10:01
Agenda item 2 is the second of two evidence sessions on pre-budget scrutiny for 2027-28. I welcome Josiah Lockhart, the chief executive officer of Changeworks and a member of the Climate Emergency Response Group, and Lewis Barlow, the decarbonisation head of profession at WSP. Good morning, gentlemen, and thank you for coming.
We will move straight to questions, and then we will see how things pan out. How well have the joint budget review strands been implemented so far?
To recap the three strands as I understand them, they are the climate narrative, the taxonomy and the net zero assessment. As I am sure we will come on to, the net zero assessment is my particular area of expertise, and I would say that the implementation is reasonable. The net zero assessment has been developed, as I am sure we will talk about, and it is potentially a powerful tool for gauging climate impact. The implementation has gone reasonably well, but there is still lots to do.
I echo Lewis Barlow’s comment that it has been reasonable. The first two of the pillars are now in place, and they have particular roles to do with summarising the carbon impact of the budget and individual budget lines. Although we have done a pilot on the net zero assessment—Lewis Barlow has done an assessment of that—it is still to be rolled out, and we are not exactly sure where we are at in that process. That assessment is probably one of the most important tools of the three pillars, as it allows pre-policy scrutiny as we go through, not just once a policy is finished.
We will come on to questions about net zero assessment later. Are the strands of the JBR worthy of the resources that are required to produce them?
I think that they are. Any policy area should use the green book as well as the Scottish public sector finance manual, and within both of those documents are the tools that will give us the required information to make the assessments. As long as we are using the rules that we have already set for ourselves for budget and policy setting, the assessments are not complicated or hard to do. The private sector often has to do those assessments, so it is not asking the Government to do much more than the private sector has to. My personal view is that the resources are adequate.
On whether the strands are worth while, given the resources that are required to deliver them, I would say yes, definitely. As Josiah Lockhart said, they have been designed to be proportionate and, as has been demonstrated, they can be delivered proportionately. The whole idea is to do things as efficiently as possible—so yes, absolutely.
Does the climate narrative provide an accessible introduction to the budget for stakeholders and, more crucially, the wider public?
It should, although I am not sure whether it actually does. As we might come on to, the narrative reflects the taxonomy, which, as was discussed last week, is perhaps too blunt an instrument. If the narrative describes the result of the taxonomy, perhaps the narrative is not helpful.
I echo that, and I have an additional critique. It is helpful to have a summary of where we are and of the assessments. One critique that could be made of the narrative currently is that it is overly positive. The way that it is written tends to be biased towards talking about all the positive things that have been assessed and where we are making progress, rather than weighing up the concrete reality of choices that have to be made between things, whether they have carbon cost or carbon benefit. As we are all aware, to an extent, it costs carbon to save carbon. Our view is that the narrative should reflect the full reality.
I have a quick supplementary question on the narrative. I assume that people who are immersed in the field will get it quickly, but we need to take the public with us on this journey, so we need to make the language as simple as possible for the wider public, because we know that we have no choice and we need to do more. We heard in our meeting last week that some of the language that is used might not be accessible and might help to switch people off at an early stage. Is that a fair assessment? Is it essential to simplify some of the language in order to take more of the public with us on the journey?
I agree that, of the three strands, that one is the most useful for speaking directly to the public, because it is a summary. Members of the public will not read through all the net zero assessments and the taxonomy or understand what the taxonomy means. The summary narrative at the beginning is our place to have the conversation with the public, which is why I argue that it should have the full reality. It should be extremely simple to understand, because not everybody will understand how we do deep carbon assessment and the work that we spend our days digging into. I would encourage Government to continually try to make the language more accessible. There should be a continual improvement process to make it more accessible.
I agree. The narrative is important, and it is important that it is easily understandable for those who do not know anything about carbon or net zero. Perhaps that has been a bit of a problem in that there is an attempt to reflect the taxonomy but it has been oversimplified. The taxonomy describes things as positive when they might actually still be emitting lots of carbon. A layperson who hears that the story is positive would assume that those things are helping us to address the climate emergency, but that is not necessarily so—it is just the language of the taxonomy.
The Scottish Fiscal Commission has recommended that the climate change assessment of the budget should allow identification of spending on policies and programmes in the climate change plan and the national adaptation plan. Why is that important, and how feasible is it?
The feasibility of gauging the carbon impact of policies is really what we were investigating in the net zero assessment—that was the genesis of the net zero assessment. It is not as straightforward as counting the carbon in the number of bricks in one place or the amount of diesel used in another, but it is an approach that has been around for some time. It is reasonably straightforward and, as has been mentioned, it has been in the green book for years.
The green book is designed for business cases, but we can also use it to assess policies. We demonstrated that with the Scottish city and regional growth deals, where we could assess not just the direct results of construction carbon but the indirect effects. That is quite common in the industry.
The primary thing that I would add in relation to why that is important is about the risk of stranded assets or having to retrofit policy or infrastructure in the future. The climate is changing and adaptation is changing. We have plans in place to help us to know when and where that is happening and, we hope, predict the future needs, although we are not always good at it. The risk is that, if we take policy decisions today without making those assessments, we might find out in five, 10 or 12 years that we have to redo things as a result, whether that is building petrol car infrastructure or retrofitting a hospital. The risk of not doing that assessment is that we have unexpected future spend.
I will move on to climate taxonomy.
Sorry, but I am going to bring in Claire Baker for a quick supplementary.
The convener asked about the resources that are required to produce the reports. Last week, there was quite a lot of discussion about the granular nature of the reports. The question is whether we have the balance right between reporting at an affordable and manageable level and getting enough information that is as meaningful as it can be.
It is fair to be concerned about whether it will take a lot of effort and resources to get the necessary detail, but that is not the case at all. We can look at things at quite a high level. The narrative is just adjectives and words, really. The taxonomy attempts to categorise things, so it is still at a very high level and not difficult. The net zero assessment—the third strand—is the bit that you might think would be difficult but, again, it is not. At its heart, the net zero assessment asks whether a policy or Government spend will make things better or worse for the global atmosphere, and that does not need to be granular at all.
Another point about the worry about granularity is that, whenever you can estimate cost, you can estimate carbon. Cost is key to all of these decisions. Cost will always be considered, and carbon is just one spreadsheet column away from cost, so it is not difficult, and it is something that is very common in the industry.
