Scotland’s net zero targets require the decarbonisation of all buildings, and the public sector has an important leadership role in demonstrating ways to reach those national goals.

This project explored evidence on the costs, opportunities and barriers of decarbonising heat in Scotland’s public sector buildings. The costs given in the report represent the wider investment and economic opportunity to decarbonise public sector buildings, for which the Scottish Government may have potential to leverage a range of funding models.

Findings

• The investment requirement to decarbonise the public sector by 2045 ranges from £3.3 billion to £8.8 billion. This estimate should be read as a high-level indication of the likely range, rather than the realistic investment.
• Targeting certain types and sizes of buildings could prove more economically effective from an emissions savings perspective. For instance, the largest 10% of buildings in the public sector have an estimated 37% of the share of greenhouse gas emissions and could be decarbonised at an estimated cost of £2 billion.
• Barriers include the absence of a central database of public sector buildings and projects, a lack of both staff and required skills which increases reliance on external consultants and concerns around high capital costs of decarbonisation projects.
• Opportunities include the promotion of success stories to showcase successful funding projects and knowledge sharing, retraining and upskilling staff, and developing a new procurement framework as an opportunity to help alleviate issues such as a lack of confidence and control.
• Recommendations identifying evidence-based actions that address key barriers and opportunities for decarbonising public buildings are categorised into four themes:
  1. Improving data availability and utilisation.
  2. Clear retrofit and decarbonisation pathways for public buildings.
  3. Upskilling public sector officers to enable delivery at scale.
  4. Central coordination to support public bodies on key challenges.

For further information, please read the report.

If you require the report in an alternative format, such as a Word document, please contact info@climatexchange.org.uk or 0131 651 4783. 

Note: This research was carried out in 2024/25, based on data available, policy and market conditions at that time. Findings should be understood in the context of the market, data availability, and policy landscape having evolved since this research was conducted.

Research completed: January 2025

DOI: http://dx.doi.org/10.7488/era/6366

Executive summary

Scotland’s net zero targets require the decarbonisation of all buildings, and the public sector has an important leadership role in demonstrating ways to reach those national goals. In this report we provide evidence on the costs, opportunities and barriers of decarbonising heat in Scotland’s public sector buildings. We estimate the capital cost of decarbonising all public sector buildings in Scotland by moving to clean heating systems. We also develop a potential range of cost metrics by sub-sector and relevant building type. We gather evidence on the opportunities offered by decarbonising Scotland’s public sector buildings as well as the barriers to doing so by assessing wider themes (beyond costs) including practicalities and operational considerations.

Importantly, the costs we present in this report are not capital costs to be solely met by the Scottish Government nor by the public sector at large, depending on funding models employed. These costs represent the wider investment and economic opportunity to decarbonise public sector buildings, for which the Scottish Government may have potential to leverage a range of funding models.

Findings

We found that the investment requirement to decarbonise the public sector by 2045 ranges from £3.3 billion to £8.8 billion. However, we determined that better data sources would impact the result significantly. Therefore, our estimates are to be read as a high-level indication of the likely range, rather than the realistic investment. This is due to the known limitations of main public sector building databases used in the research.

We found that targeting certain types and sizes of buildings could prove more economically effective from an emissions savings perspective. For instance, the largest 10% of buildings in the public sector have an estimated 37% of the share of greenhouse gas (GHG) emissions and could be decarbonised at an estimated cost of £2 billion.

We estimate that 63% of the investment required could be in urban environments and almost half of the investment could be in buildings constructed before 1919 (Figure 1). This is underpinned by the challenges associated with these respective building categories, such as the amount of space available for low-carbon heating equipment and additional enabling measures in old buildings.

We collated detailed qualitative data on drivers for heat decarbonisation through engagement with public bodies of all types, including NHS, education sector, local authorities and other bodies. Semi-structured interviews with stakeholders identified the following key barriers and opportunities to decarbonising heat in the sector:

Barriers

Information and data: there is no central database of public sector buildings and projects, nor knowledge-sharing of successfully delivered initiatives.

Organisational considerations: sector and estate-specific challenges were raised. For example, large and complex healthcare estates which lack space for heat pumps.

Resourcing: a lack of both staff and required skills were highlighted as constraints which increases reliance on external consultants.

Legislation: it was acknowledged that legislation drives action. However, it was also noted that competing legislative priorities could result in decarbonisation not being prioritised due to a lack of resources and budget. Additionally, a lack of clarity regarding timescales within legislation on heat and buildings presented a barrier to engaging stakeholders to mobilise decarbonisation projects.

Costs: concerns were raised around high capital costs of decarbonisation projects, as well as the operational costs associated with the electrification of heat, additional costs resulting from distribution network upgrades, and the impact all of these have on payback periods for projects, sometimes making for challenging investment decision-making.

Funding, finance and investment was the most prominently discussed theme. Budgets can often restrict multi-year projects, with many sectors unable to carry budgets from one financial year to another. Accessing public funding can be complex, with short time windows and significant resource requirements for funding applications.

Delivery: There is a lack of external supplier availability and mature supply chain to support projects. Scheduling constraints and delays limit when works can be carried out (a particular issue across healthcare and education sectors). A lack of experience (particularly in procurement), infrastructure challenges, and timescales remained as concerns for heat networks. Grid capacity concerns were noted particularly regarding associated cost and timescales. Challenges around timeframes and meeting net zero targets were raised, with a lack of certainty around how long projects could take.

