Prosperity for All: A Low Carbon Wales

1. A pioneering geothermal scheme is exemplified by the hosting of the in Caerau, utilising groundwater FREEDOM (Flexible Residential Energy in former mine shafts in the Llynfi Efficiency Demand Optimisation Valley along with heat pump and Management) project, a hybrid technology, providing heat to the scheme sponsored by PassivSystems, Caerau Community, supported by Wales & West Utilities and Western Welsh Government’s Smart Living Power Distribution. programme; and

2. Bridgend town centre district Policy 21 - Provide continued heating scheme involving public support to identify, develop and and civic buildings, leisure centre invest in district heat systems. and some residential, supported by the Welsh Government Energy Service. Prosperity for All: A Low Carbon Wales 57 Public Sector Procurement of spend and identifying the high emitting categories for carbon reduction. Public sector procurement plays an important role in reducing CO2 emissions The next tranche of work will see further through its supply chains. As well as analysis of these high emitting categories ensuring its buildings and vehicle fleets and the provision of expert advice to help are efficient, the public sector must also identify interventions, advise on usage take steps to reduce emissions more reduction, buying different or less carbon widely through its procurement of goods, intensive products and services. . works and services. The systems in place within public bodies must act to prompt In addition, tools have been developed for the question ‘are we doing all we can use in National Procurement Services Food to reduce carbon emissions through our Frameworks. These include tools to: procurement of goods and services? ›› measure and track the suppliers’ carbon Welsh Government’s Value Wales team footprint through the lifetime of the is responsible for ensuring positive socio- framework agreement; and economic, environmental and cultural ›› measure the carbon emissions outcomes are achieved through public associated with transport within the procurement in Wales. This is being Community Benefits Measurement Tool done by developing procurement policy, building procurement capability and Consideration is now being given to helping support authorities with legislative developing a carbon planning tool for compliance e.g. with public procurement use at the start of a procurement to help regulations and our Well-being Act. inform high level decision making around the low carbon sourcing of goods, works As part of its decarbonisation work, Value and services. Wales has adopted the approach taken by Natural Resource Wales’ Carbon Positive The work carried out so far will help Project and taken it further to develop a inform development of a ‘Decarbonisation Decarbonisation Dashboard for the Welsh through Procurement’ toolkit in due public sector. This has enabled Value Wales course, which will comprise guidance, to view the carbon emissions associated training and tools for public sector bodies with the £6bn public sector spend in to utilise. The focus of this work will be to Wales, using ‘’carbon ratings’ for each provide the wider public sector with the category. This has resulted in us estimating tools, skills and confidence to positively baseline CO2 emissions for all categories impact their carbon footprint and in doing Prosperity for All: A Low Carbon Wales 58 so contribute towards meeting the goals about what we expect, in terms of and ambitions set out by the Well-being decarbonisation from the goods Act and the Environment Wales Act. and services we procure, will send important signals and enable the Policy 22 - Value Wales to promote Welsh supply chain to develop lower and encourage carbon reduction carbon goods and services through procurement to support Welsh Government’s Prosperity for All: A Low Carbon Wales. Case Study 4 – NHS Wales and Using Procurement to reduce Proposal 3 - Development of a environmental impact Decarbonisation Dashboard to NHS Wales Shared Services baseline emissions across the Welsh Partnership has adopted a range public sector and identify high of environmental sustainability priority categories for intervention objectives: / carbon reduction supported by new guidance and a carbon measurement 1. to achieve a 3% year-on-year tool, enabling public bodies to embed reduction of carbon emissions low carbon approaches through generated at sites; procurement and measure progress. 2. to identify opportunities by introducing a system for staff Well-being Goal Spotlight – to identify suggestions for Prosperous Wales improvement; Welsh Government has announced 3. to minimise waste working Towards that it will work with stakeholders Zero Waste Strategy; to develop a new procurement strategy, which clarifies the future 4. to comply with the Well-being of operating model and enables the full Future Generations Act (Wales) 2015 value of procurement to be realised and the Sustainable Development nationally, regionally and locally38. Principle; and Our aim is to maximise procurement 5. to support Welsh Government’s spend in Wales while also using the ‘Wales Procurement Policy £6bn annual procurement spend to Statement’, utilising Sustainability support sustainable jobs and growth; Risk Assessments for all relevant decarbonisation, fair work and procurement frameworks in excess of employment practices; infrastructure £25,000 and applying a ‘Community and construction investment; use Benefits’ approach to all relevant of public assets and improve the procurement. resilience of local businesses and their communities. Being clear 38 https://gov.wales/written-statement-review-national-procurement-service-and-value-wales-commencement-order Prosperity for All: A Low Carbon Wales 59 Undertaking a Sustainable Risk ›› a lack of understanding of which areas Assessment (SRA) is designed to of fleet might be suitable to move to identify opportunities in the supply low emission vehicles. chain to address environmental, However, the cost of ULEVs in the small social and economic impacts as a vehicle sector is reducing and whole- consequence of the services and life costs for EV fleets are currently goods delivered to NHS Wales. The comparable to or approaching that output of the SRA supports and of internal combustion engines. NRW stimulates innovation, providing conducted a strategic fleet carbon review, sustainable solutions and reducing which identified opportunities to reduce the consumption of resources. diesel reliance and associated emissions, It does this by working with and whilst providing value for money. The encouraging the supply chain to review concluded NRW could save up work to lower the environmental to 27% emissions from their fleet and impacts of relevant activities such deliver a 5% cost saving through the use as production processes and of existing low emission technologies. materials, packaging and transport Whilst not all of NRW’s fleet use is suitable and recyclability. for current ULEV use, they calculated that replacing 56% of it with electric vehicles could save £136,000 and 413 tonnes of Public Sector Fleet CO2e per year. Penetration of ULEVs in the public sector We need the public sector to take a is low and patchy, but increasing. The low proactive approach to considering and take-up is due to a combination of: implementing opportunities to reduce ›› cost; emissions from their transport activities. This action would focus on scope 1 ›› a lack of available charging emissions (vehicles owned by the public infrastructure – the UKCCC has sector body). estimated nearly 29,000 charging points are required across Great Britain to meet 2030 charging needs39; and 39 https://www.theccc.org.uk/wp-content/uploads/2018/01/Plugging-the-gap-Assessment-of-future-demand-for-Britains-EV-public-charging-network.pdf Prosperity for All: A Low Carbon Wales 60 Case Study 5 – Swansea City Council adequate, given vehicles largely and Ultra Low Emission Vehicles return to depots at the end of the Swansea Council is at the forefront day and has avoided the cost of fast in the adoption of ULEVs in Wales. or rapid chargers. Further analysis Air quality in Swansea, like most has shown most council sites have urban areas, is a concern, with the ability to accommodate slow the Council fleet of 800 vehicles chargers. Furthermore the approach from small cars to 32 tonne trucks to procurement has delivered contributing to the problem. financial benefits. The electric vans Swansea has been reducing the are expected to cost 5% less than impact of its fleet for some time. their diesel equivalents. Whilst Over a decade ago the Council Swansea Council are continuing to secured 125 LPG vans and installed learn lessons, overall, the 40 new a refuelling station and converted electric vans are deemed to be a 35 small tippers to hybrid vehicles. great success. Then in 2012, the Council took delivery of 10 fully electric vehicles. This approach enabled the Council Proposal 4 - All new cars and light to learn early lessons, which were goods vehicles in the Public Sector supplemented by detailed analysis of fleet are ultra low emission by 2025 and where practicably possible, all heavy goods are ultra low emission fleet use, utilising telematics, dash by 2030 mounted driver monitoring and route optimisation. Public Sector Buildings Armed with this knowledge, From April 2017, the National experience, a strong political Procurement Service has secured expectation to deliver a step change 100% renewable electricity for existing in fleet management and a rapidly public sector partners, including Welsh maturing market in light commercial Government. This approach is at little ULEVs, Swansea Council took the additional cost to the consumer, but must bold step of taking delivery of 40 continue and be adopted by all public new electric vans in early 2018. sector bodies. Low carbon heat is more difficult to achieve, however technologies Swansea Council have also found, do exist to support the move to low payload and range are not a barrier carbon heat and a green gas market and only small working pattern is emerging. changes were required. The use of slow chargers have proved perfectly Prosperity for All: A Low Carbon Wales 61 Case Study 6 – The Welsh developing industry. Currently Welsh Government Estate Government is on target to reduce overall emissions from buildings and Welsh Government sets a high fixed infrastructure by at least 30% standard of environmental by 2020 against a 2010 baseline. In performance for the public sector in 2018, Welsh Government achieved Wales. By 31 March 2018, we had a 29% carbon emission reduction reduced our carbon emissions by against this target. 57% from the baseline year of 2010-

11. Water consumption reduced by 11 % and carbon emissions Proposal 5 - Public Sector buildings from gas and electricity by 14% in should be supplied with renewable 2017/18 compared to the previous electricity by 2020, or as soon as year. The amount of waste recycled contractually able and, where also improved from 81.5% to 88%, practicably possible, are supplied further exceeding the 2020 target of with low carbon heat by 2030. 80% over the same period. 21st Century Schools Reducing environmental impact remains a priority. Having made We are committed to the creation of a significant gains by reducing the size sustainable estate and require that all of the estate and installing energy of our new buildings achieve BREEAM efficiency measures, the focus is Excellent and an EPC ‘A’ rating. Welsh moving towards the further benefits Government also encourage local to be gained from technological authorities and further education energy management solutions and institutions to consider provision of EV renewable energy. charging points in schools and colleges. Road transport is a significant source of Alongside the administrative carbon emissions and harmful air pollution estate, Welsh Government has and our 21st Century Schools projects invested in buildings and factory process includes testing business cases to units on its wider estate to support ensure that they are compliant with the Prosperity for All: A Low Carbon Wales 62 Active Travel Act. Charging infrastructure can also encourage take-up of electric vehicles and is not typically cost prohibitive when built in at design stage. Welsh Government also encourages access to the workplace charging scheme, administered by the UK Office for Low Emission Vehicles. Fossil Fuel Divestment Policy 23 – Continue to drive In parallel to developing policies to reduce low carbon schools through 21st emissions in Wales, we must also recognise Century Schools the decisions we make to increase emissions both in Wales and globally. Fossil fuel based companies have long Hospitals been a source of investments for pension The latest NHS Wales carbon footprint fund managers. Over a relatively short report will be used to develop a range time horizon however, a decision to divest of actions to reduce emissions. Particular from fossil fuel companies and consciously focus will be on reducing the emissions make investments in industries delivering linked to building energy, travel and indirect sustainable products and services. In 2018, procurement (which is reliant on the supply for example, Monmouthshire County chain). Actions will be agreed with all Council voted to request the Greater relevant stakeholders to ensure that any Gwent Fund, which handles pensions for actions and related targets are challenging Mommouthshire, Torfaen, Blaenau Gwent, but achievable. Caerphilly and Newport Councils to make The NHS Clean Air Guidance contains an ordered withdrawal from fossil fuel commitments for the NHS to promote, based companies. The fund at the time was encourage and support zero emission estimated to hold £245m of investments in travel among residents, visitors and fossil fuel based companies. commuters and advocate for different Taking such an approach provides yet complementary approaches to important signals. Fossil fuel based promote active travel. There is an companies view divestment as a significant objective to developing and implementing risk to their business, providing an environmental sustainability strategies to important stimulus to encourage alternative assess and minimise air quality impacts of business models, products and services. decisions made on new policies; services; projects and actions to reduce emissions Proposal 6 – Commission research to from services and facilities. gain a better understanding of Welsh public sector investment profiles to Policy 24 – Continue to reduce stimulate discussion about future emissions in the health sector investment strategies. Prosperity for All: A Low Carbon Wales 63 Tourism Sustainability will always be a key priority when developing tourism in Wales. Contribution to the environment is one the of the core assessment criteria for both capital and revenue funds and tools and information available online have been developed specially for the sector. Visit Wales is implementing the commitment for an Environmental Growth Plan for Wales, through the Economy Futures Fund Tourism Investment Support Scheme. An economic contract is established with tourism businesses seeking support to develop the product, which entails a focus on decarbonisation (in terms of e.g. energy efficiency, and supply chain activity). In the case of new build, compliance with BREEAM standards is also required. As part of the offer of funding, Visit Wales requires the applicant’s commitment to four elements of an ‘economic contract’, and for this to form an understanding with the business, including ‘progressing in reducing carbon footprint’. Visit Wales has developed a number of supporting programmes and tools40 over recent years which are aimed at helping destinations as well as individual businesses become more sustainable. Policy 25 – Continue to promote and market tourism in Wales in a sustainable way 40 https://businesswales.gov.wales/tourism/working-together#guides-tabs--6 https://businesswales.gov.wales/dmwales/sites/dmwales/files/documents/climate-change.pdf Prosperity for All: A Low Carbon Wales 64 Part 3 – Sector Emission Pathways Introduction For each sector pathway we have also developed a Policy Framework consisting The sector pathways chapters in this of a Policy Outcome, Policies and Plan set out how policies and proposals Proposals. contribute to meeting sector emission reduction pathways. The chapters A policy is a committed course of action to align with the UKCCC sector emission which a policy outcome can be attributed pathways: Power, Buildings Transport, with a reasonable level of confidence. Industry, Land Use, Agriculture, Waste and A proposal is a suggested course of action F-gases. Further information around the or exploratory action, the details of which breakdown of the sectors for this Plan can might change as this course of action be found in Annex 2. is explored further. It is not possible to confidently attribute the realisation of a Each chapter sets out the modelled policy outcome to a proposal until it is contributions relating to our 2020 target converted to a policy. Further information and our first carbon budget 2016 to on the methodology can be in Part 4. 2020, which have been derived from the UKCCC’s recommended emission For a full list of all policies and proposals pathway. Further information around please see Annex 6. these emissions pathways can be found in Annex 3. Figure 8: Policy Framework explained Carbon budget 1 Longer-term outcome for a sector with an estimated emissions savings (based on UKCCC advice, evidence and policy coverage) Key actions where we Key actions where we need to increase activity need to decrease activity Relevant policy Relevant proposals Relevant policy Relevant proposals which is a committed which will need to be which is a committed which will need to be course of action explored further course of action explored further Prosperity for All: A Low Carbon Wales 65 Power Our highest priority is to reduce demand wherever possible and affordable, and The Power sector covers electricity this is principally covered in the sections generation in Wales from fossil fuel and devoted to the built environment and renewables. industry. We also expect overall power demand to increase as a result of growing 29.3% electrification of transport. In order to ensure future demand can be met, significant investment will be needed 10.2% in energy generation, transmission and distribution infrastructure. 14.4% The system will need to integrate renewable generation with storage 32.8% and other flexibility services, in order to minimise the need for new generation and system reinforcement to serve large 12.4% peak demands. Targeted investment in a 1.7% -1.9% 1.1% multi vector system will help find the most effective solutions to serving peak demand.

1. Ambition Smart systems and time-of-use pricing may help smooth consumption patterns We need low carbon electricity to and reduce peaks. Ofgem’s current review become the main source of energy in of charging regimes is considering these Wales. Renewable electricity will be used issues. to provide both heating and transport in addition to power. Gas will also The power sector will clearly need to have an important transitional role in deliver significant reductions in order to power generation. Nuclear will make a meet our 2050 and interim targets and contribution to the UK energy supply mix, carbon budgets. This will be challenging, and there will also be a role for fuels such particularly given the 22% increase in as biomethane and hydrogen produced emissions from power stations seen in from low carbon mechanisms. 2016, and the high load factors on gas fired generation in the relatively hot, dry Renewable generation will continue to and windless summer of 2018. increase to meet a large portion of power in a decarbonised system. However, the We therefore need to take forward policies intermittent nature of renewables means that will drive the low carbon transition, they alone cannot currently meet an using the levers we do have in Wales. electricity demand that varies considerably by time of day and season and will increase with the penetration of electric vehicles and electric heating. Prosperity for All: A Low Carbon Wales 66 We originally set out our vision for 3. Progress to date the low carbon transition in Energy Despite improvements in the efficiency of Wales41 and have built on this by setting energy generation and the use of natural ambitious renewable energy targets in gas to replace some coal and other fuels,

2017. However, in order for the power total emissions from the power sector sector in Wales to contribute to meeting in Wales have grown by 44% between our decarbonisation targets, we will need the base year (1990) and 2016. Over the to concentrate on reducing emissions same period, overall UK emissions from from fossil fuel sources. the sector reduced by 60%.

2. Where do power sector emissions Energy policy is not devolved and Wales come from is part of an interconnected power system. Since 1990, UK Government The power sector covers a large share has made a number of infrastructure of Welsh emissions and is comprised of planning decisions which have resulted emissions from the production of energy in significant amount of additional fossil in power stations, along with minor fuel generation being located in Wales, contributions from electrical generators thus increasing overall power sector located in Welsh businesses (auto- emissions in Wales. generators). In 2016, the first year of our budget At 16.2 MtCO2e, power generation period, Welsh power sector emissions accounted for 34% of Welsh emissions increased by 22% compared to 2015, in 2016 making it the single largest driven by an increase in particular from sector. In 2016 99.9% of sector natural gas combustion. These large emissions were from power stations shifts in emissions are common within with the remainder from sewage gas, the power sector for Wales, which is gas from waste and business sector strongly influenced by shifts in output auto-generators. Practically all power at a small number of individual power emissions (99.6%) are emissions of generation sites. carbon dioxide. Table 2: How the biggest emissions sources in the power sector contribute to the Welsh total % of total Welsh Source emissions Power stations 34% 41 https://gweddill.gov.wales/topics/environmentcountryside/energy/energywales/?lang=en Prosperity for All: A Low Carbon Wales 67 Changes in electricity generation emissions 1990-2016 across the UK 60% 40% Wales 20% 44% 0% Northern Ireland -20% -34% UK England -60% Scotland -66% -40% -85% -60% -80% -100% Wales UK Northern Ireland Source: DA-GHGI 1990-2016 England Scotland Figure 9: A graph to show historic emissions for the Power Sector and UKCCC modelling to show emission reductions for the first carbon budget (CB1) and a possible route for a contribution to an 80% reduction in all Welsh emissions in 2050 100% 20 2016 90% +44% above 18 baseline 2020 2030 2040 2050 80% 16 +2% above -37% below -65% below -94% below baseline basleine baseline baseline 70% 14 48.69 60% Emissions ( MtCO2e) 12 50% 10 40% 8 CB1 30% 6 4 20% 16.19 2 10% 0 0% 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050 Base year CB1 Year Sector Pathway Historic-trend projection Legislated Interim Target Historic emissions Legislated Carbon Budget Prosperity for All: A Low Carbon Wales 68

4. What are we aiming for? EU-ETS suggest that a significant 2020 emissions target reduction in emissions from the power sector occurred in 2017. Emissions in 2020 will be 29% lower than in 2016. This will mean Power sector pathway to 2030 that power sector emissions are 2% Power sector emissions will reduce greater than the baseline in the year by 37% from baseline levels [1990s] 2020. by the year 2030 by: Power sector allocation for ›› reducing overall power generation Carbon Budget 1 from fossil fuels; The total budget for the power ›› increasing the deployment of sector for CB1 is estimated to be renewable energy to meet the target 64.9 MtCO2e42. The Power Sector for Wales to generate 70 per cent contributes 29.3% of the total Welsh of its electricity consumption from budget for CB1. renewable energy by 2030; and In 2016 the sector emitted 16.2 ›› increasing support for innovation in MtCO2e using up 25% of the the Power Sector. Power Sectors contribution to CB1. However, indications from the 2017

5. How we are going to get there? Figure 10: Policy Framework for Power – Aligning policy action to budgets targets and the 2030 pathway Power Sector emissions reduce by 37% from basleine levels by 2030 Emissions Intensity Fossil Fuel Low Carbon Power Sector Generation Generation Innovation e.g. policies to e.g. policies e.g. policies related to limit the use of related to the uptake storage, interconnection, fossil fuel of renewables and flexible generation generation other low carbon and innovation energy 42 Analysis based on 1990-2016 GHGI. All absolute figure referenced here will vary slightly as our understanding of GHG emissions in Wales improves. Prosperity for All: A Low Carbon Wales 69

6. Policies & Proposals which contribute to our carbon budgets and targets We are part of a wider UK energy system where Wales has limited policy levers to influence emissions from fossil fuels in the power sector in the timescale to

2020. This limits our ability to make the necessary emissions reductions. The UK Government is responsible for energy policy and nationally significant infrastructure decisions, as well as remit from the upper limit of 50MW energy resilience. Ofgem has a key role onshore to 350MW both on and off shore in regulating the energy market. Welsh (excluding onshore wind, the consenting Government has recently received greater for which is already fully devolved). permitting powers and will receive further We are taking a phased approach to consenting powers in April 2019. We implementing these expanded powers, believe these changes will allow us to with interim arrangements coming exercise more influence over levels of into force on the commencement date emissions from the power sector for whilst we develop a bespoke and unified developments which have an installed consenting process over the longer-term. capacity of 350 MW or less. Together with other policies to reduce the use of Planning Policy Wales (PPW), which was fossil fuels, increase the deployment of launched in December 2018, will underpin renewables and increasing support for all future planning decisions onshore. It innovation in the Power Sector we will puts an emphasis on people and places enable the emission reductions require to and will ensure developments built meet CB1 and the 2020 target. today leave a legacy of well-designed, sustainable places that improve lives. We will reduce the use of Fossil Fuels Changes to Wales’ planning policy are for Power Generation through: designed to help Wales reduce carbon Policy 26 – Implementing emissions, through restricting extraction Energy Consenting, Planning & and use of fossil fuels (including fracking) Permitting policy by placing them at the bottom of the energy hierarchy. The NDF will also ensure Planning is a key lever for Wales in the planning system in Wales plays a determining the sources of fuel for power key role in facilitating clean growth and generation. Welsh Ministers will have new decarbonisation, and helps build resilience powers relating to energy consenting to the impacts of climate change. arising from the Wales Act 2017. These Achieving our strategic decarbonisation powers around energy consenting, will goals is highlighted as a key driver, which be commenced on 1 April 2019 and will all development plans must support. expand Welsh Ministers’ decision-making Prosperity for All: A Low Carbon Wales 70 The Welsh National Marine Plan (WNMP) emerging technologies which decarbonise will set out the Welsh Ministers’ policies the energy industry and increase energy for the sustainable development of efficiency in Wales. The cost, efficiency Wales’ seas. The plan will help manage and advancement of storage, particularly increasing demands for the use of our batteries, means it is becoming a common marine environment, encourage and and viable part of our energy networks. support the economic development of We support the removal of barriers to marine sectors at appropriate locations such technology. At present, small to and incorporate environmental protection medium scale storage projects (between and social considerations into marine 10MW and 50MW) must seek planning decision making. consent from the Welsh Ministers under the Developments of National Significance There has been growing consensus in (“DNS”) process. No storage project has recent years for improved management yet been consented through this process, of our valuable marine natural resources. as storage operators see the cost and time The plan encourages better management taken for decisions as prohibitive. of the seas and aims to ensure sustainable economic growth (blue growth), and To remove consenting barriers and to to deliver environmental and societal reflect the physical scale and impacts of objectives. A sustainable approach to storage technologies being developed, managing our marine environment will the Welsh Government intends to remove ensure its natural resources are available storage projects from the current DNS for both current and future generations to process, for decision at a local level. We benefit from. see this as a more proportionate way to determine such projects and we consider The WNMP will sit alongside and interact this change will stimulate the development with existing planning regimes and will of storage projects in Wales. be consistent with strategic priorities set out in the NDF on land. The WNMP area Policy 28 - Phasing out Unabated Coal will physically overlap with terrestrial The future of the Aberthaw coal-fired planning through Local Development plant in South Wales will have a large Plan boundaries to ensure marine and impact on emissions from electricity terrestrial planning work together. generation and is subject to UK Policy 27 - Removing barriers to Government’s commitment to phase out consenting for storage by removing unabated coal generation by 2025. batteries as part of the Development Aberthaw accounted for 14% of total of National Significance process. Welsh GHG emissions and 51% of Welsh Energy storage plays an important part power generation emissions in 2015. in helping to balance our energy system. The UKCCC advice assumes Aberthaw for example when there is less demand will have lower running hours of 1,500 such as during the night, energy storage hours per year from the middle of 2020, can help to balance the system. There are due to the Industrial Emissions Directive. Prosperity for All: A Low Carbon Wales 71 Aberthaw is assumed to cease generating Policy 29 - Developing a Policy on by 2025 at the latest, consistent with Combustion of Fuels for Power UK Government commitments to end UK Government holds the key levers unabated coal generation by this date. for electricity generation in Wales and There is some uncertainty regarding the phasing out of coal could result in Aberthaw’s immediate future due to the temporary increase of gas powered factors such as the impact of a ‘no deal’ generation. Wales currently hosts 19% of Brexit, which may affect generation the UK’s gas fired electricity generation, because of the need for UK based but uses only 6% of the UK’s total dispatchable generation. UK Government electricity43. Therefore, our emissions from will need to take into account any the combustion of fossil fuels for electricity impacts of continued operation on Welsh generation are proportionately greater Government’s climate change targets. than the total UK emissions. In 2017, 8% of Welsh Power Connah’s Quay generation was from coal and 69% Deeside was from gas44. A number of large fossil fuel installations dominate the power sector. Aberthaw coal-fired power station represented 37% of Welsh power emissions and 12% of total Welsh emissions in 201645. Pembroke gas-fired power station represented 30% of Welsh power emissions in 201646. In the short-term we expect gas fired Aberthaw generation in Wales to continue to be seen Severn Power as a resource to balance the Great Britain electricity system. We have identified planning, permitting and consenting Pembroke Baglan powers as potential ways of reducing the Barry combustion of fossil fuels to generate electricity in Wales up to 350MW. 43 Generation figures:https://www.gov.uk/government/statistics/electricity-section-5-energy-trends Consumption figures:https://www.gov.uk/government/statistical-data-sets/regional-and-local-authority-electricity-consumption-statistics 44 https://gov.wales/docs/desh/publications/181212-energy-generation-in-wales-2017-en.pdf 45 EU-Emissions trading System (EU-ETS) data: http://ec.europa.eu/environment/ets/oha.do?languageCode=en 46 EU-Emissions trading System (EU-ETS) data: http://ec.europa.eu/environment/ets/oha.do?languageCode=en Prosperity for All: A Low Carbon Wales 72 We require a robust evidence base to underpin any future action on reducing the combustion of fuels to generate electricity in Wales. Work has already started: the Welsh Government commissioned a study in 2018 to look at the options for implementing policies to reduce emissions from the power sector. This included generation from gas, coal, biomass materials and waste. Welsh Government will undertake further analysis, consultation and engagement with core stakeholders in CB1 to identify potential risks such as carbon leakage and system costs to energy that increase the wholesale energy price. We will develop a policy on combustion of fuels for power The third phase of the EU ETS covers this that will be in place by the end of Carbon carbon budget period, covering emissions Budget 1. from 01 January 2013 to 31 December In order to meet our carbon targets 2020. During this phase, the emissions cap we will also need to develop a policy for the scheme reduces by 1.7% per year. regarding new gas generation above In 2020, emissions from sectors covered 350MW (which will be consented by UK by the EU-ETS will be 21% lower than Government) to be consistent with our in 2005. In 2030, under the steeper low carbon pathway in Wales. Welsh trajectory of the revised system (Phase Government will continue to make the IV) they will be 43% lower. For more case to UK Government to consider the information on the role of Welsh Ministers, role of gas in Wales power generation the impact of Brexit, and carbon pricing over the next 10 to 15 years. This is an policies for reducing emissions from important issue on which we need clarity. current EU ETS participants immediately Policy 30- Continuing to be a part of post Brexit and over the longer-term, the EU Emissions Trading System to please refer to the Industry Chapter. the end of Phase III As the EU ETS is a market led mechanism The European Union Emissions Trading designed to reduce emissions across System (EU ETS) is a cap and trade scheme the EU at least cost, it does not target operating in 31 countries, aimed at cutting emissions reduction within specific emissions at least cost. The EU ETS covers geographical areas such as Wales. heavy energy-using installations including Emissions from all EU ETS installations in large power plants. There are currently 7 Wales have increased from 22.9 million fossil fuel power stations Wales, which are tonnes CO2e in 2005 to 27.3 million all covered by the EU ETS. tonnes CO2e in 2016. This is largely due Prosperity for All: A Low Carbon Wales 73 to the commissioning of new gas fired ›› renewable energy projects to have at power stations which, though more least an element of local ownership efficient than older models elsewhere from 2020. in the EU, still contribute to the overall emissions from Wales. Emissions from In 2017 Wales generated an estimated power sector installations participating 32.5 Terawatt-hours (TWh) of electricity. in the EU ETS have increased from 12.1 Of this, 14.6 TWh was consumed in Wales, million tonnes CO2e in 2005 to 15.9 15.6 TWh was exported and 2.3 TWh was million tonnes CO2e in 2016, an increase lost in transmission and distribution. 7.1 of 31%. TWh of the 32.5 TWh was generated from renewables (22%). Wales is making good We will accelerate the deployment of progress against our target of 70% of renewable generation through: electricity consumption from renewables Policy 31 – Delivery of our Renewable by 2030: in 2017 we generated electricity Energy Targets equivalent to 48% of Wales’ consumption. The reduction of electricity generation We have already made progress in driving from fossil fuels must be accompanied by action through our positive planning and increases in low carbon generation. The consenting regimes and support for locally energy transition is already under way, owned energy. We have commissioned with the mix of technologies generating evidence on the potential resources in power across the electricity system Wales for onshore and offshore wind evolving. Electricity generation in Wales and solar resource, and are considering from renewables has increased 26% since the implications of this work for spatial

