Overview of the Act and General Notes Interpretation Part 1: Emissions Reduction Targets Section 2: Replacement of annual and interim targets with budget targets
24.The overall effect of section 2 of the Act is to modify the Climate Change (Scotland) Act 2009 so as to remove from it the concept of interim and annual targets and replace its references to those targets with references to Scottish carbon budget targets, which (as explained above) is a concept amended into the 2009 Act by section 1 of the Act.
25.Section 2(2) of the Act repeals section 2 of the 2009 Act, which defines interim targets. Section 2A of the 2009 Act conferred a regulation-making power to modify the interim targets in section 2 of that Act. It is repealed by section 2(3) of the Act.
26.Section 2(4) of the Act modifies section 2C of the 2009 Act. Section 2C places a duty on the Scottish Ministers to request advice from the relevant body in relation to various matters (for the meaning of “relevant body” see paragraph 20 above). Section 2(4) of the Act modifies section 2C of the 2009 Act so as to replace the requirement for Ministers to seek the relevant body’s advice in relation to interim targets with a requirement to instead seek its advice in relation to Scottish carbon budgets. Section 13(4) of the Act contains further non-textual modifications to section 2C of the 2009 Act that are to operate only in the period prior to the first Scottish carbon budgets being set. These transitional modifications are explained in paragraph 77 below.
27.Section 2(5) of the Act modifies section 2E of the 2009 Act. Section 2E makes further provision about the advice from the relevant body that the Scottish Ministers must request under section 2C of the 2009 Act and may request under section 2D of that Act. Subsections (4) and (5) of section 2E, in their original form, required Ministers to take action if the relevant body gave advice to the effect that an interim target should be changed. In particular, they required Ministers to publish a statement setting out what they intended to do in light of the advice within 3 months of receiving it and if, within 12 months of receiving it, they had not laid before the Scottish Parliament draft regulations to change the interim target in question to bring it into line with the relevant body’s advice, the subsections required Ministers to make a statement to the Parliament explaining why not. Section 2(5) of the Act replaces subsections (4) and (5) of section 2E of the 2009 Act with new subsections (3A) and (3B), which make equivalent provision about the action to be taken if the relevant body advises that a different Scottish carbon budget for a period would be appropriate.
28.Subsections (6) to (8) of section 2 of the Act repeal sections 3 to 3B of the 2009 Act. Those sections were about annual targets.
29.Section 2(9) of the Act modifies section 3C of the 2009 Act. Subsection (1) of section 3C requires the Scottish Ministers to keep up to date a list of the various targets that apply under the 2009 Act. Section 2(9) of the Act adjusts section 3C of the 2009 Act in the following ways:
	The description in subsection (1) of the targets to be included in the Scottish Ministers’ list is changed so that the list covers Scottish carbon budget targets rather than interim and annual targets.
	Subsection (3) is replaced with a modified version which omits any reference to percentage figures. The original form of subsection (3) required the Scottish Ministers to lay an updated list of targets before the Scottish Parliament whenever “a percentage figure mentioned in subsection (1) has been modified.” Unlike interim and annual targets, Scottish carbon budgets will not necessarily be percentage figures (see paragraph 18 above). To accommodate that, the replacement subsection (3) is more generally expressed; it requires the Scottish Ministers to lay a new version of the list before the Parliament whenever it is changed in any way. The Scottish Ministers’ duty to change the list to reflect any change in a target, or a Scottish carbon budget, flows from section 3C(1) requiring them to maintain the list.
30.Section 2(10) of the Act modifies section 9(2)(d) of the 2009 Act to accommodate Scottish carbon budgets being concerned with emissions over a period, unlike interim and annual targets which were concerned only with emissions in a particular year. Section 9(2) requires the Scottish Ministers to request a report from the relevant body within two years of the end of each target year on various matters (for the meaning of “relevant body” see paragraph 20 above). One of those matters, specified in section 9(2)(d), is relevant body’s views on the action taken by the Scottish Ministers to reduce net Scottish emissions of greenhouse gases during the target year. Section 2(24) of the Act amends the 2009 Act so that “target year”, in relation to a period for which a Scottish carbon budget is set, will mean the final year of that period. The duty to request a report under section 9(2) will therefore arise at the end of each Scottish carbon budget period. The modification to paragraph (d) of section 9(2) means that the report should address actions to reduce net greenhouse gas emissions during the whole of the budget period not just its final year.