Opportunities

Information and data: Participants called for an increase in the promotion of success stories, showcasing successful funding projects and knowledge sharing.

Stakeholders and partnerships: collaboration with other public sector bodies, as well as public-private partnerships could facilitate decarbonisation projects that also reap benefits for the community.

Resourcing: There is an opportunity for significant retraining and upskilling given the scale of decarbonisation works needed.

Funding, finance and investment: Participants highlighted benefits in increasing the time window for public funding applications, to allow time for project development. They suggested reductions in the complexity of applications down to high-level plans, with more reliance on trust.

Delivery: Procurement concerns were highlighted, but a new procurement framework was suggested as an opportunity to help alleviate issues, such as a lack of confidence and control. This included the suggestion of fixed-fee procurement exercises with three or four suppliers, which could be tweaked based on specific buildings. Heat networks were identified as a potential solution, particularly for large sites.

Recommendations

We have developed recommendations identifying evidence-based actions that address key barriers and opportunities for decarbonising public buildings. These are categorised into four themes:

• Improving data availability and utilisation.
• Clear retrofit and decarbonisation pathways for public buildings.
• Upskilling public sector officers to enable delivery at scale.
• Central coordination to support public bodies on key challenges.

Glossary / Abbreviations table

Introduction

Context

Non-domestic buildings represent 12% of Scotland’s final energy consumption and 7% of Scotland’s greenhouse gas emissions (Scottish Government, 2021). Of the approximately 230,000 non-domestic buildings in Scotland, 23,000 are public sector buildings. Scotland’s net zero targets require the decarbonisation of all buildings, and the public sector has an important role to play in helping to meet these statutory obligations while also demonstrating national leadership through proactive and early action.

The transition to clean heating systems will involve replacing polluting heating systems with clean alternatives and making necessary fabric and accompanying upgrades to a significant number of buildings across the public sector. The distinct nature of public sector buildings will also present unique opportunities and challenges compared to other buildings.

For example, hospitals have substantial heat demand but also strict tolerances for their operations (e.g. continuous use of critical healthcare buildings), meaning heat upgrades must meet demanding needs without disrupting critical operations. Upgrades to schools should avoid the need to decant or disrupt normal operations, such as by being carried out during holiday periods. Likewise, many public bodies hold critical assets or run nationally critical operations which have unique requirements. Part 4 of the Climate Change (Scotland) Act (2009) mandates emissions reporting for 188 Scottish public bodies, covering practically the entire Scottish public sector. There is a substantial volume and variety of buildings across these organisations, all of which will need to be decarbonised in a way that accounts for their specific needs.

Proposals for a Heat in Buildings Bill consulted upon in 2023 included the potential mandate for public sector buildings to replace polluting heating systems with clean heating systems by the end of 2038 (Scottish Government, 2023a). In 2025, the Scottish Government announced that a revised Heat in Buildings Bill will set a new target for decarbonising heating systems by 2045.

In this context, the Scottish Government recognises it is critical to understand the practical implications of these requirements. Among the chief considerations is the potential added capital (or upfront) cost of decarbonising public sector buildings.

In 2020, the Scottish Government carried out cost analysis as part of the Heat in Buildings Strategy development processes. However, this high-level analysis was intended to support policy and there is now a need for more detailed assessment of costs to inform delivery programmes and funding scheme development. The previous analysis also predates the recent inflationary, supply chain and other market disruptions during and following the Covid pandemic. Therefore, more accurate and up-to-date estimates are required. Aside from previous analysis carried out internally by the government, there has been limited cross-sector evidence on the costs and wider impacts of decarbonising heat in the public sector, although some disparate sources do exist.

Another key requirement of the Scottish Government to inform their delivery programme and funding scheme design is a better understanding of the wider barriers and opportunities which public sector buildings will face as part of this transition. The public sector has already been decarbonising buildings during the past decade and will have learned lessons through these experiences. This information has been shared among public sector colleagues and the Scottish Government via liaison and working groups. However, there has been limited to no formal investigations on these. Carrying out stakeholder engagement, gathering qualitative data and developing structured themes on these topics is important ahead of making commitments to major programmes for accelerating action.

The stakeholder engagement we carried out is not intended to be comprehensive, but rather is a snapshot that can be built upon in more comprehensive engagement as part of policy development for the Public Sector and Heat in Buildings Bill.

Project aim and research questions

This research had two primary aims:

• Estimate the additional cost of decarbonising all public sector buildings in Scotland via transition to clean heating systems. In addition to this, the research also aimed to develop a potential range of cost metrics by sub-sector and relevant building types.
• Gather evidence on the drivers of decarbonising Scotland’s public sector buildings, including the opportunities and barriers.

This is the first such detailed investigation into these subjects within Scotland. Given the relative complexity and depth of the subject areas, our objective was to provide indicative early findings which could help move the discussion forward, rather than to create representative outputs.

The scope of the research was to estimate the cost to decarbonise non-domestic public sector buildings, but not the means and methods of financing these costs. The costs we represent in this report are not capital costs to be met by the Scottish Government or potentially even capital costs to be met by the public sector at large (depending on funding models employed). The Green Heat Finance Taskforce has carried out a detailed review and highlighted funding options for all types of buildings (Scottish Government, 2023b). Further research will be required to review how these models can be utilised to fund costs estimated in this research.

