apply some principles. Some of those come from general taxation principles and principles around grants, etc., but also some that are tailored to the environmental aspect and then some constraints that we have to consider. That is something that is a starter for TEN in university challenge language. I think that there are areas in its infancy around the world, and I am sure that there will be lots of things developing across countries and in the EU over time. However, that is trying to get us to think in a way about how we can apply measures in the future. I will touch on three aspects. Under the fiscal measures that are listed there, there are carbon pricing mechanisms, and I have not mentioned that, but within the Government there is a carbon price put in projects and it is used in decision making. That is a key thing that the Scottish Government has the potential to change and it might influence some changes in which project options are selected over others. There is a strong argument in the saying that carbon prices at the moment in those things are too low. The second point that I wanted to make was on the principles. There is a bullet point there that is route mapped. I think that it is really important for anything that is done now that is a clear plan for the future, because we have such a short timeframe that people need to be able to invest. I think that the landfill tax was a really good example of that. We had an escalator that everyone could see where it was going over the next five or ten years, so they knew what they had to do. That is going to be really important for any environmental fiscal measures. The last point that I wanted to make was on constraints. Under there we have UK solutions as a bullet point. Effectively, there are lots of things in the pipeline where Scotland is going to have to work with the rest of the countries in the UK. The key lesson here is to get in early and shape it as much as possible for Scotland. The evidence from some of the producer's responsibility schemes that we have is that often they are tailored to population centres in the south of England. Getting in there early when we are working on a UK solution is going to be important to get something right for Scotland. That is me. I am happy to answer questions. I hope that that made sense and that it was a bit of a fly-through of a very complex subject. I thought that that was excellent, fascinating stuff. Thank you very much for that. I think that it has probably generated quite a lot of questions from members of the committee and the stimulated dollar thinking in terms of that. I am going to open with some questions and then we are going to go around the table, of course. I sat off on your last slide in terms of fiscal measures because you talked about carbon pricing mechanisms at Rootmart in UK solutions. I am going to mention devolved taxes and subsidies. It is really important that we take people with us on this journey. That is going to be one of the most difficult things to ensure that things are proportionate in your second principle. What we have to ensure is that you said yourself that behavioural change is goodwill that you talked about from the public. We need to be able to do that. It is about how we can marry those together in terms of—I talked about, for example, landfill taxes, how everything was set out over a number of years so that people could see the road to be travelled. Do you think that that is what the Scottish Government should try to do so that we have a 10-year programme involving all the issues that you have mentioned about how we can reach various milestones along the way? Where we think that changes should be made and at what time they should be made and by whom? I do believe that. I know that it is really challenging for Government and Parliament to achieve that because there are always changes in things. Of course, we do not know that we have just seen recent events in the past month or so. Things can change very rapidly out there. I will give one example. Going back to the case study and waste management, we have a situation where local authorities are sitting there and other waste management companies. At the moment, it is quite difficult for them to invest because there are so many things that decisions are waiting on. We have a deposit return scheme coming in, but we also have a number of reviews of producer responsibility schemes, which are basically a regulation with a fiscal measure attached. Those have been under review for a while. If you talk to a local authority manager in the waste area, they are like, I do not know where to put the money, I do not know where to invest because I am not quite sure what that is going to do. That is an example of creating some certainty. We have very short timescales for those targets, so I do believe that it is as ripmapped as possible. Is it really important if that answers the question? I think that it can be quite frustrating working for those decisions to be made, but if you are looking at something that is cross-cutting involving a host of Government departments, some team ministers, consultation and so on, trying to make sure that we do not end up with unintended consequences. Some people are being heavily penalised, such that they could go to business, for example, whereas other people perhaps are making a killing out of it. To try to get that balance, it is understandable that that would be the case, providing that we get the 10-year programme or whatever it would be right, although there would have to be checks and balances in that, because no doubt decisions will be made that will prove to be wrong in terms of delivery, because nothing ever works as one would hope, but in terms of constraints, you talked about UK solutions. You mentioned obviously the importance of working with the UK, and I think that everyone would agree that that is absolutely essential in terms of this huge issue. Obviously, we cannot always move at the pace of the slowest caravan, so do you think that the Scottish Government should look at things on two levels? One, what we can deliver as a Scottish Parliament, a Scottish Government in one sphere, if you like, and then another, where we can deliver with the co-operation of the UK? Is it possible? Do you feel that that can be done in a parallel track? I think that it can. Obviously, the Scottish Government and Parliament would be subject to things that they might not be aware of that the UK Government is on the way up, but I think that there is a parallel track there. I think that the challenge is coming back to sort of repurposing, as I mentioned, repurposing existing measures, is going to be easier because, from a Scottish perspective, the things that we already have are bringing in something new. In terms of the timing of this report, there are a lot of things that are a little bit unknown. The UK Markets Act is not really tested. The common frameworks are not really tested. We have a subsidies bill coming. In some ways, the timing of this is that some of the things are not very clear, but it looks like it is going to be quite challenging to introduce new individual things in a Scottish context, because there are so many things to be tested at a UK level. I think that there might be a parallel track looking at the whole thing and then seeing where you are going to work on a UK basis or where it makes sense to work on a UK basis and where Scotland needs to do something itself. One of the last points that I suppose I would make is that there is that trade-off between ambition and practicality and pragmatism, because often you might see Scotland's ambition on something and the environment being stronger than the UK. You might want to push ahead with something and then you see that the UK is going to do it, but maybe not as ambitiously. From a resource point of view, and all the resources that are required to make this happen—and I am thinking of internal and Government civil service agencies, et cetera—it does not make sense to say, well, we just have to be slightly less ambitious here and more ambitious somewhere else and accept that where we can work, this is going to be a more pragmatic solution. That is obviously a decision that the Scottish Government and the Scottish Parliament is going to have to make, but that is a bit of the trade-off, but I think that going back to the original point in the whole round, it is good to look at the two parallel areas. You talked about an overarching issue and the complexity of current fiscal measures. It is important that we ensure that the winners and losers do not win by too much or lose