I echo that and return to my point that a lot of the work to gather the data that is needed to make the assessments is already done as part of processes that are in place in the green book and the Scottish public finance manual. That information is gathered, and it is only a small step from that to do the detailed net zero assessment. My view is that it does not need to take extra layers of time and effort to get the data that we need to make the assessments.
Our predecessor committee noted that the current approach to the climate taxonomy for the budget is quite broad. For example, it labels an entire budget line, such as that for affordable housing, as being positive for the climate. Is there any way that the system can be made more granular?
It is important to understand the roles and separation of the three pillars. The taxonomy performs a particular exercise of looking at a budget line, and, in most cases, a budget line is weighing up 10, 20 or 30 policy areas. In addition, there is a complexity—I am trying to avoid going into the detail of this—as to where specific carbon is counted within the taxonomy. In the example of housing, concrete might have been produced in a different country and is therefore counted in that country’s carbon and not necessarily in Scotland’s. That might produce a result that tells us only so much information, but it points back to the importance of the net zero assessment, which can give us the detail so that we can look at the whole-life carbon assessment and at all the pieces of the policy as it is developed upstream. Without the three pillars together, it is not a stable stool.
That is a good question, and it is good to address the concern about detail or granularity. As Josiah Lockhart says, the principle of the net zero assessment is that it is done upstream and ahead of time. You make decisions on the basis of the net zero assessment rather than after the fact, once you have made all your decisions and you are just doing some accountancy, and it does not need to be detailed at all. All that you are looking for is comparative judgments or relative assessments, and they can be quite high level. To give you some reassurance, the net zero assessment guidance says that stage 1 of the net zero assessment, in which an awful lot of policies will be screened out, will probably take an hour. Stage 2, if a policy is screened in, will take perhaps a week, and very few policies will be screened in.
10:15
I have a quick follow-up question on an issue that you have already touched on. Is it appropriate to add up all the budget lines that are labelled as positive and suggest that all of that spending is positive for climate change goals?
When you say “positive”, do you mean positive as listed in the taxonomy?
Yes.
That is worth unpicking a little bit, because “positive” in the taxonomy does not necessarily mean positive for reducing carbon emissions. That needs to be addressed, which is why the net zero assessment spun out of the taxonomy. I think that that was discussed last week.
That is the first problem: you are not really looking at the core matter in a transparent way. As I understand it, “positive” in the taxonomy means that a policy or programme of work is in line with the Scottish Government’s goals and objectives, which is fair enough, but it does not necessarily mean that it reduces carbon emissions. It could, for instance, be very good for adaptation, and that might trump carbon emissions. That is a problem, and the figures should not be added together for that reason. However, as I think we will come to, it is important to add up carbon impacts, because they are cumulative.
Mr Lockhart, do you wish to comment?
I do not have anything to add to that.
Before I bring in Sanne Dijkstra-Downie, I have a quick question on the point that you touched on, Mr Lockhart. Is there a possibility of double accounting? If we bring in a product—whether it is concrete, bricks or whatever—to be used here, that is counted in our taxonomy. If the country that we bought it from has a similar process, would it be counted in its system, too?
I am not the best person to go into the detail of how different countries count carbon, but the basic principle that we use across the UK is that carbon emissions are counted in the nation where they occur. To take a policy example, we might decide to build wind turbines here, designate a zone and construct them there. That policy decision could have carbon impacts elsewhere by encouraging another country to produce materials that we then buy. However, those emissions might not count directly towards the carbon emissions that are included in our national targets.
There are frameworks for this. I do not know whether Lewis Barlow can provide more detail on the parameters that govern how we account for such emissions. Double counting is always a risk in carbon accounting, but that is why having clear parameters is key.
I am glad that we are talking about concrete. That sounds like a strange thing to say, but concrete is associated with construction and there is a bit of a distinction to be made here when we are talking about the net zero assessment and the taxonomy. Traditionally, we are talking about policies, and that is what the net zero assessment was designed to intercept. The net zero assessment said that, when it comes to projects and programmes of construction work, those would be dealt with through planning. National planning framework 4 has very good guidance underneath it. As I think we will come to, the imperative is, at some point, to link up the net zero assessment and the planning process so that we are looking at things consistently.
As a practitioner in the industry who knows a fair bit about concrete and double counting, I do not see it as a concern. We have a universal industry standard for assessing and managing carbon in the built environment: PAS—publicly available specification—2080, which covers carbon management in buildings and infrastructure. It is not mandated, but it is clearly referenced in the national planning framework 4 guidance, and it is embedded in the city and regional growth deals. Many large governmental organisations mandate it anyway, and it is commonly used by industry. Therefore, the potential difficulties around double counting have already been addressed through a standard that has been in place since 2016.
That was helpful. David Barratt has a supplementary.
Is there not a risk of giving the impression that we are significantly reducing our carbon footprint when we are just exporting the manufacture of the raw materials to countries such as China and India, whose carbon footprint is increasing? Ours looks as if it is reducing, but it might be a bit of a false picture and might give the public the impression that we are doing fantastically when maybe we are not.
Something to look at is Scotland’s greenhouse gas inventory and whether it includes emissions that come from elsewhere. With regard to construction and the planning system, policy 2(a) of NPF4 clearly states that
“lifecycle greenhouse gas emissions”
must be assessed and minimised
“as far as possible.”
Last year, I worked with the Scottish Government and senior planners on guidance to clearly explain what the phrase “lifecycle greenhouse gas emissions” means—and it means the overall carbon emissions impact wherever and whenever it happens in the world. The question that must be considered is this: when you pay for something, what is the knock-on carbon effect? That is made very clear in NPF4.
The only thing that I would add brings me back to the three pillars. It is important that they are accessible to the public, because that demonstrates to the public that we have been able to go through a process of assessment. When we choose not to have the full process and not to make the three pillars fully public, that raises the very valid question that you have asked, which others could ask, too. It goes back to the point that the governance of the transparency of the three pillars is key to how we do our assessments.
I have a question for Lewis Barlow. I want to home in on your review of the net zero assessment. Can you talk the committee through some of your key findings and reflect, in particular, on how well you thought the pilot performed, compared to what you would have expected?