Method

We reviewed existing data and literature, supplementing these findings with primary research to start to build a more cohesive picture of the costs and practicalities of decarbonising heat in the public sector. We critically assessed currently available sources and considered forthcoming sources to highlight evidence gaps and recommendations to fill these in future.

We present an abridged version of the methodology in this section; the methodology is described in detail within Appendix A – Methodology.

Initial steps

This mixed-methods research required different data collation and analysis approaches to address each of the two aims. Our research involved establishing a steering group, a literature review, and stakeholder engagement

Steering group

A steering group was established to provide critical feedback on the findings and outcomes of the research throughout the project. The steering group consisted of representatives from the Scottish Government, ClimateXChange, Scottish Futures Trust, and the Turner & Townsend research team. This group helped to define clear research questions (presented in section 3.2).

Literature review

We began with a literature review covering all relevant data sources available for both research questions. These were recorded in a database of sources and analysed for their quality and relevance based on a standardised scoring criterion. The developmental review (Templier & Pare, 2015) aimed to gather key insights and data gaps to help inform subsequent stages of the research as well as to provide references to test our assumptions. The scoring criteria helped to determine the most reliable and relevant sources to inform the remaining analysis.

Stakeholder engagement

Following the literature review, we developed a stakeholder engagement plan to define who and how we will collate the data, based on the data gaps we required. This plan detailed the people and organisations to target for engagement, a request for the type and format of information required and plan to recruit participants for the qualitative study.

Following this process, the methodology diverged into two strands. These are covered separately in sections 4.2 and 4.3.

Aim 1: Cost of heat decarbonisation

The quantitative methodology for estimating the cost of heat decarbonisation centred around the development of a cost model.

Data collection

We collected data in two broad categories, building data and cost data. The building data was collected through engagement with public bodies as well as Scottish Government sources such as funding schemes and central government datasets. For the cost data, we relied on a diversity of sources from the literature review and our own cost databases. The key sources of cost data included:

• Costs directly from Scottish public bodies we engaged.
• Cost data from programmes and projects delivered by Turner & Townsend.
• Costs from Scottish Government funding schemes.

Data quality review

The data we collected was from a range of sources and formats, which required normalisation into comparable metrics. We also reviewed and scored each data source for quality and completeness. We then prioritised and created a scoring methodology based on the data source year, relevance and cost details. This helped us determine the weighting of the sources and the way in which we used the data, including any exclusions of data sources.

Building hierarchy

For the building data, we found that there is no complete and reliable data set for public sector buildings in Scotland. The closest dataset we have is Non-Domestic Analytics (NDA), which is based on approximately 18% of Scotland’s non-domestic building EPCs which have been completed. The remaining gap is modelled and extrapolated from this base. This means that, coupled with variability of non-domestic buildings, the extrapolations can result in significant uncertainties at a building level. This NDA faces additional challenges as it is not a representative sample of the building stock because it is biased towards newer properties that have recently been built, bought, sold or had significant retrofit work completed. There is also a geographic bias in the underlying datasets as urban areas have more coverage than rural areas. To increase reliability of the data set, we were able to collate stakeholder data across the NHS and colleges to replace and test the modelled data in NDA. We were also able to rely on a previous Zero Waste Scotland benchmarking exercise which collated real data from public bodies. We collated key metrics such as heat demand and floor area.

Technology hierarchy

Before we could assign a decarbonisation cost to each building, we needed to establish the type of low carbon heating technology which would be most suitable. To achieve this, we engaged with the Scottish Government to agree a set of high-level decarbonisation pathways for the public sector building stock. This entailed four key building level outcomes:

• For buildings with low carbon heating, we recommended no change.
• Then, we mapped all public sector buildings against the most up-to-date Heat Network Zones produced by all Scottish local authorities.
• We then assigned the remaining buildings not suitable for heat network connection with an air source heat pump (ASHP).
• Ground source heat pump (GSHP) was then selected for buildings in more rural settings with high heat demand.

See Figure 14 in Appendix A for an illustration of these decarbonisation pathways.

At this stage, we also applied weightings to data sources accounting for relevance and applicability to Scottish public sector buildings. We prioritised data from stakeholders over other cost datasets.

Cost model

We then combined the building data and cost data by applying the metrics from the cost data to the buildings, depending on each technology type. We applied the high, medium and low-cost estimates developed from the data sources hierarchy. The final step then assigned the costs of a ‘like-for-like’ fossil fuel system which we removed to arrive at the ‘additional cost’ of decarbonising the buildings.

Our cost model did not include the potential costs to upgrade electricity connections or those associated with insulation or other building measures. We also have not accounted for potential discount rates associated with likely reductions in the cost of heat pumps and heat network connections in a growing market. Finally, this exercise was limited to capital costs, though we understand a more complete picture would include an assessment of operational costs along multiple scenarios of electricity and gas price futures.

We used multiple methods to test our findings. This was to examine the scale accuracy of the methodology and to show the results of the additional building data on the underlying NDA data. Finally, we carried out sensitivity analysis to determine any significant changes to the results through small deviations to certain assumptions in the model. Appendix A explores these methodologies in detail.