by too much again if we are going to take people with us. Sometimes that can slow down perhaps a pace of change. I know that John is keen to talk about carbon tax. I am not going to touch on that, but in terms of increasing percentage overall tax take, do you feel that, while shifting resources into more net zero solutions, that could only happen with increasing the amount of tax revenue that is available, or do you feel that it can be done within the current envelope, broadly speaking? If you look at one area of expenditure, which is the largest NHS, you might think, how do we make that more net zero without effectively shifting money from patient care to insulating buildings or whatever happens to be okay? You could have long-term savings, but in the short term, you still have to invest. How do you feel in a practical, pragmatic sense that that can be done, or do you feel that it is inevitable that the amount of money that the Government is going to have to spend overall will have to increase? In the report, I made the assumption that it is revenue neutral. Overall, the tax take will increase. I suppose that is an assumption that you could assume that the tax take is going to increase, but given what we have just been through with the pandemic, etc., that seems unlikely to support businesses and people. I have assumed that it would be a neutral thing. In that case, we have got some examples. The climate change levy is one where there is a levy, but there is also a compensatory mechanism related to national insurance to offset that levy. You could look at a situation in which you put that resource tax on something, but then reduce the tax somewhere else that matches in a compensatory term. That would be the way that I would see it working. I am hoping that there is no need to increase the tax take. I would prefer that we stimulate investment by others rather than the Government having to find all that investment. Particularly in one area of the land management, we have a lot of discussion around forestry and the fact that putting money into the forestry by the Scottish Government to meet targets is very important. However, there is also a lot of private investment in there that is looking for, in the short term anyway, carbon offsets for things that they cannot address with renewable energy just yet. You could see where you could pull in a lot of investment, which is not public money. I am hoping that there would not be a need to raise the overall tax envelope, if that makes sense. Even if there was to be an overall increase in tax take, there is still a potential for significant costs to be imposed on the public through laws, regulations or whatever you call it. For example, renewable heat being installed in people's houses. We have been told that that could cost up to £33 billion over the next eight years, which is a colossal amount of money per house. The money available for that is about £1.8 billion. How do we encourage people, even assuming that we had the heat engineers to deliver us in the eight years, which I am somewhat dubious about? How can we deliver some of those very admirable ideas in practical terms, both financially and indeed in terms of the people who are able on the ground to deliver them? I think that renewable heat is a challenging one, because there are so many things that are not just a fiscal measure that is the issue here. For people to introduce heat pumps, air-source heat pumps into their houses and replace oil or gas boilers, there is a major intervention in their property. They often have to put in retrofit insulation measures. It is a change in how the system operates. As you point out, we have the skills and the heating engineers and so on. There is an issue there that goes beyond the fiscal measures. However, in terms of the renewable heat, the key thing is that, from a revenue perspective, you have to make it stack up if you want uptake. If you look at the situation with air-source heat pumps, they produce three kilowatt-hours of energy from one kilowatt of electricity, for example. What you really need to have is a situation where, taking that into account, it is cheaper than oil and mainstream gas. That is what we see in Europe, where there is a one-to-three ratio. Your electricity might be three times as expensive as your gas, but because you are getting three times the amount of energy out of the heat pump, the magnifying effect might make sense for householders to move over to it. Here, we have a situation where the gap between the gas and electricity prices is just too high at the moment. Obviously, the geopolitical situation has just made that worse in recent months. There is an issue about ensuring that we do everything. A lot of those powers are at the UK Parliament level, but we do everything to ensure that the gap between electricity price and the low carbon option and the fossil fuel price used for heating is reduced to the level where those heat pump technologies make sense. From a householder perspective or a business perspective, you will look at it and say, if I put that technology in, there is initial cost, yes, there is disturbance, but I know that, over the next 10 years, it is going to be cheaper. I think that that is going to be a key issue to try to make it happen, because the amount of people putting those systems in their houses at the moment is way below what we need. That is one of the key factors. The last thing that I would touch upon is not to underestimate the expert advice and technical support that householders and businesses need. That is where, like energy savings, trust or other services become really important to help them to do that. It is a complicated area, and the fiscal measure is one part of it, but there are a lot of other bits that go with that, if that makes sense. You mentioned in your presentation countries ranging from Belgium, Sweden and Germany to Costa Rica and some of the excellent work that has been done in some of those countries. Do you feel that the Scottish and UK Governments should look at what is happening in those countries in greater detail and try to implement some of the measures that they are doing here rather than reinvent the wheel and come up with something new that may or may not work? Adapting successful measures elsewhere could save a lot of time and a lot of effort, if that can be done. I would agree that that is really important, because it comes back to this thing that I mentioned about the urgency. Trying to invent something new could be quite challenging as a timescale to meet the targets that we have in the coming up in less than 10 years. I know, for example, that when the deposit return scheme was being designed, there was a lot of work there looking at all the countries that have already been running one for decades. You could take that principle and apply it to a lot of those things, trying to learn from others. I would agree with that. Human scientific ingenuity should not be ruled out. In my constituency, there is a company called DSM, employing around 350 people. It has developed a feed additive called BOVA, which will reduce the amount of methane emissions from cattle from between 30 to 90 per cent depending on what type of cattle they are, whether they are dairy, beef or what their feed is. That would cost much less than retrofitting huge numbers of houses and could have quite a significant impact on the environment itself. There are a number of other areas that we can look at. There will be £100 million plus investment in that factory because that food additive will be marketed worldwide and has already had regulatory approval in the European Union. You talked about, for example, changing some of the subsidies for agriculture, so we could perhaps incentivise farmers to use this safe food additive to reduce methane rather than some of the more complex methods that are being considered. The adverb for DSM being over. I shall now open out to questions around the table with Liz to be followed by Ross. Thank you and good morning for what was, as the convener said, a very thought-provoking presentation. You mentioned at the start that there are two crises that we are dealing with, namely the biodiversity one and the climate change. Of course, we have now got a third crisis and that is what is happening in Ukraine. We are not standing at absolutely horrific scenes that we see hour by hour on our television screens. This crisis is going to have the effect of making us look very long and hard at the energy mix that we have longer term. How significant do you think that it is in terms of Governments having to apply a slightly