Strive to be as self-sufficient as possible, with a competitive Scots circular economy that meets everyone’s needs in a fair way.

A circular economy is one where resources are kept at as high a value as possible, for as long as possible. The circular economy represents an enormous economic and industrial opportunity for Scotland and contributes directly to a green recovery from COVID-19. It tackles emissions through influencing product design, manufacturing and waste and resource management, and is a vital part of sectors delivering their net zero aspirations.

The COVID-19 pandemic impacted the Scottish Government’s legislative agenda and as a result, we did not introduce a Circular Economy Bill in the last session of Parliament. We remain committed to achieving circular economy outcomes and will continue to work with stakeholders to pursue these. We are committed to introducing a Circular Economy Bill later in this parliamentary session and legislative plans will be set out in future Programmes for Government. As we continue to develop the Bill, we will ensure the Assembly’s recommendations are considered.

Ahead of the introduction of the Bill we are working with our enterprise agencies to support Scottish businesses to introduce circular economy principles. Our partner, Zero Waste Scotland, administer the Circular Economy Business Support Service which offers investment for SMEs based in Scotland. The Extended Producer Responsibility scheme will help to create market opportunities for businesses to reduce packaging and invest in reprocessing.

Following analysis of the Assembly’s recommendations, the Scottish Government will take the following actions:

  • We will consider the Assembly’s recommendations as we develop plans for our Circular Economy Bill.
  • We will consider the Assembly’s recommendation to incentivise the use of Scottish grown and produced materials in house construction as we develop our construction sector Recovery Plan.
  • Our Retail Strategy will promote local production and a reduced carbon footprint in response to the Assembly’s recommendations.

Recommendation 53: Sustainable Business Loans

Introduce government backed sustainable business loans for companies and start-ups to invest in innovation in reuse and reprocessing in Scotland and creating commercial demand for repurposed/remanufactured materials.

 

Scottish Government Response

The Scottish Government supports the Assembly’s recommendation that government backed sustainable business loans should be available for companies and start-ups to invest in innovation in reuse and reprocessing in Scotland, and creating commercial demand for repurposed/remanufactured materials.

 

Our enterprise agencies - Scottish Enterprise, Highlands and Islands Enterprise and South of Scotland Enterprise - support companies to introduce circular economy practices. The agencies provide advice and connections to companies through their Sustainability Specialists and Scottish Manufacturing Advisory Service (SMAS) teams. As part of its Net Zero Framework for Action, Scottish Enterprise has committed to working with businesses and supply chains to scale-up the adoption of circular business models, building extended life, re-use and remanufacture into the design of products and services. This will be delivered through grant programmes supported by the Green Jobs Fund and the Low Carbon Infrastructure Transition Programme. South of Scotland Enterprise is co-sponsoring a CivTech Sprint Challenge with Zero Waste Scotland (How can we use technology to support the circular economy and Net Zero ambitions?) which is designed to stimulate private sector solutions that promote circular economy business models and help cross-sector organisations to work more collaboratively.

In addition, a range of government support is also available through Zero Waste Scotland for businesses looking to develop circular business models under the guise of the Circular Economy Accelerator. This includes the Circular Economy Business Support Service, administered by Zero Waste Scotland, which offers investment for SMEs based in Scotland and supports work that will deliver circular economy growth. It also includes the £18 million Circular Economy Investment Fund designed for small and medium sized businesses and organisations in Scotland working in all business and social economy sectors who are helping to create a more circular economy. It’s also the case that through polluter pays policies such as Extended Producer Responsibility, of which the Deposit Return Scheme is the most visible example, market opportunities are created for businesses to reduce packaging and invest in reprocessing.

In addition, the Scottish National Investment Bank offers long-term, patient finance on commercial terms to projects and businesses that can have potentially transformative impacts in Scotland’s society and economy. The Bank can offer both debt and equity, and looks to attract private capital to its investments. It can also operate alongside capital from other public sector bodies. The Bank is a mission-led investor with three strategic missions focussed on: the just transition to net zero; building communities and promoting equality of opportunity; and harnessing innovation.


Recommendation 54: Reduce High Carbon Construction Materials

Incentivise the use of Scottish grown and produced materials in house construction by setting targets to reduce the use of high carbon construction materials and increase the use of carbon neutral materials.

 

Scottish Government Response

The Scottish Government supports the principle of the Assembly’s recommendation to reduce the use of high carbon construction materials and increase the use of Scottish grown and produced sustainable/carbon neutral materials in house construction.

