Remote Electronic Monitoring (REM): business and regulatory impact assessment - draft

Business and Regulatory Impact Assessment

Title of Proposal

Remote Electronic Monitoring (REM) on pelagic vessels fishing in Scottish waters and Scottish pelagic vessels wherever they fish.

Purpose and intended effect

Background

As announced in the Future Fisheries Management (FFM) Strategy^[3], the Scottish Government is introducing legislation making it a legal requirement that all pelagic vessels must have a fully operational Remote Electronic Monitoring (REM) system installed on board while fishing in Scottish waters and, for Scottish pelagic vessels, wherever they are fishing.

Pelagic vessels for the purposes of this policy are defined as fishing boats which:

• are 12 metres or more in length;
• are equipped with at least one of a Refrigerated Sea Water (RSW) system, a Chilled Sea Water (CSW) system or freezer storage capabilities;

and

• uses fishing nets in the Scottish zone (or, for Scottish fishing boats, in any waters) for the primary purpose of fishing for small pelagic species of fish^[4].

REM as a monitoring and data collection tool was first trialled in Scotland in 2008. At the time, it was utilised as part of a large scale monitoring scheme in the Scottish fishing industry during the Cod Recovery Plan (CRP) (2009-2016), offering a Fully Documented Fishery (FDF) monitoring scheme. Vessels took REM on-board in return for incentives, namely additional cod quota and an increased days at sea allowance. The FDF scheme enabled Scottish Government officials to build up a considerable level of expertise and experience of operating an REM scheme successfully, and demonstrated to the Scottish Government that REM can work as an effective enforcement tool. It also acted as the catalyst for the comprehensive development of REM technology in a scientific context^[5], with research ongoing into best practice for extracting accurate scientific data from video footage, developing methodologies for the assessment of fish and shellfish stocks using REM, and development of Machine Learning (ML) software which can deliver automated image recognition of fish caught as they are processed on the on-board conveyor belt systems used by some types of fishing vessels.

Implementing REM requirements for pelagic vessels on a mandatory basis is a first for the UK, while a similar Danish scheme has been implemented since 2022^[6],[7].

The Scottish pelagic fishery is a significant part of the Scottish fishing industry and, in 2022, pelagic species represented 68% by tonnage and almost half (44%) by value (£274.5 million) of total landings taken anywhere by Scottish vessels, as seen in the Scottish Sea Fisheries Statistics 2022^[8]. Most of these landings are landed by 21 vessels (2022 count) with Marine Directorate data indicating they employ over 250 people. Mackerel was the most valuable species landed accounting for 35% of the total value of Scottish landings taken anywhere in 2022. Historically, pelagic species have made up the majority of catches landed abroad from Scottish vessels with around 95% of the tonnage landed abroad in recent years being pelagic fish. The UK’s fleet of 27 trawlers over 40 meters has been consistently profitable, with data from the EU’s Scientific, Technical and Economic Committee for Fisheries (STECF)^[9] showing the fleet’s net profits^[10] exceeded 30% of revenue every year save one between 2014-2019. The most recent published data dates from 2019, however, analysis of the change in costs, the change in available fishing quota, and the price of fish since 2019 indicate that profits are not anticipated to have radically changed from the 2019 figures.

Pelagic fisheries are seasonal and data from 2017-2022 shows that the first catching season peaks during the first six weeks of the year, starting again late summer up to November. The fishery has a consistently high quota uptake for both the West Coast of Scotland and North Sea. For example, between 2020-22 the UK uptake of quota exceeded 100% for both west coast mackerel and North Sea herring. This is possible because of a practice called “Inter-annual” flexibility^[11], which is the regulated and legislated means by which the UK is permitted to operate beyond its ‘100%’ limit.

Objective

The objectives of the policy are to deter non-compliance with fisheries legislation and ensure compliance with key legal requirements such as the landing obligation, to enhance our understanding and knowledge of pelagic fisheries and stocks and to deliver confidence and accountability in the activities of fishing vessels at-sea.

Effective fisheries management relies on vessels fishing at sustainable levels and on vessels complying with their obligations under legislation regulating sea fishing activity, which are in place to ensure that fishing is undertaken safely and responsibly and within environmental limits. Sound fisheries management is underpinned by robust scientific advice – the more data we have and the greater the confidence level in that data, the more confident we can be in our management decisions and the scientific assessments that underpin them. In turn, this can support increased consumer confidence in the product on offer.

The introduction of REM supports the Scottish Government’s Purpose, which is to focus on creating a more successful country with opportunities for all of Scotland to flourish through increased wellbeing, and sustainable and inclusive economic growth. It does this by supporting the delivery of sustainable fisheries management, and supporting the fishing industry to operate in a sustainable way.

REM also supports the delivery of two of the National Performance outcomes contained within the National Performance Framework. These are: Economy – we have a globally competitive, entrepreneurial, inclusive and sustainable economy, and Environment – we value, enjoy, protect and enhance our environment. It does this by ensuring the fishing industry remains competitive in an international context by enhancing the sustainability and transparency of fishing operations, by ensuring that legislation intended to protect the marine environment and fish stocks is complied with, and by enhancing the evidence base from which the Scottish Government makes decisions regarding the marine environment.

Rationale for Government intervention

The Scottish Government makes decisions using the best available evidence and, where there is a data gap, seeking to find new ways of accessing data. Where data is available, there may still be an issue with data accuracy. For example, current landing monitoring methods do not always properly identify misreporting of catch between fishing areas. This negatively influences the sustainable area-based management of the fishery. Introducing REM devices will ensure a better information flow between fishing activity and marine compliance / science officers and will support sustainable management of the stocks and compliance with current legislation.