more practical approach to this rather than what we would all like to do is drive to net zero? As Germany has found out very quickly, that is not going to be quite so easily accessible in the timescale that we originally thought because of the practicalities of this. Do you think that that is very significant? I do. I think that there are two aspects to that. One, it does give you a really strong incentive to create that energy security for yourself and a lot of that is going to come from renewables. There is no doubt about it simply because Scotland has such a huge supply of them. However, the impacts that we are feeling now and we are probably going to see potentially get worse over the next year or two. That does, in my mind, then your priority starts to come into making sure that you are going to have a challenging situation around fuel poverty, for example. You might have to take measures that address that and some of those might be pragmatic and recognise that we cannot change all the systems overnight. I would love it if everybody had a renewable heating system and solar panels on their property but we cannot do that overnight. Interestingly, we could probably accelerate some of those things in the solar panel area. Obviously, the feed-in tariff scheme that was mentioned in the report was withdrawn a few years ago. We have had a massive drop-off in solar panel installations. It only makes sense if you are building a new house or having a new roof roll and just a retrofit. There may be measures that you can do to accelerate on an emergency basis some higher take-up, but I think that you will have two things. You are going to have to push the renewable energy to realise that it could take years before you make a real difference. Obviously, you are going to have to take difficult measures in the short term to address things such as the sheer cost of heating and electricity. That is a real challenge. I very much agree with that. There are issues not just for consumers because there is no question that changing some of the systems in houses is going to be extremely expensive for the families involved, as in very expensive, way into the thousands if they are making that change. That is a huge issue for a lot of families. However, there is also an issue from the suppliers or producers' angle whereby at the moment, because of what has happened in Ukraine and likely to be quite long-term, there is an incentive, unfortunately, for people to continue using some of the less effective energy systems that we have had on climate change, because that is the easiest way to ensure that we have an energy mix. Do you foresee that that is a problem in terms of driving incentives on the renewable side? It is difficult to answer because I do not know what the measures would be, but I think that you can, to use that phrase, parallel track in a way, because you might have measures that are about stability to help people to get through the current situation. Getting through that current situation with reference to heat systems means maintaining your current heat system in an affordable way, which does not damage your health. However, at the same time, you could have really upped the ante on renewables and the investment going forward for the long-term. Do both of those things as best you can at the same time. Being somebody who is very invested in the green agenda, it is disheartening for me to think that we might have to take measures that are not going to be pushing completely all the renewable energy—it might be a case of stabilisation of what is there already. At the end of the day, that is going to have to happen. The price of energy affects everything, so we have not made that transition yet to a completely renewable energy system, so we are subject to all those things and we have to react. Does that answer your question? I think that this is a really serious issue. I am not sure that there is an answer just now, but I think that it is going to be a long-term problem. There will be an emphasis to use existing supplies of energy, which are not particularly environmentally friendly, for quite some time. As I said, European countries have already found that this is a bit of an issue because of the Ukrainian crisis. I will ask about another aspect of your work, particularly when it comes to the research. You were talking about landfill tax being a relatively good tax in the term that it has done what it was asked to do. It was seen to be effective and had the public on board. Is it the case that, when it comes to marginal cost pricing—in other words, you can see the extra cost of another one person using that service—is it the case that marginal cost pricing is more effective in getting the public to adhere to the behaviour change that they want than compared with something like average cost pricing, which tends to—I think that you cited the example of the John Muir Trust—I should declare the name to the member of the John Muir Trust—you cited an important part about a sort of cross-subsidisation that has its merit in totality, but it does not necessarily work in terms of those people who are having to pay the subsidy across to others. Is marginal cost pricing a better aspect to the fiscal levers that you think we need to apply? I always find it hard to grasp marginal cost pricing without a clear example of where it is applied, because it can look very different in different areas. I suppose that I have not got a clear answer on it, but I think that it could be a very useful tool, particularly in areas where there is a trigger point where, just like a slight change, might tip something the way that you want it and you do not have to put much effort and it does not have a big negative impact. I think that, from that perspective, it could work, but I would cover myself by saying that it really depends on the example of where you are applying it and what the way you are applying it. Just in terms of the dilemma, I think that what you mentioned earlier is that to get people to respond well—nobody likes paying taxes—to respond as well as they can, it is about a behaviour change aspect. People are more likely to come with you if they understand why the tax is necessary. Secondly, what is their role? How much extra are they going to be taxed on the margin? I am asking if that is a better means of ensuring that people come with you, because we need cultural change. I sat on the Environment, Climate Change Committee when the issue was being discussed a couple of years ago. That was very much our view at the time that you are not going to make much progress unless you get public buy-in to this. I think that that is essential. There has to be understanding and fair transparency and discussion about those things. That is challenging and, again, takes time, which again comes back to repurposing things. If you already have a whole lot of stakeholders involved in something that is a taxation measure and you say to them, we are going to tweak this, it is a lot easier than starting afresh of something new. You have already engaged in them and you have probably got resources, technical and civil service that are already working in that area. I think that that is true. It is a very good point about the engagement. Obviously, I think that people readily accepted something like the plastic single-use carry-back charge and they understand it. They readily accepted the price increase, because the other thing about the marginal issue around behavioural changes is that it can change people getting used to something and then you need to increase it, so you need to have that flexibility. However, I think that that is important. All the things that are mentioned here would all require quite a lot of engagement going forward. It is a massive exercise, but it has to be done, otherwise you are not going to bring people with you. Thank you for the presentation, Calum. It was interesting, in particular, in some of the comments that you made about procurement and the potential for positive reform. You referenced the agreement, the bute house agreement that underpins what the Government is currently doing. What the bute house agreement commits to in terms of conditionality around procurement for net zero purposes is that we are going to consult on businesses who are receiving a grant loan or equity funding of more than £1.5 million and, for major contracts, a condition for all that, for them to reduce Scote 1 and 2 greenhouse gas emissions at a level consistent with the 2045 targets, a requirement that they publish a carbon management plan and that they submit a copy of that plan