Net Zero Assessment: Pilot report

8. Outcomes and recommendations

55. The pilot robustly and successfully tested the NZA three-stage methodology across a wide range of policies volunteered by portfolios or drawn from Programme for Government. The pilot clearly demonstrated how policies progress from initial consideration to Stage 1, Stage 2 and Stage 3 assessment. The pilot demonstrated that, where policies already have done emissions assessments, these can be readily used for the NZA without creating additional work. The NZA can often be delivered by drawing out existing information and presenting emissions impacts clearly. The pilot demonstrated that keeping the assessment proportionate and focused on emissions means it can be more flexibly used across a wider number of policies. Overall, the pilot proved the methodology is workable and credible and can be recommended for wider roll out across the SG.

56. In rolling out the NZA, key challenges identified by the pilot should be addressed.

a. Experience from implementation of other SG impact assessments highlights that intensive resources are required for the roll out across government. This would include advertising the NZA in the SG intranet and promoting it across management and staff groups, the development of training materials and training courses, the hosting of workshops and policy surgeries, and 1:1 work supporting individual policy areas.

b. The NZA needs to align with other SG impact assessments, on governance, processes and analysis.

c. The need to engage on the NZA with lead policy teams early in the policy development process is a challenge, even for established impact assessments.

57. In light of experience with the pilot, we recommend that the de minimis threshold will be revised further downwards for the roll out of the NZA across the SG. This is because a high proportion of policies considered by the pilot did not reach the lower 0.1 MtCo2e de minimis threshold and were, therefore, evaluated as having no significant emissions impact. By decreasing the threshold, the number of policies that are included in the NZA will increase, but the volume of emissions impact captured may not significantly increase. With the lowering of the de minimis threshold the policy and analytical resource required will increase. However, these assessments would be required as part of later policy processes. There is therefore a trade-off between improving the credibility of the NZA process by improving the number of policies captured and increasing the requirement for early stage policy assessment.

58. In addition to adjusting the de minimis, consideration will also be given to the potential cumulative impact of multiple low-impact interventions.

59. During the pilot the analytical guidance focused on a proportionate approach of only considering generated emissions within Scotland and a minimum time horizon of 10 years. The 10-year minimum analysis period was chosen initially for the pilot given concerns around data availability and that many policies act in perpetuity and so do not have a whole life period. Where possible, it is recommended that whole life analysis should be undertaken.

60. Following the review of policies within the pilot, many had minimal generated emissions but impacted Scotland’s consumption of embedded emissions. We recommend that following the pilot the analytical guidance is expanded to require analysis of embedded emissions.

61. Informal consultation with CERG, representing stakeholders and experts from environmental NGOs, public and private sectors, highlighted the need to focus on policies with the highest emissions impact (typically the highest emitting sectors such as energy, heat, transport, industry, buildings and land use) where the NZA can be most meaningful and add most value.

62. Informal consultation with CERG also highlighted the expansion of the NZA to cover capital investment, procurement and business cases, the importance of whole life carbon and consumption-based approaches, the need for consistent analytical standards aligned with Scotland’s 2045 net zero target, the scope to apply NZA to existing commitments, and to consider how climate adaptation and just transition can be incorporated in assessments of the Scottish Budget. While the approach to capital investment, procurement and business cases will be consistent with the piloted NZA approach, these areas deal with more defined and specific interventions and will require additional analytical guidance to ensure robust analysis.

63. The methodology can be iteratively improved as more data becomes available. Moving forward the methodology could be further developed to cover capital investment, business cases, and explore the feasibility of its application to procurement and budget spend decisions if greater detail of budget spend can be collected.

64. During the early stages of the roll out of the approach across the SG the aim will be to test how well the approach is being used, monitor the emissions data being provided to Ministers and assess how this is being used to identify policy options to reduce emissions.

65. The pilot identified the need to ensure that existing governance structures, that have a key role in managing the impact of policies on climate, actively engage with the outputs generated by the NZA.