I made a number of recommendations, as you know, and a key one was that the threshold was too high. There was a threshold of 400,000 tonnes or 100,000 tonnes—I forget which it was—which I felt was too high, because, of the approximately 200 policies that were looked at, only two or three actually made it into that category for further assessment. Therefore, I recommended that the threshold be reduced.
As you have said, I carried out an independent review. I presented my findings to the Scottish Government and we discussed it a fair bit. My overall impression of the pilot was that it demonstrated that the approach worked, that it was not that difficult and that it could be done. A fair bit of fine-tuning had to be done, but, as a concept that came out of the JBR, it was a good one and my strong recommendation was that it be applied more widely. My chief take, as a practitioner working in this area of the industry, was that something like the net zero assessment would really help everyone.
Have any recommendations that you made in your report not made it into the subsequent roll-out of the NZA?
That is difficult to answer. I have not actually seen the net zero assessment since I published the review, so I cannot answer that question clearly.
Let me ask it in a slightly different way, then. Are there any recommendations, apart from the one that you have just mentioned, that you feel should really be incorporated in the roll-out?
Yes, and it is connected to something that I have just mentioned. There is no reason to limit the net zero assessment to policies. The review showed that most policies are not really going to make a significant difference to addressing the climate emergency anyway—indeed, that was probably a key finding.
A small number of policies—heat in buildings, for instance—will make things better, but some policies might actually take us the other way, although they will be the real minority. The danger is that we just say, “Great. We’ve got a net zero assessment, so everything’s fine,” while, over in the planning system, we are proposing to build out loads of infrastructure but are not applying the assessment in the same way. Therefore, a key recommendation was just to go for it with a net zero assessment and to make sure that it lined up with the planning system. I should say that the ingredients are there—they just need to get wired together at the top.
Great. Could you reflect on that, too, Mr Lockhart?
The infrastructure pipeline, where it has been published, is a really good example of an area where the assessment could be used. Under the Climate Change (Scotland) Act 2009, we are required to do carbon assessments of infrastructure over a certain value, which everything in that pipeline is, and I think that the recommendations made in that respect are key.
I spend most of my daytime in the heat in buildings area. It was one of the few things to get through from the pilot—which was great to see—and certain policy decisions were made to evolve those schemes. The challenge that we face is that, although the Government has committed to rolling out the net zero assessment, we are not sure where we are in that process. You can ask that question as part of your scrutiny.
Thank you.
I have a question of clarification for Mr Barlow. Did the Scottish Government commission the review, and does it have to provide an official response to it? I do understand that it is an independent review.
The review of the net zero assessment?
Yes.
Yes, it was SG that commissioned me.
And has it given you a formal response to your recommendations?
No.
Do you expect to get a formal response, or is that just going to sit in the ether?
Personally, I would be interested to see what was happening. I have continued to work with the Scottish Government on a couple of different areas, including on the planning and the city and regional growth deal side of things. I have not heard anything to the contrary, or that the recommendations are not going to get taken forward, but I would be interested in seeing a progress report, as I am sure that the committee would.
The cabinet secretary will be in committee next week, so I might pick that issue up with her.
I asked about this last week, but I would like to understand how the pilot works. Do we understand what the impact has been? It is quite complicated—or maybe I am just making it complicated—so I will try to explain what I mean.
The policy starts on the taxonomy side and then moves backward into net zero, but there seems to be no link to what the policy is meant to achieve. I will try to explain this better—I always end up with so many notes. The policy is focused on outcomes rather than inputs; in other words, it goes back to the net zero assessments to assess its effectiveness, but it already started in the policy area. Am I making any sense? Once you have made the assessment and got the outcome, it is not clear if that was the outcome that was meant to be achieved, because the assessment should have been done earlier.
I watched last week’s committee meeting and I kind of got the point then, but let us try to really unpack it.
The idea of how the assessment should be applied is—or should be—much simpler than you have described. I actually see the taxonomy as separate from the net zero assessment. I did not even think about the taxonomy when we were writing the guidance on the assessment; we just acknowledged that it was there. For reasons that we might have already established, it is perhaps imperfect at reflecting the actual reality of carbon emissions. Therefore, we put it to one side, although it still has to be looked at, I am sure.
The pilot for the net zero assessment was undertaken on around 200 policies. Normally, you would not have to do it on that many policies; I think that the Government just grabbed the policies that were around at that moment to test it out. Ordinarily, the group would get involved when a policy turned up—there would be some mechanism that would say, “Get the net zero assessment done.”
As I have said, this is a two-stage process. Most policies will not have a significant effect on Scotland’s climate change targets. If a policy is screened out, that is reflected back to the policy-making team, which will be able to demonstrate that it has done the net zero assessment and that the policy was screened out. If a policy is screened in, it goes to quantification, and then it is assessed in more detail. A clearer picture is then given on whether the policy will make things better or worse for climate change, and a ministerial note is provided at the end of that.
That process is all recorded, and that is separate from the taxonomy. I have described how I see it working, but does that accord with your understanding?
10:30
I have managed to find the correct notes. The previous committee asked the Government what would be shared from the net zero assessments. They will not be shared directly in the budget documents. It is only when they come to a positive or negative evaluation on spend that the information is shared, so my question is: whether it is positive or negative, was that the intention? If you are not going to share the earlier part of the story, you get only the positive or negative evaluation.
I do not think it was a recommendation in the review, but I would certainly recommend that the net zero assessments should be happening all the time, in line with policies appearing. At any time, a member of the public should be able to ask what is happening, what assessments have been done and what has been screened out and in. There should be a record, at least every year, of the assessments that have been done.
That would be a retrospective record of things that have happened, but what you want is the assessment to influence the policy. For policies that are screened out, the assessments, almost by default, are not going to influence the policy. For the ones that are screened in, there should be a mechanism for the policymakers to consider the net zero assessment. Should we change things? Should we go ahead with the policy? Should we adjust the policy? I am not aware of that mechanism.
You have quite neatly explained where I was trying to get to. It is about whether there is enough information to evaluate the intention. Once the evaluation is positive or negative, is that what the aim was? Are we going in the right direction to get there? There seems to be a vacuum in relation to what we, as a committee, or anybody else will know.