In addition, there are a number of positive benefits that could be gained by the wider implementation of REM. In particular, raising Scotland’s international reputation for pursuing more sustainable practices, through more rigorous monitoring of bycatch, and, similarly, enhancing Scotland’s reputation in technological adoption by incorporating wider use of REM within current business practices. Enhancing Scotland’s reputation in these ways has the potential to boost Scotland’s standing in the global seafood industry.

With the above objectives in mind, intervention through legislation is assessed to be the most effective method of effectively delivering mandatory REM requirements, and REM is assessed as being the most effective method of delivering the objectives identified.

Consultation

Within Government

Consultation has been undertaken with officials within the Marine Directorate of the Scottish Government, including policy, compliance and science experts and marine analysts/economists.

Within the UK we have also engaged with DEFRA, the Marine Management Organisation (MMO), the Welsh Government and the Northern Irland Executive on overlapping areas of interest. In an international context we have engaged with the EU, Norway and other Coastal State partners to highlight the policy to them and seek feedback.

Under the terms of the Trade and Cooperation Agreement between the UK and the EU, a formal notification of the SSI will be made to the Specialised Committee on Fisheries.

Public Consultation

A full public consultation^[12] on the use of REM took place from 15 March to 7 June 2022. The consultation sought views on the implementation, impact and general principles of the use of REM in the pelagic sector.

Responses to the consultation were mixed between individuals and organisations, and between environmental / conservation groups and fisheries organisations. They were helpful in providing a rounded view of stakeholder opinion on a number of key questions. In total the consultation received 48 valid responses.

We published our analysis report^[13] of the responses to the REM consultation in August 2023.

Specific feedback received as part of the consultation has been used to shape the policy further, including (but not limited to) the following topics:

• Lead-in time for the pelagic industry to prepare for REM requirement: The consultation proposed 12 months as a reasonable timeframe from the time the REM SSI becomes law and before mandatory REM requirements come into legal effect, for pelagic vessels to become compliant with the legislation. Whilst the majority of respondents appeared to agree with this proposition, some argued that it could take up to 36 months for Scottish and non-Scottish vessels to become compliant with the legislation. This led to us consulting further with electronic monitoring specialists and operational experts. We have therefore provided for a long lead-in time for the pelagic requirements to take effect (the SSI will be laid on 22 March 2024, with the mandatory REM requirement taking effect on 7 March 2026).
• Definition of pelagic vessels:

  The consultation defined pelagic vessels as "Refrigerated Sea Water/Chilled Sea Water (RSW/CSW) and freezer vessels, over 12 metres, fishing for small pelagic and blue whiting." This definition set out to be as encompassing as possible for all vessels which could be defined as pelagic vessels. However, some responses suggested the definition could be clearer with some proposing the inclusion of other species and others recommending net mesh size be used as a classifier of pelagic vessels. We took these responses into account in preparing a suitable legislative definition for pelagic vessels, which for the purposes of this policy are defined as fishing boats which:

• are 12 metres or more in length;
• are equipped with at least one of a Refrigerated Sea Water (RSW) system, a Chilled Sea Water (CSW) system or freezer storage capabilities;

and

• uses fishing nets in the Scottish zone (or, for Scottish fishing boats, in any waters) for the primary purpose of fishing for small pelagic species of fish^[14].

• System specification:

  The consultation asked for views on a draft system specification aimed at supporting the delivery of the science and compliance benefits. Although the majority of respondents agreed that the intended benefits would be realised, some suggested that standardising systems across different vessel types and different countries may undermine the level playing field principle. We addressed this concern through the inclusion of precise technical specifications setting out minimum standards for REM systems as part of the REM requirements that must be met. Provided these technical specifications are met, individual vessels will be able to procure and install REM systems that accommodate different layouts and vessel types. By setting standards which must be met by REM systems, this approach ensures that the systems provide the required data, without requiring total uniformity at a vessel level.

Business

Views on REM were sought as part of the National Discussion Paper on Future Fisheries Management^[15], which was published in March 2019. Engagement with industry representatives has taken place through the Fisheries Management and Conservation Group (FMAC).

We have engaged with developers of REM systems to ensure that current REM technology is capable of meeting the ‘technical specification’ minimum standards which the SSI will require.

Options

Option 1: Do nothing

Option 1 is the ‘Do nothing’ option; this is the baseline scenario. Under this option, the proposed REM requirement would not be rolled out to pelagic vessels in Scottish waters or to Scottish pelagic vessels fishing in any waters. Accordingly, no additional management measures would be required.

Option 2: Introduction of legislative requirement for REM on relevant vessels

Option 2 involves introducing a legislative REM requirement that all fishing vessels which meet the definition of a pelagic vessel for the purposes of the REM SSI must have an REM system installed onboard, comprising cameras, winch sensors and Vessel Positioning Systems (VPS) and operational when fishing in the Scottish zone or, for Scottish pelagic vessels, wherever they are fishing.

Sectors and groups affected

The following sectors have been identified as groups who will be affected by the proposal:

• Scottish pelagic fishing industry
• Wider UK and International pelagic fishing industry operating in Scottish waters
• REM suppliers
• REM maintainers/repairers
• Internal Scottish Government – Scottish Government Marine Directorate Compliance and Science
• Courts and the Crown Office and Procurator Fiscal Service – if criminal prosecutions are pursued.

Benefits

Option 1: Do nothing

No change would be required from an industry perspective, with no additional benefits being incurred.

Option 2: Introduction of legislative requirement for REM on relevant vessels

The introduction of an REM compliant fleet will principally allow for full documentation of catches, presenting a variety of benefits covering three main areas:

1) Enhance Scottish Government compliance capabilities by increasing the data available to assess fishing vessel compliance.

