Scotland's Climate Change Plan – 2026-2040 - ICIA

4. Assessment of Impacts

4.1 Introduction

This section uses the evidence presented in the previous section to assess how the Scottish Government has had regard to the Islands (Scotland) Act 2018 in the development of the CCP and how the CCP potentially impacts on island communities.

This section has been structured as follows:

• Climate Change Plan – Whole Plan Issues: Rationale for Change, Overarching impacts; Horizontal Principles: Burden of Cost, Just Transition, and
• Sectors: climate change sector assessment.

4.2 Climate Change Plan – Whole Plan Issues

4.2.1 Rationale for Change

There is overwhelming scientific consensus that we are living with the effects of significant global climate change, driven predominantly by anthropogenic Greenhouse Gas (GHG) emissions.

Scotland is already experiencing extreme weather events that have been exacerbated by climate change, such as the 2022 heatwave and flooding caused by Storm Babet in 2023. Due to global climate change, our weather will become more variable and unpredictable, with extreme weather events becoming more common.

Without coordinated global action to rapidly reduce GHG emissions, global warming levels will continue to rise and the impacts of climate change already being felt in Scotland and around the world will accelerate. Scotland has a vital role to play as part of the international effort to limit global warming, in line with the Paris Agreement.

Setting long-term targets to reduce GHG emissions also helps to secure long-term economic security and prosperity, globally and in Scotland. At global level it is clear that the cost of inaction is much higher than the cost of coordinated action. Without government intervention, individual efforts to mitigate climate change are very unlikely to be sufficient.

Simultaneously, we must adapt to the impacts of climate change which are already happening and ensure that action also supports wider environmental sustainability, such as biodiversity, water quality and availability of raw materials.

It is highly likely that the “do nothing” approach to climate change mitigation in Scotland would not effectively contribute to international efforts to limit global warming, in line with the Paris Agreement. An absence of coordinated global action is highly likely to lead to further global warming and adversely impact people in Scotland who share protected characteristics. In particular:

Productivity of agriculture – climate change poses a number of threats from the more variable and extreme weather conditions, rising sea levels, to the spread of pests and diseases. The effects on island agriculture would likely lead to increased costs, reduced quality and impact on the long-term economic stability and viability of agricultural output. This could disproportionately negatively impact island communities who are more dependent on the agricultural sector for employment and already face higher costs for food.

Availability and quality of water – as the climate warms and rainfall patterns change, there is likely to be increased competition for water between households, agriculture, industry and the needs of the natural environment. Summer droughts may become more frequent and more severe causing problems for water quality and supply to island communities.

Increased risk of flooding – climate change is expected to drive more frequent and intense rainfall events, which is likely to increase the risk of flooding in Scotland’s Island communities. Flooding has the potential to be consequential for the Islands’ people, infrastructure, cultural heritage, and the Island economies.

Increased risk of wildfires – the changing climate heightens the risk of wildfire across Scotland, as we have seen throughout recent years. Wildfires release carbon into the atmosphere, can damage or destroy sensitive and rare habitats, can kill species and pose a significant risk to people and property. Wildfires may have a disproportionate impact on Scotland’s Island communities, where limited access to emergency services, reliance on natural resources, and fragile biodiversity make response and recovery slower and more challenging.

Business reliance – climate change and associated extreme weather may disrupt transport, energy and communication networks in Scotland and around the world. This could impact on markets, affect supply chains and raise insurance costs, which could disproportionately impact island communities who already experience issues with connectivity.

Health and well-being – climate change will have wide ranging effects on our health and wellbeing. These may be direct, for example, an increase in injuries due to flooding or deaths from heart disease due to high temperatures. They may be indirect, by reducing access to the building blocks of health and wellbeing in local places. Climate change and associated extreme weather may disrupt the lives of individuals and communities, limiting access to vital services and impacting on people’s physical and mental health. This could disproportionately impact those living in island communities by further reducing access to health care and increasing health inequalities.

Security and efficiency of energy supply – climate change could influence Scotland’s capacity to generate weather-dependent renewable energy. For example, varying water availability will affect hydro generation schemes. Possible changes in wind speed caused by climate change may affect future wind power output. Climate change can also impact power distribution, with impacts ranging from damage caused by extreme weather events to reduced transmission efficiency occurring as a result of temperature fluctuations. Impacts on global energy markets may also affect energy supplies in Scotland and consequently energy security.

Infrastructure network connectivity and interdependencies – energy, transport, water, and ICT networks support services are vital to health and wellbeing and economic prosperity. The effect of climate change on these infrastructure systems will be varied. They are likely to be exposed to an increase in disruptive events such as flooding, landslides, drought, and heatwaves. Infrastructure networks are closely inter-linked and failure in any area can lead to wider disruption across these networks. It is likely that disruption would disproportionately affect island communities due to existing connectivity barriers.

4.2.2 Overarching Impacts

The policy package as a whole is likely to positively impact island communities in Scotland as it mitigates the likelihood of events which could have disproportionately negative impacts on islands. However, it is recognised that the policies and proposals contained in the CCP could have different impacts across different island communities and as such should be developed and delivered in such a manner as to improve or mitigate, for island communities, the outcomes resulting from them.

4.3 Horizontal Principles

4.3.1 Just Transition

Under the Climate Change Act (Scotland) 2009, there is a requirement for the Climate Change Plan to explain the impact of our policies and proposals on regions, and communities, workers and businesses in those regions, with reference to the just transition principles.

The Plan, therefore, highlights where policies and proposals would have significant implications for particular regions, or types of region such as islands, and the action that Scottish Government is taking to address these implications. Essentially, it sets out the Scottish Government’s approach to achieving net zero in a way which is fair and just for all parts of Scotland.

As part of this approach, the Plan acknowledges that island communities face distinct, varying opportunities and challenges as a result of the transition. It, therefore, sets out the work we are doing to ensure that islands are supported in making the necessary changes, in a way that addresses rather than exacerbates existing inequities, while building on their strengths of these communities.

4.3.2 Relevance of Islands (Scotland) Act 2018

While a greener economy has an overall net benefit, there are likely to be variations in the ease of which employment adaptation and transition occurs for island communities. For example, island communities have a higher percentage of people employed in agriculture than the rest of Scotland. Opportunities for training, employment, and remote working may also impact island communities differently than other areas of Scotland. To address this, some of the actions that the Scottish Government has undertaken include:

• supporting the development of skills and education to increase benefits from the transition and address existing inequalities, highlighting that active support will be needed to ensure a just transition,
• applying Fair Work conditions to all climate change funding, which includes action to tackle the gender pay gap and payment of the real Living Wage,
• co-development of a just transition with citizens through the representative Citizen Assembly, which should enhance how adaptation practice meets the needs of island communities,
• sharing benefits widely and ensuring burdens are distributed on the basis of ability to pay, which supports island communities who may be subject to higher living costs,
• Scotland being the first country in the world to include Just Transition principles into climate change legislation. Doing so increases the likelihood that adaptation and mitigation take into account existing inequalities and widen the net for economic benefit,
• acknowledging that carefully designed policy interventions are needed to ensure current inequalities are not deepened by the transition;
• recognising that fairness may mean supporting generational change, and encouraging new entrants into the sectors and work to remove some of the barriers they face. This may be of particular benefit for young people living in island communities,
• ensuring access to skills for workers in carbon-intensive sectors could advance equality for those who are less likely to be in employment, education, and training, and could support decreasing levels of poverty and unemployment as well as supporting career progression, and
• leveraging the transition as an opportunity to help address existing labour market inequalities by building on existing sector initiatives that aim to increase employment of under-represented groups.

4.3.3 Burden of Cost

The costs of failing to bring climate change under control could be significantly larger than those associated with decarbonisation. Increasingly frequent extreme weather events have demonstrated the damage that could be caused by higher temperatures, heatwaves, floods and sea level rises and this would be of greater risk to island communities.

While it is anticipated that investment in decarbonisation should ultimately have overall economic benefits, the transition will involve costs in switching and upgrading. There is uncertainty in transition costs, which could be affected by factors such as advances in technology and the speed of behavioural change.

4.4 Sectors

4.4.1 Business and Industrial Processes

Business and Industrial Process/NETs Outcome 1: Scotland’s industrial sector will be on a managed pathway to decarbonisation, whilst remaining highly competitive and on a sustainable growth trajectory.

Business and Industrial Process/NETs Outcome 1 Policy 1 (Existing): Continue to engage with UKG on the UK ETS: The UK Emissions Trading Scheme (ETS) is a carbon pricing system that caps emissions from energy-intensive industries, aviation, and power generation. Companies must hold allowances for every tonne of CO2 they emit, which they can buy, sell, or trade. Over time, the cap tightens, indirectly driving down emissions. The ETS is key for supporting net zero goals. The scheme is developed and managed by the UK ETS Authority, comprised of the four governments of the UK. The ETS Authority published its intention to include engineered greenhouse gas removals into the ETS from 2029. This aims to support net zero targets and incentivise the uptake of carbon removal technologies—such as direct air capture with geological storage—by providing an UK ETS allowances for each tonne of CO2 successfully stored. However, without proper investment in carbon capture and storage sites, the ETS will not promote by itself uptake in these technologies.

Business and Industrial Process/NETs Outcome 1 Policy 2 (Existing): Continue to deliver a Scottish Industrial Energy Transformation Fund (SIETF) to support the decarbonisation of industrial manufacturing through matching private funding for specific energy efficiency projects.

Business and Industrial Process/NETs Outcome 1 Policy 3 (New): Explore a new industrial decarbonisation programme to incentivise further investment and accelerate the pace of transformation for industry.

Business and Industrial Process/NETs Outcome 1 Proposal 1 (Existing): Continue to support the Renewable Heat Incentive (RHI), a scheme created by UK Government: The Renewable Heat Incentive (RHI) is a Great Britain-wide scheme created by the UK Government (with the agreement of the Scottish Government) which will continue to support the decarbonisation of public buildings by providing existing installations already accredited and meeting obligations with payments.

Business and Industrial Process/NETs Outcome 1 Policy 4 (Existing): Continue to deliver the Grangemouth Future Industry Board (GFIB) to coordinate public sector initiatives on growing economic activity at the Grangemouth industrial cluster, whilst supporting its transition to our low carbon future.

Business and Industrial Process/NETs Outcome 1 Policy 5 (New): Work with the UK Government to develop a framework for demand-side measures to increase the market for low carbon industrial products.

Business and Industrial Process/NETs Outcome 1 Policy 6 (New): Support the Scottish Environment Protection Agency (SEPA) in using existing regulatory powers to drive energy efficiency across priority sites.

Business and Industrial Process/NETs Outcome 1 Proposal 2 (New): Support the reduction of fossil fuels in chemicals and manufacturing through research and innovation, providing support for certain infrastructure and considering how to grow the market.

Business and Industrial Process/NETs Outcome 2: Technologies critical to further industrial emissions reduction (such as carbon capture and storage and storage and the production and use of hydrogen) are operating at commercial scale in the 2030s.

Business and Industrial Process/NETs Outcome 2 Policy 1 (Existing): Continue to support the delivery of the Acorn Transport and Storage (T&S) Project and the Scottish Cluster.

Business and Industrial Process/NETs Outcome 2 Policy 2 (Existing): Continue to support and develop Carbon Capture Utilisation and Storage (CCUS) in Scotland through continued collaboration with the UK Government to create the policy and regulatory frameworks required to support CCUS at scale.

Business and Industrial Process/NETs Outcome 2 Enabling Policy 3 (New): Support planning, permitting and consenting processes to ensure they work effectively for the development of carbon capture projects.

Business and Industrial Process/NETs Outcome 2 Enabling Proposal 1 (New): Engage with the UK Government, Ofgem and the National Energy System Operator (NESO) on actions to help facilitate quicker electricity grid connections for Scottish industrial electrification and to reduce the cost of electricity for industry.