Aim 2: Drivers of heat decarbonisation

The qualitative methodology for reviewing the barriers to and opportunities in decarbonising heat in the public sector centred on a process of stakeholder engagement and thematic analysis.

Topic guide

In collaboration with the steering group, we developed a set of key priorities and questions. These topics covered the drivers of heat decarbonisation including barriers and opportunities in the public sector.

Participant recruitment

We carried out purposive sampling to recruit a cohort of participants in the public sector. It was important to recruit across sectors (e.g. local authority, healthcare, education, central government), which led us to multiple rounds of recruitment to obtain participants across sectors. There were several considerations, including the potential for engagement fatigue given a limited number of stakeholders in the sector and the challenge of time availability with engaged participants. We focused on energy and estates teams groups across the public sector, with support from the Scottish Government, to recruit from the pool of colleagues most informed and experienced in decarbonisation. We followed GDPR and ethical research principles, which are highlighted in Appendix A.

Data collation

We carried out eight semi-structured interviews following a topic guide, led by researchers experienced in stakeholder engagement and decarbonisation. Due to the time constraints on the target sectors, some participants couldn’t take part in an interview. Thus, we permitted written responses to be submitted. We were sensitive to overburdening public sector officers when requesting engagement as most organisations are under considerable resource stress. Interview data was recorded with permission and transcribed through Teams to allow for direct quotes and to aid analysis.

Framework analysis

The qualitative strand of the research provides illustrative rather than representative views, given the early-stage exploratory nature of the research. We relied on framework analysis (Hackett & Strickland, 2018) a dynamic qualitative analysis technique geared toward producing actionable policy outcomes with high quality standards, to provide these illustrative insights. This involved allowing themes to emerge from the data to guide our analysis.

Cost of heat decarbonisation

Public sector buildings

We began our analysis by understanding the make-up of the public sector stock in our model and the proportion that require upgrading to different low carbon heating systems. For example, buildings which already have an existing renewable or electric heating system are considered ‘decarbonised’ for the purposes of this study as they require no changes. No upgrade is attributed to them in our modelling. This breakdown is shown in Figure 2.

The top three sectors by building number are:

• Community Services^[1] with over 6,000 buildings but only 62% require changing to low carbon heating.
• Education (all levels) with over 5,000 buildings and 75% requiring an upgrade.
• Medical buildings with over 3,000 buildings and 70% requiring an upgrade.

Viewing the building stock by floor area in Figure 3 gives a clearer picture of decarbonisation requirements by floor area, providing a different lens to the subject. Education buildings are now the largest sector and 80% of the area in these buildings require an upgrade. Additionally, all sectors require over 80% of floor area to be upgraded to low carbon heating, except Community Services and Other^[2] at 75%.

The building stock identified is limited by the lack of available data sources from stakeholders that could be matched with the existing Non-Domestic Analytics database (as discussed in section 4.2.3). Where more accurate data from stakeholders was available for NHS and Colleges, it showed a potential undercounting of the floor area by a factor of a half.

Looking at carbon emissions of existing systems, the top four sectors make up 75% of emissions. Therefore, as shown in Figure 4, the relative contribution to reaching net zero by each sector differs significantly. This also further highlights the major role of the education estate in decarbonising heat in public sector buildings.

To map the heat decarbonisation route for public sector buildings, we assigned a decarbonisation route or technology to each building (Figure 14). This entailed either a low carbon heating technology or no change if the building is considered already decarbonised. Figure 5 shows the proportion of public sector buildings that would upgrade to each type of technology when the hierarchy is applied to the buildings data technologies for decarbonisation across all public sector buildings. The largest proportion of buildings are assigned for ASHP, followed by buildings with no change, heat network connection and GSHP.

When reviewing technology upgrades by floor area covered, Figure 6 shows the most significant differences being ASHP, which increases to 72% and buildings with no change required decreases to 14%. Therefore, it is important to note that while a large proportion of buildings do not require a change to decarbonise (e.g. they have existing renewable or electric heating systems), these are primarily small buildings and almost the entire public sector (by floor area) will require some form of change – 86%.

It should also be noted that the heat network connections are based on the latest heat network zoning plans available to us from local authorities in late 2024 as part of their Local Heat and Energy Efficiency Strategies (LHEES). These figures may change should local authorities update their heat network development plans.

Cost benchmarks

The literature review analysed multiple sources of costs for low carbon heating. For ASHP and GSHP, there are two ways to take benchmarks costs, firstly using the average cost per kW and viewing the low and high estimates as a window. Secondly, cost per kW as a range depending on the size in kW of the proposed heat pump.

From the literature review, the average costs per kW for ASHP and GSHP are in Table 1 and Table 2. The detailed methodology is explained in Appendix A.

Based on different sizes of heat pump, in kW, the averages are in Table 3.

The resulting benchmark figures show a reduction in cost per kW as heat pumps increase in size, in line with expected economies of scale found in cost data. These benchmarks are not intended or suitable for applying to specific projects. This is because they do not account for granularities of different sectors, building type, size and age, location, sector and other considerations we have factored into the costings in section 5.3. These variables impact the cost of decarbonisation in a substantial way. However, these benchmarks do help to understand the scale of cost to cross reference projects, develop policy, set targets, aid in scheme design, and determine the cost-benefit balance of various projects. Therefore, the most productive use of these benchmarks is at the aggregate level, ideally suited to national-level use.