REM can act as a deterrent to non-compliant activity, such as illegal discarding of catch, and can create a level playing field for all vessels that use it within a fishery and where there are appropriate levels of monitoring and analysis. Therefore, REM aims to ensure greater levels of compliance and as such more sustainable Scottish fisheries with fewer occurrences of illegal practices. REM will, therefore, enhance the Scottish Government’s abilities to demonstrate accountability in Scottish fishing practices, to deliver confidence that fishers are complying with fisheries rules and regulations, and to supplement our existing enforcement tools used as part of our world-class compliance system. Over time, with further development of tools such as machine learning (ML), REM could be used in place of existing methods allowing efficiencies in fisheries compliance activities.

Fisheries, fishers and both fishery-dependent and fishery-independent data collection were all severely impacted by the COVID-19 pandemic. In many fisheries this resulted in a combination of sampling programmes being suspended, and when operational, a very limited observer availability due to quarantine rules. Globally, however, REM programmes were only marginally impacted, demonstrating the resilience of remote monitoring in its ability to provide continued uninterrupted data collection regardless of external extenuating factors. Therefore, these benefits highlight the advantages of having multiple monitoring methods in place to ensure an evidence base for continued fisheries management in unprecedented situations.

A monetary value to these compliance benefits has not been estimated due to the fact that the use of REM has, up until this point, not been widespread, the lack of international examples to draw on, and the unknown element of the level of non-compliance with the landing obligation. European Fisheries Control Agency analysis from 2015-2017 suggests significant levels of discarding across the EU fleet but notes that estimates are not available due to the lack of data and that REM could be instrumental in improving the picture^[16]. Research into the impact of electronic monitoring on the discarding of small cod in the Scottish demersal fisheries indicates that electronic monitoring does decrease instances of discarding^[17].

2) Enhance Scottish Government Science capabilities by increasing data available for informing scientific advice.

This will enhance the information available for stock assessments and wider marine planning purposes. REM technology offers a range of scientific benefits, by supporting and building upon existing fisheries-dependent data collection methods such as independent fishery observers, industry-science partnerships, vessel monitoring systems (VMS) and logbooks.

REM technologies can improve the timeliness, quality, cost-effectiveness and accessibility of scientific data to ensure the data utilised for fisheries management decision making is of high quality. If used on a large scale, and as more tools are developed and implemented such as ML, REM data streams can be integrated with existing data collection programmes to support stock assessments, support other scientific research interests and wider decision-making in the marine environment.

Consequently, this is expected to help deliver benefits in relation to fisheries stock management, which in turn can help lead to more responsible, traceable and sustainable fishing. Scientific involvement in co-developing and deploying REM technology is therefore of significant importance, with Scottish Government compliance and science both co-beneficiaries of this system.

As the tools to support REM are developed and improved in future, such as ML, the data generated by REM could ease the reporting burden and duplication of effort on behalf of fishers and fisheries management organisations. Information such as a vessel’s location, fishing effort, gear, and most importantly from a fully documented fisheries management perspective, the types and quantities of retained or discarded catch could be automatically determined and reported.

A monetary value for the benefit of additional data and the resulting benefit of enhanced scientific research and advice has not been estimated due to the fact that, up until now, the use of REM has not been widespread, the fact that there is a lack of international examples to draw on, and the unknown element of how much discarding is affecting stock assessment accuracy.

3) REM will support and enhance the reputation of Scottish seafood, with a demonstration of compliance by fishing vessels and delivering confidence to consumers that fishing is being undertaken responsibly and sustainably.

In addition to REM improving accountability in our fishing practices, consumers are expected to have more confidence that Scottish fish is caught sustainably, and REM is anticipated to improve the reputation of Scottish fishing in general. This confidence in sustainability has also been noted in the significant price premium that MSC certification can convey (5-25% dependent on species^{[18],[19],[20]}), with REM expected to help reinforce pelagic fishing’s credentials with a possible increase in value to fishers as a result. While the MSC certification for mackerel is currently suspended, MSC does note the different levels of sustainability in different fisheries thus potentially allowing Scottish fisheries to have a higher ranking even when there is not international agreement on quotas. This could potentially also help in maintaining international market access and accessing international markets such as the USA where stricter evidence on marine mammal bycatch is required^[21].

The price and trade benefits of REM for the pelagic fleet are difficult to quantify as the body of evidence available relates primarily to the existing MSC certification for this fleet rather than any certification above this level. However, for every 1% increase in the price of pelagic fish, the estimated total benefit to Scottish fishers could be around £2.7m per annum based on the total value of landings in 2022^[22]. While the precise benefit is uncertain, it is clear that even a small benefit would have a positive monetary impact.

Summary of Benefits

Non-Monetised – Option 1: Do nothing

1. No additional costs for the fishing industry

Non-Monetised – Option 2: REM

1. Potential reduction in discarding/unlawful practices due to increased compliance – leading to improved health of fish stocks, in turn improving catch yields and future economic gains.

2. Increased quantity and accuracy of data for science and compliance assessments.

3. Marine ecosystem benefits including enhanced sustainability of fishing practices.

4. Helping establish the tools and capabilities of ML through collected data to further improve the capabilities of REM.

5. Possible future savings in compliance and science data collection as the technology develops.

6. Fishing accountability and increased consumer confidence, improved reputation for Scottish catch, potential improvement in competitiveness of the product and improved access to markets. Total estimated monetized benefit could be £2.7m for every 1% increase in price.

Costs

Option 1: Do nothing

This option is not predicted to create any additional costs to the sectors and groups outlined above.