That is right. The net zero assessment should help to make judgment calls on policies that will affect climate for better or worse. Some will affect climate for worse, but that has to be balanced with other policy objectives. The net zero assessment should allow that in a transparent way that was not there before.
Does Mr Lockhart have anything to add to that?
I would add only that an interesting question to ask as net zero assessments are rolled out is to see the ones when the assessment changed a policy. That will start to separate out when the net zero assessment is just a tool that is used as part of a process from a situation in which the outcome has actually changed as a result of the assessment. As a part of oversight, that is a good thing to keep an eye on.
Mr Barlow, you referred to some 200 policies that went through the pilot. It seemed that the ones that went through were going to result in fairly positive outcomes. It was a limited number that went through—enough to make a decision—but they did not include policies that were not specifically aimed at reducing emissions. As we come out of the pilot and roll it out, do you expect it to be more expansive in the policies that are included?
Again, from recollection, I think that it did include policies that would reduce emissions.
Sorry—I meant that it did not include policies that are likely to increase emissions.
Oh, to increase emissions.
It was very focused on policies that were going to reduce emissions, so most of the outcomes for the ones that were selected for the pilot were positive. Was that too narrow a selection?
I cannot say with 100 per cent certainty, but I do not think that the selection of the policies for the pilot deliberately excluded policies that were going to increase carbon emissions. Again, I think that that points to the fact that things that are likely to increase carbon emissions are not necessarily policies but programmes of work. If a policy is going to directly lead to a massive construction programme, yes, that should have been included, but that did not appear in the pilot.
That shows the importance of not applying the net zero assessment on the policies in isolation. It needs to broaden out to the planning system and business cases as well, so that the assessments cover everything that is going on.
The pilot did not include capital. Is that right?
That is right.
In our discussion last week, there was a desire for capital to be included in order to get a fuller picture.
That is mentioned in the guidance for the net zero assessment. Towards the end of the guidance, it says something along the lines of “At the moment, the net zero assessment is designed for policies.” That implies that it could and perhaps should be rolled out more widely.
I advise that we watch out not to duplicate efforts. For example, a team that is trying to roll out the net zero assessment more widely might not be aware of the good work that a planning team is doing to minimise carbon through the planning system. From slightly to one side, I can see how the net zero assessment has evolved and is going in the right direction, and I can see how the planning system has evolved and is going in the right direction, but I do not get the feeling that there is a clear connection between the two. It would not take a lot of effort to weave the two together in order to get the answer that you are looking for: the net zero assessment being applied to everything.
Mr Lockhart, do you want to add to or expand on any of those points?
No.
Convener, do you want me to ask my next question?
Martyn Day wants to ask a quick supplementary question.
Since the pilot, the Government has simplified the process and lowered the thresholds. What are the witnesses’ views on that?
The threshold has been lowered to 10,000 tonnes. I appreciate that that is meaningless to the vast majority of people, which is why, in the guidance, we gave some proxies for what that would mean, so that people did not need to be experts in the subject to gauge what it would mean. It is not about a house or a few houses; it is about something that would result in a fairly substantial change in carbon emissions around Scotland.
I think that the 10,000-tonne threshold is reasonable—it is much better than the previous position—and I am not sure whether reducing it further would be worth while, because, as I said, I do not think that the problem relates to the policies. The 10,000-tonne threshold will capture problem policies. Similarly, by no coincidence, the planning system is looking at a threshold that is a bit lower for normal, regular planning developments. I am quite positive about the reductions.
We are getting to the point of creating parameters for deciding what is and is not assessed. As has been rightly said, the recommendation was to drop the threshold from 1 per cent of our carbon emissions to the new recommendation. That must be done alongside the changes relating to adding capital spend, because the assessment needs to capture things that are likely to have a major carbon impact—positive or negative.
During the roll-out, we must keep a constant eye on ensuring that we build the correct parameters in order that we capture the things that will make a difference and do not waste time on policy areas that will have no positive or negative impact.
What evidence would be needed to convince you that the assessments are changing decisions?
We would need some form of publicly available annual report, for example, on the net zero assessments, which would allow people to see what assessments had been made on what policies, as well as which policies were screened out and why.
In addition to the assessment, we developed two forms that needed to be filled out—we deliberately made them as simple as possible—so that, at any point, someone could look at the forms in order to understand why a policy had been screened out. For a policy that had been screened in, there would, ideally, be some form of narrative about the difference that it had made.
It is probably worth mentioning that, when the idea was originally floated, years ago, the net zero assessment was called a net zero test. That was the original concept. Is a policy, or whatever it is that we want to spend money on, going to make things better or worse? The word “test” implies that there will be a pass or a fail. The wording was softened to “assessment”. We want to avoid the assessment just being a retrospective one; we want it to be used as a management tool, with decisions being made on the back of it. That would give me confidence that the assessment was working.
One of the recommendations in the CERG report on the net zero assessment relates to the need for clear governance. Who owns the framework and the policies? Does the responsibility for dealing with those sit—as currently appears to be the case—with individual policy teams as and when something comes up, or is there an oversight role for the Cabinet, the director general net zero or others to play, so that there is a single body to ensure consistency? That is another aspect of scrutiny.
I have one final question, which follows on from that. Should there be some form of record when Government decides to go down a policy route—perhaps because of other political objectives—that would result in increased emissions?
There is a nice easy answer to that—yes.
Mr Barlow?
I agree.
Thank you.
Sanne Dijkstra-Downie has a supplementary question.
I think that you have partly answered this, Mr Barlow, but, for clarity, do you think that there is a risk that departments may come to see the net zero assessment as a compliance exercise—a tick-box exercise—as opposed to a decision-making tool? I think that Mr Lockhart alluded to that. If there is such a risk, how can that be avoided?
You are asking whether there is a risk that the net zero assessment becomes a tick-box exercise. I do not think that there is, if it is applied properly.
If it is applied properly and the test is working as it should, it will not matter for the policies that are screened out, because it will be possible to move on to other issues beyond climate. With the ones that are screened in, that will trigger action. It will trigger a note to the minister that they will have to consider. They will not be able to get away from the fact that they will have to do something about it. If the test is applied properly, I do not have a concern about it being a tick-box exercise.
