Low Carbon Manufacturing Challenge Fund: business regulatory impact assessment

Options

Option 1: do nothing

Do nothing is not an option due to the:

• statutory commitment which the Climate Change (Emissions Reduction Targets)(Scotland) Act 2019 places upon Scottish Ministers and the Scottish Government for Scotland to be a net zero society by 2045;
• the Scottish Governments commitment, through the Economic Recovery Implementation Plan, to drive investment and deliver jobs in green, net zero digital and high value manufacturing, in response to the recommendations of the independent Advisory Group on Economic Recovery (AGER).

Option 2: Implement the LCMCF

Sectors and groups affected

Those likely to be affected by the introduction of the LCMCF will be as follows:

• manufacturing businesses, employees, contractors, trade unions, suppliers, customers will be directly affected;
• every person in Scotland will be indirectly affected.

Benefits

Option 1: There are no benefits. Failure to support the Scottish manufacturing sector to transition to low carbon manufacturing will result in:

• longer term damage to business competiveness and profitability as customer/consumer interest increasingly turns to sustainably produced goods manufactured by wider UK and global competitors;
• a detrimental long term impact on global ecosystem resilience, and Scottish employment and health.

Option 2: Benefits will be as follows:

• every person, as well as future generations, will be indirectly benefited through improved ecosystem resilience, employment and health;
• manufacturers located in Scotland will be better placed to compete domestically and globally in a net zero, circular economy;
• Scottish manufacturers in receipt of funding will become more resilient, productive and sustainable;
• potential to build on Scotland's existing reputation for green industry support, attracting new businesses, and existing businesses looking to expand in, or relocate, to Scotland;
• it is anticipated businesses will directly benefit:
  • with cost savings through collaboration and sharing of equipment, facilities, contacts and expertise;
  • with access to new markets and customers through low carbon manufacturing processes such as remanufacturing and the development of new by-products from recovered waste;
  • by a circular economy reducing the risk of disruption from geopolitical issues, global trade tensions or climate change;
  • through improved relationships with suppliers, employees, local communities and shareholders through mutually beneficial circular strategies;
  • through stronger brand reputations from low carbon manufacturing processes and products;
  • by attracting and retaining talent and investors;
  • by increasing the opportunity for existing businesses, whose products are at risk of becoming obsolete due to increased demand for sustainable products, to diversify;
• the initial shift towards the production of capital goods, such as equipment, machinery and buildings, will result in an increased demand for construction and labour from the non-manufacturing industry sectors;^[5]

Costs

Option 1:

• no implementation costs for Scottish Government;
• longer term cost to businesses through being uncompetitive domestically and globally;
• businesses having to meet all of the costs of transitioning to low carbon manufacturing;
• affecting company's ability to attract and retain talent and obtain investment;
• longer term cost to ecosystem resilience, employment and health;
• Scottish Government failure to meet statutory requirement to meet net zero target.

Option 2:

• the Scottish Government will provide capital funding totalling £26 million to develop low carbon solutions via the LCMCF;
• it will likely be a mix of direct funding and challenge type competitive funding;
• there will be an expectation of match funding from the project partners to support resource and/or capital elements;