to whichever Government body is providing them with that funding. As one of the folk who wrote that particular section of the agreement, I am hoping that, given your comments earlier, you can tell me that perhaps there are areas that we have missed, areas that we could build upon here. If you are one of the people who are consulting on that particular condition that we might put on public procurement, what more can we do to make that more effective? At the moment, it is essentially just a commitment to say that they will reduce their emissions and that they provide us with a plan on how they are going to do that. Is there more that we could be asking for there? The challenge is looking at how that system would work. I think that it is a good approach. The challenge is that, if you ask any organisation to produce a carbon plan, they will all produce something completely different, and they will probably get advice from different consultants and different views. Anything that you can do to make it as easy as possible, I would envisage—this is just my personal view, but I think that it is based on pragmatism—that when you first start this out, it is going to be quite simple. You might want to keep it quite simple, referencing the fact that the staff involved in assessing this and also the businesses are starting a journey. It is going to get more and more mainstream as time goes on, but in that initial phase you will have to have people looking at and assessing those carbon plans and assessing whether what the people that are blind for the grants are telling you the truth in terms of the targets and what looks realistic. I do not think that that should be underestimated in terms of the resource, but also the handholding for the businesses and the people that grant that is going to be really important. It is going to be really important for the Government as well. The more you spend on handholding, the more you will recover and save time in terms of assessing those plans and making sure that they are good ones, because you will have already helped the business or the organisation to get themselves right into the right place. I think that my general comment would be thinking about that, trying to get the right resources and support in place and trying to make it as simple as possible in the first stages. My view is that what you might be asking now in five years' time will be much more developed, but at this point you might have to keep it relatively simple and that might be challenging for green people who really want to see it progressing, but it will be challenging to ask those questions from businesses and make sure that they have the answers. I do not know if that answers your question in any way. No, that was really useful. I might in a separate capacity come back to you later on when the formal consultation on that starts to ask you to put that in writing. One of the other points that you made in the report that I was quite taken by was the comment that, particularly given the urgency of the climate emergency, that reform of existing levers of taxation is perhaps more attractive than the creation of new ones. I am interested in your thoughts on the potential for reform in a couple of areas. You might not have seen this last week that Fraser Vallander Institute published a report that was commissioned by the Government on the small business bonus scheme and its relative effectiveness. I am interested in, if you have any particular views on how mechanisms like the business bonus scheme could be reformed, or perhaps in other areas, given where we have more latitude for reform, something like council tax, so that there is the potential for significant reform or even replacement of the council tax in this session, or at least starting in this session, because it is complex and it would take a while to implement. Do you have any particular thoughts on the direction of travel, either in reforming something like the business bonus scheme, economic incentives like that, or local taxation like the council tax? I have to hold on my hand up and say within this work that I did not really look at council tax on what might come, but what I am aware of is that, in the past, when we have looked at the research, it has been when you have looked at tweaking council tax for something like a better performing house, for example, in terms of renewable energy or whatever. I do not know if it is a strong enough incentive. It might look good. You are going to get pay less tax, but does it really change behaviour? I would question that. I am not familiar with the small business bonus scheme, so I cannot comment on that, but I would say from a general perspective—I have not read the Fraser Allander report, but, from a general perspective, what you mentioned would apply, what we have just discussed on larger funding. Eventually, you would want that half a million to be smaller and smaller to the point where it is all the money going out the door. I hate to use the term tick a box, but it has to show that it is aligned with all the targets in 2045 and any biodiversity targets that come forward. The same applies to that. I suppose that, in terms of priority, you would look at where is the biggest expenditure and where is likely to be the biggest benefit coming back to the earlier point about marginal cost. You would choose which schemes to intervene in first to bring in that tick a box exercise, but business rates are a different thing. There already are quite a few incentives in business rates, so there are things for renewable energy. For example, you get a reduction if you have a deposit return machine and things like that. I think that, bearing in mind what I said about the John Wierd Trust initial proposal, there is probably more—you might get more responsiveness from the business rates side, but I have to say one of the people—I hesitate to say this because it is the negative phrase—that I spoke to in this study to get information said that business rates are a dying tax because of all the changes that are happening in society as a whole. I still think that business rates offer the opportunity to have a more clear incentive and it is likely possibly—this is my personal opinion—to be more taken up than a household or council tax. I have not answered the question properly there, but I hope that that is the answer. No, that was useful and, to be fair, the small business bonus scheme report that only came out last week came out quite quietly, so I was not necessarily expecting you to have noticed it. Just one final question. You were relatively critical in a way that I would agree with of the forestry grant scheme in that it focuses on economic benefit that comes from commercial forestry, so it is essentially a monoculture that certainly is not contributing towards restoration of biodiversity and tackling the nature emergency. What kind of reform would you be looking at in an area like forestry grants? What would look like a successful version of that scheme if the overarching objectives are tackling the climate and nature emergencies? From a very simple perspective, it would be the proportion of the forestry that was funded from public that a significant proportion of it would be native species planting from a simple perspective. There is a lot more complexity within that in terms of riparian woodlands and woodland planting around rivers, et cetera, that we have lost. There is a lot of subtlety there. I think that where the Costa Rica ecosystem service payments come in, we probably want to look at if you have planted sickus bruce, there is a way of, if that is going to be a commercial crop, there are things you can do around that to get more benefit out of it. I think that is where some of the subtleties of the subsidies are. It is quite challenging to put a lot of those complexities into a scheme, so it has to be maintained really simple. The key measure would be if you just looked at the amount of native trees planted, if you were looking for a key indicator. That would be the simplest one, so that hectare age, whether it is 18,000 hectares a year, if you increased that to half of it being native planting, you realise that you are doing the right thing. You might want to include in there some other measure as well that was looking at where you have planted commercial forestry, what measures have you put in there to mitigate some of the damage. Keeping it simple, that is what I would look for. One of the concerns that I have around the environmental fiscal measures is a potential disproportionate effect on some of our rural communities. I am thinking of