Scotland's Climate Change Plan – 2026-2040

Economic Opportunities of a Just Transition to Net Zero

Scotland’s strengths and areas of competitive advantage position us well to seize the opportunities of net zero. It is vital that these opportunities are captured as part of a just transition – especially the potential to create and safeguard jobs.

This process is underway, and Scotland is seeing rewards. Net zero activity is increasingly important to Scotland’s economy: recent research from the Energy and Climate Intelligence Unit states that Scotland’s net zero economy has grown by 21.3% since 2022, contributing £9.1 billion in GVA and supporting 100,700 FTE jobs. This is a 19.5% increase in employment since 2022, faster than the UK as a whole.^[8]

The PwC Green Jobs Barometer also shows that Green Jobs are growing at a faster rate in Scotland than across the rest of the UK. That analysis shows that 5.6% of all job adverts in Scotland in 2024 were for jobs that have a positive impact on the environment, up from 4.0% in 2023. This helped Scotland once again retain first place among 12 nations and regions of the UK in the overall barometer.^[9]

The Scottish Government is taking a strategic approach to ensuring that our country can secure the maximum possible economic benefit from the transition. This CCP builds upon our Green Industrial Strategy, published in 2024, which identifies five key ‘opportunity areas’ for Scotland, based on our existing strengths and potential for growth. These are:

• Wind,
• Carbon Capture Utilisation and Storage (CCUS),
• Professional and Financial Services,
• Hydrogen, and
• Clean energy-intensive industries (decarbonised traditional industries such as chemicals, paper, steel, and emerging industries such as data centres).

The Scottish Government also recognises the investment^[10] and funding barriers associated with this transition – it is clear that public sector spending alone will not be sufficient to meet these costs. 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, in Scotland as the infrastructure is developed and other actions are implemented.

This Climate Change Plan aims to create the conditions for 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.

There are already examples of the public and private sectors working together to deliver our emissions reduction ambitions. For example, the Peatland Code and Woodland Carbon Code (WCC) 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 5 years. Although UK-wide, the majority of WCC verified and validated projects continue to be in Scotland.

Case Study: Low Carbon Infrastructure Transition Programme

The Scottish Government’s Low Carbon Infrastructure Transition Programme has provided £7 million in grant funding to support the creation of a joint venture between Midlothian Council and Vattenfall. Over the next 5 years Midlothian plans to create a pipeline of investible low carbon energy projects, investing around £100 million over that period. This partnership was formed out of the opportunity to deliver a large scale heat network to Shawfair, a new town in Midlothian, utilising heat from an existing Energy from Waste Plant. This £20 million investment from Midlothian Energy will supply heat to 3,000 new build homes, education and retail properties in the area.

To support programmes such as these, there is a clear role for the public sector to create the conditions for private investment in net zero. 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. The most recent data shows SNIB has committed over £800 million, which has unlocked a further £1.4 billion of third-party capital to support businesses and projects.

Scotland has also run the world's largest commercial offshore wind leasing round in ScotWind. Developer commitments could see an average spend of £1.5 billion in Scotland across each of the 20 ScotWind offshore wind projects. The Scottish Government has committed to invest up to £500 million over five years to leverage private investment in ports, manufacturing and fabrication - designing our investment approach to support sector needs.

The programme adopts a commercial-first approach, leveraging significant private investment alongside near-term returns and utilising grant funding only where it is required, acknowledging the crucial role that grants can play in de-risking and incentivising investment. Including Ardersier, over the past 18 months we have invested almost £150 million in a range of projects, leveraging up to £670 million in private investment into projects with the potential to support thousands of jobs.

Further opportunities for private sector investment to drive the net zero transition continue to develop. Having achieved the commitment to enable the delivery of 6,000 public charge points two years ahead of target, the Scottish Government’s commitment to enable the delivery of approximately 24,000 additional public charge points by 2030, is expected to be largely funded and delivered by the private sector. Significant investments are already being seen in public electric vehicle charging infrastructure in Scotland and is estimated to have invested between £25 million-£35 million in 2023 and £40 million-£55 million in 2024 with two thirds of public EV charging in Scotland already funded and delivered by the private sector.