31.Section 2(11) of the Act modifies section 13A of the 2009 Act. Section 13A confers a power on the Scottish Ministers to make regulations limiting the amount of purchased carbon units that can be credited to the net Scottish emissions account for a period. The net Scottish emissions account is defined by section 13(1) of the 2009 Act. It is the measure of emissions used to assess whether the 2009 Act’s emissions reduction targets have been met. Carbon units purchased through carbon-trading schemes can be credited to the net Scottish emissions account for a period so as to reduce the account for that period, but this can only be done if regulations have been made under section 13A setting a limit on the amount of purchased carbon units that can be credited to the account (see section 13(5A) of the 2009 Act). In its original form, section 13A(2) provided that regulations cannot set the limit for a year at a level higher than 20% of the planned reduction in the net Scottish emissions account for the year. In other words, no more than 20% of the reduction in the net Scottish emissions account that would be needed for that year’s emissions-reduction target to be met (assuming the previous year’s target was met) could be due to the crediting of purchased carbon units. Section 2(11) of the Act modifies section 13A of the 2009 Act with the following results:
	For years falling within a period covered by a Scottish carbon budget, the ceiling on the use of purchased carbon units is set for the whole period rather than for the individual years comprising it.
	No more than 20% of the reduction in the net Scottish emissions account needed to stay within a Scottish carbon budget for a period, assuming emissions in the preceding period to have been at the level set as the budget for that period, can be due to the crediting of carbon units.
	As it is not possible to calculate 20% of the targeted reduction in the net Scottish emissions account between the first period covered by a Scottish carbon budget and the period which preceded it (because by definition there will be no budget for the period preceding the first period covered by a budget), a transitional rule applies to allow the calculation to be performed for that first Scottish carbon budget period. The transitional rule entails calculating 20% of the difference between the first budget to be set and a notional budget for the preceding period specified by the Scottish Ministers in regulations. In making regulations setting the notional budget, the Scottish Ministers will be bound by the same obligations as they will when making regulations under inserted section A4 setting real budgets and the regulations will similarly be subject to parliamentary scrutiny under the affirmative procedure (see paragraphs 20 and 21 above).
	The ceiling on the use of purchased carbon units in respect of years not covered by Scottish carbon budgets is unchanged.
32.Subsections (12) and (13) of section 2 of the Act modify sections 17(3) and 18(2) (respectively) of the 2009 Act. In each case, the modification is to have the modified provision apply in relation to reports under inserted section 34A (see paragraph 35 below) as it does in relation to reports under the existing section 33 of the 2009 Act.
33.Section 2(14) of the Act modifies section 24 of the 2009 Act. Prior to the modification taking effect, subsection (3) of section 24 defined the functions of the advisory body to include advising on the Scottish Ministers’ duty under section 2(1) of the 2009 Act, meaning their duty to ensure the interim targets were met. That duty is abolished by the Act, and accordingly section 2(14) of the Act replaces the reference to it with a reference to the Scottish Ministers’ new duty under inserted section A3 (see paragraph 16 above) to ensure that Scottish carbon budget targets are met.
34.Section 2(15) of the Act modifies section 33 of the 2009 Act. That section requires the Scottish Ministers to lay a report before the Scottish Parliament following each “target year”. Before the abolition of annual targets, this meant a report under section 33 was required in every year up until the net-zero emissions target year (see section A1 of the 2009 Act). Now that annual targets have been replaced with Scottish carbon budget targets, emissions reduction targets will be concerned with emissions levels over a number of years rather than in respect of a single year (except in the case of the net-zero emissions target, which remains focussed solely on emissions levels in the net-zero emissions target year). Section 2(15) of the Act replaces subsections (1) and (2) of section 33 of the 2009 Act to reflect the fact that the new Scottish carbon budget targets are focussed on emissions over multiple years. Specifically:
	the replacement subsection (1) links the duty to report on the attainment of targets to the end of each period for which a Scottish carbon budget is set. A new requirement for the Scottish Ministers to report on progress towards emissions reduction annually is created by section 2(17) of the Act, which inserts a new section 34A into the 2009 Act.
	The replacement subsection (2) reproduces the effect of the previous subsection (2), which was to set out the required contents of a report under the section, with changes to reflect the move to multi-year targets.
	The new subsection (2A) makes special provision about the final section 33 report, that is the one produced following the net-zero emissions target year. As that report will address a target specific to a single year, subsection (2A) requires that report to cover, in addition to the matters set out in the new version of subsection (2) for the final Scottish carbon budget period, the matters that the previous version of subsection (2) required all reports to cover when all section 33 reports were specific to a single year.