I go back to my point about the simplicity of the assessment process and the need to transpose that simplicity to the planning system. That is necessary because we could ask the same question about planning: is carbon assessment a tick-box exercise in the planning process? In many instances, it is.
I will take a moment to tell you about something that the Sustainable Scotland Network is doing. The Sustainable Scotland Network is a conduit that allows local authorities to send carbon, climate and other sustainability information back to the Scottish Government. SSN recognised that the way in which carbon and climate are considered in the planning process is very inconsistent. While some local authorities ask quite detailed questions, others do not ask questions at all. That is not in line with NPF4, so there is a problem there.
SSN is currently undertaking a survey of local authorities to find out what questions they ask, what is appropriate and what would be going too far, in an effort to set the bar clearly for developers. That is in connection with NPF4, which is absolutely connected to the net zero assessment. However, no one in the Scottish Government is making those connections yet. I strongly recommend that those connections should be made.
Your initial question was about whether the net zero assessment is a tick-box exercise. My view is that, if we get the governance right and the transparency element right, that will prevent it from being a tick-box exercise. That is where the role of scrutiny comes in—there needs to be scrutiny to ensure that those bits are done.
Claire Baker has some more questions.
The independent review also suggested that a cumulative approach could be taken, which would involve lowering the threshold that we have talked about in order to bring in more projects. A cumulative approach would involve gathering together smaller projects. Do you think that that is a recommendation that we should make to the Government?
Absolutely, because carbon is probably the only environmental impact that is genuinely cumulative. It does not matter where in Scotland or around the world it is emitted—it all adds up to warm the planet, so we must deal with it cumulatively.
The likelihood of a bunch of policies coming along at the same time that would make a significant difference when their impact is added up is pretty slim. However, I believe that the Scottish Government is keeping a record of all those things anyway.
If stage 2 of the net zero assessment says that the proposal will be detrimental, a note will go to the ministers, who might agree that, on balance, they need to implement the proposal anyway, and they will therefore record its carbon emissions and add them to the spreadsheet. If another policy comes along that might also add carbon to the picture, it will be added to that previous one—it should not just be considered in isolation.
10:45
I am aware of cumulative impact, and we talked earlier about carbon emissions that are generated overseas because of processes that we are using. Mr Lockhart, would the accumulation process that you mention involve overseas carbon? When I read about it, I thought that the focus was more on projects that were designed and delivered in Scotland. Do you think that it is helpful to include overseas carbon?
That is always a tricky issue, because we need to prevent double counting, but that approach could be taken if that is what is chosen.
The more complicated question is how we aggregate carbon across different policy areas and different projects, going back through time. A lot of policy decisions that have been made over the past couple of years will not have been subject to net zero assessments. That means that, if we are looking only at the cumulative impact of the set of policy areas in this year’s budget, we will miss the cumulative impact of policies from last year’s budget. I do not think that there is an answer to the question of how we see cumulative impacts across a period of years up to the present.
When you talk about previous years, I take it that you mean the previous two or three years’ budgets, which contain elements of ongoing funding for things that are still coming to fruition, rather than a retrospective look at things such as the new Forth bridge.
I want to give the committee some reassurance that it is normal in the industry to take a holistic approach to the overall carbon impact of whatever is being considered. It took a while for the industry to accept the approach, but it has been accepted for at least 10 years that we need to consider the whole picture—we call it whole-life carbon, which includes carbon from quarrying materials overseas, transporting materials, manufacturing materials, taking them to the construction site and all the construction processes.
That is central to PAS 2080, which I mentioned earlier and which is the industry standard for carbon management in buildings and infrastructure. It also matches with what NPF4 says about life-cycle greenhouse gas emissions, what the green book says and what is already in train with the city and regional growth deals.
It may seem like I am labouring that point, but it is unacceptable to put artificial boundaries around carbon impact in a way that ignores other things and just say, “This is all that’s happening.” I am aware that, as I mentioned previously, Scotland’s greenhouse gas inventory principally considers what is happening in our country, although it is aware of what is happening elsewhere. We need to consider the overall picture. That is the norm in the industry.
I will ask a basic question. Who completes the assessment? Is it local authorities, businesses or the Government? Does the Government decide what goes in or what is to be assessed? You have mentioned a few times what businesses do, but I would like to understand how it all fits together.
The net zero assessment is internal within the Scottish Government, and a small number of trained people would do it. However, the wider impact assessments that I am alluding to are usually done by the developers or designers. It would traditionally be part of the environmental impact assessment process, which normally kicks in if a project is above a certain size or magnitude.
Even the EIA process’s approach to carbon and climate is diverse, which is why the net zero assessment approach in NPF4 involves an assessment of the carbon impact of all developments. That is where the proportionality kicks in: you do not have to do a detailed, full-on assessment of where overseas carbon comes from in relation to all projects, especially not small projects; you need to do it only in relation to projects above a reasonable size.
I will give you an example of what I am asking about. When we drive about just now, we encounter lots of road works. How is the carbon impact of that situation going to be measured? Will that go into a cumulative impact assessment? Will Transport Scotland or local authorities do the assessment? I mention road works because they are a visible thing that people see.
Something like that would be assessed by the local authority, because it will have a supply chain and will be employing a contractor, which might in turn employ a subcontractor. All of that is pretty imperfect at the moment, but the concept is that, if you are paying for something, you are responsible for all the carbon that is emanating from it: you are responsible not only for the carbon emissions from heating your office but for everything that happens below you.
Local authorities have a responsibility to examine their own carbon emissions from projects including the road works that you mentioned. They report that back into the Sustainable Scotland Network, which reports back up to the Scottish Government.
The process is imperfect, but what would really help is having clarity around net zero assessments. The language might change, and they might not even be called net zero assessments, but there should be clarity about how we can understand the overall carbon impact of everything that is happening around Scotland.
I echo those points, and I want to build on the point that I made earlier about the fact that a lot of that work is already being done. Government, corporations and local authorities—and everybody else—are doing those assessments, which often take in the whole life cycle.
I can give you a specific example of that. Because of our size, Changeworks has to make annual carbon disclosures, and, as part of our approach, we are responsible for the heating that our workers use in their house while they are working from home—that has to be captured as a part of my assessments, even though we are not spending money specifically on that.