However, failure to introduce REM among the fleet would mean that existing challenges around data gaps would remain and constraints to enforcing compliance with existing legislation (particularly the landing obligation) would continue. This would likely result in continued discarding taking place resulting in higher fish mortality rates and less fish available for future years. Pelagic stocks have been noted by the European Fisheries Control Agency as both an area lacking information on discards and an area that is estimated to have significant levels of discarding^[23]. In the event of discards continuing or absence of accurate information on discards it is more likely that precautionary steps will need to be taken in regards to stock assessments which typically result in more conservative quotas or greater variability in quotas. This could be detrimental to the fishing industry both in loss of short term fishing opportunities and in terms of impacting business planning.

By doing nothing, Scottish seafood could become less attractive to consumers and potentially lose market share or price premium if competitors prove the sustainability and compliance of their fisheries. This can be seen with more stringent requirements being introduced for imports to the USA market^[24] which is both a possible export market and a possible competitor for pelagic fish in some high value markets.

In 2022, pelagic species represented 68% by tonnage (293 thousand tonnes) and 44% of value (£274.5 million) of the total landings by Scottish vessels^[25]. Given the outsized quantity and value of this segment, a substantial loss of competitiveness, unsustainable fishing, or other negative impacts from inaction could have a measurable impact on the Scottish rural economy and the Scottish fishing industry.

As Option 1 is the baseline option the costs and risks above have not been monetised so as to not double count the benefits. Instead the benefits of Option 2 can be considered as costs avoided and risks avoided.

Option 2: Introduction of legislative requirement for REM on relevant vessels

The exact costs for REM will vary depending on the size and type of vessel, and the different costs charged by commercial operators. The estimates provided in Table 1 below are from a limited sample of businesses offering these services but as the market matures the businesses offering these services could change. Given the small number of vessels affected (21 Scottish vessels and an estimated 39 non-Scottish vessels) it is not expected that this legislation will increase demand for REM systems above what businesses are able to supply. We have engaged with a number of suppliers through the development of the legislation and no concerns regarding availability have been raised. Internationally, the demand for this type of system is growing fast, with no identifiable supply issues, for example over 1,400 vessels had it in 2018, with it being common for over 200 vessels per year to be added to this^[26]. We do not expect that the price of these systems will increase due to this legislation, although that is always possible in a commercial environment. Vessel owners will be free to choose which system they purchase, as long as it meets the minimum standards in the technical specifications for REM systems for pelagic vessels, which will be published by Scottish Ministers under the REM legislation.

The technical specifications will set out the type of data which must be captured by an REM system and how this must be stored and transferred for analysis. The costs associated with these different data requirements will vary depending on the system provider used and the type of activity the fishing vessel is engaged in. For example, some pelagic vessels will be at sea for longer than others and will therefore generate larger quantities of REM data in relation to these longer fishing trips.

There is a requirement for REM data to be uploaded to a data storage system (which can include a ‘cloud’ or physical server based storage system). This means that costs will be incurred both for transfer of data and subsequent storage of that data. The responsibility for sourcing REM systems which comply with the applicable technical specifications and for paying for data transfer services and cloud storage rests with the fishing industry, and they will be able to procure the system and data package that best suits their business model. This level of flexibility will allow for competition within the market.

The largest component of data being captured by the REM systems is in relation to camera footage. Whilst winch sensor and vessel positioning system device data (VPS) will need to be uploaded to server storage in real time, for the camera data there is flexibility in relation to when the data transfer takes place – this can be at sea, utilising existing data packages onboard the vessel, or in port, providing that transmission is completed by the deadline specified in the technical specifications for REM systems for pelagic vessels. Again, this means that the fishing industry can tailor their operations to their business model. For example, if they have a quick turnaround in port, they may wish to upload data whilst at sea, whilst still meeting the mandatory deadlines for completing the data transfer.

Most, if not all, pelagic vessels will already have existing data systems in place onboard, for example, to provide broadband and television packages for crew members. Based on discussions with commercial suppliers to the fishing industry, it is our assumption that these existing packages can be adapted and utilised for the purposes of REM data transfer, at little or no additional cost.

The whole system costs can be broadly split into three categories: 1) the initial upfront cost of hardware (system and installation), 2) the recurring cost of data transfer and system software / licences, 3) the ongoing maintenance of hardware and replacement kit. It should be noted that these are estimates only.

Estimated costs of the REM system for a pelagic vessel (2023 prices)

• Estimated system cost: £6,590 - £13,070
• Estimated installation cost: £1,940 - £4,360
• Estimated installation cost – Data transfer: £0 - £2,470
• Estimated annual running cost – Maintenance: £1,210 - £3,270
• Estimated software licence cost: £310 - £420
• Estimated annual running cost – Data transfer: £700 - £2,000
• Estimated annual running cost – Data storage: £510 - £5,310

Summary of Costs

• Annual cost Year 1 and replacement years (excludes maintenance): £10,050 - £27,630
• Annual cost Year 2 onwards: £2,730 - £11,000

Notes:

• System cost, installation cost, and annual system maintenance cost figures were estimated from the EU REM technical guidelines^[27] with 50% added to the maximum range to account for the additional cameras expected.
• Data transfer and storage costs were estimated based on non-public estimates provided by current and prospective REM system suppliers and public Starlink prices^[28].
• Software licence costs were estimated from the scallop REM rollout.
• Figures for REM systems were converted from Euro to GBP using the 2022 average exchange rate as published by the ONS^[29] and were adjusted to 2023 prices from 2019 prices using the Treasury’s September GDP deflator^[30].
• Figures for data transfer and storage were in current (2023) GBP prices.
• The broad range for the cost of annual data storage reflects the fluctuation in business operating models and the expected variation between commercial providers.

