Scottish Budget 2022 to 2023: carbon assessment

Annex A – Methodology

1. The figures presented in this report are estimated using the Scottish Government Environmental Input-Output Model (EIO) 2017.

2. The EIO is constructed using the Scottish Government Input-Output Tables 2017 (taken from the 1998-2018 Tables published in November 2021), ONS United Kingdom Analytical Input-Output Tables, 2017 (Blue Book 2020), ONS Environmental Accounts, Atmospheric emissions: greenhouse gases by industry and gas, 2017 (Published September 2021) and HM Treasury GDP Deflators as at September 2021.

3. A fuller description of the model and its associated Greenhouse Gas effects estimates that this assessment is based upon can be found at: https://www.gov.scot/publications/about-supply-use-input-output-tables/pages/environmental-input-output/

Revisions to the Environmental Input-Output Model

4. With the release of new Input-Output Analytical Tables covering the year 2017 for Scotland and the UK, this year the base year of the EIO model has been updated from 2015 to 2017. This has involved a number of additional changes to the model:

• The updating of the underlying Scottish Input-Output model and UK closed economy input-output model from the 2015 version to the latest published version for 2017
• The updating of the year used to calculate emissions factors from 2015 to 2017

alongside the regular annual updates of:

• Updating the emissions data from ONS environmental accounts to the latest published version
• Updating the forecast GDP deflator used to project estimates to the budget year to the latest version published by HMT.

These changes have led to a downward revision to estimated greenhouse gas emissions arising from the 2021-22 Budget as presented in the previous year's High-Level Carbon Assessment of around 4%.

5. The decrease since 2021-22 is almost entirely due to the update of the underlying Scottish and closed UK Input-Output models from 2015 to 2017, with the revisions due to updating the projected HMT deflators and GHG industry emissions ratios almost completely cancelling each other out.

6. Care should be taken when interpreting the revision to imported GHGs. Given the lack of a world economy model and emissions factors, the EIO model uses the UK economy as a proxy for the world economy. Changes in emissions intensities in the UK economy may not be representative of changes in the world economy, for example due to different technologies being used, or if more carbon intensive activities move overseas and are replaced by imports.