To some extent, therefore, those disclosures are already being taken into account, and we are just asking for all three pillars to be aggregated at a national level as part of the net zero assessment.
So, that is not happening at the moment: the information that Mr Barlow and others are collecting is not being fed into the national system.
That is correct. There is a role for the planning system in the collection of the information. If the planning system asks for the right and proportionate information from developers, each local authority will have a record of what is coming through in a simple format, which it can feed back up to central Government.
I can give you one real-life example of that. The cross-Tay link road, next to Perth, was completed last year. It was quite a large infrastructure project that took several years and followed PAS 2080, the standard for managing carbon in infrastructure. By doing that, it came out with a much lower carbon impact than it would have had otherwise, and it was built on budget and on time. It was a really successful project.
There are emerging projects that are following that new way of working, but they have nowhere to report up to. They are doing some great stuff, but, as Josiah Lockhart said, there needs to be some person or team that is looking out for everything that is coming through the planning system and the net zero assessments in order to get a holistic picture.
Is that happening at the moment?
Not as far as I know.
My understanding is that the proposal would cover any projects that are going forward in the public and private sectors. Is that correct?
No. At the moment, the situation is a bit of a cliffhanger. We have demonstrated that the approach works for policies, although it could be fine-tuned in relation to annual reports and so on. However, that approach is not being applied to the planning system. You are one connection away from that happening.
I do not have much more to add other than that an additional recommendation would be to find a way to bring the two pieces together. Once the net zero assessment is fully used, you then have the pieces all on the table. That comes back to the governance point about the need for someone or some group to be in place to bring that all together in order to deliver accurate, transparent data.
I asked the question because the examples that have been provided in the CERG report and that we have discussed today were public sector oriented, but some of the language used earlier indicated that private sector developments were included. If that is not the case, there is still a gap.
Private sector developments still need to go through the planning process, which is the catch-all process to ensure that the net zero assessment happens. There is another dimension to this process, namely ethics and the professional ethics of engineers, designers and people associated with this kind of work. The Institution of Civil Engineers has led on that in the past couple of years, drawing the connection between ethics and climate change, recognising that we are involved with works that are often detrimental to the climate—as has been the case for centuries—and that we therefore have a moral and ethical responsibility to push the process forward. In addition to the Government’s having clear rules on what needs to be done, the industry itself is pulling its socks up and saying, “We need to do better” and that working in concert with the Government is the best way forward. The private sector cannot do it on its own, but we all want the same thing.
This might be a leading question, but it is not meant to be. Would it be useful for the Government consider that aspect, as it is looking at the guidance in relation to hyperscale data centres, which it is going to publish before the end of the year?
Yes, absolutely.
You talked about the implementation and who is carrying out the assessments. What is your assessment of how resource intensive it will be for all policy proposals across Government to go through these kinds of assessments? You have mentioned small teams of trained individuals, but there will clearly be a lot of input across departments, so how burdensome will the process be?
It should not be burdensome at all, for two reasons. First, I do not think that many policies will need to go to stage 2, and, secondly, at stage 1, you do not need to do any sums. The guidance on stage 1 was very mindful of that. We want to make the process as simple as possible, so that is why there was an estimate, which might be a little bit of an underestimate, of an hour—
Is that for screening policy proposals in or out?
Yes, so it is a very quick process. The next level will involve a handful of policies, but my thoughts were that the time that would be required to do the more detailed calculation—be it a week or two weeks—is a drop in the ocean compared to whatever the policy is, because the policy is going to be a big, big policy that it is worth spending a couple of weeks on.
How resource intensive would it be if you added the planning system to it?
Hmm—that is a good question. The difficulty would just be in joining it up, because the planning system is geared up for that anyway. Policy 2(a) in NPF4 includes the brilliant line that all developments have to assess and
“minimise lifecycle greenhouse gas emissions as far as possible.”
The guidance underneath that, which came out last year, explains how that is done. I was involved in that guidance, in the net zero assessment and in the city and regional growth deals guidance, and I talk to various professionals, and we are all on the same page. These things are compatible, and it is not going to be a difficult exercise to weave them together. It is just a case of needing to co-ordinate it and a question of who will be responsible for that, rather than planning assuming that the economists are going to deal with it or vice versa. It is not going to be difficult, provided that you get the right people in the room to discuss how efficiently it could be done, because it is all about efficiency.
Therefore, you think that that should be done?
Yes.
11:00
A lot of the points that I was going to raise to have already been touched on, as you would expect. Our predecessor committee placed great importance on net zero assessments but questioned whether the process was being fully embedded in the Scottish Government, so I have a question on that and the link between the net zero assessment and decision making.
What evidence would convince you that the net zero assessments have genuinely become embedded in Government decision making? Mr Lockhart made the point about seeing the process actually changing policy, and Mr Barlow said that we probably need an annual report of some kind. Is that the kind of evidence that the committee should be looking for? Would an annual report be enough or should the process be more granular? I would have hoped that the committee would see a report within three months of a decision being made. If the report is produced annually, the risk is that it would be December before we would see a decision that had been made in January.
I have probably answered some of that already, but we certainly need an annual report. However, that would just be retrospective—you would be looking at what had happened in the past. Given that the assessments—at level 1 and even at level 2—are quick anyway, it should be a speedy process for someone to come back to the committee with an update. An update would include which stage 1 policies had been screened out—they would be finished as far as the net zero assessment was concerned—and, for the policies that were screened in, the big question would be what happened next, what message was conveyed to the minister and how that was taken on board. The net zero assessment does not go that far. It does not say, “The minister now needs to do this.” It simply says how the information was conveyed to the minister. If I was on a committee and I saw a stage 2 assessment report—there is a template, so it should be sitting in a directory somewhere—I would then ask what happened after that and what the minister did.
We also need to keep in mind the time when each of those things is being done. The taxonomy and so on happens after a decision is made, but your query is about what happens before the decision is made, and the net zero assessment is a tool upstream—we keep using that phrase—so the assessment should be done prior to the decision being made, as a part of the decision-making process to change the decision or the policy. By the time that it comes to a policy decision being made, the information exists, the report exists and the assessment has been done, so I would assume that it should be accessible—in theory.