2014. We now have more than 67,000 planning and infrastructure. We are also renewable installations across Wales. More supporting the development of energy than 80% of these are very small scale planning at the local and regional level. generators connected to the distribution network, which changes the dynamics of Providing support through our Welsh the electricity system. In 2017, the Welsh Government Energy Service Government announced Renewable Welsh Government Energy Service Energy Targets. These are: provides support for public bodies and communities developing energy efficiency ›› generating 70% of Wales’ electricity or renewable energy schemes. Building on consumption from renewables by 2030; experience and learning over recent years, ›› 1 GW of renewable energy capacity in it includes services for technical, financial Wales to be locally owned by 2030; and and commercial support. Wales Funding Programme and the Welsh Government Prosperity for All: A Low Carbon Wales 74 Local Energy Fund are accessed via the service, and together provide loans, including low or interest-free loans, to support installation. The service is developing a pipeline of renewable energy Maximising Waste to Energy and energy efficiency projects which are Over the period of the carbon being delivered across Wales. For more budget, we are maximising the detail on Welsh Government Energy use of our food and residual waste Service refer to policy 12. streams to reduce our reliance on producing electricity from carbon- Supporting local and regional bodies intensive sources. There is, for around Wales Energy Planning instance, over 27 MW of Anaerobic We estimate renewable electricity Digestion (AD) capacity in Wales generation delivered sufficient from 46 projects totalling around 27 energy to meet 48% of Wales’ MW of electricity and heat capacity electricity consumption in 2017. We in 201747. Our forthcoming Waste expect power demand to increase Strategy will set out the next steps into the 2020s and 2030s as in terms of maximising the energy electric vehicles become increasingly and broader well being benefits common and more heating is of a circular economy. For further electrified. We believe there are information on Waste to Energy transformational opportunities please see Policy 74. in developing local or regional energy plans, driven by network Policy 32 – Developing Routes to and national/regional energy Market for Renewable Technologies data, which will help decision- There must be a clear route to market making and enable us to meet our for new generating capacity in order for decarbonisation objectives. We will Wales to increase renewable electricity do this through providing support to generation. By route to market, we mean local and regional bodies to develop the ability of a potential project to have insights and energy plans. For sufficient certainty of future income in further information on Wales Energy order that it can source capital funding Planning please see Policy 11. at a market rate. This responsibility is reserved to UK Government. The UKCCC has recommended a subsidy-free route to market for the cheapest low-carbon generation after 2020 (e.g. onshore and offshore wind, large-scale solar PV). However, whilst the Control of Low 47 https://gov.wales/docs/desh/publications/181113-energy-generation-in-wales-en.pdf Prosperity for All: A Low Carbon Wales 75 Carbon Levies allows for subsidy-free UK Government’s Clean Growth Strategy renewables to be brought forward, there indicates that more nascent technologies is currently no route to market for them. such as wave, tidal stream and tidal range also have a role in the long-term The UK also needs newer and emerging decarbonisation of the UK. Wales is technologies to continue to be developed, well placed to take advantage of the to provide a diverse mix of generation, opportunities associated with the blue which can also provide economic economy including wave and tidal energy. opportunities in exporting technology In Wales, significant EU funding through and expertise. WEFO has already supported investment The bulk of new generating capacity in wave and tidal stream technologies and should be provided from the lowest demonstration zones, helping to reduce cost technologies, as recommended costs and support of the sector’s path by the UKCCC and a range of other towards a cost competitive commercial industry sources, in order to keep the market. However, further investment in cost of energy bills down. However, both the sector will be required to bring costs innovation and development funding down to a level where it can compete for is required to support technologies revenue support. along the path of cost reduction and Offshore wind in the North Sea has commercialisation. dominated UK Government funding Welsh Ministers have repeatedly written to mechanisms recently. We are working with UK Ministers on the need for continuing UK Government and the Crown Estate to support for renewable generation, and in ensure offshore wind sites in Wales can 2017 we published a statement in support compete with those in the North Sea. of onshore wind and solar technologies jointly with a range of Welsh stakeholders. We continue to advocate the need for a route to market for the most affordable renewable technologies, whilst seeking innovative approaches that can enable new generation to continue to deploy within Wales. Prosperity for All: A Low Carbon Wales 76 Case Study 7 – Gwynt Y mor – Welsh Government has commissioned Renewable Energy and published research on the future Gwynt y Môr is a 576-megawatt of offshore wind in Wales to gain an offshore wind farm located off the understanding of opportunities in coast of North Wales and is the fifth Wales. This has identified the following largest operating offshore windfarm opportunities for offshore wind. in the world and Wales' largest wind farm. The output of 1,950 GWh per year is capable of powering around 400,000 homes, or 30% of the homes in Wales. This prevents the release of approximately1.7 million tonnes of carbon dioxide every year. The potential extension of the Gwynt y Môr site could double the energy generation and take the site up to over 1GW. The Crown Estate is currently considering opportunities for the next leasing round for offshore wind in the UK. There are currently two potential sites for Wales still under consideration for Leasing Round 4. Table 3: Potential opportunities for offshore wind in Wales Timeframe Opportunity Scale Deployment timeframe Near-term Site extensions 0.5-0.6 GW Mid 2020s Medium-term New leasing 1-3 GW By ~2030 Long-term Floating wind Multi-GW Beyond 2030 Prosperity for All: A Low Carbon Wales 77 Maximising the benefit to Wales from the transition to a low carbon economy The transformational change necessary to decarbonise the energy system requires change and innovation across the whole The need for more local ownership of, and system. This change provides opportunity greater benefit from, energy is likely to for Wales to benefit. We are working in a need added investment and coordination. number of ways to ensure we capture the We have already outlined the support maximum possible benefit. we provide to energy planning, project development and local ownership. Policy 33 – Increasing local ownership of energy generation We will explore the need for greater investment in renewable generation In 2018 Welsh Government held a call and enabling infrastructure (such as for evidence on the benefits of, and storage, smart technology, data and challenges in, increasing locally-owned grids). We will also explore alternative generation48. This demonstrated that delivery models that might add value and increasing ownership of energy generation accelerate delivery, and the role of Welsh within Wales is likely to increase prosperity Government in enabling this change. and we are now taking forward the actions indicated by the evidence. Policy 34 - Maximise Welsh benefit This includes developing a policy position from major infrastructure projects on ownership of energy generation. in Wales We are providing support through our Although the Wales Act 2017 delivers Welsh Government Energy Service to increased powers to Welsh Ministers, build partnerships between communities there are still many major infrastructure and developers and we have established decisions made by UK Government and a working group to help in developing others. Welsh Government’s approach is guidance on increased shared and local to ensure we understand the impacts on ownership. We intend to deliver this Wales and ensure we derive the maximum guidance by the end of 2019. We will social and economic benefit from the further develop evidence of the economic development. and social benefits of locally owned energy and will consider the need to To date we have spent a significant adopt or develop a preferred methodology amount of time and opportunity to ensure for benefit analysis. that the Wylfa Newydd nuclear power station would provide employment, Proposal 7 - Exploring potential for training and a major legacy of benefits to investment and new approaches Wales. Though this development is now to energy on hold, if a decision is made to proceed, 48 https://gov.wales/topics/environmentcountryside/energy/renewable/local-renewable-energy-generation/call-for-evidence/?lang=en Prosperity for All: A Low Carbon Wales 78 we will ensure Wales benefits to the greatest possible extent. Some consider the future of low carbon energy lies with Advanced Modular Reactors (AMR), which are smaller and less capital intensive developments. We are exploring the potential for Wales to become a leader in this field, of an effective smart energy system. We developing technical skills that could lead are also working with Community Energy to high value jobs in the Trawsfynydd area. Wales to support and scale up pilots such We will increase support for as the Energy Local approach, which innovation in the Power Sector uses smart meters as enablers for local through: energy use. Policy 35 - Energy Innovation We are also exploring solutions in Wales, which will enable the transfer of energy Welsh Government is working with the between vectors: i.e. from power to energy regulator, infrastructure owners storage, transport or heat. This will and operators to ensure that energy maximise power infrastructure assets infrastructure supports our ambitions, and build in flexibility that provides including the increased use of flexibility affordability, security and low carbon and storage. Our work will create the solutions. This is more fully explored in conditions for delivery of a smarter the section outlining our Whole Systems energy system: one that manages and Approach to energy. moves energy between power, heat, transport and storage uses to match We have provided significant funding supply and demand. to support innovation within the energy system. Through the work Wales has UK Government has committed that developed in disruptive technology and every household will be offered a smart smart energy, we have increased our meter by the end of 2020. These are potential to host strategic innovation one component of the smart energy projects. These demonstrators will system of the future, enabling a range showcase examples of innovative housing of functions including local balancing, designs, small modular (nuclear) reactors, and potentially the future development heat and ultra-low emission transport of local energy markets. Although the in the short to long-term timescales. supplier led approach UK Government has This requires a high degree of innovation taken makes it hard to take a coherent in order to provide solutions that meet approach across Wales, we will continue people’s expectations of reliability to work with Smart Energy GB to help and affordability. householders understand the importance of smart meters as one of many enablers Energy network operators use the Prosperity for All: A Low Carbon Wales 79 innovation mechanisms administered by actions government, Ofgem and industry Ofgem to demonstrate new approaches will take to to addressing network investment, and ›› remove barriers to smart technologies our innovation work has encouraged (such as storage and demand-side these projects in Wales. Examples of response); this include the Angle DC project where Scottish Power Energy Networks (SPEN) ›› enable smart homes and businesses; is trialling the use of direct (as opposed and to alternating) current to increase grid ›› improve access to energy markets for capacity between Anglesey and the new technologies and business models. mainland. If successful, this will enable more power to pass through the existing The plan included 29 actions designed to system, avoiding or delaying the need for reduce the costs of the energy system and new infrastructure. help keep energy bills low for bill payers. We have worked closely with stakeholders Wales will continue to support in Wales to ensure UK Government takes foundational work in the numerous into account Wales’ needs from the demonstrator areas to create the right transforming energy system in developing environment for innovation. Promoting their Plan. However, these actions alone Wales as a place where we encourage are not likely to deliver the smart and businesses to participate in accredited flexible energy system we need for demonstrators to pilot innovation across Wales. We will continue to work with UK buildings, power and transport will situate Government, the energy regulator, Ofgem, us as an ideal place to develop commercial the network owners and operators to find marketable outcomes. solutions within the current regime and We have established a Task and Finish identify where alternative solutions are group on innovation to build an evidence required to develop the grid network we base for our approach. We will work need in Wales. with academic and commercial partners We have also established joint working on to build on FLEXIS49 and SPECIFIC50 and the grid in Wales, which will initially focus other support and funding sources such as on local and regional energy planning, as Smart Living, to compete for UK funding well as the emerging demand from electric and develop innovation funding models. vehicles. We are working with network Policy 36 - Market Regulation and operators to ensure their investment Investment plans provide a grid, which enables the low carbon transition in Wales. If this is In 2017 UK Government published the not successful there may be a case for ‘Upgrading our Energy System: Smart further intervention. Systems and Flexibility’ plan. This set out 49 http://www.flexis.wales/ 50 http://www.specific.eu.com/ Prosperity for All: A Low Carbon Wales 80

7. Well-being The aim of the policies and proposals for the first carbon budget and subsequent carbon budgets will be to work together to transition our power system from away from fossil fuels to low carbon system at a scale and rate that maximises their contribution to the well-being goals. The move to cleaner, low carbon generation also provides other benefits to society. For instance, a decentralized system contributes to protecting householders and businesses from high energy costs by locating generation near to demand, improving the resilience and flexibility of our energy system and keeping more economic benefit within local communities. Therefore, the move away from fossil fuels combustion to a more low carbon electricity system contributes significantly to all our well- being goals. For instance our Well-being Matrix tool identified how the local ownership element of our renewable energy policy provides strong benefits in relation to all the well-being goals. Prosperity for All: A Low Carbon Wales 81 Buildings This chapter covers the residential 29.3% sector (all of Wales’ housing including owner occupied, private and socially 10.2% rented homes) and the non-domestic buildings in the public and commercial 14.4% sectors. The majority of the emissions in this sector are related to how much energy we use to heat our buildings. 32.8%

1. Ambition If Wales is to meet its climate targets, 12.4% buildings will need to operate at close to 1.7% -1.9% 1.1% zero emissions by 2050. This will require a substantial change in how we heat We will also need to continue to and power buildings in the future. The decarbonise the heat supply of buildings. amount of energy used in our buildings How this will be achieved will need to be will have to be significantly lower. The a local decision, based on building type electricity we use to light and increasingly and the infrastructure and skills available. heat our buildings will be from low In some cases, for both off-gas and on-gas carbon and renewable sources. When gas grid buildings, there will be low regrets is needed for heating to meet demand, option. In other cases, the best solution as a supplement to other sources, will be less clear and further investigation the proportion of green gas such as will be needed. These various interventions biomethane or hydrogen will be higher. will make our homes, shops, offices, schools more efficient and more affordable Heating our homes is a particular to heat. challenge given the current dependence upon fossil fuels and an energy inefficient Achieving significant emission reduction and old housing stock. from the built environment will require changes to behaviours and the Decarbonisation of heat is likely to have adoption and effective use of smart regional variations, taking advantage of energy technologies. Towards 2050 the local opportunities. The speed of retrofit decarbonisation pathway will require of existing buildings will need to be greatly significant changes to how we interact increased and new building will need to with our homes and places of work. be built to higher energy standards. Prosperity for All: A Low Carbon Wales 82

2. Where do Building emissions Table 4: How the biggest emissions come from sources in the buildings sector contribute The buildings sector covers emissions to the Welsh total from heating and cooking in our homes, businesses and public sector buildings. At % of total Welsh Source 4.3 MtCO2e, buildings accounted for 9% emissions of Welsh emissions in 2016. The dominant source of emissions is from residential Residential 7.5% buildings, which make up 82% of the buildings sector emissions and 7.5% of total Welsh Business sector emissions. Business sector buildings make 0.9% buildings up 10% of the sector’s emissions (0.9% of total Welsh emissions) and public sector Public sector buildings make up 8% of the sector (<1% 0.7% buildings of total Welsh emissions). Practically all building emissions (96%) are emissions of 3. Progress to date carbon dioxide. Total emissions from the buildings Figure 11: Graph: Buildings sector sector in Wales have decreased by 31% emissions in 201651 between the base year (1990) and 2016, driven largely by a change to the fuel 8% mix from coal to natural gas and energy 0.34 MtCO2e efficiency measures. 10% 0.45 MtCO2e In 2016, the first year of our budget period, emissions from the Welsh buildings sector were broadly unchanged increasing by 0.8% compared to 2015. Our Buildings sector is strongly influenced by temperatures in Wales and there can be 82% significant year-to-year variability. 3.62 MtCO2e Residential buildings Public sector buildings Business sector buildings Garden and other 51 The emissions data is sourced from the Greenhouse Gas Inventories for England, Scotland, Wales & Northern Ireland: 1990-2016 and aligned to the UKCCC sectors as described in Annex 3 Prosperity for All: A Low Carbon Wales 83 Figure 12: A graph to show historic emissions for the Buildings Sector and UKCCC modelling to show emission reductions for the first carbon budget (CB1) and a possible route for a contribution to an 80% reduction in all Welsh emissions in 2050 70 100% 2016 -44% below 90% 60 baseline 2020 2030 2040 2050 80% 50 -30% below -40% below -65% below -90% below baseline basleine baseline baseline 70% Emissions ( MtCO2e) 40 60% 18.28 50% 30 40% 20 30% CB1 20% 10 10% 4.34 0 0% 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050 Base year CB1 Year Sector Pathway Historic-trend projection Legislated Interim Target Historic Emissions Legislated Carbon Budget

4. What are we aiming for? In 2016 the sector emitted 4.3 MtCO2e 2020 emissions target using up 19% of the Buildings Sectors contribution to CB1. Emissions in 2020 will be 1.9% higher than in 2016. This will mean Power Building sector pathway that Buildings sector emissions are to 2030 30% lower than the baseline in the Buildings sector emissions will reduce year 2020. by 40% from baseline levels by the Buildings sector allocation for year 2030 as a result of: Carbon Budget 1 (CB1) ›› energy efficiency measures; The total budget for the Buildings ›› low carbon heating measures; and sector for CB1 is estimated to be ›› behavioural change measures to 22.6 MtCO2e52. The Buildings Sector the way we run buildings. contributes 10.2% of the total Welsh budget for CB1. 52 Analysis based on 1990-2016 GHGI. All absolute figure referenced here will vary slightly as our understanding of GHG emissions in Wales improves Prosperity for All: A Low Carbon Wales 84

5. How we are going to get there? Figure 13: Policy Framework for Buildings Aligning policy action to meeting targets, budgets and 2030 pathway Buildings sector emissions will reduce by 40% from baseline levels by the year 2030 Energy Supply of low Demand carbon heat Energy efficiency Behavioural Low Carbon meausres change measures Heating Measures Policies that Policies that support Policies that support support reducing behavioural change increasein low carbon demand through meausres heat (e.g heat pumps, new build and retrofit biomethane and heat networks

6. Policies & Proposals which individual low-carbon heating solutions. contribute to our carbon budget We are also looking how behavioural and targets change can help to reduce emissions Energy efficiency measures will be crucial in this sector. The emission reductions to meeting our carbon budgets and required to meet CB1 and the 2020 target targets. Wales has 1.4 million homes will be delivered by the following policies across a wide range of housing types, and proposals: including a significant proportion of We will Increase the Energy Efficiency older buildings. Wales has a slightly of buildings through: higher proportion of solid-wall homes than the UK53, which means more of Policy 37 – Funding and Delivery of our housing stock is more expensive to our Warm Homes Programme insulate. The decarbonisation of heat is The Welsh Government Warm Homes also crucial in reducing emissions from Programme is our domestic retrofit the sector. Around 1 in 5 of our homes is programme targeted at the fuel poor. not connected to the gas grid, a higher It is made up of the demand-led Nest proportion than the UK as a whole54. This and area-based Arbed schemes and means more Welsh homes will require tackles fuel poverty by providing energy 53 https://www.theccc.org.uk/wp-content/uploads/2017/12/CCC-Building-a-low-carbon-economy-in-Wales-Setting-Welsh-climate-targets.pdf 54 https://www.theccc.org.uk/wp-content/uploads/2017/12/CCC-Building-a-low-carbon-economy-in-Wales-Setting-Welsh-climate-targets.pdf Prosperity for All: A Low Carbon Wales 85 advice and improving the energy efficiency benefits they received as individual of the homes of people on low incomes or households. Householders were living in the most deprived areas of Wales. particularly appreciative of the Between 2011 and March 2018, we improved visual appearance, which have invested over £240 million in Warm was an added benefit in some Homes to improve the energy efficiency schemes and other community of over 45,000 homes throughout Wales, benefits such as the creation of local making them warmer and more affordable jobs. In addition, scheme managers to heat. As a result of our efforts and were required to encourage the investments, the percentage of households participation of Welsh SME’s when in Wales in fuel poverty has reduced from procuring site contractors and other 29% in 2012 to 23% in 2016. suppliers. This approach resulted in the creation of over 498 jobs and Between 2016 and 2018 we invested in many cases local people were £44.5 million and secured a further £5.7m employed to work on local schemes. from the Energy Company Obligation. The schemes delivered training During this period, we improved 11,000 including 2842 apprenticeship weeks homes and provided free impartial advice and further training opportunities to 29,000 households. Recent research55 through graduate placements and has also confirmed the positive impact of work experience56 our programmes in addressing chronic health conditions of the participating Policy 38 – Raising standards through households – thus reducing longer-term our Welsh Housing Quality Standards pressures on our health and social care services. Another key policy improving the energy efficiency of existing buildings is the From March 2018 to March 2021, Welsh Housing Quality Standard (WHQS). we expect to invest a further £106m, There are over 225,000 social homes in which includes £24m of European Wales (16% of total homes) provided funding, to improve a further 20,000 by Registered Social Landlords (RSL) and homes and provide advice to a further Local Authorities who still have their 45,000 households. housing stock and all these properties must meet the WHQS by December 2020 Well-being Goal Spotlight – and maintain it thereafter. The average Cohesive Communities energy efficiency band has improved from Residents under the Arbed scheme Band E in 2008 (Living in Wales Property have indicated the positive impacts Survey 2008) to Band D in 2017-18 (Welsh the scheme has had on their Housing Conditions Survey 2017-18)57. communities, in addition to the 55 https://gov.wales/written-statement-fuel-poverty-data-linking-project 56 https://gov.wales/docs/desh/publications/171106-welsh-government-warm-homes-arbed-eu-project-final-report-en.pdf 57 Going from SAP 50 to 61 using SAP 2012 methodology on both years data See WHCS Headline report: www.gov.wales/WHCS Prosperity for All: A Low Carbon Wales 86 Nearly 204,500 social homes (91% of To ensure that the programme is founded the stock) now meet the Welsh Housing on a wide-reaching and long-term basis, Quality Standard (subject to acceptable an industry-led advisory group was formed fails) and we are on track to ensure all in Spring 2018. The Advisory Group on meet it by the 2020 deadline. the Decarbonisation of Homes in Wales (DAG) consists of a main group, with a WHQS includes achieving an energy wide range of expert membership drawn efficiency standard of SAP 65 or higher. from industry, landlords, academia, This is the equivalent to EPC D rating on a research and third sector bodies, as well scale of A to G. Currently 200,431 (89%) as local authorities, trade bodies and social homes have achieved SAP 65 or Welsh Government. The work of the main higher and work will continue on this up group is to consider the evidence needed to and beyond 2020. to develop and deliver a programme and Welsh Government provides £108m recommend appropriate types of action of capital funding every year to Local and support, including levers, incentives Housing Authorities (through Major and disincentives to increase the uptake Repairs Allowance) and Stock Transfer of energy efficiency measures. The RSLs (through Dowry Gap funding) which programme is considering short, medium helps to fund the improvement works. This and long-term actions. There are also a enables these landlords to lever in a much series of sub-groups covering technical larger investment of their own funds every and infrastructure, financial, government, year to the WHQS programme. customer confidence and community benefits. These groups have been meeting Proposal 8 – Improving our Evidence- regularly since early summer 2018 and will base around residential retrofit report on their findings to Welsh Ministers programme in 2019. This ongoing work benefits from To meet our carbon reduction targets the results from Welsh Housing Condition we need to scale up our retrofit activity Survey (WHCS), which was published in especially with those able to pay for December 201858. energy efficiency measures. Our first In spring 2018, a literature and critical step, which is underway, is to develop a review into research and publications long-term, evidence based programme around ‘what works’ in decarbonisation to improve the quality of homes, reduce of existing homes was commissioned. This emissions and tackle fuel poverty. Based has been followed up by a project relating on evidence of what works, we are the findings of the review to the output developing a programme of action to from the WHCS. This allows consideration decarbonise all homes in Wales by at least of how actions might be implemented, for 80% by 2050, regardless of their tenure. example by tenure, area, or construction type or a combination of all these 58 https://gov.wales/welsh-housing-conditions-survey-assessment-elements-welsh-housing-quality-standard-april-2017-0 Prosperity for All: A Low Carbon Wales 87 approaches and establishes an overall Building regulations and planning have outline cost for the programmes and an impact on what house builders will potential carbon savings. A ‘Value Case’ produce through setting standard of has also been commissioned to establish regulated emissions for new housing, the wider benefits of well-being and changes of use and renovation. Part L health linked to reductions in health and of our Building Regulations concerning social care spending as well as tackling the Conservation of Fuel and Power was fuel poverty, improving the warmth revised in 2014. It has helped achieve of homes, benefits to communities of emissions reductions of 8% and 20% in major housing regeneration programmes new residential buildings and all other and including the benefits of sourcing buildings respectively. materials and skills in Wales. The findings We have recently commenced a further will be published later in 2019. The review of Part L, which is intended to be delivery mechanisms and measures for the next step on our journey towards the scaling up of a retrofit programme a low-carbon built environment. This will be established based on the findings will inform future measures to improve of the evidence programme and will energy efficiency standards for new and include how to motivate and stimulate renovated buildings. The review will also those homeowners who are able to pay consider the role of on-site renewable for energy efficiency measures, whilst energy sources, the relationship between supporting those who need it regardless improved energy performance and of tenure. Identifying and achieving indoor air quality and increasing concerns behaviour change will be crucial to this. over summer overheating. Many of the Policy 39 –Setting higher energy recommendations from the recent UKCCC efficiency standards for new report59 UK Housing; Fit for the Future will builds through reviewing Building also be considered as part of the review. Regulations Part L (Conservation of We envisage public consultation during Fuel and Power) the summer of 2019 leading to final decisions and making necessary regulatory New construction offers opportunities changes towards the end of the year. to incorporate new energy systems and to implement much higher standards of energy efficiency. 59 https://www.theccc.org.uk/wp-content/uploads/2019/02/UK-housing-Fit-for-the-future-CCC-2019.pdf Prosperity for All: A Low Carbon Wales 88 Policy 40 – Driving innovation Case Study 8 – Innovative Housing through our Innovative Housing Programme Programme Houses that generate their own The Innovative Housing Programme (IHP) power, flats with vertical gardens aims to create demonstrator schemes to and homes built using local supply help inform Welsh Government about the chains are some of the projects to type of social housing it should financially share in £43m of innovative housing support in the future. The programme funding in 2017. The second phase runs to 2020. The programme seeks to of the three-year Innovative Housing support innovation in a broad context Programme (IHP) was announced in covering construction techniques, delivery October 2018, worth £90m in total. pathways and housing types across Successful projects include: all tenures. Refurbishment of existing residential dwellings is not eligible. A ›› Nearly £7m for Pobl Group who number of schemes have been funded are developing 225 homes near in the first two years, with a total grant Tonyrefail. The investment will create commitment of £53 million. the infrastructure to ensure the homes can act as power stations – The schemes supported by IHP are a UK first at this scale; assessed by an independent panel of experts against an evaluation framework ›› £4m for Cartrefi Croeso to build 30 as set out in the technical specification. homes in Burry Port using Welsh Each scheme has to clearly define the timber, local off-site manufacturing proposed innovation and potential for using local labour and featuring Ty future impact in seven focus areas, relating Solar panels manufactured in directly to the Well-being goals. West Wales; ›› £650,000 for Denbighshire Council All IHP schemes are required to participate to work with partners to establish in the monitoring and evaluation exercise a factory to produce timber-framed as a condition of funding and is integral to Passivhaus homes for local social the success of the IHP. Welsh Government landlords. Cartrefi Conwy will receive intends to build an evidence base to £442,000 to build 16 homes using inform future policy and investment the system. The local supply chain decisions. After initial analysis the data will provide training to local people collected will be open sourced to enable who might otherwise face barriers further analysis and research to take place. to the jobs market; ›› £1m for Anglesey Council working with Coed Cymru and social housing providers to deliver an affordable and flexible housing construction system using Welsh softwood and support Prosperity for All: A Low Carbon Wales 89 the development of a local supply chain; ›› £2.6m for Powys Council to build 26 low-carbon homes in Newtown using Welsh timber; Innovative Housing Programme ›› £839,000 for Wales and West Housing Association to build 14 homes in Bridgend using the Solcer Flexible housing House model which construction 16 incorporates energy homes efficiency and renewable technologies; and ›› £568,000 for Gwynedd Council to build four Anglesey Homeless people adaptable pods to accommodation Denbighshire Passivhaus standard to provide stable intermediate accommodation for 26 Gwynedd homes homeless people. Newtown 255 homes 30 homes 14 homes Burry Port Tonyrefail Bridgend Prosperity for All: A Low Carbon Wales 90 Case Study 9 - SPECIFIC is imported. The demand for Welsh timber Innovation plays a crucial role in has previously been constrained by over- the decarbonisation of Wales’ built specification in design requirements, but environment and we have been these have largely been overcome. Better supporting the work of the SPECIFIC education and awareness programmes Innovation and Knowledge Centre60. need to be developed and there is also The Centre is working with industry potential for clearer regulation and to develop new technologies and standard setting. integration methods to support To reduce emissions, we need to the concept that a building can think about how we design and make generate, store and release its buildings, driving innovative approaches own energy. There are now such as offsite construction, design for several different “active building” adaptability, energy management and demonstrators using different end of life. building methods and technology that could result in significant savings Over the budget period we will capture in energy consumption as a result of the learning from the IHP and SPECIFIC the buildings generating and storing demonstrators on decarbonising buildings a majority of their energy demand. where we are considering using different, Most recently the Centre has worked more sustainable materials in construction. with POBL in Neath Port Talbot to We will also ensure that energy regulation design 18 active homes that has responds to the potential for new ways to resulted in a successful application to distribute and manage energy within the the Innovative Housing Fund. built environment and in the longer-term, how evolving areas such as vehicle to grid approaches affect this. Proposal 9 – Developing Innovative construction techniques to reduce Policy 41 – Funding more efficient and meet the energy demand within buildings through our Sustainable buildings and increasing the use of buildings funding policy sustainable materials With some exceptions for smaller As well as looking at sustainable building projects, new buildings funded by Welsh design and techniques, sustainable Government are required to achieve an building materials need to be used to ‘Excellent’ rating under the BREEAM reduce the embedded carbon footprint. scheme (Building Research Establishment For instance, the use of timber in Environmental Assessment Method). construction can support domestic supply The scheme assesses the long-term chains and reduce reliance on imported environmental impact of new buildings product. Currently around 80% of and the environmental performance of timber used in construction in the UK both new and existing buildings. BREEAM 60 http://specific.eu.com/ Prosperity for All: A Low Carbon Wales 91 Policy 42 - Reducing emissions from listed buildings and scheduled monuments Cadw has formed a Strategic Skills Partnership Agreement with Construction Industry Training Board (CITB), Historic England and Historic Environment Scotland to address the identified skills and vocational training needs of the 2018 New Construction is the latest construction industry in respect of the version of the BREEAM Scheme. It covers conservation, repair and maintenance many types of development including of traditional buildings, and appropriate commercial offices, industrial units and works of improvement to them, using retail (shops, retail park, showroom, sustainable methods of construction. The restaurant, hot food takeaway). Typically agreement and action plan identify eight BREEAM Excellent achieves between areas of common interest and strategic 8-11% higher energy performance than importance, one of which is ‘promoting current building regulations. the right knowledge and skills for energy efficiency retrofit and climate change Funding the Welsh Government adaptation of traditional (pre-1919) Energy Service to drive energy buildings’. efficiency projects across the Public Sector The suite of guidance produced to As well as building in energy efficiency support the Historic Environment (Wales) into homes, we are also taking action Act 2016 also encourages owners to through the public sector. Over £60m of keep their buildings in a good state finance has been committed since early of repair in order to help reduce their 2016 to fund the Welsh Government carbon footprint, and to consider well- Energy Service. The service provides a informed energy-efficiency measures. range of support, including low cost With regard to microgeneration, Cadw finance, to support the public sector continues to promote its good practice to deliver large scale energy efficiency guide ‘Renewable energy and your and renewable energy projects. Energy historic building’, which is available on efficiency measures vary widely and the their website. focus to date has been on reducing heat and power demand. Longer-term activity is focused on delivering renewable heat and power locally. For further information, please see Policy 11. Prosperity for All: A Low Carbon Wales 92 Cadw actions on this over the past 12 Case Study 10 – Green Growth Pledge months include organising three two day The Green Growth Pledge is part of courses to deliver the Level 3 Award in the specialist sustainability support Energy Efficiency Measures for Older and available through Business Wales and Traditional Buildings for practitioners. is open to all Welsh SMEs regardless Further courses will be run by the Welsh of their industry sector. It provides Traditional Buildings Forum as part of a a practical way for businesses to new four year training programme, which demonstrate their positive impact on Cadw is grant assisting. the people and places around them Policy 43 – Providing advice and and join a growing community of support through Business Wales forward-thinking organisations. Business Wales provides impartial, By signing up to the pledge, each independent support and advice to company is asked to make a people starting, running and growing a commitment to one or more actions business in Wales. With regional centres to help them reduce impact or across Wales, the service offers a mixture ensure sustainable performance. of online and face-to-face support, as well as training workshops and individual The key role of Business Wales will advice. This can include advice on energy be one of education and information efficiency measures aimed at encouraging dissemination to SMEs across Wales, take up and helping to reduce carbon including Micro enterprises which make emissions. In line with the EAP, Business up about 95% of businesses. This will Wales provides advice to individuals and be done through online, telephone and businesses on how to become more face to face delivery channels. Business sustainable and environmentally aware. Wales is funded by European Regional In-line with the principles of the EAP, Development Fund (ERDF). Planning is Business Wales has introduced a Green underway to consider the shape of the Growth Pledge that places a responsibility service post EU funding. on companies accessing support to take positive action to reduce the impact that their businesses have on the environment. Prosperity for All: A Low Carbon Wales 93 We will Increase the use of low will include carbon heat through: the Fuel-efficient resources that might generate heat, from waste Proposal 10 - Scoping out the heat to agricultural slurry to geothermal challenges and opportunities around sources such as disused mine workings. low carbon heat This mapping can be considered against Heating constitutes a major part of sources of current and future demand, the decarbonisation challenge as heat both for heat and transport. For example, accounts for almost half of UK energy use in Wales there is currently only one and a third of UK carbon emissions. The connection injecting biomethane into need for cooling is predicted to increase the gas grid. Given Wales’ agricultural and should also be considered as part strength there appears to be considerably of future energy demand. The Energy more potential here. Mapping biofuels Generation in Wales survey estimates against the gas networks might indicate Wales produced 2,092 GWh of renewable potential for gas injection or potential off heat in 201761. grid solutions. ›› There was 596 MW of renewable There is considerable uncertainty about heat capacity in 2017.Renewable heat the best options for decarbonisation of generation in 2017 (2,092 GWh) was heat (with the exception of some low the equivalent of 10.5% of estimated regrets actions such as injection of biogas Welsh domestic heat demand. into gas grids). Decisions regarding heat infrastructure, such as the potential ›› Biomass made up 66% of 2017 for conversion of the gas network to renewable heat capacity. hydrogen and regulatory frameworks, Further work is needed to decarbonise are likely to be made at a UK level. Welsh fossil fuel heat in Wales, both through Government is focused on ensuring decarbonising the existing gas network decisions and programmes made by UK and finding alternative sources of heat. Government take account of Wales’ needs We also need to consider the implications and particular circumstances. of more integrated heat, power and transport. Some forms of bioenergy are Case Study 11 – The FREEDOM Project being used to generate electricity and FREEDOM (Flexible Residential Energy others to power transport. Given the need Efficiency Demand Optimisation to decarbonise both heat and transport, and Management) Project, a joint there may well be competition between Wales & West Utilities and WPD vectors for the same resource. £5m innovation project in the As part of our approach to energy Bridgend ‘living heat laboratory’ in planning, we are mapping the sources of South Wales. Using an air-source renewable energy potential in Wales. This heat pump and high-efficiency 61 https://gov.wales/topics/environmentcountryside/energy/renewable/energy-generation-in-wales Prosperity for All: A Low Carbon Wales 94 gas boiler hybrid system in 75 RHI eligible technologies, such as heat residential properties, the project pumps, has been mixed. Increased uptake clearly demonstrates the value that of renewable technologies will require an integrated approach to deploying better public understanding of the low-carbon smart technologies can available options as well as continued cost deliver. Project estimates suggest that reduction and increased education and a hybrid approach to decarbonising training among installers and engineers. our heating that is combined with UK Government is working with the green gas growth could lead to as off gas grid heating industry to explore much as an 80% reduction in carbon effective ways of decarbonisation, emissions from domestic heat. including replacing fossil heating fuels with lower carbon alternatives, and Wales Wales is also participating in the Heat is represented in these discussions. Networks Innovation Programme, a £320 million programme to build capacity in Our work on energy planning at the heat network delivery in England and regional and local level will provide stronger Wales. Heat networks are most effective insights into the opportunities and priorities in densely populated areas and need for Wales. We are also conducting a sizeable anchor customers in order to review of the available evidence on heat enable new developments to secure the to support development of heat policy for necessary long-term funding. Most UK Wales. Wales is already hosting a number projects are being developed by the public of pilots to help develop knowledge in this sector to deliver regeneration and fuel area and is well placed to derive benefit poverty outcomes. Welsh Government from developing skills and economic is providing additional capacity to public opportunities in relation to heat. sector organisations in order to maximise In addition, our national planning policy the opportunity for Wales from this in Planning Policy Wales encourages the programme. However, the largely rural consideration of low carbon heat options nature of Wales means heat networks are for new development. Planning authorities likely to be a small part of the response to are expected to plan positively for the decarbonising heat. use of locally generated heat, including Tackling the decarbonisation of homes off developing policies and proposals which: the gas grid is a key challenge for Wales ›› facilitate the co-location of major and has strong links to fuel poverty. UK developments to enable the use of local Government’s Renewable Heat Incentive heat opportunities; (RHI) has driven the uptake of low carbon ›› maximise the use of water heat; heating. The level of incentive has reduced as deployment of renewable heat has ›› promote district heating; and increased. While there has been good take ›› promote Combined Heat and Power up of biomass boilers and biomethane (CHP) schemes. on the scheme, take up rates for other Prosperity for All: A Low Carbon Wales 95 Proposal 11 - Increasing the use of buildings could be connected, Waste Heat and low carbon heat potentially saving on their energy costs. The first phase of the We are currently supporting the proposed network will serve public development of a number of heat sector buildings south of the main networks, including a proposed network Cardiff to London railway line these in Cardiff utilising waste heat from include Council buildings, along with Viridor’s Energy from Waste Plant. Cardiff those of the National Assembly for City Council cabinet approved the Outline Wales, Wales Millennium Centre and Business Case in April 2018. Cardiff and Vale College. We are already supporting local authorities to develop district heating projects We will look at the options around through our Wales Energy service and behaviour change through: are supporting them to access the UK Government’s Heat Networks Investment Policy 44 – Piloting Smart Flexible programme funding. We will work with and Digitalised System to reduce industry to consider what support might demand be needed to increase the level of heat During 2019, we will start to explore recovery schemes. how to motivate and stimulate those homeowners who are able to pay for Case Study 12 - Cardiff Heat network energy efficiency measures, whilst The Cardiff Heat Network scheme supporting those who need support proposes to distribute heat regardless of tenure. In doing this, we generated by the Viridor energy from need to involve citizens and be mindful of waste plant in Cardiff Bay to local unintended consequences. buildings. We are working with stakeholders as The waste heat is significant and a part of Welsh Government’s retrofit potential source of low carbon heat decarbonisation programme to explore for the businesses and residences of behavioural change as a potential lever south and central Cardiff. for reducing emissions from homes. The DAG are exploring the complex consumer Steam generated through the behavioural interactions with buildings so burning of non-recyclable waste that they can be taken into account in the at the Trident Park energy recovery recommendations being made to Welsh facility in the south east of the city Government later in 2019 on retrofitting would be used to heat water that Wales housing stock. would then circulate around the network. It would run from the In addition, Smart Living and our plant through large parts of Cardiff Innovative Housing Programme are Bay before travelling up to the city encouraging the use of using smart centre. Public sector and commercial and digital systems to help reduce Prosperity for All: A Low Carbon Wales 96 heat demand at a household level and 7. Well-being transition to decarbonised heat. The The aim of the policies and proposals projects will be monitored over the long- for the first carbon budget and term to provide an evidence base and subsequent carbon budgets will be better understanding on how people to work together to reduce emissions behave and interact with these systems. from our built environment at a Initial projects include Energy Systems scale and rate that maximises their Catapult HESG, Freedom in Bridgend and contribution to the well-being goals. the Pobl Active Homes Neath project. Also, the Energy Systems Catapult has Policies set out in this chapter that been conducting trials in 100 homes improve the energy efficiency of residential including Bridgend using their innovative buildings will provide benefits in terms of HESG (Home Energy Services Gateway)62. improved comfort and health outcomes63 resulting from cold, damp housing. Policy 45 – Incentivising energy Lower energy consumption, which could efficiency of homes through our Help lead to lower energy bills, will depend to Buy – Wales on the extent to which higher internal Our current Help to Buy Wales policy temperatures are increased as many fuel allows eligible purchasers to buy new- poor household currently cannot afford build homes with assistance from to heat their homes to a comfortable Welsh Government in the form of level64. In addition, the switch away a shared equity loan. The Help to from polluting fuels for heating can also Buy Wales mortgage calculator now improve air quality. includes an energy efficiency element. The new construction of homes offers This means when people look at the Wales the opportunity much higher cost of mortgages, they will be given standards of energy efficiency into our different options depending on the buildings for both current and future energy efficiency of the property they are generations, avoiding the potential of high looking to buy and loans will be adjusted fuel bills. New construction of buildings according to the energy rating of the also offers the opportunity to drive home they choose. innovation on construction techniques and creates the skills, jobs and supply chains needed for new low carbon homes. The learning from the innovation housing programme will be crucial in informing new build over the period of this budget. For instance, our Well-being Matrix Tool, identified how the IHP already provides benefits in relation to the well-being goals and in particular strong direct benefits for a more equal, prosperous and, globally responsible Wales. Keeping heat in 62 https://es.catapult.org.uk/projects/home-energy-services-gateway/ 63 https://gov.wales/written-statement-fuel-poverty-data-linking-project 64 https://www.theccc.org.uk/wp-content/uploads/2017/12/CCC-Building-a-low-carbon-economy-in-Wales-Setting-Welsh-climate-targets.pdf Prosperity for All: A Low Carbon Wales 97 29.3% Transport