 

The construction industry will deliver a significant element of Scotland’s net zero commitment. The Scottish Government supports plans for a more sustainable, productive, innovative and diverse construction industry. Working through the Construction Leaders Forum’s (CLF’s) Transformation sub-group, we are building on existing work to prepare the industry to deliver a net zero carbon built environment. This is an ongoing action in the Recovery Plan, which sets out our overall vision of a safe, productive, profitable, digitally-enabled, low-carbon, and socially responsible construction industry which offers quality jobs and fair work to a highly skilled and diverse workforce, and a quality and life-time value product to its customers. The recovery plan recognises that wide-ranging changes will be needed across the industry to prepare for the new decarbonisation workload, constructing and refurbishing our net zero carbon built environment, and transforming the industry in response to the well-being economic recovery.

Reducing the embodied carbon of the products and materials the construction industry uses to deliver net zero by 2045 will be one element of this, and work has already taken place to encourage increased use of local, sustainable and recycled materials to minimise embodied carbon. This includes consideration of a specified minimum content of sustainable natural materials or recycled materials in new buildings.

Work is still ongoing through the recovery plan to achieve: low embedded carbon materials as a central feature of life-cycle net zero assets; prioritisation of local supply chains which support a whole life net zero sector, and development of clusters including for timber products and recycled materials. This includes working closely with the Construction Scotland Innovation Centre (CSIC) who are exploring alternative solutions to traditional methods and materials used for construction. The Scottish Government will consider carefully the Climate Assembly’s recommendation above as the work on the recovery plan progresses.


Recommendation 55: Targets to Sell Local Produce

Set targets for supermarkets and other shops to buy and sell local produce at a fair price to farmers and consumers, and consider systems of grants for supporting more localised markets.

Children’s Parliament: Make and sell more food locally in Scotland. Support environmentally friendly small businesses, organic farmers and butchers. Choose to stock foods from Scotland over foods from abroad.

 

Scottish Government Response

The Scottish Government supports the principle of the Assembly’s recommendation to encourage and support local production and localised markets.

 

The Scottish Government understands the need to decarbonise the retail sector. Goods sold in the UK currently account for 30% of total greenhouse gas emissions, and we want to help Scottish retail to play its part in ending Scotland’s contribution to climate change and meeting our net zero target. We know that many retailers have already begun extensive work to drastically speed up the decarbonisation of their supply chains, achieve their own targets of net zero emissions and encourage consumers to lead low carbon lifestyles. However, like all aspects of our economy, more must be done to reduce environmental impacts and deliver more sustainable products and services. Therefore, the Scottish Government is considering how it can support Scottish retailers to develop sustainable products and operations and to reduce their carbon footprint in stores and across retail operations, including logistics and supply chains.

The Scottish Government has considered the detail of the Assembly’s recommendation to set specific targets for supermarkets and other shops to buy and sell local produce. Our assessment is that it would interfere with basic commercial principles and, for a number of reasons, including seasonality and availability of supply, it would prove difficult to implement. There are a number of other viable activities underway supported by the Scottish Government that are encouraging retailers to facilitate the sourcing of local produce, and so we will continue to explore the viability of any forthcoming ideas that may be designed to help in this area.

Our Retail Strategy, which is currently being drafted, has sustainability as a founding principle and as such will contribute to our climate change and net zero goals. In response to the Climate Assembly’s recommendation, the strategy will promote local production and reduced carbon footprint. It will set out our overall approach to work together to sustainably grow Scotland's retail sector, to play a critical role in creating a fairer, greener and stronger Scotland.

The strategy will support a place-based approach, including encouraging local supply chain and local markets to help retail increase sustainability and contribute to our just transition to net zero. We aim to publish the Retail Strategy by the end of this year.

With specific reference to local produce, which is referenced in both the Assembly’s recommendation and the Children’s Parliament Calls for Action, Scotland was the first national government to sign the Glasgow Food and Climate Declaration, recognising the links between food and climate and the role of sustainable food systems in combating climate change. However, it should be noted that there is a complex relationship between food production and supply and emissions, and that a range of factors contribute to the environmental impact of goods, not just local production.

We are undertaking scoping work on a single marketing brand for all Scottish food and drink produce, ‘Sustainably Scottish’, which would be available to all Scottish based producers, manufacturers and suppliers who can satisfy stringent criteria on provenance and low carbon operations. This will incentivise additional investment in low carbon operations and build on consumer demand for sustainable products, and allow the many Scottish businesses with a strong story to tell about sustainability to capitalise on that demand. We are also working to develop our local food strategy, focussed on encouraging more locally-based production to reduce the distance food travels, promote circular supply chains and enable more people to grow their own food. The consultation on this closed on 2 December 2021 and we are now considering the responses.

