Scotland's Climate Change Plan: 2026–2040

The Costs of Climate Action

Financial Costs

Scotland’s Climate Change Plan is the first in the UK to set out the costs of the policies within it. This assessment shows that the net cost^[26] arising from delivering all the policies in this plan is estimated at £2.1 billion over the period from 2026 to 2040. These are shown in Table 2, set out across the different carbon budget periods and by sector. These figures are produced by deducting the estimated cost savings and financial benefits in Table 1 from the estimated costs. This is based on a similar approach to the one used by the CCC and the Scottish Fiscal Commission in their report on the costs of climate mitigation.^[27]

Note: All costs are in 2025 prices. Totals may not sum due to rounding.

As with the financial benefits, the net costs presented in these tables are set out in more detail in the Analytical Annex. Estimates are based on forecasts to 2040 and so rely on a series of assumptions and variables over the 15-year lifetime of the plan. This means there is a degree of uncertainty and the net costs represent best estimates. In reality, costs are likely to change as a result of economic and technological factors and will require continual monitoring.

The Cost of Inaction

The actions outlined across this plan provide substantial long-term opportunities for people and businesses across Scotland, nevertheless we are clear that delivering these will require up-front spending. In meeting these costs, while the costs of a just transition to a net zero economy are significant, the costs of global inaction will likely be even higher.

Damage and disruption from flooding, drought, wildfires, failing crops and the impact of storms all pose increasing risks to the Scottish economy as the impacts of climate change grow. A 2025 report by the Office of Budget Responsibility^[29] estimates that climate damages could reach 8% of UK GDP by 2070 if the world warms by 3 degrees by the end of the century.

Scotland’s changing climate also poses growing risks to households and businesses through physical damage to homes or assets, health and safety risks to employees and customers, disruption to supply chains, reduced access to finance or insurance coverage and increased risks to employee health and safety.

As such, action on climate mitigation now is essential – not just to prevent the worst impacts of climate change, but also to ensure Scotland can take advantage of the opportunities of the transition. We are committed to ensuring a fair distribution of the costs of these actions, in fulfilment of its just transition responsibilities.

The Role of Private Investment

It is our priority to minimise the cost to the public sector by delivering at a pace and a scale that maximises and incentivises third-party investment in critical mitigation measures.

We also recognise the investment^[30] and funding barriers associated with this transition: public sector spending alone will not be sufficient to meet these costs, but there is economic opportunity in climate action related activities. The public and private sectors must work together if we are to achieve our climate change ambitions. This investment will also drive economic activity, including creating jobs and creating new markets in Scotland as the infrastructure is developed and other actions are implemented.

This CCP aims to create the conditions for private sector and third party investment by giving clear policy direction and signals of where public money will be invested to grow the key markets required to meet our decarbonisation objectives and transition our economy. The Scottish Government will continue to explore a more integrated approach to policy design and investment planning to ensure that public sector funds are used to unlock, rather than replace, private capital and investment.

The Scottish National Investment Bank (SNIB) is a development investment bank, established and funded by Scottish Ministers on behalf of the people of Scotland. SNIB plays a supporting role in attracting and unlocking investment on the transition to net zero. From its inception to the end of 2024, SNIB committed almost £400 million to their net zero mission, which has unlocked a further £1 billion of third-party capital to support businesses and projects contributing to the shift towards a net zero economy.

In addition, we have developed a national project pipeline which is tracking private capital investment opportunities across key sectors, including net zero related activities, and we are actively utilising the new InvestScotland portal, launched in November 2025, which showcases investment ready opportunities in Scotland to global capital investors. The portal is a single digital entry point into Scotland for global investors featuring opportunities including renewables and enabling infrastructure, aligned with Scotland’s Green Industrial Strategy.

Further opportunities for private sector investment to drive the net zero transition continue to develop. There are already examples of the public and private sectors working together to deliver our emissions reduction ambitions. The case studies in this section illustrate the various ways this is being achieved.

For example, with the policy and regulatory reforms expected over the next Parliament, heat networks could become a more attractive opportunity for investors. Scottish Government funding continues to support the development of the clean heat transition.

Case Study: Low Carbon Infrastructure Transition Programme

The Scottish Government’s Low Carbon Infrastructure Transition Programme provided £7.4 million in grant funding to Midlothian Council as part of a joint venture between Midlothian Council and Vattenfall.