private transport, a great of reliance on it and even public transport. It has probably got a larger carbon footprint than somewhere in the central belt. I am thinking of things like ferries, for example, or mainly all diesel. Some of the high-speed trains that we depend on outwith the central belt are diesel as well and air as well for some of our island communities. How do we make sure that anything that we introduce does not hit them disproportionately? I think that that comes back to one of the principles that I put in my start-of-a-ten strategic approach. Something has got to be proportionate, but I also think that within that you need to look at the winners and losers. If you have got some losers, how can you mitigate that impact? Anything that needs to be designed going back to that engagement piece needs to consider not just people living in the central belt but rural communities and the fact that they are more likely to be on oil heating, for example. They are more likely to have properties that perhaps need more insulation or, more importantly, more bespoke solutions. We are very good at rolling out programmes that are very basic in design, just like loft insulation and cavity wall. When you come to hard-to-treat houses, it is a completely different situation. We probably need some more technical skills. Governments are not used to that in terms of, like a very simple programme to roll out, but it might be quite challenging. Thinking about those things and the impact if it is about transport, how is that impact going to translate in rural communities and can there be some compensating mechanisms? One of the things that I have mentioned is that, in relation to electrification of transport, you might want to look at how you can help rural communities with that electrification process, which might be more fast chargers on rural roads, which is what has been done in Norway. If you want people on to electric cars because they are cheaper than the rising fuel prices that we have, one of the barriers is range and you can do those measures. It might be a mixture of design engagement around the fiscal measures that you are doing and thinking about some of the mitigations and the proportionality and then maybe some other factors that are not fiscal measures at all, but that will help. I think that is the way that I would look at it from the research that I have done. I guess that we have to make sure that they are not disproportionately impacted. Another thing that I want to pick up on is that you mentioned energy from waste, and maybe it was not in such a good place as it was previously thought. Would that be correct in what you were saying there? I am just trying to think if that is the case, is there a review taking place on energy from waste? Should there be now a moratorium put in place until we have evaluated it more? My understanding is that there is a commitment to a review by the Scottish Government. I cannot remember whether that is part of the partnership agreement between the S&P and the Greens or whether it is within the climate change plan. Sorry, I cannot remember where that is stated. However, there is a review, and yes, what has happened over time—we have within the EU and the UK a policy that was landfill is the worst in terms of climate change emissions because of the methane release from things rotting in landfill, and energy from waste was the better solution, although, obviously, we really want recycling and reuse. However, that has changed because of the composition of waste, so, as we have got better, I suppose that you could say that we should have anticipated this 10 years ago, but as we have got better at pulling out waste material, particularly food and paper and card, which are the materials that rot in the landfill, the methane emissions in the landfill are dropping, whereas what we are ending up with energy from waste is a lot of fossil fuel-based energy from all the plastics that are being burnt. That is where the change is happening, so, effectively, you have got a report from Zero Waste Scotland that has highlighted that energy from waste is actually now quite high-carbon technology, and putting it on the electricity grid is one of the higher carbon technologies as well, so that is an issue. I suppose that, in terms of what you do about it, you have to take a measured approach and plan, because there is a lot of investment required in everything, but I think that, even as it is happening in the European Union, people are aware of it and they realise that they are going to have to take some action. The industry is starting to see that the energy from waste might have a limited time horizon given the situation. I guess that it would be better if we managed to get all the plastics out of that and put them into recycling targets. That would make energy from waste better for the environment. I would agree with that. Obviously, the more you get out, the less feedstock there is for the energy from waste industry, so that is an issue. Also, the other thing is that, from energy from waste, the best performance tends to be from heat-only plants, rather than generating electricity, because conversion to electricity reduces efficiency, so that the overall carbon impact rises. You would also want to look at not only the feedstock going into energy from waste plants, but you want to look at the technology and what that plant was doing. If it is distributing to a heating network, then it has generally a far better profile from carbon emissions than it would be if it was generating electricity only. Thank you very much for that. The other question that I had was about TVL. In your report, you called it environment tourism tax. I have been a counsellor for the last five years and it has been a difficult sell to many in the hospitality industry. When we mentioned TVL, one of the ways around that is that all money raised would be re-invested back into tourism to try and grow the industry. However, that seems to be a change to that, but it has changed from a carrot into a stick. Would that be fair? I do not think so. I think that it is still a carrot. It is what I would call a hypothecated tax. I suppose that what I am suggesting is that if you want it to be accepted by visitors and you want it to be accepted by locals, the money has to be reinvested locally. The two examples that I gave in there are where they have really focused on the environmental aspect. You can get that reinvestment locally, but it might be reinvestment that helps some of the tourist attractions to reduce their emissions or to help to restore some of the damage to the countryside or to enhance biodiversity for the tourists. Trying to focus on an environmental benefit seems to work really well in the Balearic Islands and Barcelona, where the main focus is on that. I think that definition is what is an environment. What do you mean by that? It can mean anything from improving the road infrastructure to planting trees. I make the point that if you are going to reinvest it, it needs to be clear what it is. When those schemes were started, I referenced the broad definition, but we could probably be very specific about whether we are going to reinvest it here. I think that that could potentially get by in that. However, I make the point that we have very high VAT charges here, which could make something like that not viable, so I think that that needs to be considered. It could severely impact the tourism industry as well, so there are negative impacts to that. I should say that, apart from ferries being designed to be hybrid, the smaller ferries are now being designed so that, because a ferry can last upwards of 25 years to be retrofitted—for example, they may be fitted with hybrid power systems now, but in five years they could switch to electric or 10 years hydrogen or whatever, so that is now the design that is being built into the design of those ferries, not just buses and cars and trains that we have to make more environmentally friendly. John, to be followed by Michelle. Thank you very much, convener, and thanks for the input so far. It has been really interesting. One of your conclusions seemed to be that we could do with an overarching simplified carbon tax, if I have the phrase correct. You have already said that it would have to be a UK level, but I suppose that we are interested in that as well, and we can encourage the UK Government to do certain things. Is that what you just said? It is VAT and everything, but it is 5 per cent here, 10 per cent here and 20 per cent over here. Is that the idea of a carbon tax? I think that the idea is to create