1. Ambition 10.2% Welsh Government is putting Wales at the 14.4% forefront of a shift towards active travel and a low carbon public transport system which is accessible to all and contributes 32.8% to liveable and sustainable communities. This is backed by a bold ambition for a zero emission bus, taxi and private hire 12.4% vehicle fleet by 2028. 1.7% 1.1% -1.9% We have already announced a significant investment in our rail service and the plans for metro style frequency and integrated The decarbonisation of transport presents services will make public transport more a serious challenge, but also, other, attractive and connected. We need to considerable opportunities. Transport transform the image and the reality emissions have largely remained steady of public transport to make it a more over recent years despite improvements in desirable alternative to the private vehicle. vehicle efficiency but there is evidence that We are working to reform the bus industry we’re on the verge of an acceleration in in Wales and a zero emission bus fleet will the uptake of electric vehicles. contribute to improving the attractiveness Wales will embrace the adoption of of bus travel. zero and ultra low emission vehicles in The most effective way of reducing CO2 an inclusive manner and supported by emissions in the near-term will be to the necessary investment in charging replace car journeys with those using infrastructure. This will be a greater the existing public transport system and challenge away from urban centres. active travel. This will require a suite It is why we are investing £2m in the of infrastructure and behavior change short-term to facilitate a network of measures working in tandem. rapid EV chargers. We will also assess the opportunities to promote renewable Planning Policy Wales sets out a energy to support the increased demand sustainable transport hierarchy for for electricity. planning and seeks to prevent car- dependent developments that discourage We will show leadership by increasing the use of active and sustainable transport. the use of zero and ultra low emission Increased cycling and walking improves vehicles in public sector fleets and will look health and tackles congestion, poor air to encourage innovative approaches to quality as well as reducing CO2 emissions. reducing emissions in all transport sectors. Prosperity for All: A Low Carbon Wales 98

2. Where do Transport Sector Table 5: How the biggest emissions emissions come from? sources in the transport sector contribute The Transport sector includes transport to the Welsh total emissions within Wales along with Wales’ share of emissions from international % of total Welsh Source aviation and international shipping. At 6.8 emissions MtCO2e, transport accounted for 14% Cars 7.7% of Welsh emissions in 2016. Transport is our third largest GHG emitting sector, Light trucks 2.2% following the power and industry sectors. Practically all transport emissions (99%) Heavy trucks 2.0% are emissions of carbon dioxide. and buses Figure 14: Graph: Transport sector emissions in 2016 (MtCO2e)65 3. Progress to date 1% 1% Although vehicles are increasingly 0.10 MtCO2e 0.07 MtCO2e 5% 2% efficient, we are also travelling more, so 0.32 MtCO2e 0.15 MtCO2e overall sector emissions have changed little 6% 0.42 MtCO2e since the 1990 baseline, declining by just 3% to 2016. 14% 0.94 MtCO2e In 2016, the first year of our budget period, Welsh Transport Sector emissions increased by 2% compared to 2015. 16% 55% 1.07 MtCO2e 3.73 MtCO2e Cars Domestic shipping Light Trucks Railways Heavy trucks and buses International flights International shipping Other transport 65 The emissions data is sourced from the Greenhouse Gas Inventories for England, Scotland, Wales & Northern Ireland: 1990-2016 and aligned to the UKCCC sectors as described in Annex 3. Prosperity for All: A Low Carbon Wales 99 Figure 15: A graph to show historic emissions for the Transport Sector and UKCCC modelling to show emission reductions for the first carbon budget (CB1) and a possible route for a contribution to an 80% reduction in all Welsh emissions in 2050 100% 8 2016 -3% below 2020 2030 2040 2050 90% baseline -14% below -43% below -65% below -79% below baseline basleine baseline baseline 7 80% 6 70% Emissions ( MtCO2e) 60% 25.12 5 50% 4 40% 3 30% CB1 2 20% 1 10% 6.81 0 0% 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050 Base year CB1 Year Sector Pathway Historic-trend projection Legislated Interim Target Historic Emissions Legislated Carbon Budget

4. What are we aiming for? In 2016 the sector emitted 6.81 2020 emissions target MtCO2e using up 21% of the Transport Sectors contribution to CB1. Emissions in 2020 will be 11% lower than in 2016. This will mean that Transport sector to 2030 transport sector emissions are 14% Transport sector emissions will reduce lower than the baseline in the year by 43% from baseline levels by the 2020. year 2030 through: Transport sector allocation for ›› behavioural change measures (modal Carbon Budget 1 shift to more sustainable travel); The total budget for the transport ›› increasing uptake of electric vehicles; sector for CB1 is estimated to be and 31.9 MtCO2e66. The Transport Sector ›› reducing emissions from road and rail contributes 14.4% of the total Welsh transport through vehicle and fuel budget for CB1. efficiency measures. 66 Analysis based on 1990-2016 GHGI. All absolute figure referenced here will vary slightly as our understanding of GHG emissions in Wales improves. Prosperity for All: A Low Carbon Wales 100

5. How we are going to get there? Figure 16 – Policy Framework for Surface Transport aligning action with policy action to meeting targets, budgets and 2030 pathway Transport sector emissions will reduce by 43% from baseline levels by the year 2030 Behavioural Uptake of Emissions from road change measures electric vehicles and rail transport through e.g demand Policies that vehicle and fuel efficiency reduction policies increase uptake measures of electric vehicles Policies through vehicle and fuel efficiencies

6. Policies and Proposals which to be convenient and connected, utilising contribute to our carbon budget new and innovative mobile applications, Transport in Wales, like many other to be a viable alternative to cars. Provision countries, is dominated by the use of the should be tailored to take into account private car. The car has brought many the differing rural and urban contexts. benefits but is contributing to problems We will work to integrate public transport such as air quality issues, congestion and interchanges and high quality walking and a significant proportion of CO2 emissions cycling infrastructure and facilities. (55% of Transport CO2 emissions67. As well as infrastructure, we will look to We will encourage a shift from an over encourage modal shift by working with reliance on the private car to more partners to influence travel behaviours sustainable transport modes. This shift has learning from previous initiatives to a key role to play in emissions reduction in promote personalised and workplace the near-term. travel planning and sustainable travel We will support a change in travel town initiatives. behaviours through: We will look to roll out more car clubs and Proposal 12 - working to achieve a car sharing initiatives, and look at EV car modal shift from car dependency to clubs, as they have the potential to change sustainable forms of transport people’s attitudes to car ownership. The shift to autonomous vehicles also has the Pleasant and safe cycling and walking potential to radically shift the way we own routes are a priority to encourage more and share cars. We will work to increase people out of cars. Public transport needs our understanding of the potential impact 67 DA GHG inventory (1990-2016) Prosperity for All: A Low Carbon Wales 101 of connected and autonomous vehicles on Policy 46: Increasing Active Travel sustainable transport. We are investing in active travel routes which We will learn from the lesson from enable people to walk and cycle more. ‘Sustainable Cities’ initiatives in England Walking and cycling bring benefits in terms and Wales and seek to increase our of personal health and reduced congestion understanding of what drives peoples’ and transport emissions in towns and choices and how they can be influenced. cities and should, therefore, become the We will add to this work with high quality preferred ways of getting around over and comprehensive data and survey shorter distances. data on how, why, when and where people travel. The government is investing an additional £60 million over 3 years to implement Case Study 13 - Traveline Cymru our ground breaking Active Travel Act, placing a legal duty on all local authorities Traveline Cymru is a not for in Wales to consult with local communities profit business funded by Welsh and develop a safe network for walking Government and public transport and cycling. Highway improvement operators in Wales. It helps to schemes must now incorporate actions to stimulate modal shift from private enhance provision for active travel. transport to public transport through the provision of up to date travel This is further supported by numerous information about all local bus initiatives to break down barriers to services, Bwcabus, TrawsCymru and everyday walking and cycling and increase rail services across Wales through a the proportion of adults who cycle at least call centre, website, apps, journey once a week from the current 6 per cent68 planner and marketing campaigns such as Safe Routes in Communities, across Wales. the Local Transport Fund, and the Active Journeys and Eco-schools programmes. Campaigns such as New Leaf, the Traveline Challenge and Traveline The public sector has a responsibility to Heroes have all been designed take a leadership role in helping people to to reach a wider audience and make more journeys by walking, cycling encourage customers to tell their and public transport. friends and colleagues about the We have invested in schemes such as services provided, to challenge Nextbike in Cardiff, a clear example of people to make changes to their the potential to change attitudes to active travel habits and to be more aware travel, where users had collectively cycled of how making those changes can 140,000km within six months of the impact the environment. scheme launch in March 2018. 68 Active Travel Statistical Bulletin, December 2018, Welsh Government Prosperity for All: A Low Carbon Wales 102 Case Study 14 - Nextbike Proposal 13 - Significantly increasing Nextbike UK Ltd has been operating modal share of active travel for an on street cycle hire scheme in short journeys Cardiff since March 2018. The We will be reviewing our ambition for scheme was extended to increase the active travel, and will be developing number of bikes and stations from challenging targets. We recognise 500 bikes and 50 stations to 1000 that active travel initiatives will require bikes and 65 stations. 250 e-bikes sustained funding beyond 2020 in order will also be installed in 2019/20. to help realise ambitious plans for each Since its launch the scheme has local authority to create a comprehensive made a very high profile and positive network of routes and make active contribution to the visibility of cycling travel the obvious choice for everyday as a mode of transport in Cardiff. local journeys. By October 2018 over 25,000 people We propose that this will need to be had registered as members and over supported by measures to encourage 110,000 rentals had taken place. people to use the infrastructure such as Bikes are already being used for four cycle training for all ages, personalised trips per day, which is the highest travel planning and an expansion of bike- usage statistics outside of London. share schemes. The scheme will provide enhanced Policy 47 - Increasing travel by rail access to affordable transport by socially and economically There were 30.45 million rail passenger disadvantaged people, in particular journeys in Wales in 2016-17, the highest those living in the Southern Arc areas level since 1995-96. of Cardiff. Increasing the number A £2 billion investment programme will of trips made by bike can also play bring about a step-change improvement a key role in reducing noise and air in the Wales and Borders Rail Service, pollution and lessening the negative benefiting communities the length and impact of cars on local communities. breadth of Wales. Delivered by Transport This could result in improving quality for Wales, the investment will enable new of life by delivering safe and easy rolling stock, the modernisation of all 247 to use transport to key facilities and stations and the provision of new services, services. encouraging people to use the railway Prosperity for All: A Low Carbon Wales 103 network. By December 2023 an extra 285 of an ambitious, realistic, and equitable (29%) more services every weekday will rail investment programme for Wales be operational. Electrified lines and new to include the electrification of Wales’ rolling stock will result in a 25% reduction railway lines. in CO2 emissions across the rail network. Policy 48 - Increasing travel by bus Case Study 15 - Metro We are working to reform the bus industry The South Wales Metro is an to improve quality and integration. ambitious project connecting people Welsh Government has a strong with jobs and leisure opportunities commitment to bus services in Wales, across South East Wales in a fast, spending over £220 million each efficient and environmentally positive year on bus grants, concessionary way, linking public transport and fares,‘MyTravelPass’ young persons’ active travel. discount scheme, non-emergency health Phase 2 of the Metro, to be delivered transport, school transport, and the by Transport for Wales by 2023, will TrawsCymru service. 100 million passenger transform the current Core Valley journeys in Wales are made each year by Lines rail network to a more frequent bus but it is recognised that improvements and faster service. It will enable four are needed to address weaknesses caused trains per hour to each of the heads by the deregulation of the bus market. We of the valleys (Treherbert, Aberdare, also need to support the bus industry by Merthyr Tydfil and Rhymney) and ensuring that bus journey times are not direct connectivity into Cardiff Bay hampered by congestion. from across the Core Valley Lines To deliver a truly integrated transport network. The newly electrified system in Wales, we need to ensure that lines will be powered with 100% bus services in Wales meet the needs renewable energy. of passengers and are integrated with We will build on this momentum rail and other transport services. The and extend it to the North Wales and Welsh Government launched a White Swansea Bay Metro concepts. We Paper consultation in December 2018 committed an additional £50 million on proposals to legislate to improve the to move forward our plans for the effectiveness of bus services including North East Wales Metro. establishing Joint Transport Authorities, Enhanced Quality Partnerships, use of franchising, enable local authorities to run Our ambitions for rail are greater, and we their own bus services and greater sharing will continue to press UK Government of travel data. to fund the development and delivery Prosperity for All: A Low Carbon Wales 104 We want to achieve a bus network that maximise accessibility by walking, cycling works for the people of Wales, that we and public transport, by prioritising can be proud of, and is sustainable in the provision of appropriate on-site the long-term. That means it must work infrastructure and, where necessary, seamlessly with our plans for rail, road, mitigating transport impacts through the active travel and strategic park and ride in provision of off-site measures, such as the order to create a high quality, low carbon, development of active travel routes, bus integrated public transport system across priority infrastructure and financial support the country. for public transport services. We published a draft Regulatory Impact It is Welsh Government policy to require Assessment (RIA) in January 2019, which the use of a sustainable transport will seek to identify the likely costs, hierarchy in relation to new development, impacts and benefits of the proposed which prioritises walking, cycling and legislative changes. public transport ahead of the private motor vehicles. We will work to create Policy 49 - Use planning policy to new mixed use developments at major promote sustainable travel and reduce public transport interchanges which will the need to travel give people the options to live and work The planning system has a key role to without the need for private cars. play in reducing the need to travel and The transport hierarchy also recognises supporting sustainable transport. PPW, that Ultra Low Emission Vehicles also launched in December 2018 to underpin have an important role to play in the all future planning decisions, puts an decarbonisation of transport, particularly emphasis on people and places to ensure in rural areas with limited public developments built today leave a legacy transport services. New non-residential of well-designed, sustainable places which developments providing 10 car parking improve lives. spaces or more will now be required to Welsh Government’s commitment to have charging points in at least 10% of reducing reliance on the private car and the spaces available. We will consult on supporting a modal shift to walking, amending Building Regulations to ensure cycling and public transport is reflected that new homes and developments in in the policy. The policy states that Wales provide for EV charging capability. development proposals must seek to Prosperity for All: A Low Carbon Wales 105 We will use measures that increase We will take account developments of all the uptake of electric and ultra low ultra low emission vehicle technologies emission vehicles through: and continue to engage with industry and academia to monitor the opportunities The transition to ultra-low emission offered by technologies such as vehicles, essentially battery electric vehicles, hydrogen fuel. hydrogen fuel cell electric vehicles, and plug-in hybrid electric vehicles, is crucial to The radical changes which technology the achievement of our carbon reduction is enabling, and the possibilities offered targets. Global and EU emission targets by future Connected and Autonomous are driving change through the transport Vehicles have the potential to massively industry and technological advances offer accelerate the decarbonisation of massive opportunities. transport. The industry chapter of this plan sets out how Welsh Government Welsh Government believes that 60% of will support innovation within Welsh new car sales in Wales must be ultra-low businesses to address the challenges and emission vehicles by 2030, in line with opportunities of tackling climate change the UK Climate Change Committee’s with transport will be a key element. central scenario. Policy 51 - Plan for and invest in EV Policy 50 - Increasing the proportion charging infrastructure of vehicles which are electric and ultra low emission We will work with UK Government, local authorities, the energy sector and We will encourage UK Government to business to plan for and implement the retain incentives which promote the uptake roll out of EV charging infrastructure. By of electric vehicles to ensure targets for the investing £2m by 2020 we will help create decarbonisation of transport are met. a network of rapid charging points to UK Government has set out in ‘The Road enable longer distance travel by electric to Zero’ how it will use its reserved powers vehicles throughout Wales. and levers to promote this transition; Lack of charging infrastructure should to promote the affordability at this not be a barrier to EV uptake in Wales. early stage of adoption and to support We will set out a plan for public charging enabling infrastructure across the UK. The infrastructure to at least meet the demand comparative costs of electric vehicles with created by 60% of new sales for cars their petrol and diesel equivalent is a key and vans being electric vehicles by 2030 factor influencing their uptake. Price parity (around 35% Plug in Hybrid and 25% is anticipated by the mid 2020s but UK Battery electric). Government must not remove incentives before this is genuinely achieved. We are investing Prosperity for All: in A active travel routes Low Carbon Waleswhich enable people to By ensuring that all buses in Wales are zero or ultra 106 low walk and cycle more. emission we will contribute towards CO2 emission reduction and will help to deliver clean air in our towns and cities. Policy 41- Increase travel by rail We will encourage the UK Government to retain incentives which promote theuptake of electric vehicles to ensure targets for the decarbonisation of transport are met. Analysis undertaken for the UK CCC in also support innovative actions to test 201869 estimates that the number of rapid and promote smart charging, renewable chargers (43+kW) located near the major energy, energy storage and local energy roads network needs to increase by 2.5 network linked to electric vehicles. times by 2030 to meet en route charging Policy 52 - Aiming to reduce the requirements. The number of fast chargers carbon footprint of buses to zero by (22kW) required for ‘top-up’ charging 2028 needs to increase ten-fold. The increase for both these types is likely to be greater By ensuring that all buses in Wales in Wales which has proportionately fewer are zero or ultra low emission we will chargers currently than the rest of the UK. contribute towards CO2 emission reduction and will help to deliver clean air We expect that business and industry will in our towns and cities. drive much of the roll out of charging infrastructure but it is essential that UK In addition to the actions to reform the Government takes into account the bus industry described above, we will differing geographical and economic put in place a plan to deliver on the aim context for the deployment of charging in contained in Welsh Government’s EAP to more rural areas to ensure that no one is deliver zero tailpipe emission bus fleet by left behind in this transition. 2028. The Road to Zero strategy sets out how UK Policy 53 - Aim to reduce the carbon Government will support the deployment footprint of Taxis and Private Hire of charging infrastructure throughout the Vehicles to zero by 2028 UK through initiatives such as the £400 million Charging Infrastructure Investment By promoting and facilitating an early Fund. We will work to encourage the transition to ultra low emission taxis uptake in Wales of UK Government grants Wales will make a big stride forward in such as the Electric Vehicle Homecharge decarbonising transport and improving Scheme, the Workplace Charging Scheme air quality. and the On-street Residential Chargepoint As at March 2018, there were just Scheme. fewer than 10,000 taxis and Private Hire The planned large scale uptake of electric Vehicles in Wales70. Reducing emissions vehicles will place pressures on the from taxis and PHV will contribute to electricity grid in Wales; we will work with improving air quality in our towns and the energy sector to plan for this. We will cities as well as contributing to our decarbonisation targets. 69 Plugging the Gap: An Assessment of Future Demand for Britain’s Electric Vehicle Public Charging Network https://www.theccc.org.uk/wp-content/uploads/2018/01/Plugging-the-gap-Assessment-of-future-demand-for-Britains-EV-public-charging-network.pdf 70 https://www.gov.uk/government/statistical-data-sets/taxi01-taxis-private-hire-vehilces-and-their-drivers Prosperity for All: A Low Carbon Wales 107 Welsh Government launched a Policy 54 - Reduce Transport consultation on proposals to legislate Emission for reforming the licensing of taxis and Welsh Government supports the use of private hire vehicles in December 2018. challenging new vehicle standards to This included proposals that a national reduce CO2 and other emissions from standard should apply which specifies transport and international policy action to requirements for the vehicular emissions reduce emissions in aviation and shipping. of taxis and PHVs. UK Government has pledged to pursue Proposal 14 - Piloting activity to a future approach to vehicle emissions promote the use of zero and ultra low regulation that is at least as ambitious as emission road vehicles current arrangements agreed at EU level. We will assess the potential of pilot activity We are acting to reduce poor air quality to trial the adoption of zero tailpipe on the Welsh road network and in towns emission public transport and taxis at and cities and have instigated a reduced specific locations and realise our ambition 50 mph speed limit (current speed limit to establish Wales’ first all electric public 70 mph) over 5 discreet stretches of transport town in advance of wider roll- motorway and trunk road to tackle poor out. We will also assess the potential to air quality. We have developed a Clean use innovative approaches to link ultra Air Zone Framework for Wales which low emission vehicles with community provides guidance to local authorities who transport and energy schemes and links are considering options to address local with renewable energy schemes. air quality issues. We will also consider the potential impact of a 20 mph limit in Proposal 15 - Promote the urban areas on vehicle emissions and the decarbonisation of Private Sector uptake of active travel taking into account fleets in Wales recent assessments by Public Health Wales. Building on the work to decarbonise The new Wales and Borders Rail Service public transport fleets (covered in the will attract new rolling stock that will Public Sector procurement section in reduce GHG emissions across the board this Plan) we will work to promote by 25%. The new rolling stock will be awareness of whole life costs and assess operational by 2022. We will continue charging infrastructure needs for private to press UK Government to fund the transport fleets. electrification of rail lines in Wales. We will reduce emissions from road Welsh Government supports international and rail transport through vehicle and efforts to push to reduce emissions from fuel efficiency measures. international aviation and shipping. Prosperity for All: A Low Carbon Wales 108 Improving choice at Cardiff Airport and supporting public transport links also means that air travellers need to travel less by private car to make air journeys. Cardiff Airport introduced measures in 2016 which ensures operating aircraft use the shortest route to and along their final approach to the runway. This significantly reduces track miles covered by the aircraft. Cardiff Airport also encourages airlines to operate continuous descent approaches which significantly reduce fuel usage and require that aircraft taxiing from stand to runway operate at minimum power to reduce noise and fuel use.

