Scottish Budget 2021-2022: carbon assessment

1. Introduction

1. This assessment is based on the expenditure data presented in the 2021-22 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.

1.1. Scope of Assessment

2. 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.

3. The methodology for the Carbon Assessment of the Budget is high level in nature. This assessment allows the Scottish Government to place the carbon impact of its use of goods and services within the wider context of the national and global economy. It helps raise awareness of the carbon impact of spend in different areas, by identifying direct emissions and those from supply-side inputs.

4. 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.

5. 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]

6. 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. 11: 2019 Edition^[2]

7. 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. The Climate Change Plan update sets out our pathway to achieve our world-leading emissions-reduction goals and contains significant new policy commitments to do this.

8. The methodology underpinning the Carbon Assessment of the Budget remains the same as for the Carbon Assessment of the 2020-21 Budget, and uses an Environmental Input-Output (EIO) model with base year 2015. The model has 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.

9. During Stage 2 of the Climate Change (Emissions Reduction Targets) (Scotland) Bill 2019, the Government committed to working with the Parliament to review the current processes and outputs around budget information as it relates to climate change. That review is now in progress.

10. The aim of the review is, where feasible and proportionate within the anticipated timescales, to improve budget information on climate change – to understand and reduce spend that will 'lock in' future greenhouse gas emissions and increase alignment between the budget and climate change plans.

1.2. Key Results

11. Following the approach set out in section 1.1, it is estimated that total emissions attributed to the 2021-22 Budget amount to 10.2 million tonnes carbon dioxide equivalent (MtCO2e). Applying the updated model to last year's 2020-21 Budget leads to a downward revision to the published 9.5 MtCO2e to 9.0 MtCO2e.

12. The increase since 2020-21, whilst in line with cash growth in Budget spend, is affected by the fall in aggregate prices projected in the HMT deflators as a result of COVID.

13. Details on the various sources of emissions show that some 28 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).

14. It is estimated that total emissions attributed to capital investment plans of £5.8 billion of investment in 2021-22 amount to 1.3 MtCO2e. Note that these are the emissions associated with putting the capital investment in place and not the long term use. Emissions associated with resource spend amount to 8.9 MtCO2e.

1.3. Budget Context

15. Budget for 2021-22 contains details of Total Managed Expenditure (TME) of £54.0 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 2021-22 Budget will be 10.2 Mt CO₂-equivalent.

This has increased since 2020-21 in line with cash growth in Budget spend and is affected by the fall in aggregate prices projected in the HMT deflators as a result of COVID.

Emissions remain broadly proportional to spend, except for Rural Economy, 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.