transparency, so you might have, however it is kind of administered, you might have something where the carbon tax is x per cent on diesel or petrol and then it is x per cent on heating oil or whatever, depending on what the actual carbon impact is, but it is not as simple as that. Everyone thinks that carbon tax is a silver billet because it provides a transparency to businesses and you and I to see that I am getting charged this much. It could be similar to that. You look at your receipt and you have a carbon tax and you have VAT or anything out of the law charges, but it is likely to have quite a detrimental impact on low income, so you have to be really careful about that. The general view from the literature out there is that you would have to put in place some mitigations for that carbon tax because you might find that potentially people, for example, on heating oil, suddenly find that they have a much higher charge on their heating and affecting rural communities or those that are in properties where they do not have a lot of income, so you have to be careful. It is not the silver billet, it is the one tax to rule them all in some ways, but it would have to have some mitigations as well, but you could see it applied in different rates and that is the whole point of it. You would look at a flight and you would see a charge and you would go, oh my gosh, that is quite high, but that is because the impact of that flight is much higher than taking a train. To your point, I think that it is page 37 of your report where you say that low-income households will spend a higher percentage of their income on high-mission activities, so that is a challenge. Would landfill tax then be renamed as carbon tax and single-use bags? Would we call them all carbon tax? Is that a big idea? That is one approach that you could take because you could start to change the names of things and if you were trying to make them more consistent, but you might find that there are other reasons. For example, you might try to get the consistency in the carbon, for example, in the carbon tax, even on a single-use carrier bag charge. You could try to do the same, but that does not mean to say that they would all end up being priced in carbon because there are other factors to consider in that mix, so you might say, well, the landfill tax is carbon, but we have also got to consider the impacts on local communities and some other things. The charge might be much higher than the carbon charge alone. Similarly, you might look at the single-use carrier bag charge or, say, if you introduced the charge on coffee cups, and you might say, well, the carbon charge should be really five pence, but that is not going to make anyone change behaviour, so we need to change it to 20 pence. It is going to be something that could create more consistency, but it does not mean to say that everything is going to be priced exactly the same because there will be other factors. That would be my personal view. That leads me on because you said that they are changing behaviour. I think that that was one of your points. I was looking at page 23 where you have single-use carrier bags and Scottish landfill tax, both there. I think that I am right in suggesting that you are saying that because the individual, or whoever, is paying 5p or 10p for a bag, that directly changes my behaviour. Scottish landfill tax does not quite work that way, does it? I do not pay for the damage that I am doing vaguely. The council has to pay a bit more, they might change my council tax, but it does not impact on me at all. Yes, and that is a challenge. I have suggested some minor things that we can do in here. Again, I would come back to the point about carbon tax versus emissions trading schemes. Because emissions trading schemes are firmly in the background, you would not know what a business is paying in terms of allowances. You would just see the price so that it would not be transparent. What I have suggested in the report is that what we have is producer responsibility schemes, which businesses are made responsible for the product or the waste at the end of their life generally. If you are somebody who has, for example, a waste electronic equipment like a computer, if you make that computer, then you have to help at the end of its life with the recycling or the capture of that material. What I am suggesting in here is the way to engage the public, because they are not aware of that scheme in the background, if we have more deposits on things. The obvious example is small waste electronic equipment, which is an electric toothbrush, which often ends up in landfill, because people do not know what to do with it. They are not going to drive their recycling centre to place it in a container like they would a washing machine. Maybe that is an area where you have a deposit, so people are incentivised. I will take that back and I will get my £2 or my £5 back. It is a deposit rather than an extra charge. That would certainly work on batteries, which is being discussed at the European level, because we are not collecting all the batteries that we should. However, if consumers saw that deposit, it would create a value for them like it is on drinks containers. Suddenly, that changes the whole behaviour. That is the way of bringing those things to engage businesses and people into the foreground. There are probably other ways, but that is a simple one that we could do. No, I think that you are right. I think that there is a lack of information, but I do not know where to put my old electric razor or whatever it is. Frankly, some of the recycling sites in Glasgow have deteriorated. There used to be somewhere for electrical items, but now I cannot find it. The other issue that you have raised is that there seems to be quite keen in the hypothesisation that the money goes—I get it for the tourist tax, as Douglas Lumsden was asking—but the single-use carrier bag, in a sense, does not matter where the money goes. The point is that I do not want to spend five pence. Some of the businesses, I think that most of them are giving it to charity and I do not know who the charities are, but anyway. Is it really important? If we could make money off a carrier bag or returning cups or whatever it is and put it into the NHS, is that not equally good? You could do that. Obviously, there was a lot of discussion at the time that the single-use carrier bag charge came in and maybe if there is a similar charge on coffee cups it will be the same, but I think that the simplicity of doing it without getting you involved. If you say that you went to the single-use carrier bags, the money goes back to the retailer and, as you say, they are encouraged to put the money to charity. That is nice and simple, and then the Government, apart from policing the scheme, does not really have to get involved. I was working for a local authority the first time we looked at single-use carrier bag charges and the Government was trying to find a way to get the money back into the public exchange checker, if you like, and it was so complex and eventually they gave up. I think that there is a place for things like that, but there is also a place for just saying, let the retailer keep the money, we will encourage them to do the right thing. However, we are trying to get the behaviour change, and that is the key thing. It might take you five years longer to get the charge in where you get a bit of revenue, whereas you can get it in really quickly. In some ways, the minimum price is an easy thing to do, and retailers or businesses are going to complain less if they are not having to give the Scottish Government money, and they just keep it themselves. Sometimes there is cost for them, so it makes sense. Does that answer your question? No, that is fine. There is just so much in that. We could all be here asking questions for an hour, which presumably the convener does not want. Because another biggie that we have not really looked at too much this morning—you have talked about tax being neutral and your ideas—is that we maybe could take a bit off income tax or something and put it on somewhere else or council tax and waste and so on. A big one—you mentioned this in your report—is fuel duty and the fact that so much of our petrol costs when we fill up our cars go to the Government. Can you say a little more about where you think we can go with that? If we are giving all those incentives to electric cars and they do not pay so much road tax and they do not pay this and do not pay that, I think that you are even suggesting that you should get cheaper parking and things. How