Business and Industrial Process/NETs Outcome 2 Enabling Proposal 2 (New): Support knowledge sharing across industry and academia to raise awareness and understanding of technical opportunities and innovations for decarbonisation.

Business and Industrial Process/NETs Outcome 2 Policy/Proposal 3 (Existing): Support the development of the emerging hydrogen sector in Scotland to maximise the ‘new industry’ benefits that the production of hydrogen could bring to Scotland.

Business and Industrial Process/NETs Outcome 2 Enabling Policy/Proposal 4 (Existing): Replicate and scale-up demonstration projects and the evidence base for hydrogen-based technologies

Business and Industrial Process/NETs Outcome 2 Proposal 5 (New): Undertake development work to increase our understanding of the viability of nearshore carbon storage in Scotland.

Business and Industrial Process/NETs Outcome 2 Proposal 6 (Existing): Continue to explore and understand the potential of Negative Emissions Technologies (NETs) in Scotland to develop clear NETs ambitions.

The policies and proposals outlined for the business and industrial process sector will not directly impact on island communities compared to those on the mainland. However, some indirect impacts may be felt in relation to energy efficiency measures or fuel switching.

Some islands may lack the existing infrastructure needed to support fuel-switching or energy efficiency measures, compared to both the mainland and between islands of varying size. Some may have less industrial activity and may face greater challenges in developing infrastructure or investing in alternative fuels, materials, or lower-carbon products which could increase the potential for operational issues. However, any impacts are not anticipated to be unique in comparison to the impact on other communities and industries on the mainland. The exception to this is the UK ETS which may have direct impacts and are assessed in a separate ICIA: UK Emissions Trading Scheme: Island Communities Impact Assessment (ICIA) - gov.scot

Overall, the impacts of the transition on islands are assessed to be mostly positive as the policies and proposals are designed to reduce Scotland’s carbon emissions and support a just transition to net zero.

Differences between islands are generally not anticipated, and any impacts are not assessed to be a disadvantage. Mitigations are not currently in place as no issues have been raised (with the exception of UK ETS which has a separate ICIA).

4.4.2 Energy Supply

Energy Supply Outcome 1: By 2035, emissions will have reduced from thermal power generation to 0.4MtCO2e through the use of CCS, renewable power and alternative power means such as hydrogen.

Energy Supply Outcome 1 Narrative Proposal 1 (New): Support the inclusion of energy from waste in the UK Emissions Trading Scheme (ETS).

Energy Supply Outcome 1 Key Proposal 2 (New): Require new Energy from Waste (EfW) facilities to have an acceptable decarbonisation strategy aligned with Scottish Government decarbonisation goals, e.g. installation of carbon capture and storage (CCS) technology, or connection to Heat Network (National Planning Framework 4 (NPF4) Policy 12).

Energy Supply Outcome 1 Key Proposal 3 (New): Encourage existing Energy from Waste (EfW) plants to retrofit CCS, working with the UK Government to develop a policy and funding framework to incentivise this, e.g. expanding the UK Government's existing Industrial Carbon Capture Waste Business Model to include new projects.

Energy Supply Outcome 1 Key Proposal 4 (New): Incentivise advanced sorting and separating technologies for residual waste (e.g. to separate key recyclable material streams before incineration) where feasible, to be explored through the 2045 residual waste plan, and sector-led plan for Energy from Waste (EfW) decarbonisation, as part of wider efforts to end the unnecessary incineration of plastics.

Energy Supply Outcome 1 Enabling Proposal 5 (New): Work with Scottish Southern Electricity Networks (SSEN) to reduce reliance on island diesel power stations through supporting establishment of new connections between islands and mainland; and explore the use of alternative, non-fossil-fuel based solutions to diesel for back-up supply, including the use of Hydrotreated Vegetable Oil (HVO) as a transition fuel and flexibility contracts.

Energy Supply Outcome 1 Enabling Proposal 6 (New): We will continue to work constructively with the UK Government to ensure the Acorn Project and Scottish Cluster secure the fastest possible deployment, so that a just transition for our energy workforce can be secured, while delivering on net zero targets.

Energy Supply Outcome 1 Narrative/ Enabling Proposal 7 (New): Work to influence the UK Government (e.g. through development of its Reformed National Pricing Delivery Plan) so that energy markets incentivise the building and use of both medium and long duration energy storage and grid flexibility assets (such as battery storage, pumped hydro and hydrogen production), as well as demand side including hydrogen production, Electric Vehicle (EV) smart charging and other smart appliances to use electricity during off-peak hours, helping balance the grid and reduce costs and emissions which in turn can reduce the need for energy from unabated fossil fuels.

Energy Supply Outcome 1 Narrative/ Enabling Proposal 8 (New): Work with the UK Government and the National Energy Systems Operator (NESO) on the Clean Power 2030 Action Plan (CP2030) and the Strategic Spatial Energy Plan (SSEP) to represent Scotland’s interests in reducing power sector emissions. Both of these aims to decarbonise the power system across Great Britain and plan a strategic approach to its deployment.

Energy Supply Outcome 2: Support the decarbonisation of Non-Road Mobile industrial and Construction Machinery.

Energy Supply Outcome 2 Proposal 1 (New): In addition, to Agriculture Outcome 2 Proposal 1, we will also work with industry and policy sectors to reduce emissions from non-road mobile industrial and construction machinery by investigating and promoting efficiencies, alternative fuels and technological developments and providing knowledge exchange, guidance and advice.

There is potential that major renewable electricity projects, and the construction of associated network infrastructure both onshore and offshore may impact negatively on local communities both during the construction and operational phases; this includes island communities which may have increased renewable resources e.g. offshore and onshore wind. ICIA and other relevant impact assessments will be considered as renewable electricity policies are developed. These assessments are best undertaken separately for each policy, as they require focused analysis tailored to the specific context, scope, and potential impacts.

Policy has been designed to enable balance between decarbonising the electricity envelope and maintaining security of supply, by focusing on supporting SSEN’s existing upgrading work (e.g. via HVDC cables) while exploring alternative solutions including battery storage and biofuels e.g. HVDO. This intentionally mitigates negative impacts that could occur from suddenly reducing reliance on diesel generators for back-up supply.

Seven local authorities had significantly higher fuel poverty rates than the national average, with approximately a third of residents experiencing fuel poverty in Highland (33%), Argyll and Bute (32%), Moray (32%), Dundee City (31%), Shetland Islands (31%) and Orkney Islands (31%) councils. This rose to as high as 40% of residents in Na h-Eileanan Siar.^[15],[16] We note that housing stock and types of insulation vary across island groups,^[17] which may have implications for mitigating fuel poverty. The Scottish Government Heat in Buildings Strategy ICIA (2021)^[18] and Fuel Poverty Bill ICIA (2019)^[19] consider island communities fuel poverty challenges in detail.

Island households spend statistically significantly more on heating than their urban equivalents, for multiple reasons:

• As data highlighted above indicates, there are limited gas grid connections on Scottish Islands (in Stornoway and on Bute, only), with the majority of island households and businesses relying on solid fuel (coal or biomass), heating oil or electricity to heat their homes and businesses.^[20] Connection to the gas grid allows households to use mains gas for heating and hot water. As mains gas is currently the cheapest of the major commercial fuels,^[21] gas grid access can be a significant determinant in the required cost of heating a home to a satisfactory temperature.
• Energy tariffs appear to be affected by relatively limited active competition between companies. They are also subject to a premium related to additional distributional costs.^[22]
• Data indicates that domestic energy efficiency is often lower within island communities than the national average. This may be due in part to the fact island communities have a relatively larger share of stone-walled, detached dwellings of a traditional build form (although this varies by island).^[23],[24] Every island local authority, except for North Ayrshire, has a significantly larger proportion of properties with an EPC rating of F or G^[25] than the Scottish average of 4%. For example, 18% of properties in Comhairle nan Eilean Siar and 17% of properties in Orkney Islands Council have an EPC rating of F or G.^[26]

We note that many of the above challenges will also impact island businesses, as analysis by Ekosgen (2022) highlights.

Island authorities generally have household waste recycling rates (Argyll and Bute – 42.5%, Na h-Eileanan Siar – 40.3%, Orkney Islands – 21.1, Shetland Islands, 20.5%) that are lower than the national average (44.3%).^[27] This means that following full implementation of the ban on landfilling biodegradable municipal waste, island authorities could send a higher proportion of their waste to incineration than some mainland authorities. As a result, they could face higher impacts due to the expansion of the UK ETS to include incineration than other LA’s. Island authorities may also see higher impacts, from restricting the incineration of fossil materials, although these impacts may be positive with the potential for greater gains in recycling rates than other LA’s. Household Waste Recycling Rate data is updated annually and is available here: Household waste generated and managed 2024. See more under the ‘Waste sector’ in this document.

4.4.3 Buildings (Residential and Public)

Buildings (Residential and Public) Outcome 1: The heat supply to our homes and non-domestic buildings is very substantially decarbonised, with high penetration rates of renewable and zero emissions heating.

Buildings (Residential and Public) Outcome 2: Our homes and buildings are highly energy efficient, with all buildings upgraded where it is appropriate to do so, and new buildings achieving ultra-high levels of fabric efficiency.

Buildings (Residential and Public) Outcome 3: The heat transition is fair, leaving no-one behind and stimulates employment opportunities as part of the green recovery.

Buildings (Residential and Public) Outcome 1 and 3 Policy 1, Proposal 1 and Proposal 2 (Existing): A target for decarbonising heating systems.

We are setting a target to decarbonise buildings by 2045. By establishing and confirming a target for decarbonising heating systems by 2045, where reasonable and practicable to do so, we are sending a strong signal to homeowners, landlords and other building owners on the need to prepare for change. We will also publish, by the end of 2026, a Heat in Buildings Strategy and Delivery Plan which sets out the actions on the part of the Scottish Government and others which will be designed to enable and achieve this target (see below).

Buildings (Residential and Public) Outcome 1,2 and 3 Enabling Policy 2 (Existing): Financial support for energy efficiency.

We will enable progress towards our goal of decarbonisation, while reducing fuel poverty, by continuing to provide targeted advice and financial support for energy efficiency measures in homes through schemes such as Warmer Homes Scotland, our Area Based Schemes, the Social Housing Net Zero Heat Fund and our Home Energy Scotland Grant and Loan Scheme (see above).

This will support the transition while targeting measures at those most at risk of fuel poverty. These measures will help reduce the cost of living pressures still being faced by too many.

Buildings (Residential and Public) Outcome 2 and 3 Enabling Proposal 3 (New): Minimum Energy Efficiency Standards.

We have published plans to give Scottish Ministers a regulation-making power to set minimum energy performance standards for buildings with direct emission heating systems.

Buildings (Residential and Public) Outcome 2 and 3 Enabling Policy 3 (Existing): Minimum energy efficiency standards for the Private Rented Sector (PRS).

We are analysing the responses to our consultation on a minimum energy efficiency standard (MEES) in the domestic private rented sector (PRS). The consultation proposed the standard would apply to new tenancies from 2028 and all tenancies from 2033. Further to decisions on the consultation outcome, we intend to progress regulations subject to the views of the next Scottish Government. Analysis has suggested that all PRS homes installing certain measures could reduce emissions in PRS dwellings, across the sector as a whole, by around 5% (although this is dependent on behaviour, as some tenants may choose a warmer home for the same cost, rather than the same temperature at lower cost).

Buildings (Residential and Public) Outcome 2 and 3 Enabling Policy 4 (New): Social Housing Net Zero Standard.

We will review and complete work on our Social Housing Net Zero Standard in line with progress on the areas above – taking into account the standards and requirements established for other tenures through separate regulations.

