Will Scotland’s pattern of public spending today deliver Scotland’s climate targets in 2030 and beyond? This question is not easy to answer, but we do have some pieces of the jigsaw.
Part 1 of this series set out the international context. This blogpost explores five tools available to help MSPs quantify the climate impact of Scottish public spending and play a “climate governance” role when scrutinising the budget.
1. High-level carbon assessment of the budget
In 2008, the Scottish Parliament unanimously agreed an amendment to the first Climate Change Bill requiring Scottish Ministers to assess the “impact on greenhouse gas emissions of the activities to be funded” by spending proposals.
Since the Bill became law, ten high-level carbon assessments of the budget have been published using an Environmentally-extended Input-Output (EIO) model to make the estimates. This model is normally used to understand the flow of money though the economy. In the environmentally-extended version, average “greenhouse gas effect” values for 98 industry sectors convert the financial inputs into expected greenhouse gas outputs.
The tool can be used to identify “hotspot” budget lines that are likely to create carbon emissions in the near-term, because of the goods or service they buy. What the tool does not do is predict the longer-term outcome of spending decisions. For example, the emissions associated with the construction of a new railway line are measured. But the effect of the eventual opening of the new line on people’s travel choices is not (and to do so on an economy-wide basis would involve a significant amount of guesswork).
2. Budget summary document
In 2011, recommendations from the Finance Committee and Rural Affairs, Climate Change and Environment (RACCE) Committee called for better “read across” between the Scottish budget and the statutory plan to meet Scotland’s greenhouse gas emission reduction targets – now referred to as the Climate Change Plan.
In response, the Scottish Government have published six “budget summary” documents since 2012. These documents identify parts of the budget which fund climate change mitigation measures and organise them into relevant sectors such as electricity, transport and waste. This approach is referred to as a form of “expenditure tagging” by the OECD.
This summary document can help “read across” by explaining how low-carbon actions, such as energy efficiency, are funded by the Scottish Budget. It can also be used to judge if funding for those actions is going up or down on an annual basis. On the downside, it does not identify spending that might be inconsistent with the emission reduction targets – i.e. spending on high-carbon activities.
Unusually, no budget summary document was published last year. This coincided with the first year of the new budget process and parliamentary committee recommendations on budgetary information (see below).
3. Climate Change Plan progress reports
While understanding funding going into a policy is relevant, the success of that policy is arguably more important. The latest version of the Climate Change Plan (CCP) includes measurable milestones to allow the success of its policies to be monitored. In October 2018, the first progress report was published.
While data was not available to track the progress of all policies, future reports should provide an annual point-in-time assessment of whether the CCP is on track to deliver its expected emission reductions or not.
So that future progress reports can inform budget scrutiny, the Environment, Climate Change and Land Reform Committee recommended that the reports should be published earlier. This has been accepted by the Scottish Government and the Committee agreed an amendment to the Climate Change (Emissions Reduction Targets) (Scotland) Bill to set a publication deadline of 31 May.
4. Capital spending classification
At the start of 2018, the Scottish Government wrote to the Finance and Constitution Committee outlining a new analysis of its planned infrastructure spending in 2018-19. This “initial analysis” categorised capital expenditure as either high, broadly neutral or low carbon using a simple methodology. The analysis was repeated by the Scottish Government for the 2019-20 budget (see chart below). While the Cabinet Secretary for Finance, Economy and Fair Work has expressed dissatisfaction with the simple methodology, he has repeatedly made a political commitment to increase the percentage of the capital budget allocated to low carbon projects in each year of this parliament.
If the Scottish Government continue to publish this analysis, it can be used to understand the general balance of annual infrastructure spend across the high, broadly neutral and low carbon categories – and to assess whether the Cabinet Secretary’s political commitment is being met.
On the downside, this analysis only looks at spending in one year when infrastructure projects in the pipeline often take years to build and are financed from multiple annual budgets. For this reason, SPICe applied the methodology to the Scottish Government’s pipeline of infrastructure projects to provide a longer-term view. However, this remains a simple and high-level analysis using three very broad categories and the methodology makes no attempt to quantify the expected impact of the infrastructure projects on future greenhouse gas emissions.
5. Transport Scotland’s Carbon Account
Since 2009, Transport Scotland have published a document which collates greenhouse gas emission impact estimates for its large-scale infrastructure projects. These estimates are generally taken from a project’s environmental statement. The latest table from November 2018 is reproduced below:
This table can be used to understand the scale of impact that the project can be expected to have on future greenhouse gas emissions. On the downside, these estimates are not directly comparable and only become available at a relatively late stage in a project’s development, possibly too late to cancel or significantly modify the plans.
Conclusion
Understanding whether Scotland’s pattern of public spending today will deliver Scotland’s climate targets in 2030 and beyond is not a simple task. No one source of information provides all the answers, but the jigsaw can be part-solved by using all the available tools to build a picture.
Carbon assessments over the last five years suggest that emissions from the goods and services purchased by the budget are falling in both absolute terms and emissions per pound spent (“carbon intensity”). The budget summary documents suggest that funding for climate change mitigation measures remained relatively stable until the 2018-19 budget when walking, cycling and electric vehicle funding increased. But to understand whether this increased funding for sustainable travel is delivering the Climate Change Plan’s targets, we will have to wait for further progress reports. On the infrastructure side, the proportion of the capital budget spent on low carbon projects increased this year, but understanding whether today’s housing, healthcare and transport infrastructure plans will fit with the net-zero economy envisaged for Scotland in 2045 remains a challenge.
Iain Thom
SPICe Research