Scottish City Region and Growth Deals: carbon management guidance for projects and programmes

7. Monitoring and Evaluation

Central to Deals funding is the requirement for evidence to support the achievement of objectives set out within business cases. As part of this benefits realisation process, monitoring and evaluation of project performance is required to ensure successful outcomes. Information from this process is collated by the Programme Management Office (PMO) at a Deal level and reported to government Deal Leads.

For legislative context, the Climate Change (Scotland) Act 2009 was amended by the Climate Change (Emissions Reduction Targets) (Scotland) Act 2019, increasing the ambition of Scotland's emissions reduction targets to net zero by 2045 and revising interim and annual emissions reduction targets in accordance with the Paris Agreement.

Although national net zero carbon targets (i.e. 100% carbon reduction or removal) have only been in place since 2019, an 80% carbon reduction target has been UK and Scottish Government policy since 2009. The carbon emissions impact of a Deal is therefore considered to be a key output and needs to be included in each Deal's Benefit Realisation Plan (BRP). Example carbon benefits realisation outputs are included in Appendix D.

The carbon performance of projects will be based upon the achievement of carbon commitments set out in the Full Business Case (FBC). For any project, even projects in the delivery phase with no carbon commitments in their FBC, Scotland's whole life carbon emissions trajectory towards net zero by 2045 will be the carbon performance benchmark, with examples of better performance being the achievement of net zero more quickly (a 'control' benefit) or the demonstration of wider carbon benefits of the project (an 'influence' benefit).

7.1 Benefits Realisation Plans

The following carbon emissions impact performance indicators are expected to be included in BRPs. It is noted that these elements already form part of Scottish City Region & Growth Deals Carbon Guidance business case requirements.

Carbon Performance Indicators: Full Business Case

• 1. Categorise projects according to the Scottish City Region & Growth Deals Carbon Guidance, e.g. 3B, 2A, etc. Any potential worsening of a project's carbon categorisation (e.g. from a 3B to a 4B) should be reported to the Deal PMO at the earliest opportunity.
• 2. Report the estimated whole life carbon emissions impact in tonnes CO₂e in accordance with this guidance, referring to the corresponding appraisal timeline (this should match the economic appraisal period).

Carbon Performance Indicators: Operational / Post-Construction

• 1. Report the actual embodied carbon value compared to the baseline and comment on significant changes (i.e. over +/- 10%)
• 2. For operational building projects, report at least 12 months of operational carbon data (from fuel / energy usage) compared to the predicted annual average operational carbon performance at Full Business Case stage and comment on significant changes (i.e. over +/- 10%)

Any carbon emissions from operational projects should reduce towards zero by 2045 in accordance with Scotland's net zero trajectory and Climate Change Plan.

Actual post-construction whole life carbon values are unlikely to be available until the end of the economic appraisal period and are therefore not usually expected in Deals Benefits Realisation, although they are likely to require reporting through other organisational mechanisms, e.g. the Greenhouse Gas Protocol.

7.2 Example Project Carbon Performance

A simplified example of the inclusion and application of carbon performance indicators on a project is as follows.

Predicted

For an example proposed building project, the embodied carbon associated with construction is estimated as 2,000 tCO₂e. The operational carbon over a 10 year economic appraisal period is estimated to be 1,000 tCO₂e. Therefore the whole life carbon emissions impact of the building over the 10 year economic appraisal period is 3,000 tCO₂e.

Operational carbon emissions are expected to decline towards zero (e.g. through the decarbonisation of grid electricity), however an annual average of operational carbon emissions over the 10 year economic appraisal period of 100 tCO₂e/year is included in the business case.

These predictions are contained within the Full Business Case and included in the economic assessment using the BEIS carbon values, resulting in a carbon emissions impact cost of £800,000.

Actual

Once constructed, the 'as-built' embodied carbon value is reported as 2,200 tCO₂e, the 10% increase being due to additional materials and activities associated with encountering unforeseen ground conditions.

After a 12 month period of normal building operations, the operational carbon emissions are obtained from the energy provider and compared with the predicted annual average operational carbon emissions (100 tCO₂e/year). The actual carbon emissions over the first year of normal building operations are 90 tCO₂e, i.e. 10% less than predicted at the Full Business Case stage. This decrease is considered to be due to improved building energy performance.

Reported

The carbon performance indicators to be reported by the Project Owner to the PMO are as follows:

• Predicted embodied carbon (2,000 tCO₂e)
• Predicted operational carbon over appraisal period (1,000 tCO₂e)
• Predicted whole life carbon over appraisal period (3,000 tCO₂e)
• Predicted annual average operational carbon over appraisal period (100 tCO₂e/year)
• Actual embodied carbon (2,200 tCO₂e)
• Actual operational carbon over 12 months of normal operation (90 tCO₂e)

7.3 Sharing Lessons Learnt

The comparison between Full Business Case predictions and Operational / Post-Construction carbon emissions impact performance will provide valuable information that can be used to improve future projects across the construction industry.

It is recognised that whole life carbon estimation is not yet widely understood across the construction sector, however the consistent application of this guidance and the methodologies contained herein will help to accelerate its adoption through the sharing of lessons learnt across and beyond the Deals. This will help to drive consistent and transparent decision-making in the context of a Climate Emergency.