Buildings (Residential and Public) Outcome 1 and 2 Enabling Policy 5 (New): Energy Performance Certificate (EPC) Reform.

We laid revised Energy Performance of Buildings Regulations in October 2025 which were approved by the Scottish Parliament in December 2025. These were due to come into force in October 2026 but are now likely to be delayed into 2027, subject to the agreement of Parliament. The delay is due to the UK Government slowing down its timeline for EPC reform from October 2026 to the second half of 2027 – meaning that technical infrastructure (including the Home Energy Model and assessor training) will not be ready to support reformed EPCs as planned.

That new rating system will accompany the introduction of the new Home Energy Model across the UK, and the establishment of a new EPC Register and operational governance framework in Scotland.

EPCs are a modelled, standardised assessment process; so we are consulting on the development of a more detailed, bespoke Heat and Energy Efficiency Technical Suitability Assessment (‘HEETSA’) to make sure that the right measures are being installed – particularly for more challenging buildings like tenements or historic buildings.

Buildings (Residential and Public) Outcome 1,2 and 3 Enabling Policy 6 (Existing): Delivery schemes

We will continue to deliver a programme of support schemes and advice services which are designed to support a wide range of groups to decarbonise heat in our buildings.

We are committed to ensuring that support continues to be prioritised for those who need it most. We also recognise that the significant cost of moving to clean heating cannot be funded by the public purse alone. These support mechanisms will provide a platform for future progress, and will evolve alongside the role of private investment and finance.

Buildings (Residential and Public) Outcome 1 and 3 Enabling Policy 7 (New): Heat Networks – new Heat Network proposals.

The Draft Buildings (Heating and Energy Performance) and Heat Networks (Scotland) Bill sets out plans to boost heat network development. These include potentially requiring large, non-domestic premises to move away from fossil fuel heating systems when they have the opportunity to connect to a heat network. The draft Bill also includes plans to introduce powers to create a new licensing system for heat network operators across Scotland which, if an application is approved, will provide new rights and powers like access to the roads which will reduce the time and cost associated with constructing and maintaining heat network projects.

Buildings (Residential and Public) Outcome 1 and 3 Enabling Policy 8 (Existing): Heat Networks - Heat Networks Support Unit (HNSU).

The HNSU supports the development of heat network projects in Scotland. It does this by offering grant funding and expert advice throughout the pre-capital stages of development. We are working on building a project pipeline to meet our targets and to build capacity within the public sector to lead on, invest in and deliver heat network projects.

Buildings (Residential and Public) Outcome 1 and 3 Enabling Policy 9 (Existing): Heat Networks - Scotland’s Heat Network Fund (SHNF).

SHNF offers capital grants to businesses and organisations in the public, private and third sectors to develop heat network projects. It aims to support the roll-out of zero emission district heat networks and communal heating systems.

Buildings (Residential and Public) Outcome 1,2 and 3 Enabling Policy 10 (New): Heat in Buildings Strategy and Delivery Plan.

Buildings (Residential and Public) Outcome 1 and 3 Enabling Policy 11 (Existing): Future finance, including the Green Heat Finance Taskforce (GHFT).

The independent Green Heat Finance Taskforce reports identified key barriers to the scale up of private finance provision as a lack of consumer demand and a shortage of a delivery ready project pipeline for initiatives to upgrade groups of properties collectively. However, it expressed confidence that the supply of private lending would increase to match consumer and project demand.

We responded to the Taskforce last year, setting out the early actions that we have already progressed to raise understanding of the current clean heat financing landscape amongst mortgage advisors who engage directly with consumers, as well as steps that we will take to explore the potential to create a market for innovative financing approaches. As we do this we will work with lenders and the UK Government given the UK-wide nature of financing markets and regulation.

Buildings (Residential and Public) Outcome 1 and 3 Enabling Policy 12 (Existing): Local Heat and Energy Efficiency Strategies (LHEES).

Our aim is to build on the existing LHEES, standardise where possible and create a streamlined and investible delivery route to underpin our Heat in Buildings Programme.

Buildings (Residential and Public) Outcome 1,2 and 3 Enabling Policy 13 (Existing): Community And Renewable Energy Scheme (CARES).

Community And Renewable Energy Scheme (CARES) provides advice and funding to communities across Scotland looking to develop renewable energy, heat decarbonisation and energy efficiency projects.

• Heat decarbonisation target

We are setting a target to decarbonise buildings by 2045, where reasonable and practicable to do so. We will also publish, by the end of 2026, a Heat in Buildings Strategy and Delivery Plan which sets out the actions on the part of the Scottish Government and others which will be designed to enable and achieve this target.

The setting of a target is not expected to have a direct impact upon island communities. However, the data and evidence considered highlights four areas that should be explored when legislation, strategies or policies relating to the target are brought forward: fuel poverty, energy efficiency of buildings, types of fuel used, and population density and heat usage.

• Minimum energy efficiency standards

We are also considering options to introduce powers to set minimum energy efficiency standards for owner/occupier and non-domestic properties. This will not have any direct or disproportionate impacts on island communities, and any future impacts will be dependent on the specific content of future regulations. An ICIA should, therefore, be considered when these regulations are developed.

• Heat network provisions

An ICIA was published on the Heat Networks (Scotland) Bill in March of 2020: Heat Networks (Scotland) Bill: ICIA - gov.scot. We aim to make further provision to support the rollout of heat networks in the forthcoming Heat in Buildings Bill. Further and more detailed ICIA consideration will be undertaken as part of any such future heat network legislation or strategy development, including that of the draft Bill. The intention is to formally introduce the Bill early in the next Parliament, but that will be subject to the outcome of the election.

4.4.4 Agriculture

Agriculture Outcome 1: A more sustainable Scottish agriculture sector that contributes to delivering Scotland's climate change targets and wider environmental outcomes while continuing to produce high quality, nutritious food.

Agriculture Outcome 1 Enabling Policy 1 (Existing): Lay and publish the initial Rural Support Plan in Spring 2026 to set out how support, over the initial five-year period (2026-2030), will deliver on the Agriculture and Rural Communities (Scotland) Act 2024 objectives, the Vision for Scottish Agriculture, the Agricultural Reform Route Map and wider Scottish Government priorities. We will continue to publish Rural Support Plans every five years.

Agriculture Outcome 1 Policy 2 (Existing): Continue the delivery of the Agricultural Reform Route Map that outlines the phased transition from legacy EU Common Agricultural Policy (CAP) schemes to the new Four-Tier Framework, with new conditions from 2025, and ensures that future support will deliver high-quality food production, climate mitigation and adaptation, and nature restoration, informed by the co-development process within the Agricultural Reform Programme.

Agriculture Outcome 1 Proposal 1 (New): Working with industry and policy sectors, reduce emissions from agriculture non-road mobile machinery by investigating and promoting efficiencies, alternative fuels and technological developments and providing knowledge exchange, guidance and advice. (See also Energy Supply, Outcome 2, Proposal 1)

Agriculture Outcome 1 Policy 3 (Existing): By 1^st January 2027, as per The Water Environment (Controlled Activities) (Scotland) Amendment Regulations 2021, all Scottish livestock farmers producing slurry must use precision equipment for the application of slurry. We will encourage use of best practice and investigate with industry representatives how compliance with the regulations are monitored and enforced.

Agriculture Outcome 1 Enabling Policy 4 (New): Support enhancing the delivery of climate change and nature outcomes by farmers and crofters through our Agricultural Modernisation Fund, which provides funds to drive efficiency and support nature and climate friendly farming.

Agriculture Outcome 1 Proposal 2 (New): Monitor, support knowledge transfer for and, where necessary, support the commercialisation and uptake of emerging low carbon farming technologies and innovations.

Agriculture Outcome 2: More farmers and crofters have the skills, knowledge and opportunity to implement climate change measures, continuing to produce high quality, nutritious food.

Agriculture Outcome 2 Enabling Policy 1 (Existing): Since July 2024 the Farm Advisory Service has delivered an updated programme including a minimum of 70% content on climate change, sustainable agriculture and biodiversity support. This contributes to the suite of support provided under the current Agricultural Knowledge and Innovation System framework and will continue to evolve and respond to user needs as we continue to develop AKIS in the coming years to further disseminate learning on low emissions farming, through a range of communication methods.

Agriculture Outcome 2 Enabling Proposal 1 (New): We will ensure that tenant farmers are able to capitalise on the benefits of measures in Part 2 of the Land Reform (Scotland) Act 2025, and will continue to work with the Tenant Farming Advisory Forum/Tenant Farming Commissioner towards promoting the uptake of sustainable and regenerative practices and environmentally beneficial activities going forward.

Agriculture Outcome 2 Enabling Policy 2 (New): From 2025, agricultural businesses receiving Basic Payment Scheme support payments will be required to undertake 2 of 5 relevant assessments contributing to a Whole Farm Plan, while by 2028 agricultural businesses will need to have all relevant plans and audits in place for all assessments under the Whole Farm Plan.

Agriculture Outcome 3: Soil health is improved and nitrogen emissions, including from nitrogen fertiliser, have fallen.

Agriculture Outcome 3 Enabling Policy 1 (Existing): Support farmers and crofters to improve their soil health including through soil analysis as part of the Whole Farm Plan and the provision of guidance and advice. From 2028, agricultural businesses will all be required to complete soil analysis and produce a nutrient management plan.

Agriculture Outcome 3 Proposal 1 (New): Investigate technologies for alternative, improved or more efficient fertilisers, including organic and organo-mineral fertilisers and fertilising products, and encourage uptake where appropriate. Also increase understanding of nitrification and urease inhibitors and the opportunities for their use including through use of the Strategic Research Programme and the development of a new regulatory regime for non-mineral fertilising products.

Agriculture Outcome 3 Enabling Proposal 2 (Existing): Improve nitrogen-use efficiency through supporting research into crop varieties with increased nitrogen-use efficiency, or crops which increase levels of available nitrogen in the soil, while exploring ways of supporting the uptake and development of these crops.

Agriculture Outcome 4: Reduced emissions from red meat and dairy through the implementation of measures, including improved efficiencies, new technologies and improved animal health.

Agriculture Outcome 4 Policy 1 (New): Work with industry bodies and livestock producers to develop the MyHerdStats dashboard to provide all cattle keepers with information on herd fertility and animal mortality to support them to improve farm management practices.

Agriculture Outcome 4 Enabling Policy 2 (Existing): Working with the Scottish livestock sectors, co-design and realise the potential of a range of animal health and welfare initiatives and projects at farm, regional and national level. Use research, development and veterinary expertise to underpin a programme of continuous animal health and welfare improvement including dynamic health planning; promotion of best practice; health-driven improvements in efficiency.

Agriculture Outcome 4 Enabling Proposal 1 (Existing): Engage with academics and stakeholders to identify barriers and develop policy interventions to support appropriate uptake of methane suppressing feed products.

Agriculture Outcome 4 Enabling Proposal 2 (New): Work with the livestock sector to develop understanding of selective breeding for low methane genetics in reducing overall emissions from Scottish livestock production as well as the current infrastructure gaps in order to identify activity to accelerate livestock genetic improvement.

Agriculture Outcome 4 Policy 3 (New): As part of proposals to reform the Scottish Suckler Beef Support Scheme, voluntary coupled support (VCS) payments will be linked to calving interval performance from 2025. The threshold for calving interval performance will start at 410 days for both the 2025 and 2026 scheme years.

Agriculture Outcome 5: Carbon sequestration on agricultural land is increased, and carbon stores are maintained or increased.

Agriculture Outcome 5 Policy 1 (New): Protecting Peatlands and Wetlands through the introduction of new measures under existing Good Agricultural and Environmental Condition (GAEC 6 – maintenance of soil organic matter) which came into effect in 2025.