7. Well-being The aim of the policies and proposals for the first carbon budget and subsequent carbon budgets will be to work together to move towards a sustainability transport system that maximises societal well-being. Travel in Wales is currently dominated by the private car. Therefore the transition to low carbon vehicles and modal shift to public transport and active travel, will have significant public health benefits in terms of reducing air pollution. Active travel, such as walking and cycling, also provide other significant co-benefits. the economy through more efficient use Lack of exercise is linked to diabetes, of our transport networks71. dementia, depression, heart disease and some cancers. This is reduced by greater The Well-being Matrix Tool highlighted use of active travel (i.e. walking and how the active travel maps against strong cycling). Not only does this have major direct and wider benefits in relation to the benefit for health and the NHS in terms of well-being goals, in particularly against a cost savings, it also has major benefit for healthier, more prosperous and cohesive the transport system as a whole, and for communities Wales. 71 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/371096/claiming_the_health_dividend.pdf Prosperity for All: A Low Carbon Wales 109 Industry Sector to the mid 2030s through incremental improvements to energy efficiency The industry sector includes alongside switching to bioenergy and manufacturing, construction, cement electrification of heat. production, operation of machinery, food processing and the extraction Emissions from industry include those and production of fossil fuels. from energy use and process emissions. Industrial sectors with significant process emissions include iron and steel, chemicals 29.3% and cement. Energy consumption is a major cost element for companies of all sizes, especially energy intensive 10.2% businesses and large sized energy users. Environmental policies such as the 14.4% EU Emissions Trading System and the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme encourage 32.8% business and industry to operate in a more environmentally friendly way and provide an incentive to closely manage 12.4% energy production and use, alongside 1.7% 1.1% reducing emissions. -1.9% Energy intensive industrial sectors, in

1. Ambition conjunction with UK Government, In the low carbon transition, ensuring have developed decarbonisation and a sustainable, competitive industry and energy efficiency pathways72 which have business environment is paramount. We identified technically achievable scenarios need to steer the growth of a resilient for further industrial decarbonisation economy where we can continue to and energy efficiency improvements to exploit our capabilities in new low-carbon 2030 and 2050. These pathways have technologies and markets, underpinned by concluded further incremental carbon a competitive industrial base. reductions can be achieved by a continued focus on energy efficiency technologies, The UKCCC recognises that Wales has a material efficiencies across the sectors and, higher share of emissions from hard to indirectly, through decarbonisation of the reduce sectors than the rest of the UK, electricity grid. including industry for which paths to very low emissions by 2050 have yet to be identified. The UKCCC modelling projects industrial emissions to fall marginally 72 https://www.gov.uk/government/publications/industrial-decarbonisation-and-energy-efficiency-roadmaps-to-2050 Prosperity for All: A Low Carbon Wales 110 Longer term, innovation will be essential (e.g. Innovate UK) and to help build if we are to achieve significant industry collaboration. The increase in the UK emission reductions. This is not however, research and innovation budget offers just about technology improvements. It is a window of opportunity for Wales to important that we innovate in developing leverage funding. We need industry how industries service their customers and to lead on this alongside relevant finance investments. key partners. In addition to supporting Wales based

2. Where do Industry sector businesses to develop new products emissions come from? processes and services through Smart Cymru73, we see potential for both The industry sector covers emissions from industry and SMEs to adopt circular business (apart from buildings and public economy approaches to how they go electricity generators), energy production about business. This includes being (apart from public electricity and heat more efficient in the materials they use, production) and industrial processes. utilising efficient local supply chains The sector includes emissions from and considering options for recycling processes such as chemical and metal and reuse. Our lead support initiative production, refineries, manufacturing for resource efficiency in businesses is and construction, cement production, delivered through the Smart Innovation operation of machinery, food processing, programme74. and oil and gas extraction. There remain major barriers to the At 14.0 MtCO2e the industry sector adoption of ideas including the utilisation accounted for 29% of Welsh emissions of waste heat and carbon capture in 2016. Industrial emissions in Wales are storage and use. We will continue to dominated by iron and steel production work with industry to further understand and petroleum refining. Wider industry these challenges and the potential including manufacturing and construction, decarbonisation pathways. In addition, solid fuel production, cement, gas UK and EU funding has been targeted production and distribution, operation of at these areas. We need to ensure machinery, minerals and mines, chemical the knowledge from the research and production, food and drink processing demonstrators is shared, as a long-term and manufacture and paper and pulp view will be required to take ideas from also account for a significant proportion conception to demonstration. of emissions. Industrial emissions are largely comprised of emissions of carbon Welsh Government is working with dioxide (95.83%), with smaller amounts other funders to raise awareness of methane (3.54%) and nitrous oxide of opportunities outside of Wales (0.63%). 73 Smart Cymru is offers financial support to Welsh businesses to help them develop, implement and commercialise new products, processes and services. Funding is provided by the European Regional Development Fund (ERDF) https://businesswales.gov.wales/expertisewales/smartcymru 74 https://businesswales.gov.wales/expertisewales/smartinnovation Prosperity for All: A Low Carbon Wales 111 Figure 17: Graph showing Industry Table 6: How the biggest emissions sector emissions in 2016 75 sources in the industry sector contribute to the Welsh total 1% 1% 1% % of total Welsh 2% Source 2% 1% emissions 1% 1% 3% 2% 0.36 MtCO2e 1% 1% Iron and steel 11.0% 1% 1% 4% 2% 2% 38% 0.54 MtCO2e 2% 2% 1% 1% 5.31 MtCO2e Petroleum 4% 3% 3% 2% 2% 4.9% 0.58 MtCO2e0.36 0.36 MtCO2e MtCO e 2 refining 4% 4% 4% 38%38% 0.61 MtCO2e 0.54 MtCO 0.54 2e MtCO e 5.315.31 MtCO2e MtCO e 5% 4% 4% 2 2 Manufacturing 0.58 MtCO e 2.8% 0.67 0.58 e2 MtCO 4% 4% MtCO 2 e 2 and construction 0.61 MtCO 0.61 2e MtCO2 e 5% 5%0.67 5%MtCO2e 0.67 0.67 MtCO2e MtCO2e 17% 5% 5% 10% 2.36 MtCO2e 0.67 0.67 MtCO1.37 e MtCO2e MtCO2e 2

3. Progress to date 10%10% 17%17% 1.37 1.37 MtCO2e MtCO2e 2.36 2.36 MtCO2e MtCO2e Total emissions from the Industry sector Iron and steel Gas production in Wales have decreased by 37% Petroleum refining Iron steel Iron and and steel Gas Gas Industrial machinery production production between the base year (1990) and 2016, Manufacturing and construction Cement production - combustion Petroleum Petroleum refining refining Industrial Industrial machinery machinery driven largely operational changes, Pig Iron production Manufacturing Manufacturing and construction and construction Cement Cement Closed coal production production -mines combustion - combustion Pig Pig Iron Iron Sinter production production production Closed Closed coal coal mines Gas mines distribution - leakage fuel-switching to less carbon intensive SinterSinter production production Manufacture of solid fuels Gas Gas distribution distribution - - leakage leakage Chemical production - combustion fuels and improvements in efficiency Manufacture Manufacture of solid of solid fuelsfuels Chemical Chemical production production - - combustion of production. combustion Cement production - Cement Cement production production - - process emisisonst process emisisonst process emisisonst In 2016, the first year of our budget period, emissions from the Welsh Industry sector saw a 9% decline compared to 2015, driven by a significant decline in emissions from the iron and steel sector. Our industry sector is strongly influenced by variation in outputs at individual sites located in Wales and within the overall declining trend in emissions there can be significant year-to-year variability. 75 The emissions data is sourced from the Greenhouse Gas Inventories for England, Scotland, Wales & Northern Ireland: 1990-2016 and aligned to the UKCCC sectors as described in Annex 3. Prosperity for All: A Low Carbon Wales 112 Figure 18: A graph to show historic emissions for the Industry Sector and UKCCC modelling to show emission reductions for the first carbon budget (CB1) and a possible route for a contribution to an 80% reduction in all Welsh emissions in 2050 100% 25 90% 2016 80% 37% below 20 baseline 2020 2030 2040 2050 70% -35% below -43% below -66% below -72% below 58.60 baseline basleine baseline baseline Emissions ( MtCO2e) 60% 15 50% 40% 10 30% CB1 5 20% 10% 14.00 0 0% 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050 Base year CB1 Year Sector Pathway Historic-trend projection Legislated Interim Target Historic emissions Legislated Carbon Budget

4. What are we aiming for? In 2016 the sector emitted 14.0 2020 emissions target MtCO2e using up 19% of the Industry Sectors contribution to CB1. Emissions in 2020 will be 3% higher than in 2016. This will mean that Industry sector pathway to 2030 Industry Sector emissions are 35% Industry sector emissions will reduce lower than the baseline in the by 43% from baseline (1990s) levels year 2020. by the year 2030 by: Industry sector allocation for ›› improving energy efficiency measures Carbon Budget 1 of material, energy and processes, The total budget for the Industry innovation and waste heat77 sector for CB1 is estimated to be ›› increase of low carbon heat and 72.6 MtCO2e76. The Industry Sector industrial process measures contributes 32.8% of the total Welsh budget for CB1. 76 Analysis based on 1990-2016 GHGI. All absolute figure referenced here will vary slightly as our understanding of GHG emissions in Wales improves. 77 Policy outcome description expanded as per energy efficiency measures set out in CCC advice Prosperity for All: A Low Carbon Wales 113

5. How we are going to get there? industry to encourage participation in UK Government funding calls to access Figure 19: Policy Framework for funding to develop new ideas, exploit Industry aligning action with policy new technology and adopt new business action to meeting targets, budgets and models that encourage a circular economy 2030 pathway approach. Industrial sector emissions The emission reductions required to meet will reduce by 43% from baseline (1990s) levels by CB1 and the 2020 target will be delivered the year 2030 by the following policies and proposals. We will increase energy efficiency Energy efficiency Low carbon measures through: measures of heat and material, energy industrial process Policy – the EU Emissions Trading and processes, measures innovation and Policies relating to System ( EU ETS) and future emissions waste heat energy effeciency reduction policy for the traded sector Policies for uptake measures of lowcarbon heat The EU ETS is a cornerstone of in industrial process and buildings the EU's policy to combat climate change and is a key tool to reduce GHG emissions cost-effectively.

6. Policies and Proposals which Established in 2005, it is now in contribute to our carbon budget its third phase and covers more Many of the powers relating to than 11,000 power plants and heavy industry are reserved to the UK manufacturing installations in 31 90 Government. In addition, the pattern of countries (the EU 28, Norway, Iceland emissions in Wales differs to that for the and Liechtenstein). In addition, UK as a whole, with a much higher share Switzerland’s Emissions Trading of industry emissions leading to a greater Scheme is scheduled to link to the share of emissions covered by the EU EU ETS in 2020. The EU-ETS is the emissions trading system. Collaboration world's first major carbon market between industry, government and and remains the largest one. It works communities will be crucial to explore the on the 'cap and trade' principle. A opportunities around decarbonisation cap is set on the total amount of including the use of waste heat, energy certain GHGs that can be emitted by efficiency measures and capturing and installations covered by the system. reusing industrial process gases. The cap is reduced over time so that Research development and innovation total emissions fall. will be critical to enable longer-term Trading brings flexibility that ensures industrial decarbonisation by enabling emissions are cut where it costs least the development of step-change to do so at a European scale. A technological options. We will work with robust carbon price also promotes Prosperity for All: A Low Carbon Wales 114 investment in clean, low carbon chapter. Emissions from installations technologies. The scheme also of industrial sectors other than power includes mechanisms to ensure the participating in the EU ETS have increased global competitiveness of European from 10.8 million tonnes CO2e in 2005 based industry is protected. However, to 11.4 million tonnes CO2e in 2016, an it is specifically designed as a market increase of 6%. led mechanism and therefore it does During phase III (01 January 2013 to 31 not target emissions reduction within December 2020) the emissions cap for specific geographical areas such the scheme reduces by 1.7% per year. as Wales. In 2020, emissions from sectors covered The EU ETS covers heavy energy using by the system will be 21% lower than installations from industry and power in 2005. In 2030, under the steeper (see further details in the power chapter) trajectory of the revised system (Phase IV) including iron and steel, oil refineries, they will be 43% lower. coke ovens, cement clinker, glass, lime, Carbon trading policy is a devolved matter. bricks, ceramics, pulp, paper and board, However, the UK’s membership of the aluminium and petrochemicals. In 2016, EU has required the UK to adopt the EU’s emissions from the 67 installations policies and UK Government lead the participating in the EU ETS, including negotiations with the other EU Member the power sector, were responsible for States. Therefore, the Welsh Ministers’ 56% of the total emissions in Wales. This role within the existing system has been compares to 36% of total emissions in to influence UK Government’s negotiating England, 38% in Scotland and 22% in position to ensure our position is taken Northern Ireland. Emissions from all EU into account in the development of the ETS installations in Wales have increased EU ETS through successive phases. Natural from 22.9 million tonnes CO2e in 2005 to Resources Wales regulate the installations 27.3 million tonnes CO2e in 2016. This is to ensure they are compliant with the largely due to the commissioning of new requirements for monitoring, verifying and gas fired power stations which are more reporting their emissions. efficient than older models elsewhere in the EU. For further details see the Power Prosperity for All: A Low Carbon Wales 115 Future policy in this area is subject to reserved aspects relating to fiscal matters. the negotiations on the future economic Welsh Government has worked with UK partnership between the UK and the Government and the other Devolved EU. It is heavily dependent on whether Administrations to agree arrangements UK Government is able to achieve a for a No Deal outcome. In the short-term, negotiated deal and the details of any legislation is in place to facilitate a Carbon agreement on alignment or equivalency in Tax, set at £16 per tonne for 2019, which this policy area. The political declaration will come into force on 1 April 2019. which accompanied the draft Brexit All emissions covered by the EU ETS will agreement (November 2018) states “the be within scope and the system of free Parties should consider cooperation allocations currently applied to installations on carbon pricing by linking a United within the EU ETS will be honoured. Kingdom national GHG emissions trading Additional legislation maintains continuity system with the Union’s Emissions Trading in the arrangements for monitoring, System”. UK Government have also verification and reporting of emissions. expressed a preference for staying in the Over the longer-term, an emissions EU ETS through a transition period to the reduction policy for the current EU ETS end of Phase III in the event the UK leaves installations has been identified as one the EU with a negotiated deal. of the areas where a UK wide framework When the UK leaves the EU, the devolved may be required or highly desirable. nature of the policy means the National Welsh Government is, therefore, exploring Assembly for Wales as the legislature and options for a long-term carbon pricing the Welsh Ministers as the Executive will scheme with UK Government and the determine future policy for installations in other Devolved Administrations. There Wales. UK Government also has a role in will shortly be a joint consultation by Prosperity for All: A Low Carbon Wales 116 Welsh Government, Scottish Government, Climate Change Agreements (CCAs) are Northern Ireland Executive and UK voluntary schemes in which operators of Government to explore stakeholder views facilities receive a discount from the Levy on the features of future options including in return for agreeing to energy efficiency a stand-alone UK ETS, an ETS linked to the improvement targets. They aim to protect EU ETS and a carbon tax. The intention is industry sectors where competiveness may for the long-term option to be operational be affected by tax costs and to incentivise from 01 January 2021. improvements in energy efficiency and carbon reduction. Welsh Government recognises the benefits offered by large and linked Agreements allow operators of eligible trading schemes in establishing a global facilities in some energy intensive carbon price driving cost effective sectors to receive a discount on the Levy. action. If a global carbon price were to Businesses operating mineralogical or be established, the level playing field metallurgical processes are exempt from would mean there would be no need for the main rates of Levy to ensure the UK measures within the scheme to protect tax treatment of highly energy intensive business competitiveness. However, we processes is in line with tax treatments would like to explore all options to assess elsewhere in the EU. UK Government has how they might impact on emissions from confirmed that energy intensive industry industrial installations and power stations will continue to benefit from Agreement in Wales and their impact on business until 2023. competitiveness and carbon leakage. The Climate Change Agreements: Policy 55 – Climate Change Levy and biennial reports published in November Climate Change Agreements 201778 identified the energy efficiency improvements and emission reductions The Climate Change Levy is a tax on achieved by operators and sectors against energy delivered to businesses in the UK their targets for the period 1 January 2015 designed to incentivise energy efficiency to 31 December 2016. The total reported and reduce carbon emissions. CO2 emissions under the CCA scheme The Levy applies to most business users was 45.5 million tonnes (mt) compared across industry, commercial sectors, with 45.7 mt in the first target period agriculture and public services and is (1 January 2013 to 31 December 2014). charged on taxable commodities for The Levy and Agreement will continue to heating, lighting and power. Current rates operate over the budget period. of CCL (to 31 March 2019) are 0.203p/ kWh for natural gas and 0.583p/kWh for electricity. From 1 April 2019 to 31March 2020, the rates increase to 0.339p/kWh and 0.847p/kWh respectively. 78 https://www.gov.uk/government/publications/climate-change-agreements-cca-biennial-report Prosperity for All: A Low Carbon Wales 117 Policy 56 - Carbon Price Floor Economic Action Plan The Carbon Price Floor (CPF) is a UK The Economic Action Plan (EAP) published Government policy implemented to in December 2017, sets out Welsh support the EU ETS by underpinning Government’s approach to the economy the price of carbon in the UK at a level and business. It has a clear strategic aim to that drives low carbon investment. The raise levels of wealth and well-being across CPF taxes fossil fuels used to generate Wales, whilst reducing inequalities in both. electricity via Carbon Price Support (CPS) Industry and business are now required to rates set under the Levy. The CPF is a meet these requirements when receiving domestic policy and therefore the costs are Welsh Government support. We will work not borne by installations outside the UK. with our key stakeholders to maximise the opportunities the new approach provides. The CPF consists of two components See Policy 16. paid for by energy generators in two different ways: Proposal 16 - Industrial Emission Reduction Support beyond 2020 for ›› The EU ETS allowance price; Carbon Intensive Businesses ›› The CPS price which tops up the EU ETS The Environmental Protection Scheme allowance prices to the carbon floor (EPS) is a State Aid approved legal route price target. which enables us to support industry in HM Treasury confirms the target carbon delivering a wide range of environmental price and CPS rates 3 years in advance at improvements including carbon reduction. each budget and all revenue from the CPF This expires at the end of 2020. is retained by the Treasury. The costs of the The EPS is a legal route establishing a CPF are indirectly paid for by business and set of rules within which aid can be domestic energy consumers. The CPF was delivered. Projects brought forward under due to rise annually to 2020 to a price of EPS compete for funding against other £30/tCO2. At the 2014 Budget, the UK investment projects, which equally deliver Government announced a cap of the CPS against economic and other priorities set at a maximum of £18/tCO2 from 2016 in Wales. to 2020 which was extended to 2021 in the 2016 Budget to limit the competitive We will work with our stakeholders to disadvantage on UK businesses. consider the most appropriate mechanisms to incentivise industry to continue on the In the 2018 Budget UK Government decarbonisation pathway beyond 2020. announced the CPS rate will remain at This will be informed by the consolidation £18/tCO2 for 2020-21 because of recent of support under the Economic Futures significant rises in the price of EU ETS. Fund and will compliment UK wide From 2021-22, it will seek to reduce funding schemes, available now or in the CPS rate if the Total Carbon Price the future, to decarbonise industry and remains high. increase energy efficiency. Prosperity for All: A Low Carbon Wales 118 Policy 57 - Energy Efficiency Scheme The Group, to include Welsh Government – UK Government and academic representation, will build on the positive sectoral work already UK Government’s Clean Growth Strategy underway and consider the most sets out policies and proposals to appropriate ways Wales can maximise accelerate the pace of clean growth. It resource and energy efficiency and includes the development of a package of enable industry to invest in low carbon measures to support businesses to improve opportunities and deliver carbon energy productivity by at least 20% by reductions. The Group will include 2030 including the establishment of an representatives of industrial sectors industrial energy efficiency scheme to help identified by the UKCCC as most large companies reduce their energy use, challenged by decarbonisation. supporting the use of industrial waste heat and working with the Carbon Capture The Group will also consider how policies Usage and Storage (CCUS) Council to and proposals across decarbonisation consider options to deploy CCUS in the sectors including power, transport, waste UK and maximise its industrial opportunity. and buildings can contribute to industrial See policy 60 and proposal 18 for and business emission reductions. The more detail. group will also consider how products manufactured in Wales can contribute to In the 2018 Budget, UK Government a circular economy and clean growth. The announced it would establish a 5 year outcomes of the group will inform Welsh Industrial Energy Transformation Fund Government’s wider decarbonisation (IETF) as part of the Industrial Strategy targets and budgets and strengthen with up to £31579 million of investment and enhance the authority of Welsh to support high energy using businesses Government in its representations to transition to a low carbon future and UK Ministers to help ensure the scale increase energy efficiency. It will consult on and nature of the challenge in Wales is the design of the IETF in 2019. recognised and appropriately supported by Proposal 17- Industry-Led UK Ministers. Decarbonisation Group A move to a regional approach We will establish a dedicated Industry- through the EAP will enable the Welsh led Group in 2019 to consider the Government to work with industry and particular opportunities and challenges business to consider how to reduce carbon of decarbonising industrial sectors in emissions in particular areas, focussing Wales alongside ensuring a sustainable, on the particular opportunities and skills competitive industry and business development and innovation opportunities environment. to meet these challenges. This will provide 79 https://www.gov.uk/government/publications/budget-2018-documents/budget-2018 Prosperity for All: A Low Carbon Wales 119 a mechanism to further develop our from heavy industrial processes engagement with industry around the can be innovatively used to make challenges of decarbonisation post 2030, high value products and industrially which will require more fundamental important chemicals. actions. Alongside this, we recognise the significant role that innovation will play in Policy 58 - Onshore Petroleum meeting the longer-term challenges. Extraction Consenting process Case Study 16 – Innovation and Planning consent (subject to PPW10 placing fossil Industry fuels at the bottom of the hierarchy, and a Notification Direction that requires the Minister to be notified.) Innovation in the industrial sector Permits will be crucial to meet our emission reduction targets and budgets in Land-owner consent to access the land (if its our land, we can consider refusing access) a way that will secure the most industrial and economic advantage HSE consent that the proposed development is safe. for Wales from the global transition And finally, Welsh Ministers final consent for the specific activity (this is where our no support for to a low carbon economy. Whilst fracturing really kicks in). the global shift to decarbonisation offers Wales opportunities to grow our economy it also highlights the challenges faced by industry and business. The combustion of fossil fuels is The Reducing Industrial Carbon covered in the power chapter however Emission (RICE) project80 is an there are also green house gas example of innovation meeting this emissions associated with the activity challenge. Driven by a consortium of to extract fossil fuels. researchers and industrial partners in South and West Wales, funded by For fossil fuel extraction the extraction the European Regional of coal and onshore oil and gas for the purposes of energy generation are now Development Fund, it focuses on placed at the bottom of the Planning delivering transformational change Policy Wales’ energy hierarchy reflecting through the adoption of innovative their position as the least preferred processes to reduce Wales’ CO2 source of fuel for power generation. emissions and decrease Welsh Heavy Planning policy relating to coal has Industry’s energy & raw material been amended to restrict extraction and consumption. RICE will work with states that planning permission should local supply chain companies to not be granted. A Notification Direction test how carbon dioxide produced has also been published requiring any 80 https://www.swansea.ac.uk/press-office/news-archive/2018/92meu-backedprogrammetohelpwelshindustryreducecarbonemissions.php Prosperity for All: A Low Carbon Wales 120 planning application for the development Policy 59 - Industrial Heat Recovery of petroleum or coal, which the local Industrial heat recovery has potential planning authority is minded to approve, to realise significant energy and carbon be referred to Welsh Ministers. savings by reusing the waste heat either The Wales Act 2017 transfers Onshore within the industrial facility or by another Petroleum Licensing functions under end user including through a heat Part 1 of the Petroleum Act 1998 to network. There are however commercial, the to the Welsh Ministers. These new technical and practical barriers to functions commenced on 1st October implementation.

2018. The functions will include managing 14 existing petroleum licenses, the In July 2018 UK Government announced approvals associated with them and an industrial Heat Recovery Support (IHRS) decisions on whether to issue new licenses programme to further understand the which covers both conventional and challenges and barriers to adoption and to unconventional petroleum extraction. increase industrial confidence in deploying heat recovery technologies. As a new area of responsibility for Welsh Government we commissioned The IHRS Programme runs from 15 evidence in 2017 to inform our future October 2018 to 31 March 2021. Up to policy towards petroleum extraction and £18m of funding is available to support its administration in Wales. Following a the uptake of industrial heat recovery thorough analysis, we do not believe that projects which is being allocated as the evidence presents a compelling case grants through a competitive process. The that the benefits of petroleum extraction Programme is open to projects in England outweigh our commitment to sustainably and Wales. Working with UK Government, manage our natural resources. Therefore, we will continue to promote this scheme policy for petroleum extraction is to not to businesses in Wales. undertake any new petroleum licensing in Wales or support fracking. Policy 60 - Carbon Capture Utilisation and Storage We consulted on the proposed future extraction policy in 2018. Existing The UKCCC assumes that CCUS could licenses will be considered subject to our significantly reduce Welsh emissions by decarbonisation commitments and the 2050 but the deployment of CCUS in its application of Welsh Government planning Welsh scenarios does not commence until and petroleum policies in accordance with the late 2030s and will be towards the end the law. of the window of UK deployment. This reflects the greater practical difficulty and cost in the Welsh context relative to other parts of the UK. Prosperity for All: A Low Carbon Wales 121 UK Government’s industry-led CCUS study should most usefully focus on. The Council will need to work with Welsh objective will be to better understand the Government when considering steps options for delivering CCUS projects and required to reduce the cost of deploying the balance between capturing at source, CCUS in the UK. In July 2018 the Group transporting to depositories and offsetting published its independent report setting strategies. In addition, we recognise out industry’s view on how best to that we need to explore the potential to progress CCUS in the UK in order to collaborate cross-border between North enable the UK to have the option of Wales and North-West England. This deploying CCUS at scale during the 2030s, programme of work will be commenced subject to costs coming down sufficiently. later in 2019. In November 2018 UK Government Policy 61 - Food and Drink Action Plan published an action plan setting out how – Towards Sustainable Growth government can work with industry to Welsh Government’s Food and Drink find routes to deploying CCUS solutions. Action Plan ‘’Towards Sustainable Growth Proposal 18 - Commission an (2014-2020)’ was launched in 2014 to independent economic and technical deliver an overall headline target to grow feasibility study on Carbon Capture the value of the food and drinks sector Usage and Storage (CCUS) in Wales by 30% to £7 billion by 2020. The Plan includes 48 actions grouped Evidence on CCUS includes the CCUS around 5 main themes to support the Solutions Deployment Pathway Action sector, including promoting low carbon Plan, Industrial CCUS Business Models productivity and a more efficient use of and the UK Carbon Capture and Storage resources. Research Centre (UKCCSRC) 2016 report ‘Delivering Cost Effective CCS Projects applying for the Food Business in the 2020s: an overview of possible Investment Scheme (FBIS) and Rural developments in Wales and areas linked to Business Investment Scheme are scored Welsh CCS activities via shipping’81. These against their contribution to the aims studies alongside the UKCCC advice82 of ‘Towards Sustainable Growth’, which found that we will be unable to achieve include ‘Continuing to develop a green the legislated emissions reduction of at image based on sustainable production least 80% by 2050 without a significant methods’. Projects attempting to enter contribution from CCUS. FBIS also need to comply with at least one of Welsh Government Rural Communities We need more detailed and Wales-specific – RDP 2014-2020 focus areas, which information. We will work with industry to include ‘Promoting resource efficiency and understand from them what any further 81 Delivering Cost Effective CCS in the 2020s: an overview of possible developments in Wales and areas linked to Welsh CCS activities via shipping (UKCCSRC 2016) 82 https://www.theccc.org.uk/wp-content/uploads/2017/12/CCC-Building-a-low-carbon-economy-in-Wales-Setting-Welsh-climate-targets.pdf Prosperity for All: A Low Carbon Wales 122 supporting the shift towards a low carbon rapid decarbonisation of these industries and climate resilient economy’. would not only put jobs at risk but risk carbon leakage that would offshore A successor Plan to ‘Towards Sustainable production and the related emissions. Growth’, which will in effect be an The low carbon transition offers Wales a enabling plan for Food as a Foundation range of opportunities to maximise the Sector under the Economic Action Plan, well-being goals. For instance, waste heat will be launched at the end of the year. produced by our heavy industries offers The successor Plan will establish a opportunities around industrial symbiosis, refreshed vision for the food sector, a district heating networks for communities stronger set of key performance indicators and future competitiveness in a global low and targets, and a clear map of support carbon economy. for the sector. In return and in line Decarbonisation of our industry could allow with the EAP’s Economic Contract and us to become a world leader in cutting Calls to Action, businesses will have to edge and clean technologies and exporting make commitments in order to receive these to the rest of the world. The UK’s investment or in-kind support including low carbon economy has the potential to focus on decarbonisation. deliver export sales of low carbon goods and services around the world. By 2030