Cost estimate

Overall cost estimates to decarbonise heat in the public sector in Scotland are based on the ‘marginal’ cost to install low carbon heating measures, meaning the final cost doesn’t include the cost to replace an existing fossil fuel system with a like-for-like system. For example, if the cost estimate is £50,000 to install a low carbon heating system and the cost estimate to install a new fossil fuel heating system is £10,000, the ‘marginal’ cost that makes up the cost estimate in this report is £40,000.

The overall cost estimate to decarbonise heat in the public sector in Scotland is shown in Figure 7. The medium estimate is £6.1 billion with a range between a low estimate of £3.3 billion and high estimate of £8.7 billion. The total estimate for replacing fossil fuel systems with like-for-like is £334 million. Therefore, the total cost of installing low carbon heating systems will be £334 million higher than the estimates shown in Figure 7.

Medium Estimate

The estimated range shows that there are several steps that need to be taken to gain increased certainty on the figures. Decisions yet to be made on type of technology deployment, level of additional enabling measures and installation timeline all have contributed to uncertainty.

The cost estimate can be broken down by low carbon heating technology. Figure 8 shows that through the model’s methodology, ASHP is estimated to cost £4.8 billion, with heat network connections at £761 million and GSHP at £441 million. The model does not determine the exact solution in reality but gives a picture of the proportion of costs attributed to different technologies, with ASHP being found to be the dominant cost.

Due to the assumptions in the model, these proportions could change as policy evolves. For instance, the model does not attribute GSHP to decarbonise any buildings in urban environments. However, urban education campuses, hospitals or other large estates are all suitable for GSHP, which would alter the cost proportion towards GSHP.

In order to understand the overall accuracy of scale of the methodology, we used four other methods to estimate the cost, see Appendix A for full methodology. Comparing methodologies shows that whilst there are differences in the result, the maximum deviation is £1.1 billion at the low estimate and £3.6 billion at the high estimate. Blending the four method results (Appendix A) together gives a deviation of less than £1 billion across low, medium and high estimates. This is shown in Figure 9.

The different methods highlight the uncertainty of the costs with many building-specific factors influencing the actual costs. However, the different methodologies are clear on the order of magnitude of the costs, where no methodology estimate is outside the £3.3 – £7 billion range. Better data will also reduce uncertainty, for example, with Estimate Method 5 (Appendix A), wider data from the NHS and Colleges showed the costs to decarbonise these sectors could increase from a medium estimate of £800 million to £1.5 billion for the NHS and £126 million to £300 million for colleges. Better data will improve the certainty in results also because while multiple methods were used to compare results, these were mainly based on the same underlying building data. A full list of methodology limitations and assumptions can be found in Appendix A 9.2.5.2 and 9.2.5.3.

Cost estimate analysis

We have analysed the cost estimate by Local Authority Area through both the total cost and the cost per capita in each area. Figure 10 shows the breakdown with four areas having a significantly larger overall cost estimate than the other authorities: Glasgow City, Fife, Aberdeenshire and South Lanarkshire. However, when we look at the cost per capita, this is greater for the more rural local authority areas; Na h-Eileanan Siar, Moray, Orkney Islands, Shetland Islands, and Argyll & Bute. This demonstrates the impact of rural location on cost.

Total Cost per Local Authority Area

Figure 11 shows the medium cost estimate against the remoteness variable. 63% of investment is estimated to be in Urban environments, of which 82% is for ASHP and the remainder is Heat Network Connections. The model method assumes no GSHP in urban environments. However, there will be certain buildings and cases where a GSHP is the best solution in an urban environment. The estimation of cost does not preclude GSHP being the best solution in reality.

For heat network connection, 89% of cost is estimated to be in urban environments. This aligns with heat network zoning and the principle of economies of scale found in urban environments with high heat demand in close geographical proximity.

Figure 12 shows the cost estimate broken down by building age. We found that 47% of costs are estimated to be for buildings pre-1919, due to the high proportion (45%) of public sector buildings being pre-1919, highlighting the potential challenges of decarbonising the public sector. The cost estimate has been adjusted for age. However, potential additional enabling measures to improve energy efficiency in older buildings are more likely to be required, therefore increasing uncertainty in the overall costs required. Costs for energy efficiency measures are not included in the cost estimate.

Targeting buildings

Analysing the costs in line with the highest heat consuming buildings gives an insight into the potential for an efficient and targeted approach. Analysis shows that targeting the largest building by heat demand can have additional benefits compared to an approach that does not prioritise buildings according to specific factors.

Decarbonising the top 10% of buildings by heat demand tackles 37% of total carbon emissions from heating in the public sector building portfolio. This would cost an estimated £2 billion, 34% of total estimated spend for the medium scenario estimate.

Largest 10% heat demand buildings

Next largest 10% heat demand buildings

Remaining 80% buildings

Tackling the top 20% of buildings will impact buildings with 57% of carbon emissions and cost £3.1 billion. The remaining 80% of buildings would cost the remaining £2.9 billion and impact 43% of carbon emissions. This is displayed in Figure 13. To target efforts even further, this shows that by decarbonising the top 1,600 buildings (10% of the total), this will impact 37% of the public sector estates Scope 1 carbon emissions.

While the estimated cost of the remaining 80% of buildings has a lower cost estimate associated with them to decarbonise, there are challenges remaining. These include organisation and building ownership, resource, supply chain, and others which are not considered as part of the cost estimate.

