Scottish Budget 2026 to 2027: climate change taxonomy

The 2026-27 Budget and climate change

In 2026-27, we estimate that we are committing over £5.0 billion in capital and resource for activities that will have a positive impact on delivery of our climate change goals. This is a record high for the taxonomy and is an increase from the £4.9 billion committed in the 2025-26 Budget. Given that budget allocations to local authorities are excluded from the assessment, this total positive climate spend is likely underestimated.

This document highlights a selection of spending areas, across the whole of the Scottish Government Budget, that are contributing towards our response to climate change.

Energy efficiency and heat transition

The Affordable Housing Supply Programme will deliver more energy-efficient affordable homes across Scotland helping to support our climate change ambitions through funding of £925.9 million (capital and financial transactions). Local authorities and Registered Social Landlords which apply for grant funding through the programme are required to ensure that homes within new build and conversion projects contain zero-direct emissions heating systems (unless there are compelling reasons why this is not considered appropriate, or where a valid building warrant application was submitted before December 2023).

Support of £334.7 million (capital and resource) in energy efficiency and decarbonisation will promote and install energy efficiency and clean heating, helping to reduce emissions from our homes and buildings as well as supporting households in or at risk of fuel poverty. This includes programmes of advice and support to homeowners and small and medium sized businesses helping them install energy efficient and clean heating measures, as well as support for major capital funding programmes for the retrofit of social housing properties, the public sector estate (e.g. hospitals, schools, libraries), and the development of heat networks.

£2.5 million of resource funding will support a programme of research and professional advice to ensure the Building Standards system delivers its regulatory requirements and reduces total upstream emissions associated with the energy used in these new buildings.

Renewable energy

We will deploy £93.0 million (capital and financial transactions) to continue our momentum in building critical offshore wind infrastructure and developing the supply chain, leveraging significant private investment to maximise economic impact and create thousands of jobs across Scotland. To date, £670 million of private investment is being leveraged from almost £150 million of Scottish public funding into projects with the potential to support up to 5,000 jobs.

Our £45.5 million energy transitions budget (capital and resource) will continue to support the energy transition through the development of net zero technologies including carbon capture, utilisation and storage, negative emissions technologies, and hydrogen; expand support through the Transition Training Fund for skilled workers looking to transition to new energy jobs; and will help secure a sustainable future for Grangemouth.

The Carbon Neutral Islands project – with resource funding of £0.8 million – will demonstrate the low carbon potential of islands as hubs of innovation, renewable energy and climate change resilience.

International and strategic climate change

Our funding will continue to support a just transition to net zero, as well as ensuring Scotland continues to have an important role in wider global action to address climate change. £50.3 million (capital and resource) will target areas including: the North East and Moray Just Transition Fund to deliver further projects that create jobs, support innovation, and secure the highly skilled workforce of the future in the region; enabling local communities to take relevant action on climate change that meets their local needs; public and community engagement on the opportunities and challenges of net zero; and supporting climate change leadership in the public sector, especially local government. The budget also continues to demonstrate Scotland’s international climate change leadership through the Climate Justice Fund and support on addressing loss and damage.

Transport

Our investment in policy interventions that support a more rapid transition to electric vehicles (EVs) and continued support to enable the more rapid rollout of critical EV charging infrastructure will reduce road transport emissions and improve local air quality. Funding for public transport is also vital for climate action by providing viable and sustainable alternatives to car use where possible for those who need it. £85.0 million (capital and resource) will be targeted at new and continuing low carbon activities, including supporting the continued rollout of critical EV charging infrastructure and the switch to zero emission vehicles.

Meanwhile, nearly £3.0 billion (capital, resource and non-cash funding) will support our bus, rail and ferry networks, low carbon programmes and active and sustainable travel. This includes investment of £528.3 million (capital and resource) in bus services (via the Network Support Grant, concessionary travel schemes providing free bus travel for 2.4 million cardholders in Scotland, as well as the bus fare cap pilot and support for local authorities) and £226.0 million (capital and resource) on Sustainable and Active Travel. This will make it easier for people to make more sustainable travel choices, such as walking, wheeling and cycling, or accessing public transport for shorter journeys.

We will invest £311.9 million (capital and resource) in support for ferry services, and £201.5 million capital to support improvements in ferry infrastructure and new ferries, helping to reduce the environmental impact of their operations.

Nature, forestry and landscape restoration

We will invest £160.1 million (capital and resource) to maximise the ‘power’ of our land and forests to help tackle climate change and protect nature. This funding will increase woodland creation and further protect and restore peatland, our ancient Caledonian pinewoods, and deliver Scotland’s Biodiversity Strategy. With this spending, we are continuing to protect and restore our natural environment both on land and at sea to drive landscape-scale change. Woodland creation, sustainable management of Scotland’s national forests and land, and peatland restoration play a key role in our just transition to net zero, providing vital income and employment across Scotland, including in more remote communities.

Flood management

Our Flood Resilience Strategy sets out our shared ambitions to deliver a sustainable and climate-resilient approach to reduce the impacts of flooding. This budget supports the Strategy with £0.9 million resource and £42 million capital to local government, recognising the increased likelihood and severity of flood events – and devastating impacts on people and businesses – because of climate change. It builds on our investment of £42 million a year since 2009 to support local authorities to reduce flood risk and our commitment of an additional £150 million funding over the lifetime of the Parliament.

Agriculture, rural affairs and marine

Through the Vision for Agriculture, we are committed to transforming farming and food production, supporting Scotland to become a global leader in sustainable and regenerative agriculture, and enabling these industries to contribute to our statutory emission targets. Our funding for agriculture supports delivery of this Vision and a range of outcomes, including emissions reductions. In particular, working with the sector, we will provide £170.0 million (capital and resource) to deliver key activities including the Agri-Environment and Climate Change scheme, the Agricultural Reform Programme and an additional £26.0 million capital for the Agricultural Modernisation Fund.

Our funding of £73.6 million (capital and resource) will help to realise our Vision for Scotland’s Blue Economy, which sets out our ambition for the sustainable management and shared stewardship of Scotland’s sea. This includes the contribution of the blue economy and marine environment to reaching our net zero target by 2045, and specific activities such as: investment to deliver a sound scientific evidence base to inform our marine policies; and marine planning and licensing responsibilities which promote sustainable economic growth from the marine renewables industry.

Zero waste and circular economy

We will continue to build on our landmark Circular Economy (Scotland) Act 2024, providing £31.7 million (capital and resource) to make progress in Scotland’s transition to a circular economy. We will deliver actions from Scotland’s Circular Economy and Waste Route Map to 2030 to drive further waste reduction, boost reuse, repair and recycling, and reduce emissions associated with waste and resource management. This includes: delivering the Deposit Return Scheme and reforms to extended producer responsibility schemes; actions to cut the amount of food waste households and businesses produce; modernising recycling services through the Household Recycling Code of Practice; maximising landfill gas capture opportunities; and funding for Zero Waste Scotland to allow work with partners and businesses to support progress to a more circular economy.