7. Well-being annual exports could be worth up to £170 The aim of the policies and proposals billion and could support up to 2 million for the first carbon budget and ‘green collar’ jobs by 203084 contributing to subsequent carbon budgets will be growth significantly. to work together to reduce emissions The EAP is Welsh Government’s key policy from our industrial sector at a to drive inclusive sustainable growth scale and rate that maximises their and future-proof the economy through contribution to the well-being goals. our direct support for businesses. The Supporting the transition to a low carbon Well-being Matrix Tool showed that the industrial sector is crucial to Wales. In EAP had a strong positive direct benefits 2017, 146,000 people work directly in against a more equal Wales, a Wales of manufacturing alone in Wales83 without cohesive communities well-being goals. accounting for those employed in supply chains and supporting services. Unilateral 83 https://gov.wales/docs/statistics/2018/181031-workplace-employment-industry-2001-2017-en.pdf 84 https://www.gov.uk/government/news/world-first-carbon-net-zero-hub-of-heavy-industry-to-help-uk-seize-global-economic-opportunities-of-clean- growth Prosperity for All: A Low Carbon Wales 123 Land Use, Land Use Change It is crucial that the sector in Wales should remain a net sink for carbon for & Forestry (LULUCF) Wales to meet its own climate change targets. To do this, the store of carbon

1. Ambition in the biomass in the natural and built The Land Use, Land Use Change and environment should increase and that Forestry (LULUCF) sector is the only the overall amount of the sink will need one, which has the current capability to to increase significantly, in line with the remove emissions from the atmosphere. recommendation of the UKCCC. Locking up atmospheric carbon through plant photosynthesis is the only available Therefore, we need to increase our and functioning mechanism we have to woodland creation activity and ensure the “clean up” past emissions. The UNFCCC management of our soils is sufficient to be and stakeholders have commented compatible with our statutory obligation. that negative emissions are essential Whilst the UKCCC recommendations are to achievement of global climate mainly focused around the role of trees we change targets. recognise there are wider opportunities for carbon storage through safeguarding and increasing carbon stores in soils and other biomass. 29.3% We also recognise that policies and proposals in this sector provide wider benefits for society. Our Natural Resources 10.2% Policy introduced by Part 1 of the Environment Act is one of our corner 14.4% stone policies for tackling GHG emissions and delivering multiple benefits, through nature based solutions, resource efficiency 32.8% and taking a place based approach. Therefore we need to increase both tree cover and restore and enhance our soils in 12.4% 1.7% a way that provide the wider benefits for 1.1% -1.9% human health, environment and business. Enhancing the resilience of our ecosystems Prosperity for All: A Low Carbon Wales 124 will help us to adapt to climate change. extraction for fuel production. There is They also support wider benefits for only a very small amount of this in Wales. society such as maintaining supply of food As such peatland is currently not well and renewable products, such as, timber represented in our carbon budgets or and clean water to meet the needs of within the current emission pathways Welsh people, environment and business. advised by the UKCCC. We expect that The policies we develop in the short-term a new methodology will be introduced for post-Brexit support will be crucial during our first budget period, which to support the emissions reduction and will take account of a wider range of removals as well as providing these wider emissions from peatland. This will alter benefits. the overall LULUCF inventory for Wales and it makes it important that we consider

2. Where do LULUCF sector emissions peatland management within our policies come from and proposals for CB1. At -0.77 MtCO2e, LULUCF provided a net reduction in Welsh emissions in 2016. Figure 20: Graph showing LULUCF The emissions reduction is largely due to sector sinks in 201685 the action of forest land removing carbon -4% dioxide from the atmosphere. However, -6% 0.09 MtCO2e 0.16 MtCO2e the sector comprises both sinks (activities that remove carbon dioxide from the -11% atmosphere) and sources of emissions. 0.27 MtCO2e In 2016, the largest sinks are existing forest land (67%), cropland conversion to grassland (12%) and existing grassland -12% 0.30 MtCO2e (11%). The largest emission sources in the sector arise from grassland conversion to cropland (30%), existing cropland (23%), -67% 1.70 MtCO2e grassland conversion to settlements (21%) and existing settlements (16%). A key component of the LULUCF activity Forest Land remaining Forest Land in Wales is through soil and peatland Cropland converted to Grassland Grassland remaining Grassland management. However, the UK GHG Harvested Wood Products Inventory currently uses a relatively simple Settlements converted to Grassland methodology for peatland emissions Settlements converted to Grasslands modelling. This takes account only of horticultural peat extraction or peat Total sink (2016): -2.53 MtCO2e 85 The emissions data is sourced from the Greenhouse Gas Inventories for England, Scotland, Wales & Northern Ireland: 1990-2016 and aligned to the UKCCC sectors as described in Annex 3. Prosperity for All: A Low Carbon Wales 125 Figure 21 – Graph showing LULUCF Table 7: how the biggest emissions in the sector sources in 201686 land use and forestry sector contribute to the Welsh total 5% 5% 0.09 MtCO2e 0.09 MtCO2e % of total Welsh Source emissions 30% 16% 0.53 MtCO2e Grassland 0.29 MtCO2e converted to 1.1% cropland Cropland remaining 0.8% cropland 21% 23% 0.36 MtCO2e 0.40 MtCO2e Grassland converted to 0.8% settlements Grassland converted to Cropland Cropland remaining Cropland Grassland converted to Settlements Settlements remaining Settlements 3. Progress to date Forest Land converted to Grassland The LULUCF sector in Wales has remained Other LILICF sources a net sink of GHGs since 1990 with the Total source (2016): 1.75 MtCO2e size of the sink growing by 6% between the base year (1990) and 2016. In 2016, the first year of our budget period, Welsh LULUCF sector emissions decreased by 29% compared to 2015 driven largely by a change in the forest land sink. 86 The emissions data is sourced from the Greenhouse Gas Inventories for England, Scotland, Wales & Northern Ireland: 1990-2016 and aligned to the UKCCC sectors as described in Annex 3. Prosperity for All: A Low Carbon Wales 126

4. What are we aiming for? 5. How we are going to get there? 2020 emissions target Figure 22 – Policy Framework for Whilst there is considerable LULUCF Aligning policy action to uncertainty in LULUCF sector meeting targets, budgets and 2030 reporting compared to other PAGE 103 pathway sectors, we along with the UKCCC believe the sector will provide a Land Use, Land Use Change sink, together with the mitigation and Forestry emissions will reduce from baseline levels activities identified in the other by the year 2030 sectors, which will enable us to deliver the overall NWEA budget and targets. Tree cover Safeguarding e.g. policies to and increasing The LULUCF sector will continue to increase forest, carbon stores in provide a sink from baseline levels in woodland and soils and biomass hedgerows e.g policies that the year 2020. change the use of land from one to LULUCF sector allocation for another Carbon Budget 1 We intend that this sector should 6. Policies and Proposals remain a sink. We aim to work with The policy action in this area focuses on UKCCC to improve methodological two broad areas of increasing tree cover approaches and quantify its and safeguarding and increasing carbon contribution more fully. stores. We will take appropriate steps LULUCF sector pathway to 2030 to ensure that our woodland creation activity is sufficient to be compatible We will significantly increase the with our statutory obligation to reduce LULUCF sink in Wales by the year carbon emissions by at least 80% in 2030 by: 2050. Woodland creation is also essential ›› increasing tree cover; and to enable increases in resilience in existing woodland, diversification of tree ›› reducing carbon loss from peatlands species and restoration of open habitats. and building carbon stores within Woodlands also support wider benefits for biomass. society, such as supporting natural flood management or absorbing pollutants from Prosperity for All: A Low Carbon Wales 127 the air, while at the same time maintaining the role of decarbonisation and the wider supply of renewable products, including benefits that well-located woodland has timber and wood fibre to meet the future for our well-being and prosperity. Our needs of Welsh society. trees and woodlands are vital in delivering our national priorities. Wales needs both In addition to increasing tree cover, large and small scale, diverse woodlands we need to safeguard and enhance that include both conifer and broad- the carbon in our soils. Peat is found leaved species. We also need greater throughout Wales and modification and integration between woodland and other degradation can negatively impacted upon land uses and a removal of the historical, their ability to deliver a range of ecosystem artificial distinction between farmland and services, most notably; their ability to woodland management. We must also absorb and store carbon. recognise the fundamental importance The emission reductions required to meet of increasing the number of trees in our CB1 and the 2020 target will be delivered towns. New woodland will need to be by the following policies and proposals created and trees established to provide covering these areas. greater connectivity and to address key challenges, in both rural and urban areas. We will increase tree cover through: In taking forward action we will: Policy 62 – Implementing our Natural Resources Policy ›› encourage good forest design and sustainable management that makes a For woodland and foresty, the priority positive contribution to the character nature-based solution is increased canopy and quality of the landscape, improves cover and well located woodland, for the biodiversity value of the forests, and example close to towns and cities where secures wider benefits, such as flood risk it will have the greatest recreational and management; ecosystem service value. This recognises Prosperity for All: A Low Carbon Wales 128 ›› improve the climate resilience of the adopted an aspiration of target of planting forest resource and its capacity to 100,000 ha of trees between 2010 and resist pests and diseases through more 2030. Planting rates in the first 7 years of appropriate species and provenance that is period have only been a fraction choice, coupled with adaptive of the required 5,000 ha per year. The management approaches; recently published strategy provides a ›› work across government to support the more realistic target updating in line with higher value use of our timber resources, the UKCCC’s advice up until the 2020’s. in particular in the construction of high This requires developing new approaches quality housing; and to incentivising and helping landowners overcome barriers to planting, both real ›› carefully manage trees and woodland and perceived. that have high environmental values, including ancient woodland sites, and Policy 64 - Felling licences ancient, veteran and heritage trees, We will continue to replant trees in the which are an irreplaceable resource right places. Within existing woodland, all that provide a wide range of ecosystem felling is regulated by Natural Resources services. Wales. Felling of trees will continue to require a licence and licences will specify Natural Resources Wales (NRW) has a duty replanting with trees of the area of to implement the Natural Resources Policy woodland that has been felled. Only in in a local context through area statements, exceptional circumstances, to restore which must be published by 2020. Area open habitat of high environmental statements will set out the local priorities value, will licences for clearfell be granted for action including identifying areas of unconditionally. Where unconditional opportunity and constraint for woodland licences are granted, NRW will take creation. They will set out the actions that account of the carbon emissions impact NRW can take. NRW must also encourage of their decision. Before issuing an others to take steps to implement an unconditional licence for clearing of area statement. woodland, NRW will seek to negotiate Policy 63 - Woodland for with the applicant to secure planting Wales Strategy of an alternative and equivalent area of new woodland to compensate for the Welsh woodlands and trees are vital to the loss of woodland that would occur if an delivery of the priorities as set out in our unconditional licence were issued. Natural Resources Policy, The Woodlands for Wales strategy is key component on delivering these priorities. In the past we Prosperity for All: A Low Carbon Wales 129 Policy 65 - Welsh Government supporting natural flood management or woodland estate absorbing pollutants from the air, while at the same time maintaining supply of We will increase the size of our own renewable products, including timber and woodland estate. The Welsh Government wood fibre to meet the future needs of Woodland Estate is managed by NRW. Welsh society. The Minister for the Environment set out Welsh Ministers priorities for the estate in In the summer of 2018 we published the foreword to the report on the Purpose the Brexit and our Land, consultation on and Role of the Welsh Government proposals for future land management in Woodland Estate published in July 201887. Wales. This outlined two future support schemes for land managers, an Economic Proposal 19 - Increase tree planting Resilience scheme and a Public Goods Increase tree planting to at least 2,000 scheme, which will provide support to hectares per year, aiming to increase deliver more public goods from the land. this to 4,000 hectares as rapidly as Woodland creation delivers significant possible, ensuring while doing so it will public goods and our intention is to be well-located for greatest ecosystem develop further proposals in light of the service value. responses we have received to Brexit and our Land. These will set out both future We will take appropriate steps to ensure payment mechanisms for woodland that our woodland creation activity is creation and, where appropriate to sufficient to be compatible with our change our approach to the regulation of statutory obligation to reduce carbon woodland creation. Proposals arising from emissions by at least 80% by 2050. the ‘Brexit and our Land’ consultation are Woodland creation is also essential to subject to a further round of consultation enable increases in resilience in existing in 2019 and their inclusion in the Plan is woodland, diversification of tree species for information rather than representing a and restoration of open habitats and can clear commitment at this point. support wider benefits for society, such as 87 https://naturalresources.wales/about-us/what-we-do/welsh-government-woodland-estate/our-vision-for-the-welsh-government-woodland- estate/?lang=en Prosperity for All: A Low Carbon Wales 130 We will provide guidance to help NRW as We need to give those who want to plant regulator for woodland creation, and land trees a transparent and predictable process managers who wish to create the new for getting permission to do so and enable woodland that we need, to demonstrate proposals that will provide significant that new woodland is established in public benefits to access support. accordance with the objective and Landowners who want to plant trees to principles of the Sustainable Management improve the resilience of their businesses of Natural Resources. will also generate significant public benefits if they do so in the right areas, Proposal 20 - Identifying preferred and their proposals are well designed areas for tree planting and meet the right standards. The UKFS Identify preferred areas for tree planting, requires at least a quarter of all planting to including for greatest ecosystem service be devoted mainly to public goods. value, and commercial woodlands and We intend to refine the woodland planting at medium and large scale. We opportunities map so that it shows have published a woodland creation both the areas where public benefit is opportunities map on our Lle web portal. greatest, and is clearer about the kind This map shows the areas where we know of planting and the scale of planting that there are significant public benefits that is appropriate in each. As we take from planting trees. We use this map to forward the proposals which we set out help prioritise applications for funding for in the Brexit and our Land consultation, tree planting. The map provides guidance we will look at further guidance and to those planning tree planting about the the regulatory process to ensure that in issues that may influence their decisions, these areas, tree planting proposals have and help them produce a design that a timely, transparent, predictable and complies with the UK Forestry Standard proportionate way to proceed. (UKFS) and is in accordance with the Objective and Principles of Sustainable We will reduce carbon loss from Management of our Natural Resources peatlands and build carbon stocks Policy. However the regulatory process within biomass through: is the same for applications that will Peatlands are defined by their deep generate significant public benefits, as for organic soils. These soils are naturally those that will not. Applicants have told waterlogged for most of the year and as us that they face particular challenges plant material is deposited it builds up in getting larger schemes approved, rather than breaking down as happens in that landowners lack the confidence to other soils. The carbon within the plant develop proposals because they cannot tell material is locked into the peat rather whether their proposal will be approved than being released to the atmosphere as even if it is in the green area on the map. carbon dioxide. The total area of peat soil in Wales is approximately 91 400ha. Prosperity for All: A Low Carbon Wales 131 Drainage, land use change, inappropriate under grassland and arable land use grazing, burning and air pollution have all (not semi-natural). Towards 2050 we damaged and degraded Welsh peatlands. need to continually look at what new Over 70% of Welsh peatlands were opportunities can be brought into play to estimated to have been modified and in further enable all Welsh peatlands being degraded condition. This has negatively brought into sustainable management impacted upon their ability to deliver securing a further 230 kt CO2-eq yr-1 of a range of ecosystem services, most emission reductions. notably; their ability to absorb and store carbon. Peatlands in degraded condition are significant sources of GHG’s rather Case Study 17 - Realising the Natural than sinks. Capital of Welsh Peatlands The collaborative Realising The Glastir Monitoring and Evaluation the Natural Capital of Welsh Programme 2015 compared present-day Peatlands project funded by emissions to natural ‘reference’ emissions Welsh Government’s Sustainable and estimated that if all Welsh peatlands Management Scheme has National were returned to near-natural condition Park Authorities, landowners, Non- emissions reductions of approximately 300 Government Organisations, farmers kt CO2-eq yr-1 would be achieved. and community organisations Policy 66 - Peatlands for the Future working together to bring Wales' peatlands into sustainable Current Welsh Government policy is to management. It consists of co- use all available mechanisms to bring ordinated action across Wales is semi-natural peatlands into sustainable delivering multiple environmental management by 2020. Semi-natural benefits through collaboration with peatlands cover approximately 66,000ha existing mechanisms together with and if restored emissions reductions of capital works covering the current approximately 70 kt CO2-eq yr-1 would ‘difficult to do’ sectors of peatland be achieved. restoration. The aim is longer term The most intensive emissions arising sustainable management supported from peatlands in Wales are from those through Payments for Ecosystem Prosperity for All: A Low Carbon Wales 132 Service (PES) including the adoption 7. Well-being of the Peatland Code1. Other critical The aim of the policies and proposals activities will lead to more co- for the first carbon budget and ordinated and coherent approaches subsequent carbon budgets will covering external funding, training, be to work together to reduce education, PES procurement, emissions from our Land Use sector monitoring and research activities at a scale and rate that maximises relevant to Welsh peatlands and their contribution to the well-being the high carbon storage potential goals. The priorities set out in the they hold. Natural Resources Policy are they key ways that Wales’ natural resources contribute across all the Well-being Planning Policy for Wales goals. Woodland provides society with a Planning Policy Wales provides for range of multiple benefits. Provided they continued protection for Best and are managed carefully and sustainably, Most Versatile Agricultural Land and they provide shelter for livestock, contains a preference wherever possible reduce noise pollution, slow down flood for settlement to expand onto existing waters and improve air, soil and water previously developed land where it quality. They are havens for biodiversity suitable for development in preference to and provide a wealth of recreational greenfield sites. opportunities and a means of improving our general health and well-being. The timber and non-timber products from our woodlands are key renewable resources which contribute to prosperity for all. We need more of them, to aid the sustainability of our industries and to contribute to a more circular economy. The Well-being Matrix Tool highlights the policy has a large impact on all the well- being goals but specifically high against a more equal, healthier and resilient Wales. Prosperity for All: A Low Carbon Wales 133 Agriculture Future changes to agricultural support,offer the opportunity to better The agriculture sector covers soil, target public funding more effectively livestock, and waste and manure in support of societal outcomes. Our management. It also covers on farm consultation ‘Brexit and our Land’ sets fuel efficiency improvement. out the choices under consideration. The principle of ‘public funding for

1. Ambition public goods’ underpins our proposed We need to develop a resilient and approach and offers farmers and land prosperous agriculture industry, which managers the opportunity to access new reduces its carbon emissions through funding streams for the delivery of public a range of approaches, including the goods, which includes decarbonisation development of improved efficiency in through improving efficiencies and carbon livestock and crop production, nutrient sequestration. management and increasing the Agriculture emissions are mainly sustainability of farm assets. derived from livestock (cattle and sheep predominantly), the use of fertiliser for growing and farm machinery. By taking a holistic view of the overall management 29.3% of the farm business, in particular the business performance, land and animals, 10.2% improvements can be made which together will contribute to tackling climate 14.4% change within the agriculture sector. We will work closely with the industry to help transition and deliver the positive 32.8% outcomes we are seeking. The levy body organisations operating in Wales, Hybu Cig Cymru (HCC) and the Agriculture 12.4% and Horticulture Development Board 1.7% 1.1% -1.9% Prosperity for All: A Low Carbon Wales 134 (AHDB) have prepared a number of Figure 23 Graph: Agriculture sector documents88 to complement the work emissions in 2016 89 of Welsh Government in reducing the 16% GHG emissions. 0.93 MtCO2e 22%

2. Where do Agriculture sector 1.27 MtCO2e emissions come from 10% 0.55 MtCO2e Agriculture accounted for 12% of Welsh GHG emissions in 2016. Agriculture 13% emissions are dominated by methane 0.76 MtCO2e 21% (62%) and nitrous oxide (28%), with 1.20 MtCO2e 18% only 10% of sector emissions as carbon 1.01 MtCO2e dioxide. This reflects the dominance of livestock enteric emissions (largely from Livestock - other cattle enteric sheep and cattle), which accounts for Fertiliser use 54% of the sector’s emissions in 2016. Livestock - Sheep enteric Livestock - Dairy cattle enteric Fertiliser use for agricultural soils is another Agriculture mobile machinery significant source of emissions, comprising Other Agricultural emissions 21% of agriculture emissions.

3. Progress to date Total emissions from the Agriculture sector in Wales have declined by 12% between the base year (1990) and 2016, driven largely by a general decline in livestock numbers and nitrogen fertiliser use. In 2016, the first year of our budget period, Welsh Agriculture sector emissions increased by 5% compared to 2015. This is largely a result of a 55% increase in the amount of nitrogen fertiliser directly applied to agricultural soils on grassland. 88 HCC - A Sustainable Future – The Welsh Red Meat Roadmap & Industry Action Plan, HCC - 20:20 Vision, HCC - Vision 2025 and AHDB - Dairy specific roadmap 89 The emissions data is sourced from the Greenhouse Gas Inventories for England, Scotland, Wales & Northern Ireland: 1990-2016 and aligned to the UKCCC sectors as described in Annex 3. Prosperity for All: A Low Carbon Wales 135 Figure 24: A graph to show historic emissions for the Agriculture Sector and UKCCC modelling to show emission reductions for the first carbon budget (CB1) and a possible route for a contribution to an 80% reduction in all Welsh emissions in 2050 7.0 100% 90% 6.5 2016 -12% above 80% baseline 21.63 2020 2030 2040 2050 6.0 -17% below -28% below -34% below -36% below 70% baseline basleine baseline baseline Emissions ( MtCO2e) 60% 5.5 50% 40% 5.0 30% CB1 20% 4.5 10% 5.73 4.0 0% 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050 Base year CB1 Year CCC Recommended Pathway Historic-trend projection Legislated Interim Target Actial emissions to date Legislated Carbon Budget (1990 - 2016)

4. What are we aiming for? In 2016 the sector emitted 5.7 MtCO2e 2020 emissions target using up 21% of the Agriculture Sectors contribution to CB1. Emissions in 2020 will be 6% lower than in 2016. This will mean that Agriculture sector pathway Agriculture sector emissions are to 2030 17% lower than the baseline in the Agriculture sector emissions will year 2020. reduce by 28% from baseline (1990) Agriculture sector allocation for levels by the year 2030: Carbon Budget 1 ›› through improved efficiency of The total budget for the Agriculture livestock production; sector for CB1 is estimated to be 27.4 ›› improved crop and nutrient MtCO2e90. The Agriculture Sector management; and contributes 12.4% of the total Welsh ›› improved on farm fuel & energy budget for CB1. efficiency. 90 Analysis based on 1990-2016 GHGI. All absolute figure referenced here will vary slightly as our understanding of GHG emissions in Wales improves. Prosperity for All: A Low Carbon Wales 136

5. How we are going to get there? Figure 25: Policy Framework for Agriculture Aligning policy action to meeting targets, budgets and 2030 pathway Agriculture sector emissions will reduce by 28% from baseline levels by the year 2030 Improved efficiency of Improved crop Improved on farm fuel livestock production & nutrient & energy efficiency e.g. policies that improve management e.g. policies to reduce animal health, breeding, e.g. policies that energy usage and mobile genetics/genomics & include fertiliser machinery nutrition and manure management. Soil and grass improvement and precision farming

6. Policies & Proposals which We will improve the efficiency of contribute to our carbon budget livestock production Support currently provided to the Improving the efficiency of livestock sector is primarily delivered through production is about optimising production multiple schemes funded through Welsh while reducing the impact on our natural Government Rural Communities – Rural resources. It does not mean increasing Development Programme for Wales 2014- animal numbers and intensifying farming. 2020, which provide multiple benefits to It is essential we balance the need to the farm enterprise and also have a positive produce food whilst ensuring a sustainable impact on climate change. The support and profitable livestock industry. This will delivered through Welsh Government require a host of actions, which include and partner organisations is far reaching investment, behavioural change and a and cross-cutting. A summary of the greater understanding of climate change. actions under each scheme and how they link to the decarbonisation agenda is set A number of our schemes aim to increase out below. the efficiency of our livestock production through improving animal health and The emission reductions required to meet welfare, technology and innovation, CB1 and the 2020 target will be delivered collaboration, data sharing and funding by the following policies and proposals. which all help to improve product quality, reduce costs and improve emissions. Prosperity for All: A Low Carbon Wales 137 Policy 67 - Red Meat Development researching alternative disease control Programme 2018-2023 measures and sharing with industry the most successful mechanisms to prevent The £9.2m Red Meat Development disease. Programme Genetic Improvement Project, aims to improve the efficiency of livestock Policy 68 - Animal Health and Welfare production and reduce the emissions Framework associated with that production. The Through our Animal Health and Welfare project aims to achieve this through framework, we will continue to improve improved genetic performance including health in livestock. It is important to breeding, survival, longevity, fertility, emphasise that adopting this approach feed efficiency and faster growth and is meant to reduce overall emissions, not finishing while also continuing to ensure enable an increase in livestock numbers. a high quality product that meets market There is scope to improve the efficiency of demands, maintains welfare standards and animal production in Wales by increasing potentially reduces waste. the amount of milk, meat or fibre produced Raising healthy stock and ensuring by fewer animals, which will reduce optimum health and welfare standards their GHG impact. There are many ways increases profitability by reducing inputs, efficiency of production can be improved allowing farmers to market animals quicker through feeding, breeding, management and reduce costs through reduced antibiotic and ensuring optimal health. Healthy use. The Flock and Herd Health Project, part animals help protect the productivity of the Red Meat Development Programme, and production levels of farmers, reduce and the recently approved £5.5m Dairy capital losses, minimise negative trade Improvement Programme (Herd Health impacts as well as reducing pollution and Planning & Monitoring project) are both carbon emissions. Prosperity for All: A Low Carbon Wales 138 Policy 69 - Farming Connect We are raising awareness with famers Programme of emission reduction activities through various communication channels. In order We will continue to offer advice, support, to change behaviours and improve farming tools and demonstration projects focussing practices, it is essential that the knowledge on cost effective emission reduction obtained through research and evidence measures to help improve efficiency and collection enhances business performance productivity, whilst also helping farmers and supports farmers at all levels. Through up-skill and develop appropriate skills for Farming Connects Skills and Mentoring the future. programme, eligible individuals registered Farming Connect, a £28m programme, with Farming Connect can access funding provides subsidised independent, tailored to complete short accredited training business support and technical advice courses to further their understanding through the Advisory Service. The Service and personal training needs. Category 2, provides advice on using recognised tools Technical advice, offers 80% funding on and techniques to achieve optimum results topics raising Environmental Awareness and from livestock, incorporating Estimated Better Livestock Handling. Breeding Values, feed options, nutrient In addition to the face-to-face training on management, housing and wintering offer, a suite of E-learning modules are options. Improving efficiency of how we also available, covering a wide range of produce our livestock and helps to reduce topics to help improve working practices the emission intensity. and knowledge to develop farm business. Through the programmes’ Demonstration Topics specifically supporting the livestock Network, made up of 8 Innovation Sites, indicator are the Livestock Health and 12 Demonstration sites and up to 36 Welfare and Forages and Feeds categories. Focus Sites per year across Wales, Farming Policy 70- Farm Business Grant Connect runs a number of trials and projects to establish and demonstrate We will provide financial assistance to new technology and farming practices for enable farmers to invest in equipment industry focusing on improved livestock to help reduce emissions and improve health and nutrient management. efficiency in production. £40m has Outcomes from the above projects and been made available under the Farm trials are disseminated through Farming Business Grant (FBG) scheme, offering Connects communication channels; on a maximum 40% contribution towards farm open events, technical articles, case capital investments in equipment and studies, social media and news articles machinery that have been pre-identified as as well as fact sheets produced by the offering clear and quantifiable benefits to Knowledge Exchange Hub in conjunction farm enterprises. with IBERS, Aberystwyth University. Prosperity for All: A Low Carbon Wales 139 Grants of between £3,000 and £12,000 from livestock production. We will are available to purchase equipment look to improve our evidence base to which support animal handling, feed inform the Welsh Inventory and future management and the administration emission targets. of antibiotics thus reducing inputs, We will also increase awareness through improving animal health, overall efficiency further dissemination and engagement of livestock and reducing the emissions with the industry in order to change intensity of livestock production. The behaviour, ensuring farmers take overall outcomes mainly focus on the responsibility for their carbon footprint Red Meat and Dairy industries particularly and understand the wider impact of the focusing on reducing the time it takes agriculture industry. to finish stock, or increasing milk yields by decreasing inputs and improving the Proposal 22 - Provide post-Brexit profitability of the end product, without support in the form of a land compromising quality. Advice and management programme that guidance offered can be applied across contains a public goods element and all sectors providing multiple benefits to an economic resilience element the business whilst positively contributing to the reduction of the business Provide post-Brexit support in the form carbon footprint. of a land management programme that contains a public goods element and an In respect of our future plans, there are a economic resilience element, replacing number of areas where we will work to the Common Agricultural Policy with reduce emissions in agriculture. a framework that also links support to emissions reduction and removals. Proposal 21 - We will work with the farming sector to help drive efficiency Proposals arising from the ‘Brexit and our Land’ consultation are subject to a We will work with the farming sector further round of consultation in 2019 to help drive efficiency. We will do this and their inclusion in the Plan is for through improving our evidence base, information rather than representing a raising awareness and helping drive clear commitment at this point. behaviour change. We will improve soil and nutrient We will look to develop our evidence management through: base further around emission reduction Prosperity for All: A Low Carbon Wales 140 We will reduce our emissions by effective soil and nutrient management. Developing nutrient management, minimising the tailored nutrient management plans and use of fertiliser, improving manure encouraging soil testing ensures nutrients management and storage. These actions are applied in a targeted manner, which will also help to protect and enhance reduces inefficiencies and wider water and water and air quality. The policies air pollution. and proposals detailed below help to Further initiatives to improve soil and support this. nutrient management will be delivered Farming Connect Programme through the Farming Connects Skills and 2015 - 2019 Mentoring programme. We are providing skills training and advice on enhanced We will improve soil and nutrient Grassland Management, Grazing Systems, management through raising awareness, and utilising Home-grown Crops and improving knowledge transfer, skills and Forage. We are also supporting knowledge training through our Farming Connect transfer through communication Programme. channels and on-farm events offer further Farming Connect’s Demonstration information and support. Network delivers a number of on-farm Further advice and knowledge transfer projects and trials looking at improving will continue to be made available for land management practices and grazing silage and slurry storage, ensuring farmers systems which can help to reduce are equipped to meet the legal silage, emissions. In particular, the Welsh Pasture slurry and agricultural fuel oil (SSAFO) project has developed a Master Grass and regulations regarding the design (capacity), Master Soils programme providing farmers construction and maintenance of storage with practical skills and confidence to facilities for silage and slurry. implement change on their own farms. These programmes have focused on Policy – Farm Business Grant helping farmers and land managers to We are providing finance towards capital select and establish appropriate grass investments in equipment and machinery species and varieties for rotational grazing, that helps increase technical performance soil management and measuring and and delivering better crop management interpreting grass growth measurements. as well as soil, nutrient management and The Grassland and Crop Management grassland improvements. category offers subsidised support through Policy 71 - Nitrate Vulnerable Zones the Advisory Service element of Farming Connect to help farmers reduce their The Nitrate Pollution Prevention (Wales) emissions by making best use of resources Regulation 2013 are in place to protect through. The Service provides advice on water from agriculture pollution. The the most appropriate grassland and crop regulations designate areas of land which regimes, the effective management of drain into polluted waters or waters at farmyard manure and how to best address risk of pollution and which contribute Prosperity for All: A Low Carbon Wales 141 Air Quality - Crops to nitrate pollution as Nitrate Vulnerable Further regulations (which will apply to Zones (NVZs). The definition of such the whole of Wales) to address agricultural waters is as follows: pollution will be made in 2019 and will apply to all agricultural holdings in Wales ›› Surface freshwaters, in particular those from 1 January 2020. The measures will used or intended for the abstraction of include nutrient management planning; drinking water, containing or that could sustainable fertiliser applications linked to contain (if no action is taken to reverse the requirement of the crop; protection the trend) a concentration of more than of water from pollution related to when, 50 Air Quality - Farm Management mg/l of nitrates. where and how fertilisers are spread; ›› Groundwater containing or that could and manure storage standards. The contain (if no action is taken to reverse approach will be based upon the evidence the trend) more than 50 mg/l of nitrates. supporting the measures which apply in ›› Freshwater bodies, estuaries, coastal the NVZs. Therefore, emissions will be waters and marine waters, found to reduced through improved storage of be eutrophic or that could become manures and improved land management eutrophic (if no action is taken to practices, such as spreading manures at reverse the trend). the most beneficial times. The 2013 Regulations contain measures, Going forward we need to ensure which apply to agricultural holdings emission reduction is considered in any within NVZs. The measures have been regulatory reform proposals arising designed to address water pollution from the land management programme while preventing pollution swapping. consultation. Therefore, GHG emissions and ammonia Any proposals arising from the ‘Brexit emissions are also reduced within the and our Land’ consultation are subject NVZs. The measures focus on improved to a further round of consultation in use of livestock manures. In particular, 2019 and their inclusion in the Plan is for applications of livestock manures are information rather than representing a restricted to specified crop limits. Controls clear commitment at this point. are in place to ensure livestock manures can be stored until they can be applied Policy - Sustainable Production Grant when there is a nutrient requirement from £6m has been made available under the crop and when weather conditions are the Sustainable Production Grant (SPG), suitable.Currently, 2.4% of Wales is within offering a 40% grant contribution an NVZ. (between £12,000 and £50,000) towards Proposal 23 - Regulations to reduce capital investments in equipment and agricultural pollution. machinery which have been pre-identified Prosperity for All: A Low Carbon Wales 142 to specifically support famers address Policy – Farming Connect Programme and safeguard nutrient management 2015-2019 and improving water, soil and air quality We will aim to raise awareness and by reducing the impacts of agriculture evidence through out Demonstration pollution. Network projects. All Farming Connect Policy 72 - Glastir Demonstration sites receive an energy audit which identifies steps to reduce Glastir our current five year whole farm energy consumption. Results from these sustainable land management scheme, energy audits are communicated to offers payment for the delivery of specific the industry promoting best practice environmental goods and services. The and evidencing the positive impacts of main aims of the scheme are to reduce installing energy efficient lighting and the impacts of climate change within equipment by reducing overall farm costs. agriculture whilst improving water and air quality through the creation, management Policy – Farm Business Grant and restoration of woodland. As well as providing advice and evidence, We will improve on farm fuel and we offer funding through the £40m grant energy efficiency. made available under the Farm Business Grant (FBG) scheme towards capital We will reduce our emissions through investments in equipment and machinery. increasing the efficiency of our farms This support, sets at a maximum of 40% by reducing energy and water use and grant contribution, which looks to directly improving efficiency in machinery. reduce on farm energy consumption. Encouraging data capture and Grants of between £3,000 and £12,000 management through benchmarking are available to purchase energy efficient of physical and financial data enables lighting and equipment which can thorough and accurate business and directly reduce electricity usage whilst nutrient management planning. This also providing capital investment towards provides businesses with the opportunity equipment which enables farmers to utilise to gain a greater understanding of the water resources already available to them farms performance whilst also identifying through the installation of boreholes, areas for improvement and opportunities providing a private water supply. to reduce inputs. Prosperity for All: A Low Carbon Wales 143 Additionally, the FBG scheme offers around 27 MW of capacity in 201791. Our capital grant to farmers providing the forthcoming Waste Strategy will set out opportunity to purchase equipment for the next steps in terms of maximising the the preparation of land for growing energy and broader wellbeing benefits of crops. Traditionally, this process can be a more circular economy. time and labour intensive. Minimum tillage/cultivation machinery can not only 7. Well-being reduce the resource required but also The aim of the policies and proposals for reduces machinery use by cutting down the first carbon budget and subsequent the process entirely, thus reducing fuel carbon budgets will be to work together emissions from farm machinery. to reduce emissions from our agriculture Policy – Sustainable Production Grant sector at a scale and rate that maximises their contribution to the well-being Reducing tractor use and reducing fuel goals. Wales’ agriculture sector produces emissions can also be achieved by ensuring essential food for our society and large compliance with the Silage, slurry and numbers of jobs depend on farming, agricultural fuel oil (SSAFO) regulations. either within the sector itself or within the Meeting design (capacity), construction wider food sector such as food processing and maintenance of storage facilities and related retail and services together. for silage and slurry not only ensures compliance with legal obligations but also Our farmers are also the stewards of the reduces the need to spread slurry as often, natural environment, as they care for reducing tractor usage. Capital Grant the natural resources of soil, water, air available through the £6m Sustainable and biodiversity and provide essential Production Grant (SPG) offers support carbon sinks and the supply of renewable to farmers helping them to meet the resources for industry and energy. They slurry storage requirements and improve also depend directly on these natural farm design which can also include the resources themselves. collection of fresh water. The Well-being Matrix Tool highlighted Waste – Wales Waste Strategy the SMS scheme has a positive direction ‘Towards Zero Waste’ against a prosperous, resilient and healthier Wales well-being goals. The agriculture sector also links to the waste and power sector. Through the period of the carbon budget, we have been maximising our waste stream to reduce our reliance on producing electricity. For instance there is over 27 MW of anaerobic digestion (AD) capacity in Wales from 46 projects totalling 91 https://gov.wales/docs/desh/publications/181113-energy-generation-in-wales-en.pdf Prosperity for All: A Low Carbon Wales 144 Waste Management Over the last 20 years, we have moved from recycling around 5% of our