System costs

The lifespan of the system is estimated to be on average 5 years in line with industry estimates, although systems can last a longer or shorter time depending on the quality of maintenance. For the purposes of the analysis, a full system repurchase is expected every 5 years, with the first update in year 6.

The system costs for the Scottish pelagic fleet are likely to be on the upper end of the cost range due to the size of these vessels meaning that extra cameras will be required in order for REM systems to meet the minimum standards set out in the technical specifications. However, this cost will vary by vessel according to vessel size and layout, and how they choose to automatically transfer data. The costs will also vary for non-Scottish vessels, again depending on size and layout of vessel and how they transfer data. Additionally, the maintenance costs may, in practice, be lower than estimated as pelagic vessels often have specialist engineers onboard and thus vessel owners may be able to reduce the costs of installation and maintenance through using this existing resource.

Data Transfer

Three different types of data are collected by the REM systems. The winch sensor and VPS data is required to be automatically uploaded to a data storage system in real time, whilst the vessel is at sea. The costs associated with the first two data types are expected to be minimal due to the low volume of data transferred and is expected to be absorbed either through existing vessels systems or through the REM system purchased.

The third data type is the camera data. Vessel owners have the option to begin uploading data whilst at sea or, where the fishing trip which the data relates to has been completed, to upload all of the data at sea. We anticipate many may do this by utilising existing broadband and data packages (although in some cases these may need to be upgraded). The potential need for upgrades is particularly relevant for vessels that have a large amount of data to upload (because of the trip length, particularly for freezer vessels) or fishers who wish to have a quick turnaround in port before recommencing fishing activity. Alternatively, vessels can choose to upload camera data when they return to port, provided that this is completed within a 5 working day window starting from the time of arriving in port. However, if a vessel starts a new fishing trip during that 5 working day window, then the data transfer must be completed immediately before the start of that new fishing trip.

Providing that the deadline set out in the technical specifications for uploading the camera data is met, the choice regarding when to upload camera data remains with the vessel and will vary depending on their existing data capabilities and expected fishing activity.

Data should be uploaded to the data storage system and stored in an accessible format so that Scottish Ministers can access and download data as required for both science and compliance purposes. This cost is expected to be met by industry and is included in the annual running cost of the system.

Data Transfer costs

The cost to the vessels of transferring the data to the data storage system will range depending on access to port Wi-Fi, the vessel’s own data package, or if the vessel has to upgrade to a new data package.

It is expected that many vessels will use a combination of existing satellite data packages and port internet services to transfer the required data. However, due to the lack of available data on the existing satellite data packages for the fleet and their current use it is not possible to say with certainty there will be no additional costs. As such it is assumed that where satellite internet is needed it would be purchased as an extra rather than utilising existing capacity.

Analysis of trip length and time spent in port between trips in the Scottish pelagic fleet suggests that between 2017 and 2022 some vessels have trips that would not have enough port time to use slow internet and so would need to utilise satellite internet while at sea or change their fishing patterns. It is estimated that a pelagic vessel would require, on average, satellite internet one month within a year to transfer/upload data.

Due to the high average value caught on each trip, it is much more likely vessels would opt to purchase satellite internet rather than remain in port for longer especially given the availability of single month packages. Furthermore, according to our data, almost all of the Scottish pelagic vessels would require satellite internet over a 5 year period, with each year seeing a different cohort of vessels not having sufficient port time to satisfy their upload requirements.

The cost of installing satellite internet on a vessel is estimated to be £2,470 as shown by Starlink, a service which provides monthly packages with a one-time installation cost. The running cost of satellite internet is estimated to be between £700-£2,000 per month depending on the data needs, using known values from current REM providers and satellite internet services. As such, the total annual cost is expected to range between £700-£2,000 per annum (the same as the per month cost with the assumption of a single month of data required per annum) with a first year additional cost of £2,470.

The costs to the non-Scottish fleet are assumed to be the same as those of the Scottish fleet due to the lack of available data on vessel patterns and current satellite internet capacities in these fleets.

Data Storage costs

Server storage is difficult to quantify as there are many factors that can affect cost. For example, cloud storage cost is typically measured not just as the absolute amount of space that is utilised, but also the amount of traffic it creates on the cloud providers network. So, the level of uploads, reads and writes, can influence the costs involved.

The estimates here are based on a number of assumptions based on analysis carried out using information from existing REM suppliers and includes a rolling storage consumption of either 2 or 6 terabytes (TB) (e.g. initially storage costs might in reality be lower until the capacity is reached and older data needs to be deleted), and a best estimate.

We have also estimated a broad range, with the actual costs likely to fall somewhere in between. The actual costs will depend on overall quantity of data, whether data is always available or combined with ‘cold line’ storage^[31] and only retrieved on request, and assumptions about how much data is accessed.

To create these cost estimates we have looked at several vendors known to be used by REM providers and other fisheries management agencies. Different vendors will have different costs, and final costs will be market driven. It is also likely that third party REM providers will have their own contracts with cloud storage providers, which means that the costs could well be lower for individual vessels as they may benefit from REM providers’ existing packages.

In summary: 2 TB standard storage = £42-147/month

2 TB cold line storage = £35-52/month (+ £40-80 if data needs to be retrieved)

6 TB standard storage = £117-442/month

6 TB cold line storage = £58-156/month (+ £120-241 if data needs to be retrieved)

The cost of storage per vessel is likely, therefore, to be somewhere in the range of £510 - £5,310 per year.

6TB is likely to be the maximum storage needed annually. It will take time in the initial year for this capacity to be reached, if it is reached at all, as the level of data builds up. Data will need to be stored for up to 1 year, although there is provision for earlier deletion if authorised by the Scottish Government.