35.Section 2(16) of the Act modifies section 34 of the 2009 Act. Section 34 of the 2009 Act elaborates on the contents of a report under section 33. The modifications made by section 2(16) of the Act are made to reflect the fact that reports under the modified section 33 of the 2009 Act are concerned with emissions levels over a number of years rather than in respect of only one target year.
36.Section 2(17) of the Act inserts a new section 34A into the 2009 Act. As explained in paragraph 34 above, section 33 of the 2009 Act (in the form inserted by the Climate Change (Emissions Reduction Targets) (Scotland) Act 2019) required the Scottish Ministers to report on delivery against emissions-reduction targets annually because there was a system of annual targets. The Act has modified the 2009 Act to replace annual targets with multi-year Scottish carbon budget targets and therefore reports under section 33 on delivery against targets will cease to be annual because there will not be annual targets against which to report. The inserted section 34A will create a new annual reporting duty for the Scottish Ministers. Like a report under section 33, a report under section 34A will need to include the information set out in section 34 of the 2009 Act. It will differ from a report under section 33 principally in not having to address performance against a Scottish carbon budget target; the point of having a report under section 34A rather than under section 33 is that, in a system of multi-year targets, performance against the target cannot be addressed until the end of the period for which the target is set. No report under the new section 34A is required for:
	the final year of a period for which a Scottish carbon budget is set, because following those years a report under section 33 will be produced and it will contain all of the information that a section 34A report for the year would cover,
	years that predate the new section 34A being inserted into the 2009 Act, except for those few years that would otherwise fall into a transitional gap because they had not been reported on under section 33 before it ceased to require reporting against annual targets and will not be reported on under section 33 in future because they were already in the past when the first Scottish carbon budget period begins,
	future years beyond the net-zero emissions target year (as defined by section A1 of the 2009 Act).
37.Section 2(18) of the Act modifies section 35(4)(b) of the 2009 Act to remove a reference to interim targets that no longer makes sense following their abolition.
38.Section 2(19) of the Act changes the heading to section 36 of the 2009 Act to remove a reference to annual targets that would no longer have made sense following their abolition.
39.Section 2(20) of the Act modifies section 42 of the 2009 Act. Amongst other things, section 42 sets out duties that the Scottish Ministers owe to the Scottish Parliament when they lay before it a report under section 33 of the 2009 Act. Section 2(20) of the Act adjusts section 42 so that those duties arise in connection with a report laid before the Parliament under inserted section 34A too (see paragraph 36 above).
40.Section 2(21) of the Act modifies section 57(3)(a) of the 2009 Act. Section 57, in its current form, requires the Scottish Ministers to produce a land use strategy setting out objectives, proposals and policies which contribute to the achievement of their duties under sections 1, 2(1) or 3(1)(b) of the 2009 Act. Section 2(21) of the Act updates those cross-references as follows:
	Section 1 of the 2009 Act set the original ultimate target for Part 1 of the Act, known as the 2050 target. The Climate Change (Emissions Reduction Targets) (Scotland) Act 2019 replaced the 2050 target with the Scottish net-zero emissions target (see section A1 of the 2009 Act) and repealed section 1. The reference to section 1 is therefore replaced with a reference to section A1.
	Sections 2 and 3 of the 2009 Act respectively set interim targets and annual targets. The Act has abolished those and replaced them with Scottish carbon budgets under inserted section A2 and a duty, under inserted section A3, to ensure the targets arising from those budgets are met. The references to sections 2 and 3 are therefore replaced with a reference to section A3.
41.Subsections (22) and (23) of section 2 of the Act modify, respectively, sections 96 and 97 of the 2009 Act. Those sections are concerned with the scrutiny of regulations made under provisions of the 2009 Act, including section 13A. As explained in paragraph 31 above, section 13A (as first enacted) provided for regulations to set a limit on the use of purchased carbon units by reference to planned annual reductions in emissions levels whereas, as now modified by the Act, it sets the limit by reference to planned multi-year reductions. The modification to both section 96 and 97 of the 2009 Act is consequential on the changes made to section 13A; in each section, reference to section 13A setting a limit for a year is replaced with reference to its doing so for a period. These modifications are made for consistency with the modifications to section 13A and do not change the effect of section 96 or 97.
42.Section 2(24) of the Act modifies section 98 of the 2009 Act. Section 98 is an interpretative provision which defines terms used in the preceding sections of the 2009 Act.