1. Ambition municipal waste in the late 1990s to 63% in 2017-18. The amount sent to landfill Wales is a global leader in waste is 11%. This transformation has been as management. After twenty years of a result of a clear strategy, supported by sustained and collective effort following investment. Reducing waste to landfill devolution, Wales is now a high recycling and increasing recycling has had a positive society, with high quality collection impact on reducing carbon emissions. systems, a well-developed re-processing infrastructure and a worldwide reputation Our ambitions are long-term and our drive for achievement. to meet those ambitions will continue. Welsh Ministers have set the objective of, by 2050, having a more circular economy and being a zero waste, one planet resource use nation. We will aim to 29.3% realise economic, social and environmental benefits whilst ensuring our approach 10.2% to resource efficiency delivers our contribution to reducing carbon emissions. 14.4% By 2050 we will, as a minimum, reduce the impact of waste in Wales to within our environmental limits. We aim to phase out 32.8% residual waste through enhanced actions on waste prevention and sustainable consumption and production and ensuring 12.4% that all potential waste that is produced is 1.7% -1.9% 1.1% reused or recycled. Prosperity for All: A Low Carbon Wales 145 We also have an ambition of ‘zero landfill’ Figure 26: Graph to show waste sector by 2025, which means we will be aiming emissions in 2016 (MtCO₂e)92 for no waste to being 5.8% landfilled in 1.3% Wales. 5.8% 1.3% 0.07 MtCO2e 0.02 MtCO2e 0.07 MtCO2e 0.02 MtCO2e Our new waste strategy 7.2%will be consulted 7.2% 0.09 MtCO e 0.09 MtCO e upon in 2019. Within the strategy will be 2 2 8.3% 8.3% proposals for a number 0.10 MtCO e of policy initiatives 2 0.10 MtCO e 2 that impact on our carbon budget including our plans to consult on halving food waste, new targets for municipal 77.4% 0.97 MtCO e 2 77.4% 0.97 MtCO2e recycling and how we aim to maximise the innovation opportunitiesLandfill presented by Landfill Composting municipal waste moving towards a more circular economy. Industrial wastewater treatment Industrial wastewater treatment Other waste Domestic wastewater treatment Domestic wastewater treatment Composting municipal waste Other waste

2. Where do waste sector emissions Table 8 Table: How the biggest come from? emissions sources in the waste sector At 1.26 MtCO2e, waste accounted for contribute to the Welsh total 2.6% of Welsh emissions in 2016, down from 2.7% the previous year. Waste % of total Welsh emissions are dominated by emissions of Source emissions methane at 94% of the sector, followed by nitrous oxide (5%) and carbon dioxide Landfill 2.0% (<1%). The dominant source of emissions is landfill, which makes up 77% of the Waste Water 0.4% sector’s emissions. Wastewater treatment Treatment makes up the second most significant source, at 15% of the sector.

3. Progress to date Total emissions from the Waste sector in Wales have declined by 62% between the base year (1990) and 2016, driven largely by the progressive introduction of methane capture and oxidation systems within landfill management. In 2016, the first year of our budget period, Welsh waste sector emissions increased by 0.8% compared to 2015. 92 The emissions data is sourced from the Greenhouse Gas Inventories for England, Scotland, Wales & Northern Ireland: 1990-2016 and aligned to the UKCCC sectors as described in Annex 3. Prosperity for All: A Low Carbon Wales 146 Figure 27: A graph to show historic emissions for the Waste Sector and UKCCC modelling to show emission reductions for the first carbon budget (CB1) and a possible route for a contribution to an 80% reduction in all Welsh emissions in 2050 100% 4.0 90% 3.5 80% 2020 2030 2040 2050 -80% below -92% below -97% below -99% below 3.0 baseline basleine baseline baseline 70% 2.42 60% Emissions ( MtCO₂e) 2.5 2016 62% below baseline 50% 2.0 40% 1.5 30% 1.0 20% 1.26 0.5 CB1 10% 0 0% 2000 2002 2004 2006 2008 2010 2012 2014 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050 Base year 1992 1994 1996 1998 2016 CB1 Year CCC Recommended Pathway Historic-trend projection Legislated Interim Target Actial emissions to date Legislated Carbon Budget (1990 - 2016)

4. What are we aiming for? In 2016 the sector emitted 1.3 2020 emissions target MtCO2e using up 34% of the Waste Sectors contribution to CB1. Emissions in 2020 will be 48% lower than in 2016. This will mean that Waste sector pathway to 2030 Waste sector emissions are 80% Waste sector emissions will reduce by lower than the baseline in the year 92% from baseline (1990) levels by 2020. the year 2030: Waste sector allocation for Carbon ›› through reducing waste emissions Budget 1 from landfill; The total budget for the Waste ›› Increasing measures to reduce sector for CB1 is estimated to be emissions from water treatment. 3.7 MtCO2e93. The Waste Sector contributes 1.7% of the total Welsh budget for CB1. 93 Analysis based on 1990-2016 GHGI. All absolute figure referenced here will vary slightly as our understanding of GHG emissions in Wales improves. Prosperity for All: A Low Carbon Wales 147

5. How we are going to get there? We have developed a whole package of measures to support this approach Figure 28: Policy Framework for including legislation, policy, delivery Waste Aligning policy action to programmes and behaviour change meeting targets, budgets and 2030 campaigns. We have set statutory recycling pathway targets for local authorities. The Landfill Waste sector will reduce Allowances Scheme sets targets to by 92% from baseline reduce the landfilling of biodegradable levels by the year 2030 municipal waste. We are also supporting local authority contracts for the energy recovery of non- Measures to Measures to recyclable wastes. reduce waste reduce emissions emissions from from waste As well as driving legislative and landfill water treatment infrastructure improvements, we are also Waste policies & Relevant policies using behavioural change and consumer proposals and proposals campaigns such as Love Food Hate Waste to help households make the most of the

6. Policies & Proposals food they use and avoid food waste. The following policies and proposals focus on reducing GHGs from landfill, Wales’ Waste Targets supporting the generation and recovery Towards Zero Waste 2010 (Wales of energy from waste and through waste waste strategy) policies: management and innovation, stimulating the move towards a more circular ›› 70% recycling of all wastes by 2025 economy. We are also working with our ›› Statutory local authority recycling partners to reduce emissions from waste targets (70% by 2024/25) set in the water treatment. Waste (Wales) Measure 2010 and the We will increase measures to reduce Landfill Allowances Scheme Wales emissions from landfill through: Regulations are in place to reduce the landfilling of biodegradable Policy 73 - Reducing Greenhouse Gas municipal waste. Emissions from Landfill We have also legislated for the We will continue to reduce emissions business and public sector to from landfill by reducing the amount of separate recyclable waste through biodegradable waste being sent to landfill the Environment (Wales) Act 2015. and increasing landfill gas capture to This will reduce the amount of waste convert to energy generation. going to landfill, enabling more to be recycled. We are planning to have regulations in place in 2019, and in effect by 2020. Prosperity for All: A Low Carbon Wales 148 We will consult on a new Waste Strategy in to be kept separate and collected separately 2019 and within that will consult on plans for recycling from business and public to halve food waste by 2025 (on a 2007 sector premises. In 2018, two energy from baseline) and further increase municipal waste plants operated in Wales, providing a recycling rates to help us achieves our aim capacity of 35 MW for the power sector in to become a Zero waste nation. As part Wales94. of the Strategy, we will continue to invest and support Local Authorities through programmes such as our highly successful Case Study 18 – Energy from Waste Collaborative Change Programme and The largest and most recent behaviour change programmes. These are energy from waste project to be measures which will help to deliver the commissioned was the 30 MWe reduction of emissions. Trident Park energy recovery facility Policy 74 - Generate Renewable in Cardiff, owned and operated Energy from Waste by Viridor. Commissioned in 2015, Trident Park diverts 425,000 tonnes We will continue to support the generation of municipal waste a year away of renewable energy from the Anaerobic from landfill, which equates to Digestion (AD) of food waste, energy 95% of residual waste produced in recovery from waste wood in biomass South Wales. power plants and the energy recovery of residual waste (the renewable element) and the utilisation of landfill gas. This reduces GHG emissions by reducing reliance on Policy 75 - Transposing the Circular fossil fuels (also see power chapter). Our Economy Package actions to support this activity include: The EU recently set a new legislative ›› our statutory recycling targets for local framework to drive resource efficiency. We authorities (which incentivises food going are already working on transposing the to Anaerobic Digestion); EU’s Circular Economy Package95 (CEP) into our own legislation. The Package includes ›› municipal waste residual treatment waste management targets and waste procurement programme (with a packaging requirements to stimulate a requirement for high energy efficiency). transition towards a circular economy. We We also aim to put Environment Act are already exceeding some of these targets provisions in place by 2020 for food waste in Wales. 94 https://gov.wales/docs/desh/publications/181113-energy-generation-in-wales-en.pdf 95 Transposition is required by 5 July 2020. Prosperity for All: A Low Carbon Wales 149 The changes will help prevent waste and, specific objectives to support low- where this is not possible, increase recycling income and long-term unemployed of municipal and packaging waste. people in areas of high social deprivation. The consortium successfully developed new ways Case Study 19 – Public Health Wales – of working, met the ambitions Circular Economy Innovation of the tender and avoided waste through Procurement and created additional greater Public Health Wales (PHW) is a public value by creating training statutory body, established in 2009, and meaningful employment which aims to improve public health opportunities. and well-being and reduce health inequalities in Wales. As part of its mission, PHW aims for all of its We will increase measures to reduce activities to contribute towards its emissions from waste water through: public health objectives, including procurement of goods and services. Proposal 24 - Exploring the opportunities provided by the water In 2016 the organisation relocated sector in reducing emissions from nine smaller satellite offices to a new larger 4,700m2 open-plan office Research and development is crucial in Cardiff Bay. It decided to use this in tackling emissions from waste move as an opportunity to embed water treatment. We need to explore the core principles of 'sustainability' opportunities around the effective use of and 'maximising public value' in green gases (biomethane) generated from the new office. Public Health Wales the wastewater treatment process – which decided to adopt a new mindset in turn would help to decarbonise heat when procuring for the design and or transport networks. Water companies supply of office furniture, equipment in Wales are already trialling innovative and floorings, and sought suppliers methods to reduce process emissions who could reuse as much of the through anaerobic digestion and exploring existing items as possible. This tackling emissions from sludge and included repairing and refurbishing Combined Heat and Power exhausts to existing items where necessary and see what can be captured and used. adding new elements as required by We need to work with the water the design. companies on the wider opportunities The winning bid was from a around emission reduction (e.g. reducing consortium which included a emission from their fleets and energy sustainable office design service, usage) as well as opportunities provided by a furniture manufacturer and a their land assets for renewable generation community interest company with or further carbon sequestration. Prosperity for All: A Low Carbon Wales 150 We propose to bring key the water reuse, repair, remanufacturing reduces companies and other key stakeholders emissions and can help develop a together to develop a routemap over circular economy. These include greater the period of Carbon Budget 1 for economic stability through increased decarbonising the water industry in resource security and new business and Wales, with actions to be implemented employment opportunities from an in subsequent budgets. expanding industrial sector. Research suggests that if we stay on the current

7. Well-being development path for the circular economy in Britain, then by 2030 the These policies and proposals aim to sector could require an extra 205,000 jobs; reduce emissions from the waste sector in way that provides multiple benefits The Well-being Matrix Tool identifies the that contribute to the well-being goals. strong link to a prosperous and globally Keeping products and resources in use responsible Wales. for as long as possible through recycling, Prosperity for All: A Low Carbon Wales 151 F-Gases Sector In Wales, the EU Ozone Depleting Substances Regulation (1005/2009) This chapter covers Fluorinated restricts the use of chemicals, which gasses (F-gases) and includes GHG damage the ozone layer. It implements emissions of Hydroflurocarbons the Montreal Protocol, an international (HFCs), Perfluorocarbons (PFCs) treaty that aims to phase out ODS and Nitrogen trifluoride (NF3), and Sulfur restricts use to very specific circumstances. hexafluoride(SF6). Emissions of these The Kigali amendment brings HFCs under gases in Wales are dominated by scope of the Protocol, which has now emissions linked to refrigeration and air been ratified by the UK and EU. The conditioning. F-gases arise in Business, EU F-gas Regulation (EU) No 517/2014 Industrial and Building sectors. goes further than the Montreal Protocol, requiring a faster rate of phasedown and

1. Ambition extending controls to a larger number ‘F-gases’ are a family of man-made gases of F-gases. used in a range of industrial applications. This is the primary framework that is Because they do not damage the expected to significantly reduce F-gas atmospheric ozone layer, they are often emissions across the UK. We assume used as substitutes for ozone-depleting Welsh F-gases change in line with the substances (ODS). However, F-gases are UK scenarios. powerful GHGs, with a global warming effect up to 23 000 times greater than In a ‘no deal’ scenario, Wales would carbon dioxide (CO2). F-gas emissions in maintain the same high standards. Wales have more than doubled since the Phase-down, licensing and associated base year following international trends of requirements will continue to apply in increasing F-gas emissions. relation to the UK after EU exit. This will ensure the UK can continue to maintain controls on ODS and F-gases to meet climate change goals and fulfil legal 29.3% obligations under the Montreal Protocol.

2. Where do F-gas sector emissions 10.2% come from? 14.4% Wales emitted around 0.65 MtCO2e of F-gases in 2016 which is equivalent to 1.3 % of total Welsh emissions for 2016. Of these F-gases, 94% of emissions 32.8% were emissions of HFC’s. They are used in refrigeration, air-conditioning, insulation foams, electrical equipment, 12.4% 1.7% aerosol sprays, medical inhalers, solvents -1.9% 1.1% Prosperity for All: A Low Carbon Wales 152 and fire extinguishers. Emissions occur 3. Progress to date through leakage during the manufacture, Total emissions from the F-Gas sector in operation and disposal of products. Wales have increased by 103% between Figure 29: Graph: F-gas sector the base year (1990) and 2016. emissions in 2016 Without the policy framework in place 3% it is likely that F-gas emissions would 0.02 MtCO2e 6% increase further. This is due to increasing 3% 0.02 MtCO2e 0.04 MtCO2e use of products and appliances using 5% F-gases, such as in refrigeration and air 0.04 MtCO2e conditioning equipment or foams used for 9% energy efficiency measures. However, EU 0.06 MtCO2e regulations will significantly reduce F-gas 41% emissions across the UK. We assume that 0.27 MtCO2e 33% Welsh F-gases change in line with these 0.21 MtCO2e UK scenarios. Air conditioning Closed foam blowing agents In 2016, the first year of our budget Refrigeration Electrical equipment period, Welsh waste sector emissions Metered dose inhalers Other F-gases decreased by 3.5% compared to 2015. Residential aerosols Table 9 How the biggest emissions sources of F-gases to the atmosphere contribute to total Welsh GHG emissions % of total Welsh GHG Source emissions in 2016 Air conditioning 0.55% Refrigeration 0.44% Prosperity for All: A Low Carbon Wales 153 Figure 30: A graph to show historic emissions for the F-gas Sector and UKCCC modelling to show emission reductions for the first carbon budget (CB1) and a possible route for a contribution to an 80% reduction in all Welsh emissions in 2050 2016 +103% above 100% baseline 0.8 90% 0.7 80% 2020 2030 2040 2050 +34% above -36% below -57% below -71% below baseline basleine baseline baseline 70% 0.6 1.88 60% Emissions ( MtCO₂e) 0.5 50% 0.4 40% CB1 0.3 30% 0.2 20% 0.65 0.1 10% 0 0% 2000 2002 2004 2006 2008 2010 2012 2014 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050 Base year 1992 1994 1996 1998 2016 CB1 Year CCC Recommended Pathway Historic-trend projection Legislated Interim Target Actial emissions to date Legislated Carbon Budget (1990 - 2016)

4. What are we aiming for? In 2016 the sector emitted 0.65 2020 emissions target MtCO2e using up 26% of the F-gas Sectors contribution to CB1. Emissions in 2020 will be 34% lower than in 2016. This will mean that F-Gas sector pathway to 2030 F-gas sector emissions are reduced to F-gas sector emissions will reduce by a level 34% above the baseline in the 36% from baseline (1990) levels by year 2020. the year 2030: F-Gas sector allocation for Carbon ›› Through demand reduction For Budget 1 existing equipment, there is a ban on The total budget for the F-gas using the most carbon-intensive HFCs sector for CB1 is estimated to be (with a Global Warming Potential 2.5 MtCO2e96. The F-gas Sector above 2,500) for the maintenance contributes 1.1% of the total Welsh and servicing of existing refrigeration budget for CB1. equipment from 2020. 96 Analysis based on 1990-2016 GHGI. All absolute figure referenced here will vary slightly as our understanding of GHG emissions in Wales improves. Prosperity for All: A Low Carbon Wales 154

5. How we are going to get there? Figure 31: Policy Framework for F-gas PAGE 132 Aligning policy action to meeting targets, budgets and 2030 pathway F-gas emissions will reduce by 36% against base year levels by 2030 F-gas e.g demand reduction policies