Payment of these costs

The pelagic industry will accrue benefits from the use of REM, notably enhanced reputation and consumer confidence by having a well regulated and monitored fishery. On this basis, and also based on the current profitability of the Scottish pelagic fishing fleet, it is the Scottish Government’s position that the pelagic fleet is sufficiently well resourced to fund any REM technologies without the need for any public funding and that the payment of these costs should be met by the industry themselves. The maximum purchase and installation costs of REM (£27,630 maximum per vessel) are estimated to be less than 1% of the average UK’s pelagic vessel’s annual net profit (£3.8 million average net profit for UK vessels between 2016-2019).

Pelagic vessels will be responsible for all costs associated with sourcing, purchasing, installing and maintaining REM systems (including data transmission and storage costs and costs for Scottish Ministers’ access to the data storage system) which meet the requirements set out in the system specification.

Cost of additional penalties

As explored above, it should be stressed that Scottish Government seeks to use this policy to encourage compliance with sea fisheries legislation and to deter non-compliant fishing activity. If fishers comply with all of the legal duties and obligations which apply to pelagic fishing activity, then an REM system will not identify any breaches of legislation. This policy will ensure existing compliance efforts are supplemented with REM data, but otherwise will continue as at present. As such, there should be no extra enforcement penalty costs to fishers except to those who are not currently complying with applicable legal obligations. These have not been estimated as the current compliance status of each vessel is unknown.

Public sector costs: Enforcement costs

To supplement existing Marine Directorate Compliance efforts, the REM system will be able to detect non-compliance, while its very presence may deter it in the first instance. Government officials will continue to deal with non-compliance appropriately and proportionately if it occurs.

REM systems will also be applied to non-Scottish vessels fishing in Scottish waters.

While there are additional costs associated with expanding the team reviewing REM data, these are to be balanced internally from the other compliance efforts so there will be no overall additional cost. This is achieved through taking a risk based approach to resourcing different compliance and detection activities. There may be an impact on other operational priorities, particularly during pelagic fishing seasons, as resources are focussed on REM analysis and enforcement. There may be some minimal costs associated with purchasing specialised software for analysis or server storage for downloaded data. These costs are expected to be absorbed through existing budgets and are estimated to range between £4,000 - £30,000 annually.

Public sector costs: Science costs

There would be a need to expand the team reviewing the REM data for scientific reasons particularly to review bycatch and interactions with protected, endangered and threatened species. These extra costs are estimated to be £80,000 in the first two years and then £40,000 in subsequent years (in 2023 prices).

Summary of Costs

Non-Monetised – Option 1: Do nothing

1. No additional direct costs for the fishing industry or public purse.

2. Indirect costs continuing practices of illegal discarding which can result in higher stock mortality than expected with the knock on effect on future fishing productivity.

3. Possible loss of competitive position and reduction in price received in future. Estimated up to £2.7m cost to the industry for every 1% drop in pelagic fish price.

Non-Monetised – Option 2: REM

1. There are no major costs expected which are not monetised below.

Monetised – Option 1: Do nothing

1. None

Monetised – Option 2: REM

1. Cost of REM systems per vessel ranges between £10,050 - £27,630 in the first and sixth year and between £2,730 - £11,000 each other year. With 21 vessels in the Scottish pelagic fleet the total cost to the Scottish fleet is expected to range between £211,050 - £580,230 for the Scottish Pelagic fleet in the first and sixth year and between £57,330 - £231,000 and for the Scottish Pelagic fleet each other year. The costs in the first and sixth years are likely to be on the upper end of the range due to the large size of the Scottish vessels meaning 8 to 12 camera systems may be required.

2. Between 2018-2021 there is an estimated 39 pelagic vessels fishing in Scottish waters from the rest of the UK or from foreign countries. The estimated total cost for this fleet is expected to range between £391,950-£1,077,570 in the first and sixth year and £106,470-£429,000 for each other year.

3. Enforcement system costs ranging from £4,000-£30,000 in total. With these costs borne by the Scottish Government. The cost to the non-Scottish fleet are assumed to be the same as those of the Scottish fleet due to the lack of available data on vessel patterns and current satellite capabilities in these fleets.

4. Scottish Government Marine Directorate’s Science, Evidence, Data and Digital Portfolio support costs estimated to be around £80,000 in the first two years and then around £40,000 thereafter. With these costs borne by the Scottish Government.

Regulatory and EU Alignment Impacts

Intra-UK trade

No impact. There is no expected impact on intra-UK trade as this will only impact the act of fishing in Scottish waters (or, for Scottish vessels, the act of fishing in any waters) and will not have any effect on downstream purchases or sales. We have engaged with other UK fisheries administrations in relation to SSI, to ensure that are informed and aware of the impacts on non-Scottish UK vessels.

International Trade

Limited/No impact. This policy should have no impact on imports or exports of goods or services, nor on the trade flows between countries. Domestic and foreign businesses will be impacted in the same way within Scottish waters but only Scottish vessels will be subject to REM requirements outwith Scottish waters. This position is not expected to confer any advantage to domestic or foreign businesses due to the low cost of the system relative to the average annual net profits of Scottish pelagic vessels (<1%).

Non-Scottish vessels may be reluctant to use REM and this may impact on the overall attractiveness of pursuing fishing opportunities in the Scottish zone. However, these impacts are thought to be minimal or short-lived given the general direction of travel by other Coastal States (particularly the EU) towards the mandatory use of REM within their waters.