Agriculture Outcome 5 Enabling Policy 2 (New): Support knowledge transfer and skills development on planting and managing trees as part of a farm business throughout the lifetime of the CCP to increase tree planting and improve management of trees on farmland.

Agriculture Outcome 5 Enabling Proposal 1 (New): Review, update and develop mechanisms, as appropriate, to better support the establishment and management of trees on farms including future agricultural support and the Forestry Grant Scheme.

Agriculture Outcome 5 Enabling Policy 3 (New): We will continue to explore options for more integrated land use, including through delivery of Scotland’s Fourth Land Use Strategy so that food production is reflected as part of a multi-faceted land use, including forestry, peatland restoration and management, energy and biomass production, aligning with policies in the Land Use, Land Use Change and Forestry chapter.

Agriculture Outcome 5 Enabling Proposal 2 (New): Work with the Tenant Farming Commissioner to develop a Land Management Tenancy following the completion of the Land Reform Bill. This will enable individuals to undertake a range of land use activities in a way that supports: Sustainable and regenerative agriculture, the achievement of net zero targets, Adaption to climate change, and increasing or sustaining biodiversity.

Several policies and proposals have already been subject to an Island Communities Impact Assessment, for example:

• Outcome 1 Policy 1 and 2 under the Agricultural and Rural Communities (Scotland) Bill),
• Outcome 2 Proposal 1 and Outcome 5 Proposal 2 under the Land Reform (Scotland) Bill,
• Outcome 4 Policy 3 and Outcome 5 Policy 1 under Rural Support (Improvement) (Miscellaneous Amendment) (Scotland) Regulations 2024 and Outcome 5 Policy 3 as part of the development of Scotland’s Fourth Land Use Strategy,
• Outcome 1 Policy 2 and 4, Outcome 2 Policy 1 will be subject to separate impacts during their delivery, and
• The remaining policies and proposals do not currently or are not expected to require an Islands assessment – the Scottish Government will ensure the teams working on these policies and proposals are aware of the need to keep under review whether an ICIA is required.

The primary affected sector for these policies and proposals is Scotland’s agriculture industry, i.e. our farmers and crofters. They apply equally, regardless of whether they are performing arable, dairy, mixed, or upland farming activity and regardless of whether they are located on the Scottish islands or on the Scottish mainland. All farmers and crofters will have the same equal opportunities to benefit, contribute, comply, gain access to the services, training and financial support to help deliver the policies and proposals. Equally they will all need to comply with the same requirements to obtain future support payments.

24% of all agriculture holdings in Scotland are on the islands. Therefore, the majority of Scotland’s agriculture holdings (76%) impacted by these policies and proposals are on the mainland. A very small proportion of arable agriculture in Scotland takes place on the islands, so arable related policies and proposals will, on wider balance, have less impact on the islands compared to the mainland. Related policies and proposals on woodland will, on wider balance, have less impact on the islands given the overall amount of woodland on agricultural holdings is found on the mainland. Related policies and proposals on livestock, could, on balance, have more impact on islands, given livestock is the most common farm type on the islands, but all livestock producers will need to comply with conditions to be offered the same support. The Communication, guidance, and support related policies and proposals, will, on balance, impact our islands but, this is the case at present and they will still be offered the same level of opportunity to access this support as at present.

There is no specific identified or substantial difference in impact of the policy and proposals on islands or island communities, we, therefore, do not expect our policies and proposals on our farmers and crofters to significantly disadvantage island communities more than mainland communities. There are potential challenges to island communities (which could also equally apply to areas on the mainland, mostly Argyll, North-West Highlands, and the upland areas), in land make-up, activity, access and distance, for example:

• Outcome 1 Proposal 1, Outcome 2 Policy 1, Outcome 3 Policy 1 and Proposal 2, Outcome 4 Policy 2 and Outcome 5 Policy 3 on the support of dissemination of information, guidance, support, and advice on climate change mitigation measures in agriculture. A potential barrier is access for island or mainland communities (due to digital or physical connectivity issues). Ensuring support continues to be accessible to all, whether provided online or in-person or through other avenues, will be considered as part of delivering those policies and proposals to minimise the risk of exclusion.
• Outcome 1, Policy 3 and 4 and Outcome 1, Proposal 1 and 2, which will support the sector with new technologies, equipment, or materials. Island communities may face higher transport costs and restrictions for example, the technology might not be suitable or relevant for the type of farming activity or physical restrictions in getting it to islands. We will continue to consider how we can reduce any barriers to island communities accessing new technology, equipment, and materials.
• All Outcome 4 policy and proposals may have a bigger impact on the islands, as livestock farming is the most prevalent farming activity on islands. Due to the potential cultural barriers in the islands, there could be stronger reservations to changing traditional agricultural practices, especially if they incur additional costs. Benefits and support of livestock policies will be communicated to all livestock producers across the whole of Scotland to encourage and highlight the benefits of change.
• Outcome 5 Policy 1, 2 and 3 may have a more negative or positive or direct or indirect impact on islands depending on the land make-up of islands and what farming can occur on the islands. Certain land use changes may be more challenging on the islands, such as integrating trees due to soil depth or peaty conditions and climatic conditions which reduce the species of trees which can be planted. Others could benefit islands more, such as peatland restoration, given majority of land on islands is more peaty. The benefits of any land use policies that could affect islands will be communicated to them along with providing the same support and opportunities as on the mainland.
• Outcome 1 Policy 2, Outcome 2 Policy 2 and Outcome 3 Policy 1 which relate to future support payments may involve lost income or increased spending for farmers and crofters (both on islands and on the mainland) in order to comply and be eligible for future subsidies. However, the cost to business in terms of delivering the mitigation measures necessary to reduce emissions from agriculture and the future support scheme is complex and challenging to estimate. At present the delivery mechanism for most of the mitigation measures is still being developed so it is not possible to determine a cost impact to business and any possible mitigations and what the overall impact to islands would be compared to the mainland.

There are currently no additional mitigation measures in place. During implementation of the policies and proposals, we will ensure we consider any challenges islands may face, while continuing to keep under wider general review if further mitigations measures or further Island Communities Impact Assessments are required.

Our assessment on:

• Population identifies the policies and proposals in the CCP are not designed to create or break down any barriers or address any island or mainland specific population issue. We expect the CCP policies and proposals could indirectly contribute to population retention in both island and mainland rural communities. For example, the policies and proposals may help with increasing the number of young farmers, retaining existing farmers, offering new skills and opportunities to island and mainland rural populations.
• Economic development identifies the policies and proposals in the CCP are not designed to create or break down any barriers or address economic development on the islands or on the mainland. If there is an impact from the policies and proposals, it would be indirect and be the same for island and mainland rural communities. For example, the policies and proposals have the potential for economic stability and growth, by generating new employment, new businesses opportunities, and providing financial and economic opportunities within farming business and rural communities.
• Transport, housing, fuel poverty, digital connectivity, health and social care, empower island communities, arts, crafts, language, and education, we identify that the policies and proposals in the CCP are not designed to address or remove any barriers in these areas, whether on the islands or the mainland and are not expected to impact these areas.
• Environmental wellbeing and biosecurity, we identify that the policies and proposals will have an impact regarding agricultural land throughout the whole of Scotland, not just specific to the islands. We acknowledge our islands might not be able to take full advantage of some opportunities, equally, islands will benefit more from peatland restoration, The environmental impacts (direct and indirect) will apply equally as with mainland. For example, if farmers and crofters throughout the country undertake environmental improvements, this will enhance nature restoration, improve local biodiversity, soil conditions and landscapes, and will help with improving the environment and wider health and wellbeing of the communities, whether on the islands or on the mainland.
• Climate change and energy identifies all the policies and proposals are designed to contribute towards addressing climate change by delivering actions to reduce greenhouse gas emissions from the sector and mitigate against climate change. Several policies and proposals will have either direct or indirect positive impacts for both the islands and the mainland. If all farmers and crofters undertake improvements, it will significantly reduce greenhouse gas emissions from agriculture while also providing positive impacts on the environment and landscapes both on the islands and on the mainland.
• The policies and proposals are not designed to create or break down any barriers or address any energy impacts on the islands or on the mainland.

We expect that the impact of our policies and proposals will vary across all Scottish farms and crofts and that location on an island is not a significant factor in the variation in impact, particularly when comparing island farms to those on the mainland which have similarities in terms of business size, farming activity and land.

As a result, we are satisfied the effect of the policies and proposals don’t amount to any disadvantage to the islands compared to the mainland.

4.4.5 Land Use, Land Use Change and Forestry (LULUCF)

Land use Outcome 1: To set and promote the national strategic approach to the integrated nature of land use and support and empower rural communities and stakeholders to co-develop natural capital led solutions that help address the climate and nature crises while delivering environmental, social, and economic benefits.

Land use Outcome 1 Enabling Policy 1 (Existing): We will publish Scotland’s 4th Land Use Strategy by end of March 2026.

Land use Outcome 1 Enabling Policy 2 (Existing): We will support the four successful Regional Land Use Partnerships to transition from pilots to Scottish Government-backed initiatives, and using the learning from these Partnerships, seek opportunities to expand land use partnership working over the longer term.

Forestry Outcome 1: An increase in annual woodland creation rates, with the consequent benefits of more carbon sequestration, rural employment and community benefits, enhancements to biodiversity, landscape and tourism, and support for agricultural business (e.g. shelter for livestock, wind and flood management).

Forestry Outcome 1 Enabling Policy 1 (Existing): Forestry grants will provide funding via a grant scheme to support eligible landowners to establish appropriate woodlands.

Forestry Outcome 1 Policy 2 (Existing): Woodland creation on Scotland's national forests and land. Forestry and Land Scotland will deliver an annual contribution towards the overall woodland creation target by creating new sustainable woodland on Scotland's national forests and land, including through partnerships with external organisations to scale carbon capture opportunities.

Forestry Outcome 1 Enabling Policy 3 (Existing): Awareness-raising. We will continue to deliver a programme of farm-based events to demonstrate and support improved productivity through integration of farming and forestry enterprises.

Forestry Outcome 1 Enabling Policy 4 (Existing): Woodland Standards. The Scottish Government will lead on the work with the UK and other UK Governments to maintain and develop a UK Forestry Standard that articulates the consistent UK wide approach to sustainable forestry. The Standard defines how woodland should be created and managed to meet sustainable forest management principles and provides a basis for monitoring.

Forestry Outcome 1 Enabling Policy 5 (Existing): Under the National Strategy Economic Transformation commitment to develop a values-led, high integrity market for responsible investment in natural capital – we will increase private investment in land management for climate change by March 2026 through enhanced uptake of existing mechanisms (Peatland Code, Woodland Carbon Code) and implementation of new mechanisms.

Forestry Outcome 1 Enabling Policy 6 (Existing): Woodland carbon capture. The Scottish Government will further develop and promote the Woodland Carbon Code in partnership with the forestry sector, and will work with investors, carbon buyers, landowners and market intermediaries to attract additional investment into woodland creation projects and further increase the woodland carbon market.

There is considerable scope for islands to contribute to the Climate Change Plan woodland creation ambitions. The main constraints on this are the high levels of exposure and poor soils that limit tree growth on some islands, together with the geographic isolation and higher cost of forestry work carried out on islands. These factors have been used to inform the development of incentives and support mechanisms (including the Forestry Grant Scheme). As a result some tailored support and facilitation mechanisms have been put in place to help address the identified challenges of creating woodlands on islands. These mechanisms will continue to be kept under review and where appropriate further opportunities will be taken to ensure the effects on island communities continue to be effectively mitigated.

Forestry Outcome 2: Increase the use of sustainably sourced wood fibre to reduce emissions by encouraging the construction industry to increase its use of wood products where appropriate.