My issue is that our job, as a committee, is to scrutinise matters before decisions are taken but also to scrutinise the decisions that are taken, so it is about how we link net zero assessments more closely to the budget, for example. If a minister is moving towards a decision that has triggered a net zero assessment at stage 2, I would like to see a mechanism that would trigger the committee’s also seeing the assessment at some point, prior to the decision actually being made, to allow us to scrutinise that in more detail.
The Climate and Emergency Response Group’s briefing refers to applying a net zero assessment to existing commitments as well as new decisions so that the results can inform reprioritisation. Is that actually happening? If not, and if it cannot cause the Government to reconsider existing policy, does the net zero assessment process have sufficient teeth to influence new policy?
The first point to make is that we are not sure where the net zero assessment is being used currently. We know that there is a commitment to it and that it is meant to be in the process of being rolled out, but I do not think that anybody has visibility on where the net zero assessment is being applied today.
CERG’s recommendation in relation to existing policy is about the point I made earlier about the risk of our starting something at a certain point and missing decisions that were made in previous years but that have an impact over five, 10 or 20 years. Potentially, we need to change those decisions or retrofit them—we need to re-evolve space—and we have a carbon cost and another financial cost as a result. Therefore, CERG’s recommendation is that we need to look at existing policy areas, where decisions were made before the net zero assessment process started, with the caveat that it will be more resource intensive to go back in time.
Yes. We need to put that to the minister, who will be here next week, but I would like to have a mechanism for reporting and publication of the net zero assessments. We should have sight of them for scrutiny purposes, to inform and influence decisions.
That is a good point. On the question of applying the net zero assessment to existing policies, the intention is that it is an upstream thing that will help people to decide on the basis of climate whether something should go ahead or not, but it is also a great tool to shine a light on things that may have been a bit hazy before. There is no greenwashing through the net zero assessment. For instance, if someone is doubtful about the climate-positive nature of something that has been touted as being fantastic for the climate, they could say, “Will you apply the net zero assessment to that, please?” As I said, it is a quick exercise that should tell them the truth. It is another advantage of the tool that it can be used to shine a light on things that may not have been considered in that way before.
My next question picks up on the point that you made about there being an inconsistency between different local authorities in relation to the implementation of NPF4 and the life-cycle carbon in projects. Are you doing a piece of work to review how consistent that is and whether local authorities are delivering on it, or is someone else doing that?
That work is under way. I am volunteering a bit of time to look at it in a steering capacity, but it is being led by the Sustainable Scotland Network with support from the University of Strathclyde. A survey is being prepared and it will go out to the local authorities probably in the next two or three weeks. There are some great questions about what local authorities are asking, what they are seeing and whether people have the necessary skills.
That work was instigated not by the Scottish Government but by SSN. The SG planners are well aware of it and they agree that it needs to happen, but there is zero governance of it. It is voluntary. I can provide you with the conclusions of the survey when they are available, and I recommend that the committee follows up on them and asks about them. As I said, I hope that the outcome will confirm where the bar sits for everyone and include a recommendation that everyone is at least mindful of the net zero assessment.
Given that I asked that question, I refer to my entry in the register of interests. I am a councillor and convener of the Fife planning review body.
I do not feel that I have seen that assessment embedded in Fife as well as you have said it should be. I am very interested in following up on the survey to see how, not least, Fife is doing, and other local authorities as well.
The assessment is really necessary, because local authorities are in a difficult position. NPF4 says some great things, and even the guidance provides more clarity, but, when push comes to shove, the planners in local authorities tend not to have the skills or experience to ask the right questions. Developers are giving them different reports. There was an instance where planners at Moray Council had to push back on a development because the developer had not provided the basic information. The local authority was saying, “You have to provide this because of NPF4,” but the developer was saying, “Where does it say that I have to do that?” The survey work will help to inform that.
What are the timescales for the survey?
Results should be available by Christmas, and I hope that it will be complete by quarter 1 of next year.
It will helpful in feeding into our other work. Thank you.
We will certainly take you up on the kind offer to share that information.
Claire Baker has a brief supplementary question.
I am trying to understand what happens through the net zero assessment process. There is a stage 1 and a stage 2. If something progresses to stage 2—perhaps a big project such as the Queensferry crossing, which I mentioned earlier—and it is judged to have a negative impact, what is it expected that the Government will do? Could the Government justify going ahead with something that will have negative impact if it has broader social value? Does it have to explain that?
Going back to taxonomy, we heard this morning that it would be better if there was more transparency about how decisions are made when a project is at the net zero assessment stage. How does the Government make a decision if it is advised that a project it will have a negative impact?
That is out of the remit of the net zero assessment. The purpose of the net zero assessment is to provide the data to allow the Government to make its decisions. The Government has to weigh up carbon against the economy, poverty and all of its other priorities.
It is up to the Government to make the decisions, but the assessment would make the decision transparent. It allows anybody—the public or us—to say to the Government, “The report gave certain advice, so why did you make a different decision?” We do not currently have the data point to ask that question.
That is a great question. As Josiah said, that is beyond the remit of the NZA. The stage 2 form, which the minister would get, ends with the ministerial submission statement section. It states that the ministerial submission statement should be
“a concise paragraph (2-3 sentences) summarising: the nature of the expected emissions impact … why it arises … the estimated scale and horizon … main assumptions … recommended mitigation options.”
The form then says:
“This section should be copied directly into the Ministerial Submission under the ‘Contribution to the Government’s Four Priorities’ section.”
I hope that the Government would then balance the carbon impact against its other sustainable development priorities, including the economy, jobs and social care. Climate is only one of the many parameters, and I do not know whether there is any clear guidance on that.
At the moment, the Government says that its evaluation will not be in the public domain at that stage and that there will not be a public element until the process reaches the taxonomy stage. However, based on what we have heard from you and from last week’s panel, it would be helpful to have more information at the net zero assessment stage and for there to be more transparency around why decisions are made at that point.
Absolutely. The idea is that the process should be very transparent. There is nothing to hide. Scotland has great policies and approaches already, so we should not be ashamed of what we are doing. It is good, and it could be subject to a freedom of information request anyway, so why not lead with it and be proud of what we are doing? Other countries are not doing this. We can lead the way.
