Scottish Budget 2025 to 2026: Carbon assessment

1. Introduction

1. This assessment is based on the expenditure data presented in the 2025-26 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. This high-level carbon assessment only includes estimates of the short run impacts of expenditure on greenhouse gas emissions (GHGs). Care should therefore be taken in interpreting this assessment. For example, the assessment of the construction of a cycleway would include emissions generated in the construction, but would not capture the reduction in emissions from any resulting modal shift.

3. It provides a limited overview of emissions and does not, for example, provide any indication as to the consequential impact of specific policies. The climate taxonomy analysis which is also published alongside the Budget instead provides an assessment of the alignment of spend to Scottish Government climate priorities.

4. Taken together, the high-level carbon assessment and the taxonomy assessment provide separate but complementary analyses of government expenditure in the context of the climate emergency.

1.1. Scope of Assessment

5. The high-level carbon 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.

6. As mentioned above, 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. This is better captured in the taxonomy assessment of the Scottish Budget.

7. The methodology underpinning the high level Carbon Assessment (HLCA) of the Budget remains the same as for the 2024-25 Budget. As usual the model has been updated to use the latest available Greenhouse Gas emissions estimates from ONS Environmental Accounts 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

8. The summary of the analysis below are subject to the scope and limitations of the analysis as discussed above.

9. Following the approach set out in section 1.1, it is estimated that total emissions attributed to the 2025-26 Budget amount to 8.9 million tonnes carbon dioxide equivalent (MtCO2e).

10. This has increased slightly from 8.6 Mt when applying the updated Environmental Input-Output model to last year’s 2024-25 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.

11. Details on the various sources of emissions show that some 27 per cent of the Scottish Government’s carbon footprint is caused by the use of Energy, Water and Waste, followed by Manufacturing (19 per cent) and Transport and Communication (17 per cent).

12. It is estimated that total emissions attributed to capital investment plans of £7.3 billion of investment in 2025-26 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 7.9 MtCO2e.

1.3. Budget Context

13. Budget for 2025-26 contains details of Total Managed Expenditure (TME) of £63.5 billion across portfolio areas. Expenditure is split between resources and capital expenditure, and Annually Managed Expenditure (AME). This is illustrated in Table 1.

14. The taxonomy assessment of the Budget document presents an alternative approach that reviews the alignment of spend with SG climate objectives based on long-term impact of spend. This assessment shows that around 9% of budget spend is positively aligned with the delivery of the Scottish Government’s climate objectives. 2% is negatively aligned, primarily delivering road and livestock investments which support emission generating activity. The vast majority of spend, 89%, is neutral delivering on core objectives which generate relatively little emissions domestically but may have higher emissions when evaluated in consumption terms; This is primarily healthcare and social funding.

Summary

It is estimated that total emissions resulting from the 2025-26 Budget will be 8.9 Mt CO₂-equivalent.

This has increased slightly from 8.6 Mt when applying the updated Environmental Input-Output model to last year’s 2024-25 Budget. This is in line with the change in published budgeted spend, with a very slight reduction in emissions per pound spent.

‘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 taxonomy assessment of the Budget sets out how climate spend is aligned to the Scottish Government’s climate objectives.