Forestry Outcome 2 Enabling Policy 1 (Existing): Collaboration with the private forest sector and other public sector bodies, we continue to implement the timber development programme through an annual programme of projects that support the promotion and development of wood products for use in construction.

Forestry Outcome 2 Enabling Policy 2 (Existing): To work closely with the sector through the Scottish Forestry and Wood Based Industries Industry Leadership group.

Forestry Outcome 2 Enabling Policy 3 (Existing): Making funding available to support the sustainability of forest nurseries.

Peatlands Outcome 1: Protect. Protect and support the natural function of areas of peatland that are already in good condition, and prevent areas already degraded from deteriorating further.

Peatlands Outcome 1 Policy 1 (Existing): We will continue our work alongside other UK nations to ban the sale of peat for horticulture in Scotland. We will draw on the outputs of our consultation, stakeholder engagement and commissioned research to ensure that the timing and scope of the ban are right for Scotland.

Peatlands Outcome 1 Enabling Proposal 1 (New): We will continue work started by the Peatland Expert Advisory Group to improve the tools, guidance and monitoring relating to the design and construction of windfarms on peat.

Peatlands Outcome 1 Proposal 2 (New): Informed by the local pilot projects announced in our 2025-26 Programme for Government, we will ensure that future deer management arrangements in Scotland support our peatland and wider soils ambitions to 2040. This will include requiring and, where appropriate, incentivising activity to control deer numbers in areas where priority work to improve nature is underway, such as peatland restoration.

Peatlands Outcome 1 Enabling Policy 2 (Existing): In 2026, we will commence the new measures introduced in the Wildlife Management and Muirburn (Scotland) Act 2024 that increase protection for peatlands by establishing a licensing scheme which only permits muirburn on peatland for certain purposes such as for the creation of firebreaks to help prevent wildfires.

Peatlands Outcome 2: Manage. Support positive measures by landowners and managers to manage and improve degraded peatlands.

Peatlands Outcome 2 Enabling Proposal 1 (Existing): We will continue our work with partners and stakeholders to develop incentives, guidance, advice and support on peatlands within the new agricultural support framework for land-owners and managers looking to integrate peatland protection, management and restoration with existing land use on their farm or croft.

Peatlands Outcome 2 Proposal 2 (New): We will continue our work with Peatland ACTION to support crofters wishing to progress peatland protection, management and restoration, and ensure we learn from the experience of initiatives working to bring private finance into this sector. The new Crofting and Scottish Land Court Bill aims to bolster and strengthen the role of grazing committees, giving them, and individual shareholders, more options for proposing a range of environmental initiatives on common grazings.

Peatlands Outcome 2 Enabling Policy 1 (New): NatureScot will progress a holistic ‘Developing Healthy Ecosystems’ approach to strengthen monitoring of peatland condition within all designated sites even where it is not a listed feature.

Peatlands Outcome 2 Enabling Policy 2 (New): Through the Land Reform (Scotland) Bill we will:

a. legislate to adjust tenancy arrangements allowing tenant farmers, small landholders and others to deliver multiple eligible land use activities including peatland restoration and rewetting,

b. propose a new model lease for environmental purposes to assist individuals, communities and landlords to undertake hybrid land management actions including peatland restoration and rewetting, and

c. introduce Ministerial powers to make regulations for Land Management Plans; these will require landowners who own land over a certain threshold to set out how they are managing or intend to manage the land in a way that contributes towards achieving Net Zero emissions targets, adapting to climate change and increasing or sustaining biodiversity.

Peatlands Outcome 3: Restore. Support focused interventions to return degraded peat to a more natural condition and reinstate the natural ecosystem functions and benefits they can provide.

Peatlands Outcome 3 Policy 1 (New): We will increase peatland restoration by 10% each year to 2030 and maintain levels after that leading to the restoration of more than 400,000 hectares by 2040. Within this, we will look to increase the proportion of the most highly degraded and emitting peat that is restored.

Peatlands Outcome 3 Enabling Policy 2 (New): To bring focus, stability and certainty to the sector going forward, and to take us towards our 2040 ambitions, we published our first Peatland ACTION Partnership Plan on 15 December 2025. This details the realistic and achievable actions needed over the next five years reflecting the current capacity, skills and capabilities of the sector. It also seeks to ensure that our investment maximises the multiple benefits of peatlands for climate, nature and people.

Peatlands Outcome 3 Enabling Policy 3 (Existing): In 2026, we will consult on and launch Scotland’s Peatland Standard which will ensure quality and consistent peatland restoration standards and bring efficiencies to the sector for training, project development, delivery techniques and monitoring and verification.

Peatlands Outcome 3 Enabling Policy 4 (New): We will continue to deliver the Scottish Government’s Implementation Plan in response to the recommendations of the Land-Based Learning Review to contribute to attracting and equipping more people with the skills and knowledge needed to work in land-based and aquaculture sectors.

Peatlands Outcome 3 Enabling Policy 5 (Existing): In addition to our multi-year investment plans for peatland restoration set out in our 2026 spending review over the next four years, we will also continue our work to leverage and blend responsible private investment into peatland protection, management and restoration through our Private Investment in Natural Capital Programme.

Peatlands Outcome 3 Proposal 1 (Existing): Informed by new approaches to monitoring, we will continue work to restore and improve the condition of degraded peat on land that is publicly owned, managed by Crown Estate Scotland and within formally designated nature conservation sites.

Peatlands Outcome 3 Enabling Policy 6 (New): As announced in the budget 2025-26 we will continue working with the Scottish Land Commission to develop the evidence necessary to identify and assess options for a carbon land tax.

Peatlands Outcome 4: Research and evidence. Continue to invest in world-class peatland research to inform the development of policy and practice.

Peatlands Outcome 4 Enabling Policy 1 (New): Through our forthcoming Strategic Research Programme and other routes, we will continue to invest in research on: the distribution and condition of Scotland’s peatland resource; businesses in the supply-chain and any impacts arising from our actions; building the restoration pipeline and driving efficiencies; and understanding the complex relationship between herbivore grazing, peatland condition and emissions.

Peatlands Outcome 4 Enabling Proposal 1 (New): Scotland’s new LiDAR data will contribute to the identification and monitoring of peatland restoration sites and contribute to transparency and cost effectiveness of some surveys.

Key points supporting this conclusion are:

• An ICIA related to peatlands and wetlands compliance, implemented under existing Common Agricultural Policy (CAP) schemes, found no significant difference in peatland distribution or condition between islands and adjacent mainland areas, except for some regional variations (e.g. Orkney has less peat compared to other islands and mainland Caithness). There were no adverse comments or evidence from stakeholders indicating that peatland regulations or restoration efforts disproportionately affect island farmers and crofters compared to mainland counterparts.
• Discussion with key stakeholders from the Shetland Islands highlighted certain challenges specific to island communities, including limited long-term funding certainty, policy clarity, transport, and capacity issues. However, these are being addressed through tailored support, context-specific policy design, and empowering local delivery partners to align restoration efforts with local social and cultural values. This approach aims to mitigate potential barriers rather than cause disproportionate negative impacts.
• The peatland policy package explicitly includes provisions to support crofters and small-scale land managers, who are more common on islands, including local engagement through programmes like Peatland ACTION. This suggests an intention to provide equitable support to island communities in line with mainland areas.
• Consultation on the horticultural peat sales ban acknowledged island-specific concerns (e.g., logistics, costs, access to alternatives) and included phased timing with tailored support and advisory services to ensure no disproportionate impact on island communities.

4.4.6 Transport

Transport Outcome 1: To address our overreliance on cars, we will create the enabling environment for reducing car use, incentivising behaviour change towards sustainable travel modes and disincentivising private car use, where these align with a just transition.

Transport Outcome 1 Enabling Policy 1 (Existing): Work with Local Authorities and Regional Transport Partnerships to provide research, advice and guidance on reducing car use.

Transport Outcome 1 Policy 2 (Existing): Through the sustainable travel element of the People and Place behaviour change programme for the financial year 2025/26, encourage promotion of car and bike share schemes, Mobility as a Service, demand responsive transport and multi-modal mobility hubs to encourage the use of integrated public transport and reduce car use.

Transport Outcome 1 Policy 3 (New): Successor Policy Car Use Reduction.

Following a review of the car use reduction policy, a new target has been set out in alignment with the Climate Change Plan and supportive of our Net Zero targets. A target has been set to reduce emissions from cars in the first carbon budget (2026-2030) by at least 16% from today’s levels (2023).

The policy seeks to achieve a national-level reduction in car use and not a uniform reduction in car use across all geographical areas, it is not anticipated to impact on island communities in a significantly different way than on other communities across Scotland. The commitment to produce place-based, experience-specific delivery plans provides further opportunities to engage directly with island communities and ensure that any plans for delivery within the islands are reflective of their circumstances and specific requirements.

Transport Outcome 2: To support modal shift through more sustainable forms of travel, including incentivising public transport use and supporting more people to walk, wheel and cycle for everyday journeys.

Transport Outcome 2 Policy 1 (Existing): Provide free bus travel for those under 22 years of age and older and disabled persons through the National Travel Concessionary Schemes.

Transport Outcome 2 Policy 2 (Existing): Bus Infrastructure Fund.

Provides funding to Local Authorities and Regional Transport Partnerships to work together with bus operators to develop and deliver local bus infrastructure improvements. These will improve the quality of bus infrastructure and perceived safety; make it easier to access bus services; improve integration between bus and other modes of transport; and make bus journeys shorter and more reliable. This will provide benefits for existing bus passengers as well as encouraging people to leave their cars at home and take the bus.

Transport Outcome 2 Enabling Policy 3 (Existing): Progress development of smart and digital integrated ticketing and payment systems and technology across public transport in Scotland.

Transport Outcome 2 Enabling Policy 4 (Existing): We will deliver improvements to the national concessionary schemes, enhance the digital travel data services that sit behind Traveline Scotland and other journey planner providers, and will develop the Open Data provisions in the Transport (Scotland) Act 2019.

Transport Outcome 2 Policy 5 (Existing): Retain the commitment to Active and Sustainable Travel investment.

Transport Outcome 2 Enabling Proposal 1 (New): Guarantee of multi-year funding to provide confidence to the public sector to plan and invest in bus priority.

Transport Outcome 2 Proposal 2 (New): Increases in funding alongside capacity and capability of Local Authorities/ Regional Transport Partnerships/Transport Scotland and supporting consultancy.

Transport Outcome 2 Policy 6 (New): Transport Scotland to develop and deliver trunk road bus priority and bus priority at trunk road signals.

Transport Outcome 2 Enabling Proposal 3 (New): Multi-year funding commitments required to enable build-up of capacity and capability in the active and sustainable sector and confidence for planning and delivery of long-term, large-scale ambitious infrastructure programmes.

• Public Transport / Active Travel Infrastructure Investment

The STPR2 ICIA was an integral part of the transport appraisal of transport investment options. The main transport appraisal report provides the overarching outline of the appraisal approach and integration with the other statutory assessments that were undertaken.

The STPR2 Island Communities Impact Assessment (ICIA) Final Report, December 2022 sets out the approach undertaken to the assessment of impacts on island communities and demonstrates Transport Scotland’s compliance with the Islands (Scotland) Act 2018. It identifies the potential impacts associated with the STPR2 relating to Policy Outcome 2 recommendations on island communities. Detailed ICIAs of individual interventions should be undertaken at detailed design stages where appropriate.

• Young Person’s Scheme

A consultation with island communities was undertaken between 24 May and 21 June 2021. Islands representative groups, including Local Authorities, Community Councils, Development Trusts, Regional Transport Partnerships (RTPs) and other interested parties were contacted to be made aware of the consultation and encouraged to take part. The consultation sought to gather views on whether there are any other significantly different impacts on island communities. The consultation received 151 responses from individuals and organisations in our island communities and has informed this Impact Assessment.