do we compensate for that? What is going to happen? I think that that is a big issue for the UK Government because I have forgotten the actual numbers. We are talking billions of revenue that would be lost. The question is what happens in that now. The obvious thing is that once everybody has electric cars, they could start taxing. In terms of the annual tax that you pay duty on the car, they could just increase that whereas moment is very cheap for electric cars. In terms of the lost fuel revenue, the consensus has been that that would get replaced with road pricing. If you had asked me a few years ago, I would have thought that I just cannot see that happening because it is so complex, but technology has moved on. You are seeing what is happening in London with them pioneering some of the changes in terms of charging in the congestion zone in London. If London manages to do those things and it becomes more electronic in everything, you could see road pricing coming forward. If I was the UK Government, I would be sitting there, and I am going to gradually lose billions of pounds. I need to do something. Road pricing looks the most obvious to me from the research work that I have done. I know that it is not popular and there are lots of issues around it, but looking at it pragmatically, it looks like the most likely option. Australia has had that for some 20 years. You drive along a motorway and you have an electric chip in your car. You do not have to stop at any toll bus or anything. You drive along and as you pass every five kilometres, it is almost like being in a taxi in a metre tick-over. If it has been doing it for 20 years, there is no reason why it cannot be done here all over. As you said, it will be very popular and it would have to be met with reductions probably in other motor-related tax. One of the things about road taxes is that it is not all spent on the roads. That just goes into general taxation. I think that you have done a great job in your report, particularly restricting it to only 90 pages, such as the complexity of the area. We have got this backdrop, which I will also look to the UK Parliament report from the Public Accounts Committee. It makes it clear that we have a plan—the UK Government has a plan without answering the key questions—of how it will fund transition to net zero, including how it will deliver policy on replacing income from taxes such as fuel duty, or even a general direction of travel on levies and taxation, which really nails it. When I went and read your report, the principles that you set out a few could disagree with them, but it immediately struck me that there must be areas where, if you adhere to one principle, you are actually going to be moving against another principle. Are there any particular areas that you would want to bring out that has not been brought out thus far—some of the examples that you have already given—and it is around complexity? I think that it would be useful to have some more examples of that, because I would not in any way underestimate the complexity of what we have got to try to do. It is a challenge. I did say that coming to a strategic approach in this is really a starter for 10 using university challenge language. The principles that are meant to be balanced are not a scientific answer, and I think that some of the questions from the committee have drawn that out. What about rural properties, what about ferries, what about—so you could take a scientific approach to the principles, but at the end of the day it is about finding the right balance for something. The one thing that I would say is that I think that the overall whole-government approach is so important, and a lot of the—perhaps if that goes forward—in terms of the whole government applying the same principles for biodiversity and climate change and all the money that it spends, you are less likely to get conflicts than some of those principles because everything is going in the right direction. The other thing that I would probably pull out, apart from the route map that I mentioned, is the holistic policy package. It is really important. Again, it has come up in terms of heating and everything. The fiscal measures often in an area, especially where the Scottish Government does not have full control, are only really one piece of the jigsaw, and it is trying to look at that wider thing. You might look at a fiscal measure and you might say, actually, we would be better just banning that. Often, Governments do not like to ban things because it is not very popular, but it might be that you go, well, actually a fiscal measure here might not work, so maybe we actually have to look at a whole package of other support or do a fiscal measure with a whole lot of other support. I think that that is the other thing that I would draw out. Because I have not worked through to see where there might be some obvious conflicts, I am hoping that there will not be, but I am sure that they will come up when there will be particular niche interests or things that we have not been considered when you look at any particular area of the Scottish Parliament's competence. Supposedly, following on from that, you have looked to other countries and you have put them in your report and so on, but as you again highlight part of the complexity is around the process of fiscal transfers, which is particularly complex for the Scottish Parliament. Within your thinking, did you consider other states where there is a similar model of fiscal transfers? I did not get an opportunity in that research to do that. I saw some of the individual measures that we are doing in each area, but I did not have an overall approach to look at which countries are doing a transfer better than others. That is something that is definitely worth looking at. I suppose that what did come up is that, in the general perspective, about the proportion of resource tax, which is an environmental taxation and the taxation bracket, rather than the grants and subsidies bracket, is only 6 to 7 per cent for the EU 27. When you look at that graph, you can see that it is actually maybe not going in the right direction. You could say that no-one is yet showing a sign of good transition, but I did not look at it specifically, so I may have missed something. That is maybe something for the future, maybe the Parliament wants to consider. I could ask a multitude of questions like everyone else, but we would genuinely be here all day. You could ask another one, if you like. Okay, right, since I have been invited. You do allude to some of the potential limitations introduced by the UK Internal Market Act and the subsidy control bill. Obviously, it has been refused in the LCM by the Scottish Parliament and the economy committee, which has written quite stringently about it. Are there any other particular areas that you would want to bring out here? I suppose that it is a timing element. As initiatives may be attempted to be introduced by the Scottish Government, they might fall foul of the subsidy control bill when they are trying to do the right thing for the right reasons within a very restricted framework. In your report, you make commentary about it, but you do not choose to give specific examples. Are there any examples that you would like to bring out here? In my mind, yes, there is probably a couple of points. I am not saying that they are the largest or more significant, but I was thinking about the common frameworks that are developing. I think that around waste-related things that we have discussed today, I am hopeful, but I think that there has always been quite a strong framework of competence for the Scottish Parliament and the Scottish Government around waste and circular economy. I think that there is potential in those common agreements for still to have some leeway. That might make the comment that the energy from waste, if you bring in an energy from waste tax of some kind, might be through that mechanism. If the others have not, other countries have not already done it in the UK. There are two other comments that I would make. One is that I am concerned about what it means from minimum prices. I think that we have shown with the single-use carrier charge that minimum prices can be a really useful little tool to change behaviour in particular areas. I would like to see the Scottish Parliament having that in its toolbox for a number of things. That probably extends to putting deposits on particular waste streams that we want to address in a different way. Looking at it in this early stage, it looks like that would be a problem, so we might lose that