A National Mission with Local Impact - draft infrastructure investment plan 2021‑2022 to 2025‑2026: consultation

Annex C - Carbon Assessment of The Infrastructure Investment Plan

The Scottish Government has used low, neutral and high carbon categories (known as a taxonomy approach), as shown in the table below, to analyse planned infrastructure spend for individual years.

The categorisation was developed and proposed by the Low Carbon Infrastructure Taskforce in 2015^[32]:

Low Carbon

Seen as necessary to the low carbon transition

• Transport – bus, rail and ferry
• Energy – all renewable generation and electricity transmission and distribution
• Rural affairs and the environment – waste
• Housing – energy efficiency programmes

Neutral

Do not represent substantial carbon efficiency gains in their own right but are consistent with low carbon ambitions

• Rural affairs and the environment – all non-waste
• Housing – all non-energy efficiency
• Water, Digital, Health, Schools, Justice
• Culture and heritage
• Regeneration

High carbon

Relatively carbon intensive

• Transport – roads and airports
• Energy – fossil fuel generation

This analysis estimates that 35% of the Capital Budget in 2020/21 can be classed as Low Carbon^[33]. However, there are a number of reasons why this approach gives only a partial or crude estimate of the actual savings:

• Does not quantify the overall change in emissions.
• Does not capture all emissions-saving measures, particularly those in the Neutral category.
• Has not been brought into line to match higher emissions targets.

In passing the 2019 Climate Change (Emissions Reduction) Act in Scotland, the Parliament agreed that a new methodology should be developed in order to assess the contribution made by the infrastructure investment plan to the new targets.

In order to respond to this new requirement, and in recognition of the limitations of the current approach, an independent research project was commissioned to explore alternative options. This research was facilitated by ClimatexChange – Scotland’s centre for expertise connecting climate research and policy.

The ClimatexChange report recognises that this is a relatively new area of policy and methodological development. It identifies four different types of assessment approach relevant to infrastructure investment decisions:

• Absolute emissions methods,
• Baseline-and-intervention methods,
• Gap analysis, and
• Taxonomies.

A description of each methodology and its strengths and weaknesses is shown below, please see the final research report for more detail.^[34]

Taxonomy
Categorises types of asset into broad groups to rate the carbon impact.

Strengths

• Easy to interpret.
• Relatively easy to implement using existing tools & guidance.

Weaknesses

• Blunt tool, limited in detail.
• Does not quantify the level of emissions reduction
• Does not capture all emissions-saving measures.
• Not matched to Scottish targets.

Absolute Emissions
Calculates emissions relating to an infrastructure asset throughout its lifetime.

Strengths

• Provides a detailed assessment of individual projects.
• Can capture lifecycle impacts and international emissions effects
• Provides a detailed assessment of individual projects.
• Can capture lifecycle impacts and international emissions effects.

Weaknesses

• Data heavy and resource intensive – requires a detailed assessment of each project.
• May not adequately capture the cumulative impacts

Baseline & Intervention
Estimates the change in emissions over time compared to a ‘no change’ scenario.

Strengths

• Flexible approach –individual projects or combination of programmes.
• Captures system-wide change.
• Compatible with current assessment methods.

Weaknesses

• An assessment of each intervention is required in order to design the modelled scenario.
• Modelling outputs can be complex to interpret – may be challenging to identify the pure ‘infrastructure’ effects of investment.

Gap Analysis
Assesses the difference between planned investment and the target.

Strengths

• Allows for analysis of any shortfall in required implementation or investment.

Weaknesses

• An assessment of each intervention is required
• Requires a decarbonisation scenario and a detailed understanding of costs or implementation plans.

The Scottish Government plans to consider these research findings carefully. In particular, we note the recommendation to take a phased approach. While the report suggests we could adopt a new version of a carbon taxonomy (such as the EU Sustainable Finance Taxonomy or Climate Bonds Initiative Taxonomy) in the short run, it is not clear that the benefits of doing so are strong. It is therefore considered preferable to maintain the current taxonomy until such time that a more sophisticated and transparent reporting method can be developed.

From the remaining three, the Scottish Government is minded to explore further the use of Baseline and Intervention, and Gap Analysis approaches. The development of the new approach using one of the methods (or a combination of them) is likely to be an iterative process and will require substantial work to establish the new framework and collect the necessary data. This is noted in the Infrastructure Investment Plan forward programme.