One of the earlier questions was about the public’s ability to understand such things. Having the information available to the public is important for transparency. We have to make difficult decisions. The world is a difficult place. Being open about the fact that we are making difficult decisions and what we are weighing up makes us a more transparent country.
Mr Barlow, I am sure that the official reporters will be in touch with you for the full form that you just read from, so that they can use it for reference.
I have a couple of quick supplementary questions before I open it up to colleagues for any final questions. We touched on governance earlier. Mr Lockhart, section 3.3 in the CERG paper on governance suggests establishing
“clear gate checks and named accountability”.
Just below that, it says:
“The Corporate Centre should also play a big role”.
Have you seen any improvements to what happens in practice as a result of the recommendations?
We do not really know what is in practice, because it is being “rolled out”—that is the phrase that is being used. We think that the pieces are there to be able to pull this together. We have a relatively new DG net zero, who has a role in that. The climate change plan is on its way, and it has its own governance framework, too.
The pieces are there to have a centre of governance and to allow processes to be overseen, but the decisions are still to be heard; it may be that they have been made and we are unaware of them. As you can imagine, we think it is important to have clear governance about who is responsible for a project, who designs it and who oversees it. In our report, we made lots of recommendations about how to oversee it, some of which were quite resource heavy. However, at the end of the day, our key recommendation is that someone—a named person or a named group—should be responsible for oversight.
11:15
At the bottom of page 3 of the CERG briefing paper, it is stated:
“Lessons can be learned from other jurisdictions (e.g. New Zealand, Australia) who are already leading the way on policy appraisal and WLC assessment of infrastructure projects.”
What gaps have you found where those countries are doing things that we are not? I go back to the comment from Mr Barlow a moment ago, that we seem to be leading the way on some aspects, although that was in reference to net zero assessments. It goes back to the point that I touched on earlier, that some of this is quite complicated and we are trying to make it accessible for the wider public.
I will take that in two parts. On what is missing, I would drive hard on the infrastructure element. We have had a few conversations about that and it is currently not in scope. The infrastructure pipeline has been published but it is not currently in scope to have a net zero assessment done on it, despite what is in the climate change legislation on having some sort of assessment. There is a tie-up there. That is a clear area where we are missing a piece.
On our being world leading, there are a lot of countries in the world and there are a few world-leading countries. We are one of them—we are doing this when the majority of countries are not. We are ahead, but there are areas where we can still learn from countries that have done things slightly differently to improve our plans.
Mr Barlow, do you want to add anything? The questions were addressed to Mr Lockhart, but I would like to hear your experience as well.
Sorry, but could you repeat the question?
It was about lessons learned from other jurisdictions. Although we are one of the leaders, we are behind in some aspects. New Zealand and Australia were the two that were referenced in the CERG briefing paper.
Yes, we are leading, as you say. I would also put Sweden out there as being relatively advanced. I have been tracking what has been going on in Sweden for some years, and my broad estimate is that it is three to five years ahead of the UK and Scotland. For that reason, Sweden is starting to encounter problems. When you lift the lid on all of this and everything becomes transparent, you have to make difficult decisions, and that is when the process becomes very political.
We can learn from that. We have to be transparent. To go back to a point that was raised earlier, we need to understand the truth about the climate impact, but how do we weigh that up against everything else? That is what we are setting the scene for.
Do colleagues have any final questions?
I have one. The witnesses will have come to the meeting prepared for lots of questions. Are there any that we have not asked that you expected us to ask? That is a catch-all question.
I was going to ask that if no one else had any questions, so thank you for taking my job.
I wondered whether you would ask about the infrastructure pipeline. That clearly involves a large amount of carbon. It is an investment of more than £10 billion. The taxonomy has been applied to it and there is a narrative around it but the third strand of net zero assessment has not been applied. You can see why: it is because the net zero assessment is, as I said, intended for policies, but you could easily apply the net zero assessment to the pipeline, which would give a different narrative. It would be much clearer that there is a big carbon impact from that, and that the situation is not as positive as currently described using the taxonomy language.
The pipeline has been costed and, as I said, whenever you can estimate cost, you can estimate carbon, so that would be a quick exercise. However, again, that points to the planning process. I imagine that those who are involved in developing the pipeline will have said, “All these things will be dealt with through the planning process, and we have a good planning process, so that should take care of it.” Again, I point to the disconnect there.
You have mentioned the city deals and growth deals, and those are also referenced in the CERG report. Was any work undertaken retrospectively to use past projects to give a full understanding of how the process will work with activity going forward?
That is not uncommon. Even if a project is finished, you can still learn from it and, quite often, you will find that carbon was saved without anyone even talking about carbon. On the Queensferry crossing, for instance, on the northern side, a lot of blaes was used—it was spent oil shale from West Lothian—instead of fresh aggregate material. That saved an awful lot of carbon, but no one was even thinking about it clearly at the time. Retrospectively, you think, “Hey—look how we can save cost and carbon.”
That was done with the city and regional growth deals. There are quite a lot of new projects under way that have to follow the guidance, but that did not rule out consideration of previous ones. A retrospective analysis was done on all of them. In a way, that was a bit of a prelude to the net zero assessment, where the basic question is: will these projects make things better or worse or will they not make much difference in relation to the climate emergency? That was very useful.
Any there any final comments?
I reiterate that Scotland is doing really well compared to the rest of the world and to the rest of the UK. The elements are there, with NPF4, city and regional growth deals, carbon guidance and the net zero assessment. We just need to connect them up and publish the information.
I echo the point about how far Scotland is ahead of the rest of the world on all these things. We have lined up the fact that the private sector is doing this and is required to do it, and it is now about trying to apply that nationally across the board. One of my key recommendations to the committee is to think about how to find out where we are at with the net zero assessment process as part of the pre-budget scrutiny that you do. In theory, the assessment should be being rolled out in the background, so I assume that some of the work is being done. However, at least in the public domain, we do not know whether it has been done or where it is in that process. The pre-budget scrutiny is a good opportunity to start asking those questions in the absence of the assessment being fully rolled out.
Thank you very much. You have certainly given us quite a few suggestions and recommendations, which I am sure the cabinet secretary will hear about next week, in addition to what she will have heard today.
That concludes our business in public. As agreed earlier, we will now move into private session to consider the remaining items on our agenda.
11:22
Meeting continued in private until 11:54.