This impact assessment has considered the potential effects of the proposed Scheme on people from island communities which may be significantly different from their effect on other communities (including other island communities) in Scotland.

It does not clearly demonstrate that the effects of the proposed Scheme on children and young people from island communities is significantly different from the effect on children and young people in rural mainland communities. Where relevant, this position extends to include rural mainland communities in which Gaelic is used within the community or as part of the local authority’s Gaelic Medium Education provision.

Public transport provision for island communities comes with distinct challenges and many respondents to the consultation have acknowledged that extension of free bus travel to young people across Scotland can play an important role for island communities in supporting social cohesion, access to public services, business and tourism and connecting with wider transport networks.

However, it is noted that provision of bus services on islands, as in many rural areas across Scotland, is variable. It is hoped that the new Young Persons Scheme will increase patronage on many of these routes, enhancing their viability. In addition, the powers that will be available when the bus provisions of the Transport (Scotland) Act 2019 come into force will allow local authorities to run their own services, enter into formal collaborative partnerships with bus operators and set up franchises in their areas. Additional measures in the 2019 Act to improve information for passengers so that bus travel is more accessible and attractive, together with other enhancements such as simplified multi-operator ticketing schemes, will also be coming into force.

We will also monitor the impact of the Young Persons Scheme on bus operators and other stakeholders and have committed to reviewing the scheme after the first full year of operation

Transport Outcome 3: To support modal shift through encouraging more freight to move by rail or water instead of road.

Transport Outcome 3 Policy 1 (New): Providing grant support for modal shift of freight from road to rail or water.

Transport Outcome 3 Policy 2 (New): Specific rail freight investments.

The aim of the policy is to promote and facilitate modal shift to rail/water to take advantage of the significant environmental and economic benefits it brings for Scotland. Moving freight/goods which are currently transported from the road network and onto rail or water as much as feasible. This focuses on the movement of goods over longer distances between key freight destinations, usually warehouses and distribution centres or factories/quarries. It does not typically include delivery to shops or homes. There are no anticipated impacts on the Scottish Islands. There is no railway infrastructure on our Scottish Islands but railways can connect into ports on the Scottish mainland. Water transport (freight on ferries) is already the main way goods currently get across to the Islands.

Transport Outcome 4: We will phase out the need for new petrol and diesel cars and vans by 2030.

Transport Outcome 4 Policy 1 (Existing): Vehicle Emissions Trading Schemes (VETS) legislation/ Zero emission vehicle (ZEV) mandate.

The four-nation Vehicle Emissions Trading Schemes (VETS) Order 2023 is the main policy instrument for phasing out the sale of new petrol and diesel cars and vans in Scotland.

Due to the CO2 trading schemes and flexibilities inherent in the design, manufacturers can comply with VETS without meeting the headline ZEV sales percentages providing their remaining non-ZEV sales are of sufficiently efficient vehicles and by trading with other manufacturers with excess credits.

Transport Outcome 4 Enabling Policy 2 (Existing): Continue to invest in critical skills in the servicing and maintenance of Electric Vehicles (EVs) and charging infrastructure to support a just transition.

Transport Outcome 4 Enabling Policy 3 (Existing): EV Infrastructure Fund (public EV charging network).

Transport Outcome 4 Policy 4 (Existing): Develop a Public Sector Fleet Decarbonisation Action Plan, developed in partnership with public sector fleet operators, including identifying new delivery models that crowd in private investment and for the sharing of vehicles and infrastructure with fleet decarbonisation costs incorporated into business-as-usual fleet operations.

Transport Outcome 4 Enabling Policy 5 (New): Develop a range of new policy interventions that support consumers, sole traders and micro businesses to more rapidly transition to EVs.

Transport Outcome 4 Key Enabling Policy 6 (New): Additional support to rapid rollout of critical EV charging infrastructure including public EV charging in rural communities and home charging at domestic properties, including cross-pavement charging.

The policy outcome depends on two supporting policies: the Vehicle Emissions Trading Schemes (VETS) expanding the share of new zero emission cars and vans on the market and the actions to ensure continued investment in public charging infrastructure aligned to the public charging Vision (detailed in the draft Vision Implementation Plan).

The draft Vision Implementation Plan set forward a routemap to deliver a comprehensive and convenient network that meets the needs of users and is funded by private investment by 2030. Information has already been collated as part of the public consultation on the draft Vision Implementation Plan, which is complemented by monthly and quarterly data provided by commercial data providers and the UK Department for Transport. More accurate vehicle data is expected to become available towards the end of 2025 enabling more accurate analysis of EV adoption across Scotland, including across island communities.

Island-specific comparative data is not currently available below the local authority level. However, there is some evidence of significant variability in EV infrastructure provision across Scotland’s islands, largely influenced by traffic volume and geographic remoteness. This suggests that some islands may be more underserved than others, depending on their connectivity, population density, and economic activity.

Island communities will face different effects of the policy outcome than non-island communities. However, these are already well documented at parent-policy level or accounted for on policy-specific ICIAs (such as Vehicle Emissions Trading Schemes (VETS)). As a result of these, investment priorities within Electric Vehicle Infrastructure Fund, low carbon transport loan and the newly proposed rural and island community fund seek to address these findings.

The Vision and its Implementation Plan sit under policies that cover a wider remit than solely public charging infrastructure. These parent policies have their own ICIAs which have already taken into account many of the impacts foreseen from rising EV adoption and expanding public charging infrastructure: the Strategic Transport Projects Review (STPR) 2, the Nation Transport Strategy (NTS) 2 and the National Planning Framework (NPF) 4 (post adoption integrated assessment).

In terms of cars and other light vehicles, many island communities may disproportionately benefit from the VETS legislation due to a combination of generally greater charge point availability, coupled with unique regulatory environments and greater availability of second-hand Zero Emission Vehicles (ZEV) removing the remaining barriers to EV transition.

The STPR 2 ICIA recommends that zero emission vehicles and supporting infrastructure should be part of the policy for decarbonising transport. It notes that the potential positive impacts on groups who are more vulnerable to adverse health impacts of transport-related emissions and air pollution as well as charge points at ferry terminals which would lead to a much better multi-modal integration and, therefore, a wider sustainable transport system.

The STPR 2 ICIA also states that for island communities, the regional spatial priorities for the North and West Coast Islands as set out in the NPF 4 will ensure a more resilient future for island communities, including through decarbonising transport and reducing fuel poverty.

The NTS 2 ICIA does not include specific detail around the development of a public charge point network, it is a strategy for Scotland’s whole transport system and sets out a strategic framework to achieve a sustainable, inclusive, safe and accessible transport system. Actions proposed in the draft Vision implementation Plan (VIP) take into consideration the transition to EVs and their place within this integrated network.

The NTS 2 ICIA also recognises that island communities have differing needs and expectation of their transport system due to greater difficulties accessing public transport for essential services. A lack of alternative public transport options means people remain reliant on cars in these areas and it is often necessary for individuals living on the islands to travel further to access essential goods and services. This being the case, there is a need for continuing car use. The roll out of EVs and charging station is seen as positive as it will facilitate the use of EVs on the islands without increasing vehicle ownership or transport options and also supporting tourism through enabling EV user to charge safely.

The assessment also concludes that the NTS 2 policy has limited impact on addressing existing social challenges, supports improvements to air quality which will also potentially have a positive impact on the natural environment and biodiversity.

NPF 4 positions climate change and nature recovery as primary guiding principles for all plans and decisions in the planning system to support the achievement of a net zero, nature-positive Scotland. The energy sector is integral to this, and provides significant opportunities for growing rural island communities to overcome inequalities through a place based approach. For island, the NPF spatial strategy includes supporting new development in areas where the market has previously shown less interest but where regeneration would help to overcome disadvantage.

In summary, there are no significant detrimental impacts for islanders compared to the mainland with respect to the Vision and its Implementation Plan which have not been mitigated.

It is recognised that the island communities will face different effects of the policy outcome than non-island communities. However, these are already well documented at parent-policy level (detailed above) or accounted for on policy-specific ICIAs (such as VETS). As a result of these, investment priorities within the electric vehicle infrastructure draft. EVIF, low carbon transport loan and the newly proposed rural and island community fund seek to address these findings.

Transport Outcome 5: We will work with the energy, finance and road transport sectors and related businesses to ensure all road vehicles are zero emission by 2040.

Transport Outcome 5 Policy 1 (Existing): Providing Government support for bus decarbonisation (ScotZEB).

Transport Outcome 5 Policy 2 (Existing): Providing Government support for decarbonisation of Community Transport (Plugged-in Communities).

Transport Outcome 5 Policy 3 (New): Investment in replacement of HGV vehicles and deployment of charging infrastructure.

Transport Outcome 5 Proposal 1 (New): Consider what regulatory options are available to encourage and ensure transition; implement as required.

Transport Outcome 5 Proposal 2 (New): Support skills development and other aspects of economic development to support a Just Transition.

This outcome is closely related to outcome 4 (“We will phase out the need for new petrol and diesel cars and vans by 2030”), which addresses the decarbonisation of cars and vans which account for a considerable percentage of emissions from road transport. Comments relating to that outcome also apply in relation to outcome 5. However, additional considerations apply to outcome 5 as it relates to all types of road vehicle, not just cars and vans.

For heavy duty vehicles, key stakeholders include HGV operators, industry bodies, charge point providers, the electricity distribution network operators and financiers of vehicle fleets and energy systems.

Work on skills has included a) engagement with stakeholders across all local authority areas, including local authorities, b) engagement with the regional transport partnerships, and c) engagement with representatives of the college network providing services in island and rural communities.

Data on HGV usage shows that the volume of traffic varies across the islands depending on the nature of local industry and consumer demand but is generally low. However, the mapping activity highlights sites where en route charging will be essential to support HGV traffic to and from island communities even where the overall volume may be low. Data which currently reflects 2% of Scottish trucks suggests that there are very few locations on the islands themselves where dedicated en route charging will be required as charging at locations such as depots and ferry terminals may be sufficient. However, this may change as additional data is incorporated. More important will be en route charging at critical locations on the mainland where vehicles travelling to and from the islands will need to re-charge to complete their journeys.

Awareness of this fact will influence the design of specific programmes for investment in the charging network as these are developed. Consideration has already been given in long term financial planning to the possible need for additional Scottish Government funding to fill gaps in the strategic HGV charging network in island and rural areas should commercial investors not be willing to develop these sites.

Information has already been collated as part of the public consultation on the draft Vision Implementation Plan for the transition to zero emission cars and vans, which is complemented by monthly and quarterly data provided by commercial data providers and the UK Department for Transport. More accurate vehicle data is expected to become available towards the end of 2025 enabling more accurate analysis of EV adoption across Scotland, including across island communities.

Stakeholders include the general public, local authorities, businesses as well as public charge point operators, key transport infrastructure and public transport providers such as ports and ferry operators.

Information on the requirements of the islands has already and continues to be captured through the project mapping national energy demand for HGVs and engagement with colleges and skills bodies.

The STPR 2 ICIA also states that for island communities, the regional spatial priorities for the North and West Coast Islands as set out in the NPF 4 will ensure a more resilient future for island communities, including through decarbonising transport and reducing fuel poverty.

NPF 4 positions climate change and nature recovery as primary guiding principles for all plans and decisions in the planning system to support the achievement of a net zero, nature-positive Scotland. The energy sector is integral to this and provides significant opportunities for growing rural island communities to overcome inequalities through a place-based approach.

In summary, there are no significant detrimental impacts for islanders compared to the mainland with respect to current policy proposals for the decarbonisation of heavy duty vehicles. The policy outcome is covered by existing ICIAs either at the parent policy level or at individual policy level where such policies have been defined, such as VETS legislation.