ability, which would be a shame. The third thing that I would say is on the subsidies bill. When I looked at that, my concern was about agricultural subsidies, which is so significant to the Scottish economy. When I read the bill and I am not a lawyer, it did not look very focused on that. It looked more focused on, and I may be completely wrong, and it may change. It looked more focused on funding businesses through state aid and so on, in terms of manufacturing and other businesses rather than agriculture. I was hopeful that that aligned with the fact that, in England, they are moving in the same direction as some of the things that I have mentioned about where agricultural subsidies need to go. I am hoping that there will be no barriers to the changes in the agricultural subsidies for Scotland Parliament. Those are the minimum prices for the agricultural subsidies, and I have forgotten what I said first. Those are the three things that sprung into my mind, but, as I went through this, it is not that they have a particular significance, but those are the points that came into my head. For the record, I can point out that the Scottish Government is recommending the refusal of an LCM run that is yet being passed. Thank you for that, Michelle. That is a concluded question for the committee. I have two wee things for me. One of my great concerns is biodiversity. For example, I read in the last couple of weeks in The Economist that excluding our seas, 96 per cent of the biomass of all vertebit creatures on earth is either human or the livestock that we raise to feed us. For example, 70 per cent of all bird life on the planet is poultry. You touched on some of the measures that have been done in Sweden with regard to the Iberian links, which were on the verge of extinction. There is a lot of work being done there to try to restore it. What more can we do in terms of biodiversity? You spoke about tree plantations, for example, perhaps up to half being native woodland. We have done a lot in Scotland since the First World War, when tree cover was 92 per cent. We are up now back to about 17-18 per cent, not quite Japan, which is 73 per cent and has been over the centuries. They have never denuded their forests at all. What more can we do to try and restore the biodiversity that has halved worldwide since the 1970s? I think that agricultural subsidies are important here in getting it right. Obviously, we are a very forest-degraded country to what was originally there. Getting back the native forestry, when you plant a native forest, it does not create magically an ecosystem, but then it comes through time. Having more of a mosaic of our landscape, where there is more of that native forestry, is going to be really important. Any incentives that we can do to do that, whether they be through the agricultural forestry payment system or even encouraging investment and offsets. Under the woodland carbon code, that is a really good mechanism that provides some certainty about what climate change benefit you are getting for businesses that want to invest in offsets and things, but it is a good way of with some safeguards of getting more forestry. That more of native forestry is going to be key. I think that the other area that I touched on was the persecution of animals. If we can do something in fiscal measures that changes that concept that many people have, particularly in agriculture where things are viewed as pests, if we can turn that around so that some of that wildlife is seen as positive, because there is a payment involved, that is why I included it. Obviously, we are seeing some fantastic reintroductions in terms of the sea eagle, the red kite and the beaver, but then we have some huge challenges of persecution of those because of some of the damage that they do. It would be good to find a way of turning that around in our own behaviour and thinking that it is a positive thing that I get paid for being here. Those are the two things that come into mind. I suppose that one thing that did not come out too strongly was peatland. Obviously, we still have a huge peatland resource and there is a peatland code as well. I think that trying to encourage that in some way in providing a framework, it may not be a fiscal measure, it may just be providing a framework for investment. I think that it is going to be important as well to maintain that by diversity. Those are the things. That is all terrestrial. I did not go into detail on marine. Obviously, I mentioned some of the fishery payments, but I did not go into the marine area, so that is in reference really to the terrestrial wildlife. I will stick to land. We have no take zone. The only Scotland has only no take zone on constituency, so I think that there is a lot more we can do on that. In terms of land, what you have said is that we would be great for helping to extend the number of squirrels in pine mountains, birds etc. Ultimately, what about reintroducing apex predators? Obviously, wolves died out in Scotland in the 17th to 18th century, bears probably 1,000 years earlier. Minnesota has reintroduced wolves, which was ferociously opposed for understandable reasons by farmers and people who brought up one little red riding here, etc, who thought that wolves would have a severe impact on human populations, which they do not. Are those things going to be palatable in the decades ahead? I do not think, but perhaps we are ready for them quite yet. Are those things that you are seeing mean that the red deer population in Scotland is now so high because of the lack of predation that there is an argument there for introducing a predator that would perhaps reduce the numbers to avoid culling and indeed the destruction of the trees that we have just been talking about? I can cut, and obviously it is not really a fiscal measure, but I can say that all likelihood from my experience is that, yes, it would be very official to get those predators. I think that they will come. I think that members of the committee may know that probably the most likely one is the lynx first. Obviously, there is a lot of controversy around wolves. Some of the payment systems that I have mentioned in here could certainly be beneficial. Obviously, lynx is not a main, although it is an apex predator, it is not a main predator red deer, more a road deer, but there has been a lot of groundwork done around the introduction of the lynx. For me, looking at a personal perspective and as a rewilding enthusiast, I would say that it looks the most likely of the apex predators to come first. Wolves are incredibly challenging for the reasons that you have said, but I think that we have some really good news from some of the innovative stuff that they are doing in America and in buffer zones as well around areas where they have apex predators such as puma and lynx, camera traps and someone who is on a farm next door who gets astray lynx and then they get a payment from coming on to their land. Not only that, they come back to what I was mentioning earlier about the supporting measures. They have all been supported in thinking differently about how they manage sheep and livestock and bringing back in what was more traditional things like dogs that apex predators are scared of. That is a thing that is now developing as an industry in its own in America, some of the large breeds of dogs that have traditionally guarded flocks and getting support for farmers to have those as well as the camera traps. There is a range of measures there, but I think that the appetite is there now. I think that more and more people are talking about it, and as awareness of biodiversity and ecological restoration grows, I think that there will be more interest and maybe more support for things like that. That is, obviously, my personal view, some of the things that are not quite related to fiscal measures. Fiscal measures have to be used to actually do this. It will not happen without significant fiscal measures, so I think that there is an important fiscal issue for us. If farmers are not incentivised, they just wouldn't do it. It's as simple as that. Thank you very much. I thank you for your evidence. I think that we all really appreciated your time this morning and your answering of questions into your excellent report. With that, we shall now call a five minute break. I will say to you that your report will set line from the committee's approach to examining the finances of net zero and beyond, and we will look at that again at a future meeting. That has also concluded our public part of the meetings as well as having a break. We will go into private session at 11.30.