EU Alignment

The EU is taking steps to consider a role for REM in certain fisheries in the future as part of their wider review of the control and enforcement regulation^[32] . The SSI will advance the standards shared with the EU, creating a temporary period of divergence while it progresses its own development of REM. We have undertaken engagement and consultation with the EU on this REM policy and development of the SSI and are also seeking to share our learning from its development internationally, including with the EU.

Scottish Firms Impact Test

This section has been informed by evidence gathered during the consultation phase.

The UK’s fleet of 27 pelagic trawler vessels over 40 metre has been consistently profitable, with data from the STECF^[33] showing this fleet making net profits exceeded 30% every year save one between 2014-2019. Net profit per UK Pelagic vessel has often been over £4 million per annum between 2016-2019 as shown by the STECF data. As the majority of the UK fleet consists of Scottish vessels^[34], it is expected that the cost of installing and maintaining the REM device (see costs section) will have only a marginal impact on the profits of the subjected businesses.

The total cost is expected to range between £10,050-£27,630 per vessel in the first year, affecting 21 vessels (2022 figure^[35]), and £2,730-£11,000 per vessel each year thereafter. With the average revenue per Scottish pelagic vessel estimated to be £13 million in 2022^[36] and using the lower estimate of 30% net profit we arrive at a per vessel profit of £3.9 million per annum, where the REM costs per vessel represent less than 1% of net profits.

As a result, the introduction of mandatory REM requirements to the Scottish Pelagic fleet is not expected to materially impact their businesses and is not expected to have impacts for the further supply chain.

Competition Assessment

The introduction of REM on a level playing field basis in relation to pelagic fishing activity within the Scottish zone will ensure Scottish pelagic boats are not out-competed by non-Scottish vessels not having the same requirement when fishing in Scottish waters.

With the reputation of Scottish pelagic seafood expected to be enhanced as a result of demonstrating compliance with sea fisheries legislation such as the landing obligation (bringing these products more in line with public demand), this is anticipated to make the competitiveness of these products more favourable compared with substitute goods.

It should be noted that there could be some advantage gained by the non-Scottish pelagic fleets if their respective national governments choose to fund some or all of the costs of the REM systems. However, there is no guarantee that any third country governments will offer any funding to affected vessels within their pelagic fleet and, given the relative cost of the system against the turnover (<1%) and profits (<1%) of these businesses, any funding which was offered to third country pelagic vessels is anticipated to have only a negligible impact on overall competitiveness, with all vessels still required to operate and maintain the system, regardless of who funds it.

Furthermore, the requirement on Scottish Pelagic vessels to operate an REM system outside of Scottish waters should not impact on their competitiveness due to the low value of the fisheries caught outside of Scottish waters (~10% of total landed value as evidenced by Marine Directorate management data) and the fixed cost nature of the system meaning that the extra cost of running the system while fishing outside of Scottish waters is negligible.

Competition Filter Questions

Will the proposal directly limit the number or range of suppliers? E.g. will it award exclusive rights to a supplier or create closed procurement or licensing programmes?

No. Any supplier with the capabilities to supply REM systems which meet the technical specifications for REM systems for pelagic vessels (which will be published by the Scottish Ministers) will be able to do so.

Will the proposal indirectly limit the number or range of suppliers? E.g. will it raise costs to smaller entrants relative to larger existing suppliers?

Limited / No Impact. The proposal is not anticipated to limit the ability of any supplier to provide REM systems, regardless of size or existing business provision.

Scale should not affect the competitiveness of larger suppliers over smaller. The only consideration will be whether an REM system meets the minimum standards set out in the technical specifications.

Will the proposal limit the ability of suppliers to compete? e.g. will it reduce the channels suppliers can use or geographic area they can operate in?

Limited / No Impact. Introduction of REM will not directly affect firms’ routes to market or the geographical markets they can sell into.

Will the proposal reduce suppliers' incentives to compete vigorously? e.g. will it encourage or enable the exchange of information on prices, costs, sales or outputs between suppliers?

No. Introduction of REM is not expected to reduce suppliers’ incentives to compete vigorously.

Consumer Assessment

The consumer in this is considered to be those who purchase the fish from the pelagic fleet. It is not expected the consumer will be impacted, in terms of the price paid by consumers for pelagic fish, as the cost to the pelagic fishing industry is expected to be negligible (<1%). However, it is expected to improve consumer confidence in the sustainability of the product they are purchasing.

Consumers could also be considered the pelagic vessel owners – the impacts on this group of people are considered throughout this BRIA.

Test run of business forms

No business forms have yet been produced, however, we will undertake a test run to ensure ease of use once forms are ready.

Digital Impact Test

Digital Impact Test Filter Questions

Does the measure take account of changing digital technologies and markets?

Yes. This is working with industry to move to a new and increasingly mature digital technology through remote electronic monitoring with the possibility of increased use of ML to review the footage from cameras forming part of REM systems. Drafting of the SSI and the accompanying technical specifications has taken account of the need to future proof the requirements to allow for future digital developments.

Will the measure be applicable in a digital/online context?

Yes. REM data will be uploaded, accessed, and processed digitally.

Is there a possibility the measures could be circumvented by digital / online

transactions?

No. There are no transactions in this process.

Alternatively will the measure only be applicable in a digital context and therefore

may have an adverse impact on traditional or offline businesses?

No. The REM process contains a mix of traditional offline processes e.g. the installation and operation of physical hardware and digital processes (the capture, transmission, storage and analysis of digital REM data).

If the measure can be applied in an offline and online environment will this in

itself have any adverse impact on incumbent operators?

No. REM systems are likely to be supplied and operated by a mix of existing suppliers, and new suppliers, with no restrictions in place as long as the technical and operational requirements of the legislation are met.

Legal Aid Impact Test

Individual vessel masters could require access to legal aid if prosecuted for an offence under the REM SSI.