Sensitivity analysis

The sensitivity of results has been tested to show changes in the result with changes to underlying assumptions. Two key tests conducted were on the Optimism Bias assumption at 21% and on Peak Heat load in design of heat pumps at 37% peak above standard demand. These assumptions were adjusted in the model in 5% increments higher and lower than the medium estimate. Optimism bias is determined to not be highly sensitive, with a 15% adjustment yielding only a 3% change in the result. Heat Pump sizing also performed similarly with 4% result change from an 18% adjustment. Therefore, the sensitivity in the model is low and the results will remain similar if assumptions change in the future.

Drivers of heat decarbonisation

Outputs from the qualitative data collection were analysed using thematic analysis. High level themes and topics were identified from the interview transcripts, as shown in Table 4. Full findings and opinions within the public sector can be found in Appendix B. These should be read as illustrative findings, not representative views of public bodies, bearing in mind the limited sample size and research objective. A summary of the barriers and opportunities from these broad themes follows.

Barriers

Information and data: there is no central database of public sector buildings and projects, nor knowledge-sharing of successfully delivered initiatives.

Organisational considerations: sector- and estate-specific challenges were raised. For example, large and complex healthcare estates which lack space for heat pumps.

Resourcing: a lack of both staff and required skills were highlighted as constraints, which increases reliance on external consultants.

Legislation: it was acknowledged that legislation drives action. However, it was also noted that competing legislative priorities could result in decarbonisation not being prioritised due to a lack of resources and budget. Additionally, a lack of clarity regarding timescales within legislation on heat and buildings presented a barrier to engaging stakeholders to mobilise decarbonisation projects.

Costs: concerns were raised around high capital costs of decarbonisation projects, as well as the operational costs associated with the electrification of heat, additional costs resulting from distribution network upgrades, and the impact all of these have on payback periods for projects, sometimes making for challenging investment decision-making.

Funding, finance and investment was the most prominently discussed theme. Budgets can often restrict multi-year projects, with many sectors unable to carry budgets from one financial year to another. Accessing public funding can be complex, with short time windows and significant resource requirements for funding applications.

Delivery: There is a lack of external supplier availability and mature supply chain to support projects. Scheduling constraints and delays limit when works can be carried out (a particular issue across healthcare and education sectors). A lack of experience (particularly in procurement), infrastructure challenges, and timescales remained as concerns for heat networks. Grid capacity concerns were noted particularly regarding associated cost and timescales. Challenges around timeframes and meeting net zero targets were raised, with a lack of certainty around how long projects could take.

Opportunities

Information and data: Participants called for an increase in the promotion of success stories, showcasing successful funding projects and knowledge sharing.

Stakeholders and partnerships: collaboration with other public sector bodies, as well as public-private partnerships could facilitate decarbonisation projects that also reap benefits for the community.

Resourcing: There is an opportunity for significant retraining and upskilling given the scale of decarbonisation works needed.

Funding, finance and investment: Participants highlighted benefits in increasing the time window for public funding applications, to allow time for project development. They suggested reductions in the complexity of applications down to high-level plans, with more reliance on trust. Heat networks were identified as a potential solution, particularly for large sites, however a lack of experience (particularly in procurement), infrastructure challenges, and timescales remained as concerns.

Delivery: Procurement concerns were highlighted, but a new procurement framework was suggested as an opportunity to help alleviate issues, such as a lack of confidence and control. This included the suggestion of fixed-fee procurement exercises with three or four suppliers, which could be tweaked based on specific buildings. Heat networks were identified as a potential solution, particularly for large sites.

Conclusions

Our research shows the additional cost to decarbonise heat across all Scottish public sector buildings will range from £3.3 billion to £8.7 billion, with a medium estimate of £6.1 billion. We determined that more detailed data sources could impact these estimates. Using the same data but applying different cost estimate methodologies resulted in medium estimates of between £3.3 billion to £7 billion, showing consistency in the order of magnitude of the main results.

Our model has shown that targeting certain types and sizes of buildings can help to develop strategies for cost-effectiveness with respect to carbon savings. For instance, the largest 10% of buildings can be decarbonised at an estimated £2 billion, impacting 37% of carbon emissions in the public sector. We also found that 63% of costs will be in urban environments and 45% of the costs overall will be in buildings constructed before 1919. There will be challenges with these building categories, such as uncertainty around space for low carbon heating technologies, additional enabling measures in old buildings and technology type decisions by individual building owners.

Qualitative analysis of semi-structured interviews with stakeholders across the public sector identified that key drivers for decarbonising heat in the public sector span key themes such as information and data availability and use, costs, funding/finance and investment, public sector skills and capacity, stakeholders and partnerships, delivery constraints, and organisational considerations specific to each organisation type (Education, Healthcare etc).

Recommendations

We have developed recommendations based on the qualitative and quantitative findings of this research. These recommendations identify evidence-based actions which address key barriers and opportunities for decarbonising public buildings. They are categorised into four themes:

• Improving data availability and utilisation.
• Clear retrofit and decarbonisation pathways for public buildings.
• Upskilling public sector officers to enable delivery at scale.
• Central coordination to support public bodies on key challenges.

References

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AECOM, 2024. Spon’s Mechanical and Electrical Services Price Book, s.l.: s.n.

