Scottish Budget 2023-24: high level carbon assessment

1. Introduction

1. This assessment is based on the expenditure data presented in the 2023-24 Budget and fulfils the statutory requirement under Section 94 of the Climate Change (Scotland) Act 2009 to report upon the emissions impact of expenditure proposals.

2. It provides a limited overview of emissions and does not, for example, provide any indication as to the consequential impact of specific policies. As a result, policies and expenditure which have emissions reducing lifetime impacts may appear in this assessment as generating emissions due to short run impacts. Care should therefore be taken in interpreting this assessment. For example, the construction of a cycleway may generate emissions in construction which would be reflected here, but a reduction in emissions from modal shift would not.

3. This assessment is presented in the backdrop of the ongoing work driven by the Scottish Government and Parliament's Joint Budget Review in relation to incorporating Climate Change in budget decisions as well as Advice from the Committee on Climate Change on the scale of transformation needed to achieve future targets.

1.1. Scope of Assessment

4. The assessment of the Budget captures the emissions associated with the Scottish Government's purchase of goods and services. It is a consumption-based measure that covers direct emissions (e.g. the production of gravel for roads constructed by the Government or generation of electricity used by Government) and also any imported emissions that are generated in producing the direct and indirect goods and services that the Government purchases.

5. The assessment does not take account of 'second-round' emissions. While we do include emission impacts associated with Government spend and its supply chain, we do not count the emissions or savings associated with all of the outcomes arising from this spending. For example, while the Carbon Assessment could include an estimate of the carbon associated with the cost of constructing a road, the carbon associated with the subsequent use of the road is not included.

6. The Scottish Government uses a range of other tools, during the policy development stage, to quantify emissions impacts over the policy/project lifetime. These tools include Strategic Environmental Assessments. The Environmental Assessment (Scotland) Act 2005 requires that every qualifying public plan, programme and strategy is considered for its likely environmental effects and, where likely to be significant, opportunities to avoid adverse impacts are sought and positive ones enhanced. Results are published in the Environmental Reports within the Strategic Environmental Assessment database: Environmental assessment: Strategic Environmental Assessment (SEA) - gov.scot (www.gov.scot)^[1]

7. Further tools include Environmental Statements, which are required to assess the environmental effects of certain public and private projects under the Roads (Scotland) Act 1984 (Environmental Impact Assessment) Regulations 2017, which update the requirements in the Roads (Scotland) Act 1984. The Carbon Account for Transport also provides a balance sheet for Scotland's greenhouse gas emissions, and the expected emissions impacts of major transport infrastructure projects and regulatory measures. The latest Transport Carbon Account is available at the following link: Carbon Account for Transport - No. 12: 2020 Edition^[2]

8. The combined effect of Scottish Government policies to reduce emissions over the period to 2032 is set out in the Climate Change Plan update, published in December 2020. This is due to be updated in the draft Climate Change Plan which will be laid in Parliament by the end of 2023.

9. Although the methodology underpinning the Carbon Assessment of the Budget remains the same as for the Carbon Assessment of the 2022-23 Budget, the base year of Environmental Input-Output (EIO) model itself has been updated from 2017 to 2018. This is possible because of the newly available input-output analytical tables covering the year 2018 for Scotland and the UK. As usual the model has also been updated to use the latest available Greenhouse Gas emissions ratios and HM Treasury deflators. More information about these changes and their effects on the overall GHG estimates can be found in Annex A.

1.2. Key Results

10. The conclusions below are made in the context of the limitations of the assessment process. The Scottish Government have publicly acknowledged the current process of carbon assessment has limited value in allowing meaningful scrutiny of the Budget or in supporting the alignment of spending choices with our climate ambitions. These limitations are being addressed through a Scottish Government and Parliament Joint Budget Review on matters climate change matters.

11. In the meantime this assessment should be read alongside the Climate Change Assessment of the Budget (annex G of the Budget) which sets out increased investment in low carbon activity and a shift in balance from high carbon to low carbon investment

12. Following the approach set out in section 1.1, it is estimated that total emissions attributed to the 2023-24 Budget amount to 8.8 million tonnes carbon dioxide equivalent (MtCO2e).

13. This has increased slightly from 8.6 Mt when applying the updated Environmental Input-Output model to last year's 2022-23 Budget. This is in line with the change in published budgeted spend, with a very slight reduction in emissions per pound spent. Once changes in the level of spend are taken into account, emissions are broadly stable.

14. Details on the various sources of emissions show that some 26 per cent of the Scottish Government's carbon footprint is caused by the use of Energy, Water and Waste, followed by Manufacturing (20 per cent) and Agriculture, Forestry and Fishing (18 per cent).

15. It is estimated that total emissions attributed to capital investment plans of £6.4 billion of investment in 2023-24 amount to 1.0 MtCO2e. Note that these are the emissions associated with putting the capital investment in place and not their long term use. Emissions associated with resource spend amount to 7.8 MtCO2e.

1.3. Budget Context

16. Budget for 2023-24 contains details of Total Managed Expenditure (TME) of £59.8 billion across portfolio areas. Expenditure is split between resources and capital expenditure, and Annually Managed Expenditure (AME). This is illustrated in Table 1.

Summary

It is estimated that total emissions resulting from the 2023-24 Budget will be 8.8 Mt CO₂-equivalent.

This has increased slightly from 8.6 Mt when applying the updated Environmental Input-Output model to last year's 2022-23 Budget. This is in line with the change in published budgeted spend, with a very slight reduction in emissions per pound spent.

Emissions remain broadly proportional to spend, except for Rural Affairs and Islands, where emissions per unit of spend are higher.

'Second-round' emissions that may result from Government spending and the use of public goods and services, whether beneficial in terms of reducing emissions (e.g. spending on energy efficiency or afforestation) or negative in terms of increasing emissions (e.g. road use) are not captured. The separate Climate Change Assessment annex of the Budget sets out increased investment in low carbon activity and a switch in balance from high carbon to low carbon investment.