The project installed a low carbon district heating network at the new emerging town of Shawfair which uses heat from the Millerhill Energy from Waste plant. The network has the potential to supply heat to 3,000 new build homes, education and retail properties in the area. This initial phase of the heat network, which saw first heat on in June 2025, will expand to serve more customers across Shawfair and Craighall Village.

The network is capable of further expansion into the wider Midlothian, East Lothian and Edinburgh areas. Scottish Enterprise estimates that the grant funding for the Shawfair heat network in Midlothian resulted in £58.6 million of Gross Value Added (GVA), which is £8 GVA per £1 of government grant.

Scotland has also run the world's largest commercial floating offshore wind leasing round in ScotWind. Developer supply chain commitments could see an average spend of £1.5 billion in Scotland across each of the ScotWind offshore wind projects. Scottish Government strategic investment in the ports, manufacturing and fabrication facilities critical to realising our offshore wind ambitions is catalysing significant private and wider investment in ports and supply chain.

Case Study: ScotWind

Investment in Scotland’s offshore wind supply chain and ports is significant and growing. To date, we have unlocked almost £900 million of investment in critical enabling infrastructure and supply chain facilities. The Scottish Government’s investment of almost £150 million is crowding in a further £70 million from UK public finance institutions and leveraging up to £670 million in private investment into projects with the potential to support up to 5,000 jobs. Investment has supported ports and supply chain projects right across Scotland, including the ports of Ardersier, Kishorn, Nigg, Lerwick, Scapa, Montrose and Stornoway, as well as Subsea Micropiles and Sumitomo’s £350 million subsea cable manufacturing plant under construction at the Port of Nigg, which will help support around 330 jobs over 10 years and is already stimulating wider economic activity. SMEs including THREE60 Energy and QHSE Aberdeen are already engaged in supporting the development, demonstrating how targeted public investment in a strategic anchor project can generate broader supply chain benefits and long-term economic value.

Significant investments are already being seen in public electric vehicle charging infrastructure in Scotland. Since 2011 the Scottish Government has provided over £65 million to support the development of public EV charging infrastructure across Scotland. As a direct result of this funding and increasing private sector investment Scotland now has over 7,400 public charge points, with the capacity to charge over 12,000 electric vehicles at any one time. This is more rapid and ultra-rapid EV chargers than any other part of the UK except the South East of England.

Case Study: EV charging infrastructure

The Scottish Government has introduced a 100% non‑domestic rates relief for public electric vehicle charging sites for ten years from April 2026, improving commercial viability and supporting continued private sector investment in Scotland’s public charging network. Private investment is already significant, with the Scottish Futures Trust estimating £25-35 million invested in 2023, £40-55 million in 2024, and £50-75 million in 2025, enabling faster deployment of high‑power charging infrastructure with reduced reliance on ongoing public subsidy. This approach is already delivering in practice, demonstrating how private investment is supporting network expansion, consumer confidence, and delivery of transport decarbonisation objectives.

E.ON is continuing to invest in Scotland, working in partnership with government, local authorities and communities to expand low‑carbon energy and electric vehicle charging infrastructure. Scotland’s clear policy direction and ambition for net zero give E.ON the confidence to commit to long‑term investment, helping to build a reliable, accessible and future‑proof charging network that supports people and businesses across the country. By combining E.ON’s expertise in energy and infrastructure with Scotland’s leadership on climate policy, we are accelerating the switch to cleaner transport and helping make Scotland’s net zero ambitions a reality.

The Peatland Code and Woodland Carbon Code have successfully leveraged private investment into nature restoration alongside existing public support; developing a responsible, values-driven, high-integrity natural capital market in Scotland that is already supporting our response to the twin crises of climate change and biodiversity loss. Through the Woodland Carbon Code, there has been an estimated £26 million of private investment into woodland creation over the last five years. Although UK-wide, the majority of Woodland Carbon Code verified and validated projects continue to be in Scotland.

Case Study: Woodland Carbon Code – Ardachuple

Ardachuple is a 69 hectare project in Argyll and Bute in the Kyes of Bute National Scenic Area. It is planted with a mix of productive and native species to store carbon, support wildlife and provide timber income.

Private finance was essential to making the project viable. After planting, the project sold 15,000 Pending Issuance Units to a low-carbon energy company, helping to cover the cost of buying the land and support ongoing management.

In future, harvesting and timber processing will also support local contractors, transport companies and an Argyll based sawmill. Recent research indicates this project could support up to eight full-time equivalent jobs in the planting and establishment phase, as well as creating additional employment through supply chain activity and specialist services such as ecological monitoring.