Enforcement, sanctions and monitoring

This policy will provide a new, enhanced method of enforcing compliance with existing legislation regulating sea fishing activity. Penalties will be applied in instances of non-compliance in line with existing sea fisheries offences.

Where a breach of fisheries regulations has been detected, it will be reported as appropriate to the prosecuting authorities. This can result in either a Fixed Penalty Notice of up to £10,000, or a fine of up to £50,000 on summary conviction, or a fine on conviction on indictment.

The Scottish Government will review the data recorded by REM systems in order to check compliance with legislation regulating sea fishing activity. The frequency of review will be risk based.

The Scottish Government will remain the relevant competent authority with responsibility for scientific studies, compliance, monitoring and enforcement of the requirement to have a compliant REM system on board.

Implementation and delivery plan

Consultation timescales

The consultation on REM, ran between March 2022 and June 2022. Consultation analysis was published on 14 August 2023.

Preparation of draft legislation

The draft REM SSI will be laid before the Scottish Parliament on 22 March 2024.

The pelagic 6 month preparatory period will come into force on 7 September 2025 and the main pelagic REM regime will come in to force in on 7 March 2026.

Post-implementation Review

The intention is to maintain regular scrutiny of the policy,

Summary and recommendation

Option 2, introduction of a legislative requirement for REM on relevant pelagic vessels is the recommended option.

As explored in detail above, this policy is consistent with the strategic context and outcomes of the Fisheries Management strategy^[37], namely:

• Overarching principles of sustainability – the policy will deliver full accountability of catch from the pelagic fishing sector, allowing for long term sustainability and growth.
• Environmental outcomes – further from the above, the policy will allow for more accurate calculation of catches, based on certainty that the amount of fish being extracted is known and accurate.
• Economic outcomes – thorough management of this fishery will ensure it remains productive and resilient, allowing for long term economic growth.
• Ensuring high levels of compliance can safeguard the health of fish stocks which in turn reflects in sustainability and potential long term growth in the industry. Additionally, signalling sustainable fishing practices is anticipated to value to the landed product and maintain international competitiveness.
• Social outcomes – further from above, as the policy supports the sustainable growth of this fishery, the wider benefits that flow from this industry are expected to be realised in the communities which the workforce and processing facilities are drawn from.

Option 1

Total benefit per annum (2023 prices): Non-Monetised

• No change to existing practices.

Total cost per annum (2023 prices): Non-Monetised

• No additional costs for the fishing industry or public purse.
• Indirect costs continuing practices of illegal discarding which can result in higher stock mortality than expected with the knock on effect on future fishing productivity.

Option 2

Total benefit per annum (2023 prices): Non-Monetised

• Potential reduction in discarding/unlawful practices due to increased compliance – leading to improved health of fish stocks, in turn improving catch yields and future economic gains.
• Increased quantity and accuracy of data for science and compliance assessments.
• Marine ecosystem benefits including enhanced sustainability of fishing practices.
• Helping establish the tools and training data sets required for ML through collected data to further improve the capabilities of REM.
• Savings in data collection compared to traditional methods and possible future savings in compliance and science data collection.
• Fishing accountability and increased consumer confidence. Improved reputation for Scottish catch, potential improvement in competitiveness of the product and improved access to markets. Monetised benefit to the industry could be up to £2.7m for every 1% increase in price.

Total benefit per annum (2023 prices): Monetised

• There is no figure for total monetised benefits for REM due to the uncertainty in this new scheme.

Total cost per annum (2023 prices): Non-Monetised

• There are no major costs expected which were not monetised below.

Total cost per annum (2023 prices): Monetised

• Cost of REM systems per vessel ranges between £10,050-£27,630 in the first and sixth year and between £2,730-£11,000 each other year.
• With 21 vessels in the Scottish pelagic fleet the total cost to the Scottish fleet is expected to range between £211,050-£580,230 for the Scottish Pelagic fleet in the first and sixth year and between £57,330-£231,000 for the Scottish Pelagic fleet each other year. The costs in the first and sixth years are likely to be on the upper end of the range due to the large size of the Scottish vessels meaning 4 to 12 camera systems may be required.
• Between 2018-2021 there were an estimated 39 pelagic vessels fishing in Scottish waters from the rest of the UK or from foreign countries. The estimated cost for this fleet is expected to range between £391,950-£1,077,570 in the first and sixth year and £106,470-£429,000 for each other year.
• Enforcement system costs ranging from £4,000-£30,000 in total. With these costs borne by the Scottish Government.
• Scottish Government science support costs estimated to be around £80,000 in the first two years and then around £40,000 thereafter. With these costs borne by the Scottish Government.

Summary of monetised costs of each option

Option 1

• Year 1: £0
• Year 2: £0
• Year 3: £0
• 10 Year total: £0

Option 2 – Minimum of Range

• Year 1: £687,000
• Year 2: £239,420
• Year 3: £193,984
• 10 Year total: £2,676,319

Option 2 – Maximum of Range

• Year 1: £1,767,800
• Year 2: £743,961
• Year 3: £681,463
• 10 Year total: £8,200,179

Note: Figures have had a 3.5% discount rate applied in line with the Treasury Green Book.

Declaration and publication

I have read the Business and Regulatory Impact Assessment and I am satisfied that (a) it represents a fair and reasonable view of the expected costs, benefits and impact of the policy, and (b) that the benefits justify the costs. I am satisfied that business impact has been assessed with the support of businesses in Scotland.

Signed: Mairi Gougeon

Cabinet Secretary for Rural Affairs, Land Reform and Islands

Date: 20.03.2024

Scottish Government Contact point: inshore@gov.scot