6. Policies & Proposals We will decrease F-gas emissions through: Policy 76 – implementing the 2015 EU F-gas regulation The 2015 EU F-gas Regulation introduced a series of measures, including a quota system, a series of bans and further leakage checks, which are expected to bring emissions down significantly by the early 2030s: ›› It reduces the quantities of HFCs that producers and importers are allowed to place on the EU market. ›› For new equipment, the regulation introduced a series of bans on the use of F-gases covering cross-cutting areas. ›› There is some strengthening of existing obligations related to leak checking and repairs, F-gases recovery and technician training. ›› It has been estimated by the UKCCC that if these policies are continued post EU exit, they will save around 0.5 MtCO2e by 2030. Prosperity for All: A Low Carbon Wales 155 Part 4 – Methodological Approach Introduction contributions this implies for Carbon Budget 1 (CB1) only. The UKCCC’s analysis This section describes the methodological suggests that we will meet the first budget approach for: predominantly through existing actions ›› how we will achieve our overall emission and provides an assessment of how this reductions, including how we are effort is currently distributed across our accounting for the policies, sectors. This is a logical approach given that there is limited time to implement ›› how we will monitor those policies; and new policy and for that to have a ›› how we have developed this Plan, significant effect on emissions within guided by the principles of the Well- the current budget period. However, being of Future Generations Act 2015. the advice highlights the need to start developing further policies to achieve our Meeting the Targets and next budget and in recognition of this, the Plan identifies longer-term policy proposals Budgets that will be needed to deliver future Under Section 39 of the Environment budgets and targets. (Wales) Act 2016 Welsh Ministers must prepare and publish a Plan (report) for Achieving these sectoral contributions each budgetary period setting out their will ensure that Wales delivers the overall proposals and policies for meeting the emission reductions required to meet carbon budget. The Plan sets out how we CB1 and the 2020 interim target, as will ensure Wales lives within the allocated well as remaining on track to deliver our budget for the period 2016-2020 and longer- term commitments. The Sector meets the 2020 interim target. Pathways Chapters in Part 3 outline the agreed sectoral contributions over the Following our own analysis, including first budget period and details the policies an internal cross-sector review, we have and proposals that will ensure these adopted the UKCCC’s recommended contributions are delivered. 80% pathway and the specific sectoral Prosperity for All: A Low Carbon Wales 156 These include actions from across all Ministerial portfolios within Welsh Government, as well as UK and EU policies and wider societal contributions that will be required to deliver our targets. These policies and proposals also take into account the recommendations made by the UKCCC in their advice and responses to our consultation ‘Achieving our low- carbon pathway to 2030’ to the first carbon budget period. Alongside this Plan we have published a summary of responses and have outlined in Annex 5 where we have developed the ideas for action further. The policies and proposals are set out in Part 2 and Part 3 of the Plan. Part 2 primarily sets out the cross cutting and facilitative policies and proposals to decarbonise, whilst maximising the benefits of emission reduction. These are mainly indirect emission reduction actions but are no less important. Part 3 of the Plan details each sector’s emissions pathway and provides the Policy Framework that will deliver these reductions, consisting of a Policy Outcome, key actions and Policies and Proposals. These policies and proposals reflect more direct emission reduction actions. The Policy Framework is explained below. Prosperity for All: A Low Carbon Wales 157 Policy Framework Carbon budget 1 Longer-term outcome for a sector with an estimated emissions savings (based on UKCCC advice, evidence and policy coverage) Key actions where we Key actions where we need to increase activity need to decrease activity Relevant policy Relevant proposals Relevant policy Relevant proposals which is a committed which will need to be which is a committed which will need to be course of action explored further course of action explored further We have shown how we will take action A Policy Outcome provides an emissions through our policies and proposals. saving underpinned by a number of A policy is a committed course of action to measures. The emission savings have which a policy outcome can be attributed been quantified from the UKCCC’s with a reasonable level of confidence. evidence and other sources of evidence, A proposal is a suggested course of for further information see Annex 3, action or exploratory action, the details which we have accepted for this budget of which might change as this course of period. The supporting measures are action is explored further. It is not possible constructed from a policy or combination to confidently attribute the realisation of related policies. of a policy outcome to a proposal until Policy outcomes are not bound by the it is converted to a policy. Many policy delivery timeframe of the existing budget proposals will continue to be developed (2016-2020) and recognise the longer into detailed policies to deliver future term need to decarbonise our economy. carbon budgets. Where a policy proposal contributes to a future Plan, the rate to To support the policy outcomes, we have which the outcome contributes towards identified the main actions we need to the budget delivery for that period will be take to achieve these outcomes. This quantified. As we go through our carbon will normally involve the increase of budget cycles, the long-term emissions particular activities (e.g. active travel), savings of the outcomes stated here may or the decrease others (e.g. reduce change, as new evidence emerges and energy demand). Prosperity for All: A Low Carbon Wales 158 further work is undertaken to quantify the To meet the requirements of this report, impacts of our policy proposals. a Monitoring, Reporting and Verification (MRV) system will be developed to The policies and proposals in this Plan are track the progress of the Plan. This will mainly focused around: provide an insight into how the policies ›› direct emission reduction activities; and proposals set out in the Plan have contributed to meeting the targets and ›› actions to develop our evidence base to budgets. It is proposed that the suite of make future decisions; quantitative performance indicators will be ›› knowledge transfer to share learning; structured in three ‘tiers’ that seek to track ›› Funding mechanisms; and progress from the national level down to the policy level. The three tiers include: ›› the role and establishment of advisory bodies and collaborative groups. ›› Tier 1: Emissions estimates which are consistent with the Environment Act Monitoring and Reporting target definition for each sector; The Environment (Wales) Act 2016 ›› Tier 2: More specific activity data, requires Welsh Ministers to prepare and or emission factors, that provide lay a statement after each budgetary information on the underlying drivers of period setting out whether Wales has met GHG in Wales. Data will generally come the budget and relevant interim targets. directly from the database compiling the GHG inventory for Wales; and The statement must explain what the Welsh Ministers consider to be the reasons ›› Tier 3: Policy-tier indicators will monitor why the carbon budget and interim target the policies and proposals which Welsh have, or have not, been met. In particular, Government is actively doing or aiming it must include the Welsh Ministers' to do to reduce GHG emissions. This will assessment of the extent to which their also include the monitoring of UK policy proposals and policies for meeting the delivery where it contributes to the carbon budget for the period have been delivery of Welsh targets. carried out, and have contributed to the In addition, further performance indicators carbon budget for the period being met will be explored to track progress on (or not being met). the realisation of the wider well-being This report must be laid before the end benefits identified in the Plan and to track of the second year after the budgetary wider contextual factors that influence period, allowing time for the emissions Welsh emissions such as population and data to be compiled from the GHG economic factors (i.e. GVA). Adopting Inventory, which requires 18 months from an integrated MRV system for tracking the close of year. For further information GHG emission reduction targets, based on on our GHG Inventory please see Annex 4. both an inventory and suite of indicators, would provide additional granularity and Prosperity for All: A Low Carbon Wales 159 insight into individual policies and actions How we developed this implemented to achieve these. Indicators enable the progress of individual policies Plan guided by the Ways to be tracked in more detail. Crucially of Working and Well- they also enable both implementation being Goals (i.e. has a policy been initiated) and The Well-being of Future Generations effectiveness (i.e. to what extent it is (Wales) Act ensures we consider the social, achieving its original aims) to be tracked. cultural, economic and environmental Such information can be used to establish impacts of our decisions, both now and a detailed feedback mechanism between for the long-term. As a result of our evidence compilers and policy makers, responsibilities in line with the Act, we allowing policies to be adapted or even also need to ensure that our decisions terminated if not effective or to establish and actions are undertaken under the if lack of impact is due to them not being ‘sustainable development principle’. In effectively rolled out. developing this Plan, we have considered It is also important to understand policy how to achieve our long-term target effectiveness given a large proportion of by looking at what actions we need to our emissions are outside of our control. take, ensuring we collaborate and involve The National Assembly’s Climate Change, stakeholders to integrate decarbonisation Environment and Rural Affairs Committee within the way we work as a government, highlighted the importance of specificity to limit further effects of climate change in looking at the effectiveness of devolved and avoid unintended consequences. and non-devolved policy interventions. Climate change is one of the biggest global challenges and requires us to work differently and come up with different solutions. We have adopted the Ways of Working under the sustainable development principle to guide and shape our action. A number of examples are provided below: Prosperity for All: A Low Carbon Wales 160 The Environment Act establishes a clear long term pathway for Wales to reduce emission by at least 80% in 2050. Whilst this first Plan focuses on the short term (carbon budget 2016-2020), it also lays the foundations for future action and continues to develop the policies now that will take us through to Long Term the 2020s and beyond. The consultation Achieving Our low Carbon Pathway to 2030 is one example of our long term thinking. It was our first step in developing future policy proposals that will deliver our emission targets and meet the needs of future generations. Setting longer term targets for renewable energy and the public sector sets a direction of travel, providing certainty and clarity to enable us collectively to maximise the well-being goals for our future generations. We need to understand the impact of our policies to limit unintended consequences. This will include the development of our wider evidence base such an emissions modelling tool and further refinement of our integrated well- being assessment matrix tool. This will allow us to develop future policies and Prevention proposals in a way that maximise the goals and limit unintended consequences. We propose to establish a climate justice advisory group to ensure our transition avoids unintended consequences. The group will be represented from a range of sectors, from heavy industry to the citizen, and will advise Welsh government on its decarbonisation policies, considering how they can deliver fair work and tackle inequalities as the industrial landscape evolves towards a low carbon economy. To drive low carbon solutions we need to integrate decarbonisation into our government processes and the way we develop and implement policy. As a Integration result of this, decarbonisation now features as the sixth priority in the national strategy: Prosperity for All, which requires the government to collectively work towards delivering our national strategy. To ensure we are making good policy decisions, decarbonisation is also a key consideration of how we develop and implement policy, from our impact assessment process to how we fund our capital infrastructure. It is also an integral part of our cross cutting policies and processes for innovation, skills and business. Prosperity for All: A Low Carbon Wales 161 To make effective change requires us to work differently. We have changed the way we work across government and with key partners from across different sectors to help shape our policy delivery, from the establishment of our accounting framework to generating Ideas for Action that will enable us to meet our carbon budgets and targets. To drive action, we have developed an extensive collaboration programme working at all levels. This included: ›› The Ministerial Task and Finish Group, which is a new Ministerial group established in recognition of the cross cutting and strategic decisions needed. ›› A cross government Programme Board to oversee implementation of the Act. The Board is supported by a series of cross government Working Groups to Collaboration drive action across government. ›› Collaborating with key external stakeholders across sectors to develop the carbon budgeting framework, the public leaders event and ideas for action in our consultation. We have now started to develop our systems thinking recognising the need to work with our stakeholders across boundaries in a joined up and integrated way. Many of the policies and proposals reflected within this Plan have been designed to ensure close and effective collaboration with partners over the remainder of the budget period, for instance the establishment of a joint industry/government working group. Feedback from our consultation also suggested we need to continue to support cross-sector external collaboration with key experts and organisations. To assist this we will work with our stakeholders to identify how we can encourage more cross sector collaboration including public and private sector. We will do this through holding a regular Climate Change Conference together to discuss progress and develop future ideas. Prosperity for All: A Low Carbon Wales 162 We recognised we needed to involve people across different sectors bringing different stakeholders together to stimulate ideas and discuss how we shoulf to meet the challenge. In doing so, we worked closely with the Future Generations Office to help guide action on the involvement principle of this Plan in particular around young people. We have changed our communications methods, introducing new communications materials to provide regular updates through social media, our newsletters and Written Statements. We have also involved people through individual meetings as well as events, actively seeking views from the broadest range of stakeholders from across all emission sectors throughout the development of this Plan. This included our consultation period and the wider events that we held since 2016 which were cross-sectoral in nature. Involvement Future generations have been at the forefront of our thinking in the development of this Plan and we have involved them through a competition and a young person’s video competition and consultation. We have continued this approach by designing the policies and proposals in this Plan with the aim of involving society in the transition. We will do this by: ›› collaborating with key partners and the Centre for Climate Change and Social Transformations and other key partners to explore how we use the media, arts and educators to communicate about the transition to a new energy system and the impacts of climate change; ›› building an evidence base to identify where we can maximise the impact of behavioural and social science; ›› collaborating with key partners through the climate just advisory group to understand the impacts of measures on people; and ›› empowering communities and young people to act as advocates and early adopters of the low carbon transition. Prosperity for All: A Low Carbon Wales 163 Maximising our goals to ensure we are all working to the same purpose for the future generations Contribution to the Well of Wales. The goals are to create a Being Goals and Objectives prosperous Wales, a resilient Wales, a healthier Wales, a Wales of cohesive The Well-being of Future Generations communities, a Wales of vibrant culture Act requires us, alongside other Welsh and Welsh language, and a globally public bodies, to carry out sustainable responsible Wales. In order to ensure we development by setting and publishing maximise our contribution to all the well- objectives and taking reasonable steps being goals, twelve well-being objectives to exercise their functions to meet them. were set within our national strategy These objectives must show how public Prosperity for All, which are mapped bodies achieve the seven well-being across the goals. Well-being Objectives Support people Deliver quality health Support young people Build resilient and businesses to and care services fit for to make the most of communities, culture drive prosperity the future their potential and language Tackle regional inequality Promote good health and Build ambition and Deliver modern and and promote fair work well-being for everyone encourage learning for life connected infrastructure Drive sustainable Build healthier Equip everyone with Promote and protect growth and combat communities and better the right skills for a Wales’ place in the world climate change environments changing world Prosperous Healthy & Ambitious United & & Secure Active & Learning Connected Key Themes ‘Prosperity For All’ - the national strategy The strategy sets out how we will deliver for Wales during this term - and set long-term foundations for the future ‘Taking Wales Forward’ - The Programme for Government 2016-2021 The programme sets out what we will deliver for Wales during this Assembly term Well-being of Future Generations Act The Act sets out the need for a long-term focus, and five ‘ways of working’ to guide the Welsh public services in delivering for people Prosperity for All: A Low Carbon Wales 164 As the Plan is a an accumulation of 76 more of the well-being goals and improve policies and 24 proposals, we can only decision making. Examples of well-being make assumption on a high level basis, impacts in the tool include GHG emissions, as there are a number of variables we energy bills, crop yields and mental health. have to consider covering different sectors We intend to develop the tool further, and time periods. This is different to including improving its usability for one policy, where it is easier to show and future Plans to enable us to look at the accurately measure the impact. cumulative effect of individual policies and However, we recognise we have a their collective contribution to the well- responsibility to show how collective being goals. We have included examples action is maximising our well-being of how individual policies and proposals objectives and goals. We are doing this have been through the tool and deliver through the way we develop our policies multiple benefits in the sector emission and looking at the collective contribution pathways chapters in Part 3. of the Plan. How the Plan maximises our How we developed the Plan to contribution to the goals maximise the goals. Although not formally required, as part Although the Plan is predominantly based of the development of the Plan we on existing policies, we recognise we decided to commission a SA to provide an have to develop proposals further into independent assessment of the Plan as a policies, in a way that maximises our whole and to help demonstrate that the contribution to the well-being goals. To Well-being goals and Objectives formed an this end, we have developed a well-being integral part of the plan-making process. policy development tool, which helps A Sustainability Appraisal is a systematic us explore the social, cultural, economic process that aims to promote sustainable and environmental impacts of potential development by assessing the extent to decarbonisation interventions. which an emerging plan or project will help to achieve relevant objectives. The tool asks a series of questions to assess what changes are expected as a Instead of following the traditional SA result of a particular policy. These changes process, we wanted to ensure that our were created by considering the Well- wider well-being requirements were being goals and our well-being objectives taken in to account. Our SA includes the and relate to a broad range of areas, principles and approach of the traditional including number of jobs, air quality, and SA and Strategic Environment Assessment community cohesion. (SEA) process, whilst incorporating our wider objectives such as the Well- The tool provides a list of expected Being of Future Generations Act, Welsh impacts, which can be positive or negative. Government’s well-being objectives and The tool can help prompt where policies requirements for IAs. Further details on the can be strengthened in relation to one or Prosperity for All: A Low Carbon Wales 165 methodology can be found in Prosperity for All: A low carbon Wales Sustainability Appraisal (SA). The SA highlighted there were no significant negative effects identified and therefore no recommendations arising from the SA. Many of the effects identified were predicted to be minor positive impacts and some were found to have negligible or neutral effects. Major positive effects were indicated through the overarching approaches in Prosperity for All: A low carbon Wales. Whilst all the factors are inter-related and cross-cutting, particular issues for energy generation and transport are identified. The SA made some suggestions for Prosperity for All: A low carbon Wales that could help enhance well-being and sustainable development or contribute to the next round of plan-making and SA, We will take the findings from the SA in to account in the development of the next phase of the programme, which starts in April 2019. Prosperity for All: A Low Carbon Wales 166 Overall Summary SA of Implementing Prosperity for All: A low carbon Wales (2016-20) WELL-BEING GOALS PROGRAMME FOR GOVERNMENT KEY THEMES PROSPEROUS AND HEALTHY AND AMBITIOUS AND UNITED AND SECURE ACTIVE LEARNING CONNECTED SA OBJECTIVES 2016-20 1 Encourage Prosperity 2 Support Employment 3 Combat Climate Change 4 Health and Wellbeing 5 Healthier Communities 6 Better Environments 8 Resilient Communities 9 Connected Infrastructure 10 Wales’ place in World 7 Skills and Learning Prosperity for All: A low carbon Wales for all Vision ++ + ++ + ++ ++ 0 ++ + +? Leadership, Integration, Collaboration and ++ + ++ + + + + + 0 0 Involvement Power + +? + + +? + 0 + + +? Industry + +? + + 0 + 0 + + +? Buildings 0 0 + ++ + + 0 0 0 0 Transport + 0 0 + + + 0 0 0 0 Waste + 0 + + + + 0 0 0 0 Land Use and Forestry 0? +? + + + + + 0 + 0 Agriculture + + + + +? + + 0 0 0 Methodological + + ++ + + + + + + + approach Categories of Significance of Effects Symbol Meaning Sustainability Effect ++ Major Positive Proposal or policy encouraged as would resolve existing sustainability problem + Minor Positive No sustainability constraints and proposal or policy acceptable 0 Neutral Neutral effect ? Uncertain Uncertain or unknown effects Minor - Potential sustainability issues; mitigation and/or negotiation possible Negative Major Problematical and improbable because of known sustainability issues; mitigation likely to -- Negative be difficult and/or expensive Prosperity for All: A Low Carbon Wales 167 Part 5 – Next Steps This Plan is the next step of a low intervene early to introduce any necessary carbon journey for Wales corrective action before the end of the Over the next year, we will continue to budget period. work on decarbonising Wales, involving and collaborating with others and Future Plans implementing the policies outlined in We will be publishing our next Plan in the Plan. 2021. Our policies and proposals will evolve as we build our evidence and Advice on our long term targets learn lessons about what does and does In May 2019, we will be receiving, not work, and as we adapt to trends in further advice from our advisory body the economy, society, technology and the UKCCC on our long-term targets in innovation. light of the Paris Agreement, ensuring they reflect our commitment to being Methodology a globally responsible Wales. We will For future Plans, we will develop and consider this advice and its implications refine our methodology for setting out for our statutory framework and report how we will meet our carbon budgets. back to the Assembly before setting the In the development of this Plan, our third carbon budget next year. We will also pathway to meeting the first budget was consider the other sources of evidence largely constructed on the basis of existing described in the Environment (Wales) policies and proposals, given that there Act 2016. is little time to develop and implement significant new policies within the current Autumn Conference budget period. This approach and the In the Autumn 2019, we will hold our first pathway for the first budget period was conference bringing people together to informed directly by the UKCCC advice look at how we collectively decarbonise. and their assessment of how the current suite of policies delivering in Wales could meet the first carbon budget. However, Monitoring and Reporting for future Plans we will need to develop We are committed to further developing a more comprehensive approach that our MRV system so we can monitor the will allow us to test the impact of new performance of our Plan and adjust the emerging policies and proposals. To actions as required during the relevant support this work we have developed a budget period. This will be a critical 2050 pathways tool for Wales. This tool process where future Plans are developed will allow us to explore and test the impact and published early in the carbon budget of differing levels of action, and different period. This will enable us to effectively distributions of actions across our sectors, monitor the progress of our Plan and on our future emissions pathways. Using Prosperity for All: A Low Carbon Wales 168 this tool the specific level of our proposed may have a more significant impact on policy outcomes can be adjusted until a reported Welsh emissions. Depending on pathway is created that provides sufficient the nature of any future changes, these confidence that they will deliver upon the improvements may be more challenging legislated carbon budget. to integrate with our published emission reduction Plans and performance With future pathway modelling in place to reporting, and in the extreme may provide complement our statutory advice from the grounds for revisions to our statutory UKCCC, the form of future Plans may take targets and budgets. The Environment on a updated form, especially with regard (Wales) Act provides for such amendments to sector classification. In order to simplify where it can be demonstrated that there our sectoral approach, we may wish to has been a significant development move from the current UKCCC sector in scientific knowledge about climate definition (Annex 2) to a classification that change, or where an amendment has more closely aligns with our own pathway been recommended by the UKCCC. modelling and the internationally agreed inventory reporting classification. We will also continually look at how we show the ways of working and maximising Over the current and future budget the well-being goals and will continue periods the internationally agreed to work with the Well-being of Future emissions inventory reporting process Generations office. will continue to evolve and improve, as we increase our scientific understanding Where indicated, the policies and of emissions. Wales will continue to proposals contained within the Plan will engage with this process and ensure be consulted on separately, where such that the Devolved Administration-GHG consultation has not already taken place. inventory provides the best possible Views received in response to both this representation of GHG emissions in Wales. Plan and the detailed policy proposals These updates may change our reporting which will follow it will be considered as of Welsh emissions and may result in we update key elements of the Plan before revisions to the understanding of Welsh setting our second carbon budget. emissions upon which the Plans were initially developed. These updates are in Working with Partners on the most cases expected to be small and can International Stage be managed within the existing flexibility We will continue to work with other mechanisms built into our accounting States and Regions on the international approach. However, for sectors where stage, sharing our collective learning to our current emissions reporting is more contribute to the challenge of global uncertain such as LULUCF, and to a lesser climate change. extent Agriculture, improvements to the inventory reporting methodologies Prosperity for All: A Low Carbon Wales 169 Annexes

Annex 1 – Wales Accounting The Act begins by assuming Wales will include all emissions generated within Framework Wales within its targets and budgets and therefore we will take action to What are we accounting for in Wales? reduce emissions in all areas. However, In terms of our accounting framework, the Act allows Welsh Ministers to vary we will account for all emissions in the coverage and approach to certain Wales, with no complicated reporting emissions. Wales’ emissions are split processes, as we believe it is the most between emissions from the traded transparent way. and non-traded sectors. The traded The Environment (Wales) Act requires sector relates to the largest emitters that for the year 2050, Wales achieves that currently fall within the European at least an 80% reduction in the Net Union Emissions Trading Scheme (ETS). Welsh Emissions Account (NWEA) Nearly 60% of our emissions come from compared to 1990 levels. It adopts the the traded sector, which includes large recommendations of our statutory advisors sites that use, or produce our energy the UKCCC and accounts for emissions and products like steel. The ETS aims to as described: gradually reduce emission through a ‘cap and trade’ approach over time. ›› In line with international carbon reporting practices. We account for The UK Government have decided emissions and removals of the basket of to remove these emissions from their 7 greenhouse gasses including Carbon accounting framework and deal with them Dioxide, Methane, Nitrous Oxide and in a different way. However in Wales we the four F-gases (HFC’s, PFC’s, SF6 will be including all emissions as it is the and NF3); most transparent approach. ›› It is calculated by taking all emissions We will include the Welsh share of produced in Wales, minus emissions International Aviation and Shipping removed from the atmosphere by trees emissions in to our Net Welsh and peatlands (carbon sinks); and Emissions Account. All flights, which operate within Welsh borders and ›› Emissions accounted for as Welsh domestic shipping, are automatically emissions within the NWEA represent included within the NWEA. However, all direct emissions that are released 1% of our emissions in 2016 come from to the atmosphere from activities international flights and shipping. The occurring within the territorial boundary method for calculating different countries’ of Wales (with the exception of those fair share of emissions from planes and emitted from International Aviation ships travelling between countries is and International Shipping which being considered at an international are also included but largely released level. Therefore we considered whether to the atmosphere outside of our it was best to wait for the outcome of national border). these discussions or to find another Prosperity for All: A Low Carbon Wales 170 way to calculate Wales’ fair share and required us to set a limit on the maximum include the emissions. In line with the amount of carbon offsets that can be used recommendation from the UKCCC we to meet the first carbon budget and 2020 decided it was the most transparent to interim target. In developing a limit we include all emissions generated in Wales took into consideration a range of factors and we would calculate our fair share including: based on the amount of fuel taken from ›› The Greenhouse Gas Inventory (GHGI) – Wales to support international flights and The GHGI provides the information on shipping. emissions produced in Wales. However, We will only use offset schemes the GHGI has inherent uncertainties. towards our targets and budgets that As our understanding of emission and are considered robust and recognised technologies increases, the GHGI is by international reporting guidelines. updated. For Wales these uncertainties Whilst our focus is on our domestic are estimated to be +/- 3%, and action, the Act allows the use of offsets therefore we need to allow flexibility to to contribute to our targets and budgets account for methodological emissions to account specifically for significant changes of this order within our targets unforeseen increases in emissions such and budgets; and as cold winters, significant changes in ›› Emission from our largest (EU-ETS) sites our emissions inventory or increase in – We chose to include direct emissions industrial activity. This means Wales could from our biggest (EU-ETS) emitters, contribute to emission reduction schemes therefore Wales could potentially in other countries and claim the emission miss targets regardless of whether we reductions to count towards our own delivered sufficient emission reductions targets. The effect is Wales is restricting across the rest of our society. Therefore, global emissions in to the atmosphere but we looked at past emissions from these from different locations. However before sites and identified the largest relevant utilising any offset mechanisms we would historical change in emissions from seek advice from the UKCCC. these sites. We calculated what would We have set an offset limit of 10% happen if these increases occurred for for the first carbon budget. The Act every year of the first carbon budget. Prosperity for All: A Low Carbon Wales 171 How did we set our interim targets Change (UKCCC). The UKCCC are our and carbon budgets? independent advisory body consisting We have set an ambitious pathway for of a range expertise, who also Wales. Once we knew what emissions we provide advice to the UK and Scottish were going to include in our targets, and Government and Northern Ireland therefore where we could take action, Executive on climate change matters; we could then consider the scale and ›› Past emissions in Wales – we analysed rate at which we could deliver emission our historic emission data utilising the reductions and set targets and budgets. GHG Inventory to identify trends and patterns; The Act required us to set interim targets for 2020, 2030 and 2040 and the first ›› Emission modelling – We commissioned two carbon budgets (2016-2020 and Cardiff University to develop the Wales 2021 – 2025) by the end of 2018. We 2050 Calculator. The calculator allowed wanted to ensure the targets and budgets us to start analysing different pathways were ambitious enough so we could for Wales based on different mixes of deliver our 80% target but also need to effort across society; be careful they were not too ambitious ›› The Well-being of Future Generations and potentially have negative effects. For Act – we commissioned the example, placing too heavy restriction on development of a Well-Being industries and business could mean they Assessment, which provides the may leave Wales. This would not only have economic, social, environmental and a negative impact on our economy and cultural impact and opportunities supporting communities but also could of alternative pathways. We also result in the emissions being emitted considered the UK's international somewhere else, possibly in a place commitments under the Paris where there are less stringent restrictions Agreement which includes limiting on emissions. global warming to 2 degrees and To fully analyse our options we considered working towards 1.5 degrees; and a range of evidence as set out in the ›› Cost – we looked at the range of Environment Act including: potential costs including the UKCCC costs estimates for delivering their ›› Independent advice – We commissioned recommended pathway and we also advice from our statutory advisors, developed our own methodology. the UK Committee on Climate Prosperity for All: A Low Carbon Wales 172

Annex 2 - Sector definitions The sectors described in Part 3 are matched to specific emission activities (IPCC Categories) within the Welsh Greenhouse Gas Inventory, as follows: UKCCC sector NC Format IPCC category Energy Public_Electricity&Heat_Production (1A1ai) Supply Power Business Electricity generators at Welsh businesses -Public_ Electricity&Heat_Production (1A1ai_) Residential_stationary (1A4bi) Residential:Off-road (1A4bii) Non-energy_products_from_fuels_and_solvent_ use: Paraffin_wax_use (2D2) Residential Metered_dose_inhalers (2F4a) Residential buildings Aerosols:Other (2F4b) Composting_municipal_solid_waste (5B1a) Non-biogenic:Other (5C2.2b) Non-biogenic:Other_Accidental fires (vehicles) (5C2.2b) (Non-residential Public Commercial/Institutional buildings(1A4ai) buildings) Business Commercial/Institutional buildings (1A4ai) Industrial All Process all except Commercial / Institutional buildings Industry Business (1A4a) and Business Generators -Public_ Electricity&Heat_Production (1A1ai_) all except Public_Electricity&Heat_Production Energy Supply (1A1ai) All but Domestic_aviation (1A3a), Domestic_ Transport Transport navigation (1A3d) and Fishing (1A4ciii) Prosperity for All: A Low Carbon Wales 173 Agriculture Agriculture All Land use, land Land use use change, and All change forestry Waste Waste All management Aviation_Bunkers Exports Marine_Bunkers International Aviation and Domestic_aviation (1A3a) Shipping Transport Domestic_navigation (1A3d) Fishing (1A4ciii) F-gases All F-gases, independent of sector Prosperity for All: A Low Carbon Wales 174

Annex 3 - Constructing emissions pathways The Plan is required to show how future budgets and targets will be met in Wales. This requires an approach to project future emission trends in Wales and assess the future impact of our policies and proposals on Welsh emissions. The Wales 80% scenario contains Accurately projecting future emission reductions across all sectors between 2015 pathways and the impact of specific and 2050. The scenario for each sector policies and proposals upon this pathway is based on detailed analysis, combining is challenging and highly uncertain. assumptions about new technology and There are a wide variety of approaches investments (e.g. new vehicle purchases, to constructing emissions projections heating system replacements, energy including a wide variety of optimised efficiency installations, power plant energy system models (UK TIMES96), top- investments) and how consumers behave down high level models (UK/Wales 2050 (e.g. how vehicles are driven, how calculator97) and sector specific emissions buildings are heated). The scenarios are models. For our first carbon budget we informed by an assessment of the costs have been guided by expert advice from and barriers of different options (both our statutory advisors who have drawn technologies and behaviours), by the on a broad range of modelling tools to need to reduce emissions on the path to construct their scenarios for Wales. 2050 and by call for evidence undertaken in Wales by UKCCC to provide advice The UKCCC, building on their experience to Welsh Government on targets and of UK scenario modelling98, constructed budgets. a range of scenarios to understand the decarbonisation pathways available The UKCCC sector scenarios are based in order to meet the 2050 target in on the latest emissions data available at Wales. These scenarios take account of the time when their advice was published the current context in terms of Welsh (1990-2015)99. This has now been emissions, trends and policies, as well as superseded by the 1990-2016 inventory the specific challenges and opportunities data that was published on 12 June to reduce emissions in Wales, which differ 2018100. As described above, this latest significantly from the UK as a whole. data provides an update to the entire time- 96 UKTIMES is a technology-rich model that performs a least-cost optimisation in order to meet energy service demands while meeting specified emissions targets 97 http://2050-calculator-tool.decc.gov.uk/. A Wales specific 2050 pathways model is also under development by Welsh Government. 98 https://www.theccc.org.uk/publication/the-fifth-carbon-budget-the-next-step-towards-a-low-carbon-economy/ 99 Greenhouse Gas Inventories for England, Scotland, Wales & Northern Ireland: 1990-2016 100 Greenhouse Gas Inventories for England, Scotland, Wales & Northern Ireland: 1990-2016 Prosperity for All: A Low Carbon Wales 175 series, providing an improved estimate of emissions in the base-year right through to the addition of new data for the year 2016. To account for this within the Plan we have updated the UKCCC’s original advice to reflect the latest (1990-2016) emission information101. We have done this by applying the percentage reductions implied in the original UKCCC advice to the new GHGI baseline published for 1990-2016. This is an important process to ensure that the recommended scenarios continue to deliver the interim targets and carbon budgets, which are based on a percentage reduction from the 1990 baseline, rather than fixed absolute emissions targets. 101 The only exception to this is for the LULUCF sector. For this sector the UKCCC took into account the 2016 inventory methodology changes at the time of publishing their advice, so no further update is required. Prosperity for All: A Low Carbon Wales 176

Annex 4 – The Greenhouse Accounting for uncertainty in the Welsh Greenhouse Gas Inventory Gas Inventory The UK and the associated DA GHGI Where do we get our data from? is one of the most comprehensive and detailed inventories in the world, but it The Welsh GHGI102 provides the basis for does have inherent uncertainties. The our assessment of GHG emissions on a GHGI does not provide a direct measure of territorial basis for Wales. It is produced atmospheric emissions in Wales. Rather, it in consistency with the international provides a modelled estimate of emissions reporting guidelines issued by the based upon a wide range of data sources United Nations Framework Convention detailing activities (i.e. total passenger car on Climate Change and the UK GHG miles driven in Wales) and their associated inventory reporting protocol. From the emissions factors (i.e. GHG emissions per close of year it takes approximately 18 mile driven). Ultimately the accuracy of months to compile the Welsh Greenhouse the emissions estimates are driven by the gas inventory meaning at present the quality and quantity of the underlying data latest inventory data for Wales is for the and the modelling approach. In addition, year 2016. the natural variability in processes (e.g. emissions from farming practices under different climatic conditions and across soil types, carbon content of fuels, and performance of industrial production plant and abatement plant) that are being “modelled” introduces a degree of uncertainty. 102 http://naei.beis.gov.uk/reports/reports?report_id=958 Prosperity for All: A Low Carbon Wales 177 For Wales, our emissions are dominated Whilst the Welsh inventory has a relatively by carbon dioxide emissions from well- low overall uncertainty there is a constant documented emission sources such as drive to improve our understanding of heavy industry (power generation, oil GHG emissions. The nature of emission refining and iron and steel production). As inventories is such that ongoing such, the Welsh inventory is estimated to improvements to data collection or have a relatively low overall uncertainty of estimation techniques will inevitably lead +/_ 3 per cent. However, when emissions to some revisions of historical data and our are assigned to individual sectors these understanding of the trends especially in uncertainties can be larger. This is sectors with greater uncertainty. especially the case for more uncertain As a result of these improvements, categories where we understand less along with any changes in international about the distribution and intensity of reporting guidelines or changes arising the estimates such as nitrous oxide from from recommendations following the agricultural soils (~+/-35%103) and carbon expert review by the UN of the UK dioxide from Land Use, Land Use Change GHGI, each year when a new inventory and Forestry. is published it updates the estimates for every year back to 1990. These revisions can lead to changes in the historical estimates of emissions. 103 Note that the agriculture inventory methodology has been updated in the 1990-2016 cycle, but the uncertainty analysis has not been updated to reflect this improvement, either at UK or at DA level. Further work is ongoing to assess the uncertainty parameters and distributions for the new agriculture inventory data and methods. Prosperity for All: A Low Carbon Wales 178

