Climate Change (Scotland) Act 2009 (Scottish Carbon Budgets) Amendment Regulations 2025: statement

Business and Industrial Process and NETs

Industry plays a foundational role in Scottish society, driving economic growth and underpinning key sectors such as manufacturing, energy, and construction. Industrial emissions arise from a diverse range of activities, particularly within manufacturing, mining, and construction, including cement, glass, and food and drink production

Within the industrial sector, because of the balance of reserved and devolved responsibilities, progress is often dependent on the UK Government or through shared action with the UK Government and other devolved Governments. Nonetheless, there are several areas in which the Scottish Government can support the decarbonisation of the industrial sector; the forthcoming CCP will set out more broadly what these proposals and policies and, some of which are included below.

The UK ETS will continue to be a key policy mechanism to drive decarbonisation, with a price cap set to align with net zero targets. The UK ETS creates a cost-effective incentive for decarbonisation and represents ~16.3% of Scotland’s emissions, based on 2023 data, including the energy-intensive industries.

Our Scottish Industrial Energy Transformation Fund, which launched in 2020 to provide match-funding for industrial decarbonisation projects at sites across Scotland, will continue until 2026. The next CCP will outline our proposals and policies to build on the successes of this fund to maintain sector confidence and leverage increased investment and develop an updated funding approach.

In the next CCP, we will outline our proposals and policies to support the development, deployment and commercialisation of Carbon Capture Usage and Storage (“CCUS”) to support the decarbonisation of industry in Scotland. Alongside support from the Scottish Government, continued roll out of CCUS across Scotland relies on the UK Government to provide funding, a mechanism for support and a timeline through their existing CCUS roll-out programme. Once the CCUS infrastructure has been established, the Acorn Project will be able to support the decarbonisation of the hard to abate sections of Scotland’s industrial clusters.

Proposals and policies to support industry to decarbonise, including via electrification and through the expansion of the hydrogen sector, will also be outlined in the next CCP. We will work with industry in Scotland to assess hydrogen decarbonisation solutions, including opportunities for fuel switching to hydrogen and the opportunities that large scale hydrogen production can offer industry, particularly in the cross-sector nature of hydrogen systems. We will also work with Scotland’s Enterprise Agencies to develop mechanisms to deliver funding support to the sector. To support electrification, in the next CCP we will support knowledge sharing initiatives across industry and academia to raise awareness and technical understanding of opportunities such as flexible demand management.

The next CCP will also outline proposals and policies to provide a supportive policy environment for the development of NETs within Scotland, including actions to continue to grow our understanding of NETs and support how best to provide support and confidence for commercial organisations in Scotland to develop their proposals.