Where specific policies have yet to be finalised, such as in relation to funding programmes for heavy duty vehicles and/or their regulation, the need for a further ICIA will be considered as these develop.

In terms of cars and other light vehicles, many island communities may disproportionately benefit from the VETS legislation due to a combination of generally greater charge point availability, coupled with unique regulatory environments and greater availability of second-hand ZEVs, removing the remaining barriers to EV transition.

It is recognised that the island communities will face different effects of the policy outcome than non-island communities. However, these are already well documented at parent-policy level, accounted for on policy-specific ICIAs (such as VETS), or being assessed as part of development of the evidence base for further interventions (such as mapping of HGV energy requirements). As a result of these, investment priorities within EVIF, low carbon transport loan, the newly proposed rural and island community fund and future interventions in relation to heavy vehicle fleets and infrastructure seek to address these findings.

Transport Outcome 6: We will work to decarbonise scheduled flights within Scotland by 2040.

Transport Outcome 6 Supporting Policy 1 (Existing): Developing the world’s first zero emission aviation region in partnership with Highlands and Islands Airports Limited (HIAL).

Transport Outcome 6 Policy 2 (Existing): SAF and Project Willow.

The development of alternative fuels, such as sustainable aviation fuel (SAF). SAF will play a crucial role in reducing emissions over the short and medium term. SAF as a potential opportunity area for Scotland and the work of Project Willow demonstrated that a long term, new industrial future is achievable at Grangemouth, and the report includes two potential SAF projects that could be developed at Grangemouth. The Grangemouth Just Transition Fund is available to support new low carbon propositions, in particular a SAF proposition at Grangemouth.

Transport Outcome 6 Policy 3 (New): Air Departure Tax.

The Scottish Government will introduce Air Departure Tax (ADT) as a devolved replacement for the UK-wide Air Passenger Duty (APD) from April 2027. This is possible due to the development of a new Highland and Island exemption that protects crucial connectivity in the region while complying with the UK Government’s subsidy control regime.

This commitment was first made in the Scottish Government’s ‘Update to the Climate Change Plan 2018 – 2032’ and aimed, amongst other matters, to create the world’s first zero emission aviation region, in partnership with Highlands and Islands Airports Limited (HIAL). The commitment recognises that national (and international) aviation emissions are included within the Scottish Government’s legal commitment to be net zero by 2045.

Subsequently, the Scottish Government’s Aviation Statement, published in 2024, set out new actions where the Scottish Government can contribute to growing Scotland’s international connectivity, securing lifeline services in the Highlands and Islands and decarbonising aviation.

The technology required to achieve this commitment is still in early development phase (this applies to the development of both zero-emission aircraft and the necessary infrastructure required). However, the introduction of zero-emission aircraft would improve air quality across both urban and rural areas.

A consultation on the Scottish Government’s ADT proposals was launched on 29 January 2026. The consultation invites comment and evidence from interested parties and is open until 26 March 2026. The contributions received will then be analysed with a response published in due course.

4.4.7 Waste Management

The vast majority of policies for inclusion in the waste sector package are also actions from Scotland’s Circular Economy and Waste Route Map to 2030, published in 2024, and have been subject to ICIA process during development. Some other specific policies in the package have also been subject to individual assessment. It is anticipated that once specific interventions have been defined and agreed, further impact assessments may be necessary.

An ICIA screening process was implemented for both the Circular Economy (Scotland) Act 2024 (then Bill) and Circular Economy and Waste Route Map to identify whether there are issues which merit further exploration through research and engagement with island representatives. Following initial workshops, desktop research and screening process, several key issues were identified and were highlighted via the Route Map ICIA process, and further updates were made following feedback through two public consultations. After the second consultation, this list was updated to include the following areas for consideration:

• Transport;
• Availability and access to disposal options and/or infrastructure;
• Availability and access to products and services;
• Employment and skills;
• Constraints regarding public service design; and
• Disproportionate costs/cost of living implications

Similarly, the following key issues were identified for investigation in the Circular Economy Act (then Bill) ICIA:

• Choice for consumers: concerns were raised that retailers may reduce their product range, either to avoid needing to charge for certain items, or to help manage waste or surpluses. There may also be price and availability issues for reusable items.
• Transport: changes to delivery or collection systems may be more difficult to implement or more expensive for island authorities or affected organisations due to the greater distances involved and use of ferries and the associated time and availability constraints.
• Storage: the ability to store and segregate waste may be hindered by lack of facilities and/or the increased amount of time it could take to remove items off island.

It is worth noting that the Circular Economy Strategy for Scotland is being published in March 2026, alongside its own updated ICIA.

These previous Island Communities Screening Assessments provide an overview identifying any broad likely impacts. There is potential, once the measures are implemented that they may have impacts. It is intended that further detailed assessment of the impacts and associated evidence is gathered at the point where the details of measures are developed. Specific impacts are discussed below by the waste package’s five strategic outcomes.

Waste Outcome 1: Strengthen the Circular Economy

Waste Outcome 1 Enabling Policy 1 (New): Publish a Circular Economy Strategy in 2026.

Waste Outcome 1 Enabling Policy 2 (New): Set new circular economy targets by 2027.

Waste Outcome 1 Enabling Policy 3 (New): Work to embed circularity into public sector procurement processes, helping to reduce the environmental impact of public spending.

Waste Outcome 1 Supporting/Enabling Policy 4 (Existing): Develop digital waste tracking service, in partnership with the UK government and other devolved governments.

Islands face specific challenges that could make circular economy targets more challenging to reach: for example, reliance on types of transportation, and importing goods and materials.

This strategic outcome incorporates skills, education and training and will be an avenue to highlight and create opportunities in island communities in the form of new jobs within the circular economy, underpinned by just transition principles. There is potential to stimulate local job markets and local economies in island communities as interventions are developed and implemented. The recently published circular economy strategy included a draft screening assessment for island communities, and covers specific sector and system considerations.

Procurement costs for island communities differ from the mainland, and costs can be higher purchasing equivalent products and services for a variety of reasons. Circular procurement practices have the potential to offer positive impacts in islands communities by offering a route to affordable, potentially refurbished high quality products. There may even be potential for procurement practices to encourage the growth of local circular solutions such as refurbishment and repair within island communities.

Waste Outcome 2: Reduce and Reuse

Waste Outcome 2 Enabling Policy 1 (New): Publish a product stewardship plan to set out our framework to prioritising products based on their environmental and economic impact, by 2026.

Waste Outcome 2 Policy 2 (Existing): Packaging: Introducing reforms to extended producer responsibility (EPR) for packaging, working with the other UK governments.

Waste Outcome 2 Policy 3 (Existing): Policy 3: Packaging: Implementation of the Deposit Return Scheme (DRS) for single-use drinks containers.

Waste Outcome 2 Policy 4 (Existing): Develop action to tackle the environmental impact of single-use drinks cups.

Waste Outcome 2 Enabling Proposal 1 (New): Develop further measures to tackle consumption of problematic single-use items and promote and enable the uptake of reusable alternatives (including consideration of environmental charging where appropriate and working with other UK nations and industry on reusable and refillable packaging targets and wider support).

Waste Outcome 2 Proposal 2 (New): WEEE: Reform extended producer responsibility for waste electrical and electronic equipment (WEEE), working with the other UK administrations.

Waste Outcome 2 Proposal 3 (New): Batteries: Reform extended producer responsibility for batteries, working with the other UK governments.

Waste Outcome 2 Proposal 4 (New): End of Life Vehicles: As part of UK-wide Extended Producer Responsibility (EPR) reform, seek to place greater financial responsibility on vehicle producers for the environmental impact of their products at end-of-life.

Waste Outcome 2 Enabling Narrative Policy 5 (New): Working with the fishing and aquaculture sectors to improve the collection and recycling of end-of-life gear.

Waste Outcome 2 Enabling Proposal 5 (New): Mainstreaming reuse and repair, including developing measures to improve the reuse experience for consumers and support alternative business models that prolong product lifespan.

Waste Outcome 2 Enabling Policy 6 (New): Develop measures to address the disposal of unsold consumer goods.

Waste Outcome 2 Enabling Proposal 6 (New): Develop an intervention plan to guide long-term work on household food waste reduction behaviour change.

Waste Outcome 2 Policy 7 (New): Develop with stakeholders effective options to implement mandatory reporting for food waste and surplus by businesses.

Waste Outcome 2 Enabling Proposal 7 (Existing):

Support the development and implementation of NHS Scotland actions to tackle food waste, to be reflected in NHS Scotland’s forthcoming revision to its Climate Emergency and Sustainability Strategy.

Waste Outcome 2 Enabling Policy 8 (New): Support the development of a model for regional Scottish hubs and networks for the reuse of construction materials and assets.

Waste Outcome 2 Enabling Proposal 8 (New): Investigate and promote options to incentivise and build capacity for the refurbishment of buildings.

Waste Outcome 2 Enabling Proposal 9 (New): Develop new and promote existing best practice standards in circular practices within the construction sector, and assess the options for both voluntary and mandatory compliance.

Waste Outcome 2 Enabling Narrative Policy 9 (New): Consider how devolved taxes can incentivise the use of secondary aggregates and support circular economy practices.

Waste Outcome 2 Enabling Narrative Policy 10 (Existing): Delivery of the National Litter and Flytipping Strategy.

Opportunities for increasing reuse to help reduce consumption of goods and packaging may be different for island communities – as well as limitations as a result of lower population density making collection services less efficient, residents and businesses in island locations often pay a higher price for deliveries and in certain circumstances additional sums for suitable packaging on items so that it can withstand complex transit arrangements.

Infrastructure requirements for smaller quantities of arisings coupled with a smaller market for reusable items may not offer the necessary economies of scale to ensure scheme or business viability. It is also recognised that any reuse targets that are developed would require modelling work to understand island specific impacts and any support that may be required.

Equally, if measures result in a reduction of waste being produced or if primary producers on islands can sell easily to the local community, then there are potentially more significant benefits on islands due to reduced waste and recycling costs or more effective localised business operations. This may be true regarding any measures to address the disposal of unsold consumer goods, product stewardship measures or promoting circular business models – and as such any future ICIAs for measures would be required to explore and understand impacts and benefits.

It is understood that island communities already experience a relative lack of choice in terms of access to goods and services when compared to other communities. This is a result of fewer shops in the local area, and the higher cost of deliveries to more remote parts of Scotland. This may be relevant here and should be considered where appropriate when interventions under this strategic outcome are taken forward. This is particularly important where specific products have a direct charge attached to them, but alternatives are less readily available for island communities.

Interventions that create employment and develop skills in the repair or refurbishment of products could bring additional benefit to island communities where availability of jobs is variable. However, in the development of these measures, consideration should be given to whether opportunities may be more limited compared with other communities given the likely scale of potential operations. For example, this was considered as part of the banning of the sale and supply of single-use vapes.

Measures addressing environmental charges for problem products have the potential to have a different impact in islands communities. However, issues are only made clear when interventions are developed, and products are identified and assessed. At this later stage of policy development, policy-specific ICIAs should be produced.

There is potential for redistribution of food to be more challenging in an island setting. The Scottish Government's six-fold urban rural classification (2016) classifies the islands as mainly remote rural, with remote small towns. Those living in isolated rural areas have been found to be more vulnerable to food poverty, and the cost of living is generally higher in island communities.

Previous research has identified that remoteness can be a challenge both for businesses with surplus food to redistribute, and for community organisations trying to access surplus food, due to the distances involved. Despite this, there are currently a range of redistribution mechanisms in place in island communities. These range from involvement with large-scale organisations such as FareShare, who distribute food to charitable organisations, including some in the islands, to locally focused community initiatives such as community fridges and food share schemes.