Annex 5 – Link between Ideas for Action and A Low Carbon Wales Relevant policies and proposals in A Low Potential action to 2030 Carbon Wales (2016-20) Collaborate with business to further Policy 16: Economic Action Plan (EAP). decarbonise their activities whilst at the same time improve their competitiveness Policy 43: Providing advice and and productivity to take advantage of the support through Business Wales. opportunities arising from the transition to a low-carbon economy Work with Regional Skills Partnerships Policy 3: Commission RSPs to review (RSP) to anticipate future skills needs, current skills gaps and shortages focusing on priority growth sectors across regional priority sectors that identified within regions support the decarbonisation agenda Review all current skills and work- based learning programmes to explore Policy 3: Commission RSPs to review whether they can respond more flexibly current skills gaps and shortages to emerging requirements such as those across regional priority sectors that represented by decarbonisation, working support the decarbonisation agenda. closely with employers Conduct a gap analysis of options Policy 4: Establish Task and Finish where innovation can support the Group to explore innovation and decarbonisation agenda and maximise decarbonisation. the opportunities Prosperity for All: A Low Carbon Wales 179 Policy 12: Work with key partners to expand and refocus education around decarbonisation. Policy 12: Establish a on the transition to a low carbon society. Policy 15: Provide funding to enable Collaborate with organisations across all action on climate change in school and levels of society and involve citizens in communities. achieving our low-carbon pathway Proposal 1: Design a public communications campaign to encourage people to use their cars less. Proposal 14: Hold a Climate Change Conference to collaborate with and involve all sectors and levels of society. Provide fruit, shade and fuel trees for the Policy 17: Provide fruit, shade and entire Mount Elgon region, Uganda by fuel trees for the entire Mount Elgon 2030 region, Uganda by 2030. Power Support the development of regional Policy 10 Energy Systems Planning: and local energy planning to address the Policy 11- Welsh Government Energy supply, distribution, and use of energy Service and Smart Living Policy 27: Removing barriers to consenting for storage by removing batteries as part of the Development of National Significance process. Policy 32: Develop routes to market for Support innovation and commercialisation renewable technologies. of new products, processes and services Policy 35: Energy innovation. in the energy system Policy 36: Market regulation and investment. Proposal 7: Explore potential for investment and new approaches to energy. Prosperity for All: A Low Carbon Wales 180 Develop and implement Wales’s policy Policy 29: Develop a policy on position around the extraction and combustion of fuels for power. combustion of fossil fuels in power Policy 58: Onshore Petroleum generation Extraction. Proposal 7: Exploring potential for investment and new approaches to energy. Accelerate the deployment of renewable Policy 11: Welsh Government Energy generation whilst encouraging local Service ownership Policy 31: Delivery of our renewable energy targets. Policy 33: Increasing local ownership of energy generation Transport Develop a charging network that Policy 50: Increase the proportion of encourages early take-up of electric vehicles which are electric and ultra vehicles (EVs) and explore the merits of low emission. other measures, including access to bus Policy 51: Plan for and invest in EV lanes and free municipal parking charging infrastructure. Policy 52: Aim to reduce the carbon footprint of buses to zero by 2028. Policy 53: Aim to reduce the carbon Reduce the carbon footprint of taxis and footprint of taxis and private hire buses to zero within 10 years to achieve vehicles to zero by 2028. the aim in the Economic Action Plan Proposal 14: Piloting activity to promote the use of zero and ultra low emission road vehicles. Policy 49: Use planning policy to Double the percentage of adults making promote sustainable travel and reduce cycling journeys at least once a week and the need to travel. increase the percentage of people making walking journeys at least once a week by Proposal 12: Working to achieve 25% from the 2016 baseline modal shift from car dependency to sustainable forms of transport Explore the relationship between speed limits and greenhouse gas emissions, Policy 56: Reduce transport emissions. with a view to considering environmental factors in speed limit reviews Prosperity for All: A Low Carbon Wales 181 Buildings Proposal 39: Setting higher energy Set higher energy efficiency standards for efficiency standards for new new builds through reviewing Building builds through reviewing Building Regulations Part L (Conservation of Fuel Regulations Part L (Conservation of and Power) Fuel and Power). Proposal 8: Improving our evidence Develop a long-term residential retrofit base around the residential retrofit programme based on evidence programme. Policy 1 – To continue to develop our evidence base around decarbonisation Establish the baseline of energy use and (including the social, cultural, associated emissions from business sector economic and environmental) to buildings inform the levels of future carbon budgets and the policy intervention required to meet them. Policy 40: Driving innovation through the Innovative Housing Programme. Deliver buildings that are more Policy 41: Funding more efficient sustainable by using innovative buildings through our sustainable construction techniques to reduce and buildings funding policy. meet the energy demand within buildings Proposal 9: Developing innovative and increase the use of sustainable construction techniques to reduce materials, such as timber and meet the energy demand within buildings and increasing the use of sustainable materials. Proposal 10: Scoping out the challenges and opportunities around Scope out the challenges and low carbon heat. opportunities around low-carbon heat Proposal 11: Increasing the use of waste heat and low carbon heat. Prosperity for All: A Low Carbon Wales 182 Agriculture Provide post-Brexit support in the form of a land management programme that Proposal 22: Provide post-Brexit contains a public goods scheme and an support in the form of a land economic resilience scheme, replacing the management programme that Common Agricultural Policy (CAP) with contains a public goods element and a framework that also links support to an economic resilience element. emissions reduction and removals Ensure that emissions reduction is considered in any regulatory reform Proposal 23: Regulations to reduce proposals arising from the land agricultural pollution. management programme consultation Land use and forestry Revise our regulatory and support regimes to increase tree planting to at least 2,000 Proposal 19: Increase tree planting. hectares per year, aiming to increase this to 4,000 hectares Identify preferred areas for tree planting, Proposal 20: Identifying preferred including commercial woodlands and areas for tree planting. planting at medium and large scale Ensure that all peatlands supporting semi natural habitats are under active management by 2030 by supporting, enabling and co-ordinating the Policy 66: Peatlands for the Future. restoration and sustainable management of peatland, as well as utilising and maximising associated funding opportunities Prosperity for All: A Low Carbon Wales 183 Industry Policy 60: Carbon Capture Utilisation and Storage. Commission an independent economic and technical feasibility study on carbon Proposal 18: Commission an capture use and storage (CCUS) independent economic and technical feasibility study on Carbon Capture Use and Storage (CCUS). Policy 57: Energy Efficiency Scheme Consider the further development of (UK Government). our Environment Protection Scheme (EPS) beyond 2020 to support the most Proposal 16 - Industrial emission carbon-intensive industries reduction support beyond 2020 for carbon intensive businesses. Consider waste heat recovery and use as Policy 59: Industrial heat recovery. part of the approach to heat policy Establish an industry-led working group Proposal 17: Industry-led on decarbonisation Decarbonisation Group. Prosperity for All: A Low Carbon Wales 184 Public sector Support the public sector to baseline, Policy 20: Support the public sector to monitor and report progress towards baseline, monitor and report progress carbon neutrality towards carbon neutrality. Policy 23: Continue to drive low-carbon schools through 21st Century Schools. Public sector buildings are supplied with Proposal 5: Public Sector buildings renewable electricity by 2020 and, where should be supplied with renewable practicably possible, are supplied with electricity by 2020, or as soon as low-carbon heat by 2030 contractually able and, where practicably possible, are supplied with low carbon heat by 2030. All new cars and light goods vehicles Proposal 4: All new cars and light in the public sector fleet are ultra low goods vehicles in the Public Sector fleet emission by 2025 and where practicably are ultra low emission by 2025 and possible, all heavy goods are ultra low where practicably possible, all heavy emission by 2030 goods are ultra low emission by 2030. Waste Create new opportunities for resource Policy 9: Maximising the innovation efficient manufacturing through opportunities presented by moving embedding resource efficiency within towards a more circular economy. our programme of innovation support to SMEs and using public sector Policy 75: Transposing the Circular procurement to stimulate the market Economy Package. Prosperity for All: A Low Carbon Wales 185

Annex 6 - List of policies and proposals Policy 1 - To continue to develop our evidence base around decarbonisation (including the social, cultural, economic and environmental) to inform the levels of future carbon budgets and the policy intervention required to meet them. 22 Policy 2 - We will continue to align the carbon and financial budget cycle incrementally 24 Policy 3 - Welsh Government to commission RSPs to review current skills gaps and shortages across regional priority sectors that support the decarbonisation agenda. This would form an element of their funding contract from April 2019. 27 Policy 4 - Establish Task and Finish Group to explore innovation and decarbonisation 29 Policy 5 - Planning Policy Wales 31 Policy 6 - National Development Framework 31 Policy 7 - Wales Marine Plan 31 Policy 8 - Integrating policy development, 33 Policy 9 - Maximising the innovation opportunities presented by moving towards a more a circular economy. 36 Policy 10 - Energy Systems Planning 39 Policy 11 - Welsh Government Energy Service & Smart Living 42 Policy 12 - Work with key partners to expand and refocus education to include sustainability and decarbonisation 44 Policy 13 - Work with Cardiff University to help understand how to transform individual lifestyles and systems of governance for a sustainable, low-carbon future 45 Policy 14 - Hold a Climate Change Conference to collaborate with and involve all sectors and levels of society. 46 Policy 15 - Provide funding to enable action on climate change in schools and communities 47 Policy 16 - Economic Action Plan 50 Prosperity for All: A Low Carbon Wales 186 Policy 17 - Provide fruit, shade and fuel trees for the entire Mount Elgon region, Uganda, by 2030 51 Policy 18 - Ensure our new International Strategy is founded on sustainability with a decarbonisation as a key part, working with other like-minded States and Regions and through our engagement with international networks and organisations. 51 Policy 19 - Welsh Government to consult on options for successor Carbon Reduction Commitment Scheme in Summer 2019 55 Policy 20 - Support the public sector to baseline, monitor and report progress towards carbon neutrality 55 Policy 21 - Provide continued support to identify, develop and invest in district heat systems. 56 Policy 22 - Value Wales to promote and encourage carbon reduction through procurement to support Welsh Government’s Prosperity for All: A low carbon Wales. 58 Policy 23 - Continue to drive low carbon schools through 21st Century Schools 62 Policy 24 - Continue to reduce emissions in the health sector 62 Policy 25 - Continue to promote and market tourism in Wales in a sustainable way 63 Policy 26 - Implementing Energy Consenting, Planning & Permitting policy 69 Policy 27 - Removing barriers to consenting for storage by removing batteries as part of the Development of National Significance process. 70 Policy 28 - Phasing out Unabated Coal 70 Policy 29 - Developing a Policy on Combustion of Fuels for Power 71 Policy 30 - Continuing to be a part of the EU Emissions Trading System to the end of Phase III 72 Policy 31 - Delivery of our Renewable Energy Targets 73 Policy 32 - Developing Routes to Market for Renewable Technologies 74 Policy 33 - Increasing local ownership of energy generation 77 Policy 34 - Maximise Welsh benefit from major infrastructure projects in Wales 77 Policy 35 - Energy Innovation 78 Policy 36 - Market Regulation and Investment 79 Prosperity for All: A Low Carbon Wales 187 Policy 37 - Funding and Delivery of our Warm Homes Programme 84 Policy 38 - Raising standards through our Welsh Housing Quality Standards 85 Policy 39 - Setting higher energy efficiency standards for new builds through reviewing Building Regulations Part L (Conservation of Fuel and Power) 87 Policy 40 - Driving innovation through our Innovative Housing Programme 88 Policy 41 - Funding more efficient buildings through our Sustainable buildings funding policy 90 Policy 42 - Reducing emissions from listed buildings and scheduled monuments 91 Policy 43 - Providing advice and support through Business Wales 92 Policy 44 - Piloting Smart Flexible and Digitalised System to reduce demand 95 Policy 45 - Incentivising energy efficiency of homes through our Help to Buy – Wales 96 Policy 46 - Increasing Active Travel 101 Policy 47 - Increasing travel by rail 102 Policy 48 - Increasing travel by bus 103 Policy 49 - Use planning policy to promote sustainable travel and reduce the need to travel 104 Policy 50 - Increasing the proportion of vehicles which are electric and ultra low emission 105 Policy 51 - Plan for and invest in EV charging infrastructure 105 Policy 52 - Aiming to reduce the carbon footprint of buses to zero by 2028 106 Policy 53 - Aim to reduce the carbon footprint of Taxis and Private Hire Vehicles to zero by 2028 106 Policy 54 - Reduce Transport Emission 107 Policy 55 - Climate Change Levy and Climate Change Agreements 116 Policy 56 - Carbon Price Floor 117 Policy 57 - Energy Efficiency Scheme – UK Government 118 Policy 58 - Onshore Petroleum Extraction 119 Policy 59 - Industrial Heat Recovery 120 Policy 60 - Carbon Capture Utilisation and Storage 120 Prosperity for All: A Low Carbon Wales 188 Policy 61 - Food and Drink Action Plan – Towards Sustainable Growth 121 Policy 62 - Implementing our Natural Resource Policy 127 Policy 63 - Woodland Strategy for Wales 128 Policy 64 - Felling licences 128 Policy 65 - Welsh Government woodland estate 129 Policy 66 - Peatlands for the Future 131 Policy 67 - Red Meat Development Programme 2018-2023 137 Policy 68 - Animal Health and Welfare Framework 137 Policy 69 - Farming Connect Programme 138 Policy 70 - Farm Business Grant 138 Policy 71 - Nitrate Vulnerable Zones 140 Policy 72 - Glastir 142 Policy 73 - Reducing Greenhouse Gas Emissions from Landfill 147 Policy 74 - Generate Renewable Energy from Waste 148 Policy 75 - Transposing the Circular Economy Package 148 Policy 76 - Implementing the 2015 EU F-gas regulation 154 Proposal 1 - Design a public communications campaign to encourage people to use their cars less. 34 Proposal 2 - Establish a climate just advisory group on the transition to a low carbon society 45 Proposal 3 - Development of a Decarbonisation Dashboard to baseline emissions across the Welsh public sector and identify high priority categories for intervention / carbon reduction supported by new guidance and a carbon measurement tool, enabling public bodies to embed low carbon approaches through procurement and measure progress. 58 Proposal 4 - All new cars and light goods vehicles in the Public Sector fleet are ultra low emission by 2025 and where practicably possible, all heavy goods are ultra low emission by 2030 60 Prosperity for All: A Low Carbon Wales 189 Proposal 5 - Public Sector buildings should be supplied with renewable electricity by 2020, or as soon as contractually able and, where practicably possible, are supplied with low-carbon heat by 2030. 61 Proposal 6 - Commission research to gain a better understanding of Welsh public sector investment profiles to stimulate discussion about future investment strategies. 62 Proposal 7 - Exploring potential for investment and new approaches to energy 77 Proposal 8 - Improving our evidence-base around the residential retrofit programme 86 Proposal 9 - Developing Innovative construction techniques to reduce and meet the energy demand within buildings and increasing the use of sustainable materials 90 Proposal 10 - Scoping out the challenges and opportunities around low-carbon heat 93 Proposal 11 - Increasing the use of Waste Heat and low carbon heat 95 Proposal 12 - Working to achieve a modal shift from car dependency to sustainable forms of transport 100 Proposal 13 - Significantly increasing modal share of active travel for short journeys 102 Proposal 14 - Piloting activity to promote the use of zero and ultra low emission road vehicles 107 Proposal 15 - Promote the decarbonisation of private sector fleets in Wales 107 Proposal 16 - Industrial Emission Reduction Support beyond 2020 for Carbon Intensive Businesses 117 Proposal 17 - Industry-Led Decarbonisation Group 118 Proposal 18 - Commission an independent economic and technical feasibility study on Carbon Capture Use and Storage (CCUS) 121 Proposal 19 - Increase tree planting 129 Proposal 20 - Identifying preferred areas for tree planting 130 Proposal 21 - We will work with the farming sector to help drive efficiency 139 Proposal 22 - Provide post-Brexit support in the form of a land management programme that contains a public goods element and an economic resilience element 139 Proposal 23 - Regulations to reduce agricultural pollution. 141 Proposal 24 - Exploring the opportunities provided by the water sector in reducing emissions 149 Prosperity for All: A Low Carbon Wales 190 List of Case Studies Case Study 1 Bridgend Energy Catapult – Energy Path Network Tool 39 Case Study 2 Understanding Carbon Footprint 54 Case Study 3 Bridgend – low Carbon Heat 56 Case Study 4 NHS Wales and Using Procurement to reduce environmental impact 58 Case Study 5 Swansea City Council and Ultra Low Emission Vehicles 60 Case Study 6 The Welsh Government Estate 61 Case Study 7 Gwynt Y mor – Renewable Energy 76 Case Study 8 Innovative Housing programme 88 Case Study 9 SPECIFIC 90 Case Study 10 Green Growth Pledge 92 Case Study 11 The FREEDOM Project 93 Case Study 12 Cardiff Heat network 95 Case Study 13 Traveline Cymru 101 Case Study 14 Nextbike 102 Case Study 15 Metro 103 Case Study 16 Innovation and Industry 119 Case Study 17 Realising the Natural Capital of Welsh Peatlands 131 Case Study 18 Energy from Waste 148 Case Study 19 Public Health Wales – Circular Economy Innovation through Procurement 149 Prosperity for All: A Low Carbon Wales 191

Annex 7 - List of policies and proposals by portfolio Key: Main Portfolio Associated portfolio Health and Social Services Environment, Energy and Economy and Transport International Relations and the Welsh Language Policy or Proposal Housing and Local Rural Affairs Government Finance Education UK/EU Action To continue to develop our evidence Policy base around our decarbonisation We will continue to align the carbon and financial budget cycle Policy incrementally. Welsh Government to commission RSPs to review current skills gaps and shortages across regional priority sectors that support the Policy decarbonisation agenda. This would form an element of their funding contract from April 2019 Establishment of a Task and Finish Policy Group to scope out innovation need Planning Policy Wales Policy National Development Framework Policy Wales Marine Plan Policy We will take an integrated approach to tackling emissions through the policies set out in the Clean Air Policy Plan,the Low Carbon Delivery Plan and other associated strategic cross- government plans. Maximising the innovation opportunities presented by moving Policy towards a more a circular economy. Energy Systems Planning Policy Prosperity for All: A Low Carbon Wales 192 Key: Main Portfolio Associated portfolio Health and Social Services Environment, Energy and International Relations Economy and Transport Housing and Local Policy or Proposal Rural Affairs Government Finance Education and the Welsh Language UK/EU Action Welsh Government Energy Service Policy and Smart Living Work with key partners to expand and refocus education around decarbonisation and promote co- Policy benefits to health and well being for current and future generations Work with partners to help understand how to transform individual lifestyles and systems of Policy governance for a sustainable, low- carbon future The Establishment of a climate just Proposal advisory group in 2019 We will host an Annual Decarbonisation Conference to Policy discuss progress and generate new ideas Provide funding to enable action on climate change in school and Policy communities Economic Action Plan Policy Provide fruit, shade and fuel trees for the entire Mount Elgon region, Policy Uganda by 2030 Ensure our new International Strategy is founded on sustainability with a decarbonisation as a key part, working with other like-minded Policy States and Regions and through our engagement with international networks and organisations. Prosperity for All: A Low Carbon Wales 193 Key: Main Portfolio Associated portfolio Health and Social Services Environment, Energy and International Relations Economy and Transport Housing and Local Policy or Proposal Rural Affairs Government Finance Education and the Welsh Language UK/EU Action Design a public communications campaign to encourage people to Proposal use their cars less. Welsh Government to consult on options for successor Carbon Policy Reduction Commitment Scheme in Summer 2019 Support the public sector to baseline, monitor and report progress towards Policy carbon neutrality Provide continued support to identify, develop and invest in district Policy heat systems Value Wales to promote and encourage carbon reduction through Policy procurement Development of a Decarbonisation Proposal Dashboard to baseline emissions All new cars and light goods vehicles in the Public Sector fleet are ultra low emission by 2025 and where Proposal practicably possible, all heavy goods are ultra low emission by 2030 Public Sector buildings should be supplied with renewable electricity by 2020, or as soon as contractually Proposal able and, where practicably possible, are supplied with low-carbon heat by 2030. Continue to reducing emissions in Policy the health sector Continue to drive low carbon schools Policy through 21st Century Schools Prosperity for All: A Low Carbon Wales 194 Key: Main Portfolio Associated portfolio Health and Social Services Environment, Energy and International Relations Economy and Transport Housing and Local Policy or Proposal Rural Affairs Government Finance Education and the Welsh Language UK/EU Action Continue to promote and market Policy tourism in Wales in a sustainable way Commission research to gain a better understanding of Welsh public sector investment profiles to stimulate Proposal discussion about future investment strategies. Energy Consenting, Planning and Policy Permitting Remove barriers to consenting for Policy storage Phase out of Unabated Coal Policy Develop a Policy on Combustion of Policy Fuels for Power EU Emissions Trading Scheme Policy Delivery of Renewable Energy Targets Policy Wales Waste Strategy ‘Towards Zero Policy Waste’ Developing Routes to Market for Policy Renewable Technologies Increased local ownership of energy Policy generation Maximise Welsh benefit from major Policy infrastructure projects in Wales Energy Innovation Policy Market regulation and investment Policy Explore potential for investment and Proposal new approaches to energy Funding and Delivery of our Warm Policy Homes Programme Prosperity for All: A Low Carbon Wales 195 Key: Main Portfolio Associated portfolio Health and Social Services Environment, Energy and International Relations Economy and Transport Housing and Local Policy or Proposal Rural Affairs Government Finance Education and the Welsh Language UK/EU Action Raising standards through our Welsh Policy Housing Quality Standards Improving our Evidence-base around Proposal residential retrofit programme Setting higher energy efficiency standards for new builds through Policy reviewing Building Regulations Part L (Conservation of Fuel and Power Driving innovation through our Policy Innovative Housing Programme Funding more efficient buildings through our Sustainable buildings Policy funding policy Reducing emissions from listed Policy buildings and scheduled monuments Developing Innovative construction techniques to reduce and meet the energy demand within buildings and Proposal increasing the use of sustainable materials Providing advice and support Policy through Business Wales Scope out the challenges and opportunities around low-carbon Proposal heat Increase the use of Waste Heat and Proposal low carbon heat Piloting Smart Flexible and Digitalised Policy System to reduce demand Incentivising energy efficiency of homes through our Help to Buy Policy Wales Prosperity for All: A Low Carbon Wales 196 Key: Main Portfolio Associated portfolio Health and Social Services Environment, Energy and International Relations Economy and Transport Housing and Local Policy or Proposal Rural Affairs Government Finance Education and the Welsh Language UK/EU Action Working to achieve a modal shift from car dependency to sustainable Proposal forms of transport Increasing Active Travel Policy Significantly increasing modal share Proposal of active travel for short journeys Increasing travel by rail through Policy investment Increasing travel by bus Policy Using planning policy to promote sustainable travel and reduce the Policy need to travel Increasing the proportion of vehicles which are electric and ultra low Proposal emission Plan for and invest in EV charging Policy infrastructure Aiming to reduce the carbon Policy footprint of buses to zero by 2028 Aim to reduce the carbon footprint of Taxis and Private Hire Vehicles to Policy zero by 2028 Piloting activity to promote the use of zero and ultra low emission road Policy vehicles Promote the decarbonisation of Proposal private sector fleets in Wales Reduce Transport Emission Policy EU Emissions Trading Scheme Policy Carbon price Floor Policy Prosperity for All: A Low Carbon Wales 197 Key: Main Portfolio Associated portfolio Health and Social Services Environment, Energy and International Relations Economy and Transport Housing and Local Policy or Proposal Rural Affairs Government Finance Education and the Welsh Language UK/EU Action Climate Change Levy & Climate Policy Change Agreements Industrial Emission Reduction Support beyond 2020 for Carbon Proposal Intensive Businesses Energy Efficiency Scheme – UK Policy Government Industry Led Decarbonisation Group Proposal Onshore Petroleum Extraction Policy Industrial Heat Recovery Policy Carbon Capture Utilisation and Policy Storage Commission an independent economic and technical feasibility Proposal study on carbon capture use and storage (CCUS) Food and Drink Action Plan – Policy Towards Sustainable Growth Implementing Natural Resources Policy Policy Woodland Strategy for Wales Policy Felling licences Policy Welsh Government woodland estate Policy Increase tree planting to at least 2,000 hectares per year, aiming to Proposal increase this to 4,000 hectares Identify preferred areas for tree Proposal planting Peatlands for the Future Policy Prosperity for All: A Low Carbon Wales 198 Key: Main Portfolio Associated portfolio Health and Social Services Environment, Energy and International Relations Economy and Transport Housing and Local Policy or Proposal Rural Affairs Government Finance Education and the Welsh Language UK/EU Action Red Meat Development Programme Policy Animal Health and Welfare Policy Framework Farming Connect Programme Policy Farm Business Grant Policy We will work with the farming sector Proposal to help drive efficiency Provide post-Brexit support in the form of a land management programme that contains a public Proposal goods element and an economic resilience element Regulations to reduce agricultural Proposal pollution Nitrate Vulnerable Zone Policy Reduce Greenhouse gas emissions Policy from landfill Generate Renewable Energy from Policy waste Transposing the Circular Economy Policy Package Exploring the opportunities provided by the water sector in reducing Proposal emissions Implementing the 2015 EU F-gas Policy regulation Prosperity for All: A Low Carbon Wales 199 Acronyms and Glossary of terms Acronyms AD Anaerobic Digestion AHDB Agriculture and Horticulture Development Board BEIS UK Government Department for Business, Energy and Industrial Strategy BREEAM Building Research Establishment Environmental Assessment Method CAP Common Agricultural Policy CB1 Carbon Budget One (first carbon budget) CB2 Carbon Budget Two CCA Climate Change Agreement CCL Climate Change Levy CCS Carbon Capture and Storage CCUS Carbon Capture Usage and Storage CHP Combined Heat and Power CO2 Carbon Dioxide COP Conference of the Parties COP24 Conference of the Parties in Katowice, Poland CPF Carbon Price Floor CPS Carbon Price Support CRC Carbon Reduction Commitment Energy Efficiency Scheme DAG Advisory Group on the Decarbonisation of Homes in Wales DNS Developments of National Significance EAP Economic Action Plan EPC Energy Performance Certificate EPS Environmental Protection Scheme ERDF European Regional Development Fund ESC Energy Systems Catapult Prosperity for All: A Low Carbon Wales 200 EU European Union EU ETS European Union Emissions Trading System EV Electric Vehicle - (Included but not shortened) FBIS Food Business Investment Scheme F-gases Fluorinated gases FLEXIS Flexible Integrated Energy Systems research programme FREEDOM Flexible Residential Energy Efficiency Demand Optimisation and Management GDP Gross Domestic Product GHG Greenhouse Gas GHGI Greenhouse Gas Inventory GW Giga Watt GWh Gigawatt Hours HCC Hybu Cig Cymru HESG Home Energy Services Gateway HFCs Hydroflurocarbons IAs Impact Assessments IETF Industrial Energy Transformation Fund IHP Innovative Housing Programme IHRS Industrial Heat Recovery Support IPCC Intergovernmental Panel on Climate Change IWA Institute of Welsh Affairs JTA Joint Transport Authorities kW Kilowatt LULUCF Land Use, Land Use Change and Forestry MRV Monitoring, Reporting and Verification MtCO2e Million tonnes of Carbon Dioxide Equivalent Prosperity for All: A Low Carbon Wales 201 MW Megawatt NDCs Nationally Determined Contributions NDF National Development Framework NF3 Nitrogen trifluoride NICW National Infrastructure Commission for Wales NRW Natural Resources Wales NWEA Net Welsh Emissions Account NWEAB – RSP North Wales Economic Ambition Board – Regional Skills Partnership North Wales ODS Ozone-depleting substances OFGEM Office of Gas and Electricity Markets PES Payment for Ecosystem Services PFCs Perfluorocarbons PHW Public Health Wales PPW Planning Policy Wales PV Photovoltaic R&D Research and Development RHI Renewable Heat Incentive RICE Reducing Industrial Carbon Emissions RSL Registered Social Landlords RSPs Regional Skills Partnerships SA Sustainability Appraisal SAP Standard Assessment Procedure SF6 Sulfur hexafluoride SME Small and Medium Enterprises SPECIFIC Sustainable Product Engineering Centre for Innovative Functional Industrial Coatings SPG Sustainable Production Grant Prosperity for All: A Low Carbon Wales 202 SRA Sustainable Risk Assessment SSAFO Silage, Slurry and Agricultural Fuel Oil TWh Terawatt hour UKCCC UK Committee on Climate Change UKCCSRC UK Carbon Capture and Storage Research Centre UKFS UK Forestry Standard ULEV Ultra Low Emission Vehicle UN United Nations UNFCCC United Nations Framework Convention on Climate Change WHCS Welsh Housing Condition Survey WHQS Welsh Housing Quality Standard WIIP Wales Infrastructure Investment Plan WNMP Welsh National Marine Plan WRAP Waste and Resources Action Programme Glossary of terms Anaerobic Digestion The break down biodegradable material in the absence of oxygen. Decarbonisation The process of reduction or removal of greenhouse gas emissions from our activities, to create a low carbon economy. Carbon Capture and Storage The process of trapping carbon dioxide produced by burning fossil fuels or other chemical or biological process and storing it in such a way that it is unable to affect the atmosphere. Carbon leakage Occurs when industry relocates to countries with less stringent environmental regulation, resulting only in displacement of emissions rather than a reduction, at no benefit to the environment. Prosperity for All: A Low Carbon Wales 203 Carbon sequestration The removal and storage of carbon from the atmosphere in carbon sinks (such as oceans, forests or soils). Circular Economy A circular economy aims to maintain the value of products, materials and resources for as long as possible by returning them into the production cycle at the end of their use, while minimising the generation of waste. Consumption emissions Emissions of greenhouse gasses whether in Wales, or elsewhere, that may reasonably be attributed to the consumption and use of goods and services in Wales. Contracts for Difference A Contract for Difference is a form of subsidy support for UK renewable electricity and low carbon generation. Decarbonisation Pathway A modelled route showing how emission reductions are distributed over time, and across sectors, to deliver the target of at least an 80% reduction in the year 2050. Fossil fuels A fuel derived from geological deposits of plant and animal remains, such as coal, oil, or natural gas. Paris Agreement The UNFCCC’s Paris Agreement sets a global ambition for tackling climate change. The current pledge under the Paris Agreement to limit the global average temperature rise to less than 2° Celsius requires governments around the world to take action to decarbonise their economies, while striving to keep the temperature rise to 1.5° Celsius. Smart energy Smart energy can be considered as an approach using the internet to coordinate different intelligent devices and sensors across the energy system. Smart energy systems are now beginning to expand into integrating and interlinking with transport and heat systems. Smart technology allows homes, businesses and communities to use energy and other resources more efficiently. It offers the Prosperity for All: A Low Carbon Wales 204 potential to generate, store and use energy in ways not previously available, in order to provide comfort and mobility and improve our health. It could enable local energy trading and other community sharing opportunities. UK Greenhouse Gas Inventory The UK Greenhouse Gas Inventory (UK GHGI) reports annually on estimated UK emissions of the seven direct greenhouse gases under the Kyoto Protocol. (http://naei.beis.gov.uk/) DA Greenhouse Gas Inventory The DA Greenhouse Gas Inventory (DA GHGI) provides an annual report on estimated greenhouse gas emissions for Wales, England, Scotland and Northern Ireland. Description of sector graphs 29.3% This diagram shows the percentage share 10.2% of the first carbon budget that is allocated 14.4% to each sector. This shows the relative significance of each sector in terms of total 32.8% greenhouse gas emissions over the first carbon budget. 12.4% 1.7% 1.1% -1.9% This diagram (left graph) shows the historic emissions for the sector and the UKCCC’s recommended pathway for the sector 0.8 2016 +103% above baseline 100% 90% (updated to reflect the latest 1990-2016 0.7 2020 +34% above 2030 -36% below 2040 -57% below 2050 -71% below 80% GHGI as described in Annex 3). The left 70% hand bar chart shows the sector emissions in 0.6 baseline basleine baseline baseline 1.88 60% Emissions ( MtCO₂e) 0.5 year one (2016) of the first carbon budget. 50% 0.4 40% CB1 0.3 0.2 30% 20% The right hand bar chart shows the first carbon budget for the sector split equally 0.65 0.1 10% 0 0% Base year 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Year 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050 CB1 across the five year budget period. There is CCC Recommended Pathway Actial emissions to date (1990 - 2016) Historic-trend projection Legislated Carbon Budget Legislated Interim Target no fixed annual budget for the sector and the distribution of sector emissions over the 5 year budget is not required to be equal, therefore this bar graph provides a general illustration of progress only. ISBN English - 978-1-78964-971-0