Reaching Net Zero Could Cost Scotland £1.1 Billion a Year Until 2050: Report

The report also said Scotland’s interim target of a 75 percent carbon reduction by 2030 was a ‘fiscal risk’ that could be difficult to manage within the budget.
Reaching Net Zero Could Cost Scotland £1.1 Billion a Year Until 2050: Report
Wind turbines are silhouetted against the sun at Black Law wind farm, in Black Law, Scotland, on Jan. 29, 2010. Jeff J. Mitchell/Getty Images
Victoria Friedman
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The Scottish Government will have to spend an average of £1.1 billion a year by 2050 to achieve net zero, around 18 percent of its capital budget, a report has said.

In a report published on Thursday, the Scottish Fiscal Commission (SFC) analysed the financial implications of Scotland meeting its emissions target, estimating that “an average of £1,136 million a year (in 2024 prices) will be required in additional capital investment from the Scottish Government to reach net zero over the period 2020 to 2050.”

“This is equivalent to 18 per cent of the Scottish Government’s 2024-25 capital budget of £6,193 million,” the report said, noting that these figures “do not include the costs associated with adapting to climate change or damage from climate change.”

The SFC explained that while achieving the carbon emissions target is a responsibility shared by the central UK and Scottish governments, the “fiscal burden” may fall more onto Scotland which will need to invest more in forestry, land use, and land use change.

While it accounts for about a third (32 percent) of the UK’s land mass, Scotland has around half of the UK’s trees and 70 percent of its peatland.

Interim 2030 Target Could Be ‘Fiscal Risk’

Scotland also has its own interim target of reducing carbon emissions by 75 percent—compared to levels of territorial emissions in 1990—by 2030. The UK government aims for a 68 percent reduction by that year.

The SFC labelled the 2030 target a “fiscal risk,” saying, “Overall, this presents a substantial pressure for public spending and could be difficult to manage within the Scottish Budget.”

“The Climate Change Committee have described the Scottish Parliament’s 2030 emissions reduction target as ‘extremely challenging.’ We think it could be difficult for Scottish Government to fund meeting it,” the SFC warned.

Scotland’s target for achieving net zero is by 2045, five years ahead of the UK. While the SFC expressed concerns over Scotland’s 2030 interim target, it said the 2045 target “is not considered a risk in the same way as it is achievable under the balanced pathway scenario for the UK’s 2050 target.”

Reaching Net Zero ‘Our Moral Obligation’

Despite the fiscal risks and costs, SFC Chairman Professor Graeme Roy said, “Doing nothing, not responding to the challenge of climate change, will be far more expensive and damaging to the public finances than investing in net zero.”

“Unmitigated climate change would be disastrous for the public finances. Economy, society and crucially our public finances. It is simply not an option,” Mr. Roy added.

Mairi McAllan, the Cabinet secretary for wellbeing economy, net zero, and energy in the Scottish Government, said that reaching net zero was an “environmental imperative and our moral obligation.”

“Done correctly, achieving net zero is also a significant economic opportunity for Scotland,“  Ms. McAllan said, adding, ”In 2024–25 alone, we are committing £4.7 billion in capital and resource for activities that will have a positively impact on delivery of our climate change goals.”

Cost of Net Zero

Last week a paper by the Global Warming Policy Foundation and authored by former World Bank adviser Professor Gordon Hughes said that the UK’s energy transition to net zero is “unrealistic” and “threatens to be economically and socially unsustainable.”

Mr. Hughes estimated that the cost could be a minimum of 5 percent of GDP for the next two decades, which might “easily exceed” 7.5 percent. This is far higher that the Climate Change Committee’s 2019 estimate of around 1 to 2 percent of GDP per year.

Either the net zero target is delayed to 2070 or 2075, or Britons will need to be persuaded to pay more for decarbonisation, the report warned.

“However it is financed, the energy transition will involve a substantial reduction in household incomes and consumption for a population that has neither been prepared for such a shock nor agreed to it,” Mr. Hughes wrote.

Decarbonisation ‘Much More Expensive’ Than People Think

In February, senior economists told the Lords Economic Affairs Committee that the move to net zero will be much more expensive than people have been led to believe, and the exact cost of transitioning is not fully known.

Olivier Blanchard, senior fellow at the Peterson Institute for International Economics, told peers that “there is a substantial fiscal cost to achieving anything close to net zero.”

“We don’t know exactly what it is. We know what we have to do today. But we don’t know how long and how much it will be in the future,” Mr. Blanchard said.

“The public doesn’t believe—or hasn’t been made to understand—that it is going to be costly for them. It is going to be costly,” he said.

Sir Dieter Helm, professor of economic policy at Oxford University, likewise told the committee that decarbonisation will be “much, much more expensive than people imagine.”

PA Media contributed to this report.
Victoria Friedman
Victoria Friedman
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Victoria Friedman is a UK-based reporter covering a wide range of national stories.
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