In addition, there are already a number of programmes in place to support local produce including funding to the Scottish Grocers Federation for a second phase of a “Go Local” programme in 2021/22 to help drive sales of fresh, affordable local produce in convenience stores throughout Scotland and a further £200,000 of funding to our Regional Food Fund to 42 community groups and regional food groups to support a wide range of local activities to raise the profile and sales opportunities of local producers. The funding is supporting new food trials, farmers markets and local online directories.


Recommendation 56: De-Incentivise Imports

Grow and adapt our local economies by de-incentivising imports and establishing more innovative businesses and low carbon manufacturing industries in Scotland.

 

Scottish Government Response

The Scottish Government supports in principle the Assembly’s recommendation to grow and adapt our local economies by establishing more innovative businesses and low carbon manufacturing industries in Scotland.

 

As mentioned in Recommendation 55, there is a complex interaction between emissions, the environment and trade. Local production does not always mean more environmentally friendly production. A range of factors contribute to the environmental impact of goods at every stage of their life cycle, not just the number of times that a product crosses a border; including design, production methods, trade logistics, connections with other supply chains, and their environmental sustainability.

Manufacturing accounts for 169,000 jobs, over half of Scotland’s international exports, and 47% of businesses’ expenditure on research and development. The Scottish Government’s ambition is for Scotland to become the home of manufacturing innovation, to be seen as an inventor and producer, not just a consumer of goods – innovative, thriving, and with an international perspective.

As a result, the Scottish Government (working closely with industry, public sector partners and academia) has established a single and integrated programme – Making Scotland’s Future. This programme brings together our partners across the support landscape for manufacturing in Scotland in order to deliver a more collaborative and joined up approach to supporting the sector. Through collaboration, the Programme aims to boost productivity; drive innovation; and develop the skills of our current and future workforce to ensure Scotland is world-renowned for our manufacturing capabilities. In line with the Programme for Government and the Assembly’s above recommendation, we are committed to helping manufacturing businesses make the technological and just transition to net zero. The opportunities presented by a low carbon economy are at the heart of this Programme.

As referred to in Recommendation 1, central to its success is investment in a range of support measures including: the National Manufacturing Institute Scotland (NMIS), the Michelin Scotland Innovation Parc (MSIP), the Scottish Manufacturing Advisory Service (SMAS), the Advancing Manufacturing Challenge Fund (AMCF) and the Low Carbon Manufacturing Challenge Fund (LCMCF).

NMIS is working to transform manufacturing skills, productivity and innovation right across Scotland by enabling manufacturing companies to trial and test new processes, applications and technologies. Focusing on net zero solutions for manufacturing is at the heart of NMIS, as it seeks to find circular solutions which will bring materials back into manufacture at the end of life by focusing on the circular economy. It is also the first UK member of a new global trade group to advance sustainability in additive manufacturing. It is led by a team of industry-leading engineers and researchers, and, as highlighted in recommendation one, backed by £75 million of Scottish Government funding.

Also highlighted in Recommendation 1, MSIP will be an international location for innovation in sustainable mobility and low carbon energy with a strong focus on hydrogen. It will cater to a mix of start-up, high growth and more mature companies, both inward investors and indigenous; research/innovation organisations and facilities; and include a Skills Academy and incubator facility for SMEs. It will provide key capability to enable the transition to hydrogen and electric vehicles.

The Low Carbon Manufacturing Challenge Fund (LCMCF) will be open to any business in the manufacturing sector and will provide research and development funding for projects that result in increased product circularity, reduce waste during the manufacturing process and reduce carbon. We believe the LCMCF can support development of new business models; lead to new products that will drive low carbon transition in the Scottish manufacturing sector; drive collaborative development across supply chains of new manufacturing processes and technologies; develop options to enhance capacity in growth sectors; and exploit opportunities in support of the transition to a circular, net zero carbon economy. It is backed by £26 million of capital investment over five years and is part of a wider £60 million investment for industrial decarbonisation.

We are committed to developing further scope to using locally sourced goods and materials with a view to lowering carbon emissions of products associated with transport as well as supporting local economies. Our Supply Chain Development Programme aims to improve the capacity, capability and development of supply chains in Scotland, spanning sectors where we see genuine sustainable economic potential to grow Scottish supply chains.