Scottish Budget 2026 to 2027: climate change taxonomy

Climate Change Taxonomy of the Scottish Budget

The Taxonomy of the full Scottish Budget has been produced annually since the 2024-25 Budget. Prior to that, from 2018-19 to 2023-24, a similar exercise was carried out on the capital elements only of the Budget. The current taxonomy assessment sets out how the Budget will impact on the Scottish Government’s priority of tackling the climate emergency. It is divided into two parts: the first part presents an overarching climate narrative, highlighting key spending areas from multiple portfolios across the Scottish Budget 2026-27 that contribute towards our response to climate change; and the second part provides a carbon taxonomy assessment and commentary of the capital and resource budget.

Delivering our just transition to net zero

Given our ambitions for net zero and climate resilience are long term, addressing climate change remains one of the government’s key missions. We know that climate change is happening here and now and responding to it requires emphatic leadership, through cross-Government action on net zero and climate mitigation, on climate resilience and adaptation, on biodiversity loss, and on supporting a just transition while maximising the many benefits of our climate action. Consequently, the Scottish Budget continues to prioritise spending to deliver our commitments.

Delivering climate action now is also essential to unlock significant benefits for the people of Scotland into the future. The transition to net zero and climate resilience will provide substantial direct, financial benefits and cost savings, particularly for households who will see significant long-term savings, as set out in the draft Scottish Climate Change Plan which was published on 6 November 2025. In addition to this, there are further indirect benefits from climate action that will support the wellbeing of people across Scotland, for example protecting people and communities from the health harms associated with fossil fuels.

Scotland is over halfway to achieving our target of net zero emissions by 2045. The latest official statistics for Scotland showed that our greenhouse gas emissions had fallen by 51.3% between 1990 and 2023 – the largest reduction in the whole of the UK. Nearly every sector of the Scottish economy has seen substantial emissions reductions over that time.

In 2025, we moved from annual climate change targets to a five-yearly carbon budget mechanism, which offers greater flexibility in the long-term planning of decarbonisation, whilst retaining our statutory 2045 net zero target date. The Climate Change Committee – our statutory advisors on climate change – support the use of carbon budgets and provided advice for Scotland in May 2025 on carbon budget levels. In October 2025, Parliament passed legislation to set carbon budgets at the levels advised by the Climate Change Committee.

The draft Climate Change Plan covers the period from 2026 to 2040. The draft Plan sets out the policies and proposals to deliver on the first three carbon budgets. The draft Plan also sets out how the carbon budgets will be met fairly, in a way that continues to maximise the opportunities of the transition, while reducing negative impacts to a minimum wherever possible – the ‘Just Transition’.

It is clear that achieving our climate ambitions requires a collective effort. In noting the scale and impact of spend in Scotland to tackle climate change, for example, the role of the Scottish Government and wider public sector is critical. Indeed, the costs associated with delivering these ambitions cannot be borne by public sector funding alone, with sustained support being needed over several decades. As such, the Scottish Government has been delivering a programme to attract private capital investment that includes: launching the Invest Scotland portal in November 2025, which showcases investment opportunities and provides a single entry point to government; undertaking targeted engagement with key investors including pension funds; and focusing on policies to leverage private investment in areas like offshore renewables and housing. This 2026-27 Budget continues this important work.

Nevertheless, the role of Scottish Government spending is crucial and this Budget focuses investment and spending on areas critical for building our climate resilience, delivering net zero by 2045 and accelerating a just transition in the coming years.