Net Zero Assessment: Pilot report

1. Executive summary

1. Protecting the planet by tackling the twin climate and nature crises is one of the First Minister’s four top priorities for the Scottish Government.

2. A new Net Zero Assessment is a commitment of the Scottish Government in response to the 2022 Joint Budget Review (JBR) by the Scottish Government and the Scottish Parliament. The JBR aimed to improve the information available around the Scottish Budget and decision-making on climate change.

3. The Scottish Government is committed to maintaining Scotland’s place at the forefront of international best practice for budget scrutiny on climate change. We are continuing to build on existing climate change assessment activity within government and the Net Zero Assessment aims to embed quantitative carbon assessment in the early stages of our policy development and spending decision-making.

4. Between March and October 2024, the Scottish Government successfully piloted its new Net Zero Assessment methodology across a range of new policies.

5. The Net Zero Assessment pilot involved a three-stage process:

a. Stage 1: an initial screening discussion between the lead policy team and review panel.

b. Stage 2: a light-touch assessment of emissions impact which identifies policies requiring full in-depth analysis.

c. Stage 3: an in-depth full quantitative emissions assessment.

6. To ensure proportionality, policies which fell below a de minimis threshold were screened out at Stage 1 or Stage 2 and were not subject to full in-depth assessment.

7. The Net Zero Assessment methodology is compliant with HM Treasury Green Book appraisal principles, the well-established approach that underpins all economic analysis and appraisal within the Scottish Government.

8. The Scottish Government has had ongoing engagement on the pilot with the Climate Emergency Response Group (CERG) and has taken views from technical experts, most recently at a workshop hosted by CERG on 29 October 2024. The Scottish Government commissioned an independent, external, expert review of the pilot. The findings of the independent review are broadly consistent with this Report and its recommendations. The conclusion of the review was that the pilot has laid a strong foundation for integrating carbon assessment into policy-making, thereby enhancing the Scottish Government's efforts to achieve its net zero targets and addressing the climate emergency. The independent review made recommendations for refinements to achieve maximum efficiency and effectiveness.

9. Having completed the pilot, Net Zero Assessment will be rolled out in 2025 across all Scottish Government significant new expenditure decisions. As a first step in this rollout, guidance to officials was developed in October 2024 and the text is at Annex E.