BEIS, 2016. Building Energy Efficiency Survey. [Online]
Available at: https://assets.publishing.service.gov.uk/media/5a75964540f0b67f59fce0d4/BEES_overarching_report_FINAL.pdf

BEIS, 2021. Non-Domestic and Domestic Renewable Heat Incentive (RHI) monthly deployment data (Great Britain):. [Online]
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Available at: https://www.cibse.org/knowledge-research/knowledge-portal/guide-f-energy-efficiency-in-buildings-2012
[Accessed January 2024].

CIBSE, 2021. CIBSE. [Online]
Available at: https://www.cibse.org/knowledge-research/knowledge-resources/knowledge-toolbox/benchmarking-registration

Climate Change (Scotland) Act, 2009. s.l.: s.n.

ClimateXChange, 2023. Network investment costs of the heat transition in Scotland. [Online]
Available at: https://era.ed.ac.uk/handle/1842/39851
[Accessed January 2025].

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Available at: BEIS Document Template – Standard Numbering – Curve Only Cover Page Image

DESNZ, 2024. Average temperatures, heating degree-days and deviations from the long-term mean. [Online]
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[Accessed December 2024].

DESNZ, 2024. Green Book supplementary guidance: valuation of energy use and greenhouse gas emissions for appraisal. [Online]
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[Accessed 2024].

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[Accessed December 2024].

Energy Systems Catapult, 2022. Energy Systems Catapult: LAEP Guidance and datasets. [Online]
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Eunomia, 2020. HEAT PUMP MANUFACTURING SUPPLY CHAIN RESEARCH PROJECT, London: Department for Business, Energy & Industrial Strategy.

Hackett, A. & Strickland, K., 2018. Using the framework approach to analyse qualitative data: a worked example. Nurse Researcher, 26(2).

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Available at: https://discovery.ucl.ac.uk/id/eprint/1566603/1/heat%20pump%20load%20profiles%20paper.pdf

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Scottish Government, 2021. Heat In Buildings Strategy, s.l.: The Scottish Government.

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Appendices

Appendix A – Methodology

Initial steps

Steering group

We established a steering group to guide the research with critical feedback on the findings and outcomes. The steering group consisted of representatives from the Scottish Government, ClimateXChange, Scottish Futures Trust, and the Turner & Townsend research team. The group was consulted on a bi-weekly basis and also provided critical input via a feedback workshop.

Literature review and cost data

Following the formation of the steering group, we began with a developmental review of the literature. We chose this as the preferred technique as it helped us develop policy research-oriented ideas that are grounded in previous research (Templier & Pare, 2015). The developmental review was well-suited to this research as it goes beyond simply synthesising prior studies; its novelty lies within proposal of new ideas and an output that can solve an extant problem, and thereafter be generalisable throughout the domain of applicability.

We reviewed data and literature from known sources as a baseline of the research. This included datasets and benchmarks to cover gaps. It also included the most up-to-date data and insights from the Local Heat and Energy Efficiency Strategies (LHEES) Review we conducted for the Scottish Government, which includes all heat network zones and decarbonisation drivers represented in all 32 LHEES and Delivery Plans.

In addition, we drew from retrofit cost datasets based on our data from programmes including the Retrofit Accelerator – Workplaces (RA-W). This has data points of real-world costs of heat decarbonisation and energy efficiency from over 600 projects. We also utilised our cost database through the Turner & Townsend Cost Management function, which stores large volumes of real cost data from projects delivered across Scotland and the UK.

We included or excluded evidence based on an evaluation of its applicability. This was primarily evaluated on its ability to help answer the research question and objectives with queries such as: is it relevant and timely to the cost of heat decarbonisation landscape? Is it up to date? Does it shed light on barriers in data collection?

We created a data log to assess the literature and data sources, this recorded the following information on each data source to support quality review checks and assimilation into the research:

1. Core focus/theme
2. Author
3. Year published
4. Region(s)
5. Measures covered
6. Asset identifiers
7. Usable energy data
8. Cost data included
9. Quality: methodology
10. Quality: data
11. Relevant type/granularity
12. Modelling input relevancy
13. Assessor comments
14. Methodology

We removed data sources that we planned to access but were unavailable. As part of the review, the quality of evidence (e.g., data sourcing and methodology) was appraised. If poorer quality evidence was determined to negatively affect the quality of the results, it was excluded or superseded see Section 9.2.4. Finally, we tested the data to our Cost Management data, which has asset lifecycle costs based on asset type included. This step was carried out as a sense check only and didn’t impact the final model calculations.

Stakeholder engagement

A Stakeholder Management Plan was created to identify stakeholder engagement methodology, approach and plan. Two phases of engagement were carried out: data collection and drivers of heat decarbonisation.

This also defined our approach to aligning the qualitative research with GDPR and ethical research guidelines.

1. We stored personal data securely and with permission from individuals, including interview recordings and written responses.
2. We clearly communicated the research goals with participants, informing them why they are being engaged, and what this research informs.
3. We informed all participants of their right to decline at any point during the research.
4. We committed to anonymise all responses and deleting information in a prompt manner.
5. We only engaged with participants after they consented to the research and were clear on these five points.

Beyond this point, our methodology diverged into two approaches, each covering one research aim.

