Scottish Budget 2021 to 2022

Annex H Summary of Carbon Assessment

The Scottish Government has committed, over the course of this current Parliament, to deliver year-on-year increases in the percentage of the capital budget allocated to low carbon investments. This commitment is met again in Budget 2021-22.

Taxonomy Assessment of the Capital Budget

The Scottish Government has used low, neutral and high carbon categories (known as a taxonomy approach), as shown in the table below, to report on this assessment to Parliament. The categorisation was developed and proposed by the Low Carbon Infrastructure Taskforce in 2015.^[1]

Category: Low Carbon

Description: Seen as necessary to the low carbon transition

Examples:

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

Category: Neutral

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

Examples:

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

Category: High Carbon

Description: Relatively carbon intensive

Examples:

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

Each year, the Scottish Government publishes the percentage of each category of investment as a share of the total budget. In line with previous years, Local Government spending lines are excluded from the measure as we do not hold specific information on low/neutral/high carbon spend made by local authorities. The total also considers net Financial Transactions funding only.

The following table provides the percentage uplift in low carbon capital investment compared to investment in Budget 2020-21. The detailed table in this annex sets out a line-by-line breakdown of how these percentages are calculated. To show like for like comparison between financial years, each budget line is taken from that year's Budget at introduction:

Key Changes

The welcome increase in the percentage of low carbon investment has arisen from the commitment of the Scottish Government to a £2 billion Low Carbon Fund across the five financial years of the next Parliamentary term. In the first year £165 million extra funding has been committed, on top of continuing the approaching £1.8 billion underlying investment.

The percentage share of high carbon investment has increased a little. This is a direct consequence of accepting the Infrastructure Commission for Scotland recommendation that much greater investment is required in ongoing maintenance.

In 2021-22, investment in maintaining our existing trunk road and bridge network has been boosted, helping to address a backlog. Additionally projects, such as improving the air traffic control system in Highlands and Islands Airports Limited (HIAL), also count as high carbon. HIAL helps preserve vital, life-line communications across our dispersed highlands and islands communities.

Next Steps

In passing the 2019 Climate Change (Emissions Reduction) Act in Scotland, the Parliament agreed that new ways to assess the contribution made by infrastructure investment to the emissions targets should be explored. In the draft Infrastructure Investment Plan, the Scottish Government set out a planned approach to developing a new methodology, acknowledging that this would take time.

The Scottish Government will take this forward in conjunction with the Joint Review of Budget. Developing this new approach will form part of the five year implementation plan for our decision-making framework set out in the forthcoming Infrastructure Investment Plan. This will also support the next Climate Change Plan.

Footnotes

1. The case for low carbon infrastructure in Scotland