For island businesses with surplus food, the key issue will be whether there are organisations that could make use of the food locally. This may be a challenge particularly in smaller island communities. However, there are examples of local opportunities for redistribution in remote communities in the form of community fridges and community pantries in smaller communities.

The introduction of mandatory reporting of food waste and surplus requirements placed on businesses would likely apply to businesses across Scotland, and so would not be an island-specific issue. However, island businesses may need to make more changes to their operations than those elsewhere to report on food waste and surplus, because businesses may be currently exempt from the duty to ensure segregated food waste collection under the rural exemption in the Environmental Protection Act 1990. Businesses would, therefore, need to implement a system for measuring their food waste, for example, via representative sampling. However, this will apply to businesses in other parts of the country covered by the rural exemption, so is not unique to an island setting. Mandatory reporting and any changes to the existing rural food waste exemption (following consultation in 2025) would be subject to an ICIA when being developed with stakeholders and as any secondary legislation is designed and implemented.

Waste Outcome 3: Modernise Recycling

Waste Outcome 3 Policy 1 (Existing): Make our final investments from the Recycling Improvement Fund to improve local authority recycling collection infrastructure.

Waste Outcome 3 Enabling Policy 2 (New): Develop a statutory Code of Practice for household waste and recycling services.

Waste Outcome 3 Policy 3 (New): Recyclable plastic film and flexible packaging is to be collected for recycling from both households and businesses across the UK by 31 March 2027.

Waste Outcome 3 Enabling Policy 4 (Existing): Review separate collections of textile waste from households, following recent consultation.

Waste Outcome 3 Enabling Policy 5 (Existing): Review current practices with respect to separate collection of bio-waste (e.g. garden waste).

Waste Outcome 3 Enabling Policy 6 (New): Undertake a review of waste and recycling service charging.

Waste Outcome 3 Enabling Policy 7 (Existing): Review the rural exemption for food waste recycling, following recent consultation.

Waste Outcome 3 Enabling Policy 8 (New): Setting statutory local recycling and reuse performance targets for household waste services from 2030 onwards.

Waste Outcome 3 Enabling Narrative Policy 9 (New): Actions to strengthen household waste enforcement tools, as set out in Circular Economy and Waste Route Map.

Waste Outcome 3 Enabling Policy 10 (New): Review of compliance with commercial recycling requirements.

Waste Outcome 3 Enabling Policy 11 (New): Conduct a national compositional study of waste from commercial premises.

Waste Outcome 3 Enabling Policy 12 (New): Co-design measures, including targeted communications, to improve commercial waste service provisions that drive waste prevention and reuse, with a particular focus on food waste recycling.

Work undertaken for previous screening assessments under the Islands (Scotland) Act 2018 has identified that island authorities often face higher costs per capita in collecting, transporting and disposing of waste and recycling. This is, in part, due to the rural nature of collections meaning they are less efficient because of factors such as longer distances, ferry journeys, inaccessible properties and low payloads. The Scottish Government Urban/Rural Classification highlights that the majority of the island authorities have high proportions of their populations in very remote small towns and rural areas. Some islands do not have a kerbside recycling service at present for this reason. Additional costs are incurred as waste and recycling must often be transported off island for processing due to the limited number of operational landfill sites and other disposal facilities located on islands.

People living in island communities may face additional barriers to responsibly disposing of and recycling their waste due to the lack of facilities – this includes waste from a number of sources, including households, commercial properties and construction and demolition sites. Smaller local authorities, with less waste to market, may have greater difficulty negotiating with the private sector to invest in and establish new facilities. It is also more difficult for island communities to work with neighbouring authorities and to share costs of these developments through waste partnerships.

Some waste partnerships have been successfully developed by smaller authorities particularly for treatment and disposal in mainland Scotland and in the rest of the UK. For example, Orkney Islands Council's residual waste is shipped to Shetland and constitutes a significant percentage of the feedstock required for the council owned and operated Energy from Waste (EfW) facility in Lerwick.

The pooling of residual waste and recycling tonnages to create economies of scale and support viable operational facilities is easier on the Scottish mainland. The complexities of Island waste collection logistics have been set out in the published Extended Producer Responsibility for Packaging in Scottish Highlands and Islands - Summary Report.

When developing interventions that will address issues with household recycling, such as local performance targets, reviewing waste and recycling service charges, or a new statutory recycling Code of Practice, it will be essential that the design processes account for island communities and to ensure equity in access to services across all areas – with options appraisals undertaken for adopting alternative high performance collection systems if required. As these interventions are developed focused ICIAs may be required, which should include the differing impacts for different island communities, how changes in waste produced may be impacted by transportation issues such as cost, but also disruption of ferry services due to high numbers of tourists or poor weather for example. Any co-design processes will also necessarily include representation from island communities.

The Return and Recycle Orkney pilot initiative is an example of how issues specific to island communities can be understood when implementing policies relating to household recycling. It was set up to gather information on the use of reverse vending machines on an island location, to understand location-specific complexities, provide insights to inform the development of a deposit return scheme in Scottish island locations and provide operational insight to stakeholders involved in the logistics and day-to-day operations. It also assisted with general learning regarding the operation of a Voluntary Return Point, and wider operational and logistical learning.

Transportation logistics can be particularly challenging for difficult to recycle materials such as Waste Electrical and Electronic Equipment (WEEE) collections, end-of-life vehicles and construction materials. Recycling of farm plastics, for example, has two voluntary collection schemes and several waste collectors that will collect this material for processing; however, storage, preparation for transportation, potentially low value of the material and high shipping costs can be prohibitively expensive in certain cases.

As above, it is a common theme of ICIAs that there are unique challenges for island communities regarding the availability and affordability of transport – and the lack of economies of scale and competition. There are higher costs of transportation and less efficient logistics (e.g. payloads in vehicles) when covering a low-density population often covering multiple islands. This may make it harder for commercial organisations on islands to distribute their resources and collect recycling.

While market measure actions may be more limited due to the costs, infrastructure, distance travelled and feasibility on islands, consideration should be given to the challenges island businesses face during the development of measures as well as the unique opportunities and service set-ups that might benefit island communities. Measures to improve commercial waste service provisions can explore these issues in greater detail, for example, via co-design with island-based businesses and commercial organisations, and commercial waste service providers, and assess any disproportionate impact on island communities.

Interventions within this outcome to undertake a national waste composition analysis from commercial premises and review commercial compliance will also serve to highlight and understand barriers and challenges for island communities in reducing waste arising and improving recycling.

Waste Outcome 4: Decarbonise Disposal

Waste Outcome 4 Policy 1 (Existing): Introduce a ban on biodegradable municipal waste going to landfill.

Waste Outcome 4 Enabling Proposal 1 (Existing): Review and target materials currently landfilled to identify and drive alternative management routes, including the potential to extend the BMW landfill ban to include biodegradable non-municipal wastes.

Waste Outcome 4 Enabling Policy 2 (New): Develop a Residual Waste Plan to 2045.

Waste Outcome 4 Policy 3 (Existing): Increase the capture of landfill gas.

Impacts associated with costs of disposal are likely to vary between islands. Some islands have local access to a landfill or other residual waste treatment facility, while all other waste must often be transported off island for processing - often by ferry. This limits the facilities that are available to island communities as is shown by SEPA's Landfill Sector Plan which identifies the locations of operational landfill sites in Scotland. The complexities of Island waste disposal logistics have been set out in the published EPR in Scottish Highlands and Islands – Summary Report.

Supporting implementation of the ban on biodegradable municipal waste going to landfill has involved support for local authorities to prepare and secure contracts that comply with the landfill ban, including island authorities. Similarly, islands authorities will require assistance to follow the findings of the independent review of incineration. The report stated that in terms of managing residual waste, incineration was currently preferable to landfill – noting that it is particularly problematic for some of the more remote or rural areas of Scotland to gain access to these facilities. It also made clear recommendations around capacity and decarbonisation of energy from waste.

Increased recycling rates or changes to segregation of waste, potentially as a result of the new household Code of Practice for recycling and waste services and/or Residual Waste Plan to 2045, may result in a different amount of space required on ferries and more complex disposal logistics. This impacts the costs associated with transport, particularly when multiple ferry journeys are required before waste arrives at its destination.

More limited options for disposal routes on islands has resulted in some communities taking decisions that may require upfront investment but ultimately limit additional costs – for example, creation of energy from waste facilities on Shetland. This investment was also highly successful in diversion from landfill while providing heat to a local energy network.

Implementing measures further up the waste hierarchy to divert waste away from landfill, and energy from waste, may face specific challenges due to the operational viability of existing facilities. Also increased transport costs and complex logistics – for example, for some materials, there are limited times that they are allowed on the ferries due to odour (or perceived odour) affecting other passengers. However, benefits can also be seen in terms of new income streams for high value and clean recyclable material or reduced landfill operation costs – or delaying the need to build new landfill cells.

The impact of the inclusion of energy from waste in the UK Emissions Trading Scheme on island local authorities is also recognised as potentially having a disproportionate effect owing to disposal costs already being higher than for most mainland counterparts. However, there is also potential in these areas to improve recycling capture and increase income from recycling streams when diverting high carbon material away from incineration.

As above, further Island Community Impact Assessments already are and will be carried out where appropriate when individual measures are designed and developed fully.

Waste Outcome 5: Other Sources (anaerobic digestion and composting and wastewater).

Waste Outcome 5 Enabling Proposal 1 (New): Broadly align with Energy Neutrality and Resource Recovery requirements in the EU's Urban Waste Water Treatment Directive (Art 11 and 20). Likely to include Energy audits, energy recovery and resource recovery. Scottish Water is currently mandated to achieve net zero by 2040 across all of its water and wastewater operations.

Waste Outcome 5 Enabling Proposal 2 (New): Continue to work with the Scottish Environment Protection Agency (SEPA) and the sector to ensure there is appropriate capacity in Scotland to manage these biodegradable materials and optimise the efficiency of both anaerobic digestion and composting.

At this early stage it is not possible to outline impacts for island communities for these proposals. Further assessments will be developed alongside the proposals and relevant consultations or regulations.

4.5 Conclusions

This ICIA has provided an assessment of the potential impacts of the CCP on island communities. Scottish Government guidance on ICIA has been followed and key issues and evidence have been examined to assess the potential impact on island communities.

Key Findings

• The policy package as a whole is likely to positively impact on island communities as it mitigates the likelihood of events which could have disproportionately negative impacts on those living in island communities. The rationale for climate change mitigation can be compared with the “do nothing” approach which could result in negative disproportionate impacts on island communities.
• While a greener economy has a net overall benefit, there may be variations in the extent to which island communities adapt and transition to a changing employment landscape as a result of the climate change mitigation policies in the CCP. For example, island communities have a higher percentage of people employed in agriculture than for the rest of Scotland, therefore, careful attention will be required to ensure that the policies in the CCP are delivered in a manner which can achieve a Just Transition for these communities. The CCP should interact with other Plans, such as the second National Islands Plan to consider potential such impacts.
• Opportunities for training, employment and remote working may also impact island communities differently. Our consideration of just transition principles in developing our policies has ensured suitable measures to address existing inequalities by leveraging the transition as an opportunity to help tackle persistent barriers to quality employment.
• Ensuring that costs do not disproportionately disadvantage certain groups is a cross-cutting theme of the CCP. There is good evidence that Scottish Government has considered the differential needs of island communities who are already burdened with higher costs of living than for the rest of Scotland.
• The examination of the policies within each sector has noted a range of potentially positive impacts on island communities. Additionally, it is noted that Scottish Government has anticipated the potential for differential impacts and has proposed measures which should, on the whole support effective, mitigation for island communities. This includes further actions identified through ICIAs undertaken for specific policies.