The Scottish Fiscal Commission has cautioned that Scotland is set to bear a disproportionate financial burden in the battle against climate change.

The watchdog’s assessment shows  that the Scottish government will need to allocate an average of £1.1 billion annually, constituting around 18% of its budget, to achieve net-zero emissions.

The warning comes in the wake of the UK Climate Change Committee’s outlined scenario for a ‘balanced pathway’ toward net zero. They emphasised that a significant portion of emissions reduction efforts, particularly in forestry and land use, must occur in Scotland.

Failure to address this imbalance could result in Scotland bearing the brunt of the fiscal strain associated with climate action, said the Scottish Fiscal Commission.

This is not to say Scotland is not willing to do what it takes to mitigate climate change. In fact, it has set its sights on an even more ambitious goal of reaching the same net zero milestone five years earlier than the rest of the UK. 

“To better assess the fiscal risks facing the Scottish government, we need more information from both governments about their plans for tackling all aspects of the climate change challenge,” said the Commission’s chair, professor Graeme Roy.

“Handling not just the achievement of net zero and the future adaptation challenges, but also their fiscal consequences is a shared endeavour that needs to be managed well by both Scottish and UK governments.”

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The watchdog also raised concerns about the impact of transitioning to a net-zero economy on Scotland’s labour market, particularly in the oil and gas sector. While acknowledging potential job opportunities in renewables, the Commission cautioned that these prospects are not guaranteed.

Citing a report from Robert Gordon University, the watchdog highlighted the risk of a decline in the offshore energy workforce if net zero targets are met swiftly without a corresponding transition to renewable energy sources. 

However, the Commission identified growth opportunities in emerging sectors such as hydrogen, carbon capture and storage, and battery manufacturing, contingent upon robust government support and clear policy incentives.

The Commission’s warning serves as a call to action for policymakers to address the imminent challenges and opportunities associated with Scotland’s transition to a low-carbon economy.