Aim 1: Cost of heat decarbonisation

This section describes the methodology for developing the estimated cost of heat decarbonisation.

Data collection

We engaged participants to provide datasets covering assets (building characteristics and energy data) and heat decarbonisation projects (completed project costs, quotes for installation, and other costs). A Request for Information (RFI) was issued to stakeholders to collate this data (Table 7).

Evidence provided was included or excluded based on an evaluation of its applicability, primarily based on its ability to help answer the research question and objectives. This considered whether it was relevant and timely to understand the cost of heat decarbonisation.

We contacted 116 stakeholders across 75 public sector organisations in our engagement activity. In addition, we engaged with the Steering Group and leveraged data through contacts within Scottish Government and Scottish Futures Trust. Finally, we also leveraged relationships from within Turner & Townsend. The breakdown of stakeholders engaged by sector is in Table 6. In total, we collected data (additional to NDA) for over 1,400 buildings and 65 decarbonisation projects.

Data quality review

Data sources were reviewed for completeness and quality. In the data log, the data sources were analysed by ranking the quality of the methodology and quality of data from a rank of ‘Poor’, ’Average’ and ‘Good’. The data source was also reviewed against relevancy of type/granularity of data and relevancy to the Cost Model, this was on a scale of ‘Low’, ‘Medium’ and ‘High’.

Building hierarchy

We created a building data hierarchy to determine the best source of data to be prioritised to represent the building stock. This ‘layering’ helped to increase the confidence of the datasets and provided a more accurate representation of public sector buildings before the cost estimates were applied to these. We preferred data from Building Assessment Reports (BARs) and the datasets provided by public bodies over NDA. The preferred points of data (e.g. heat demand and floor area) replaced the data from NDA. The rationale for this hierarchy is set out in Table 8.

Technology hierarchy

We created a technology cost data hierarchy to determine the weighting of each cost source into the model. This is set out in Table 9 & Table 10. We gave the strongest weighting to data source from stakeholder data because it is most applicable in terms of location and building type, and it includes total costs of decarbonisation projects. Thereafter, data sources rank higher if they include enabling costs and have higher relevance to the research in comparing types of building and location to the public sector in Scotland. Costs from the cost data sources have been adjusted for inflation using Office for National Statistics Consumer Price Index (CPI) data (Office for National Statistics, 2024).

In addition, optimism bias used by BEIS for other low carbon heating projects at a rate of 21% was used for the cost metrics (BEIS, 2023).

We agreed a building technology decision tree with the Steering Group to cover the main categories of heat decarbonisation technology Figure 14. Where a building has existing low carbon heating, there will be no cost given for decarbonisation. Where a building is in a heat network zone and has a heat demand over 75kWh/m², it will connect to a heat network. Where buildings are not in these heat network zones, are rural and have a heat demand of over 200kWh/m², this will have a GSHP. In all other scenarios, the building will have an ASHP.

Cost model

The cost model used data from two main datasets which we developed: the building dataset and the costs dataset.

The building dataset comprises all Scottish public sector buildings and consists of data from stakeholders and national databases such as Non-Domestic Analytics (NDA). The cost model is made up of project data from stakeholders and other data sources from the literature review. A public building was defined as having the public sector flag from the NDA database, but not including the building type ‘Place of Worship’.

Throughout the process, we constantly reviewed and revised sources where we found data gaps, opting for the best data available. This included synthesising and checking the data sources against similar datasets.

For the cost dataset, we created a database of public sector decarbonisation projects and collected key variables for each project including:

1. Building Type
2. Location
3. Organisation
4. Floor Area
5. Size of low carbon heating (in kW)
6. Building Age
7. Remoteness – Rural/Urban ranking
8. Type of low carbon heating

We used these variables to strip away metric factors from the base cost of each project to get a baseline cost for each project. This allowed a baseline cost to be produced to use for analysis on average costs and benchmark costs across the sector and technologies.

The variables were sourced during the literature review and referenced for their sources, see Appendix C. We identified variables which were then compared and combined to form metric factors which are applied to the costs in the cost model, and then applied to the costs in the building model.

The base cost for each technology was applied to the building assigned with that technology. The variables are then applied to the base heat demand for each site and multiplied by the cost metric for each technology. Each technology has a ‘low’, ‘medium’ and ‘high’ cost metric based on the cost model analysis. Each has been applied to the buildings and three costs have been produced, this gives a main cost with banding around a range of potential costs.

Secondary methods are used to test the main methodology and giver tolerance percentages. This checked for errors as well as the scale of difference in methods. These secondary methods are:

1. Costs per m2.
2. Costing low carbon heating based on changing cost per kW variable depending on the overall size (kW) of the heat demand.
3. Testing the heat demand of the site using benchmark heating hours.
4. Utilising more reliable sector-specific building data sources (only NHS and Colleges were available).

Cost estimate methods

Method 1 – Estimating heat demand on building type

This primary method is based on utilising the Building Type and Floor Area to determine a required size of low carbon heating for each building. The heat demand is comprised using datasets on average heat demand for different building types and introducing assumptions to include typical design of low carbon heating solution. We used the following assumptions:

• The heat demand uplifted by 8% to account for hot water demand (Department of Business, Energy and Industrial Strategy (BEIS), 2018).
• Peak load has been accounted for by reviewing typical peak:mean ratio in a winter day of 1.37 (Love, 2017).
• Used a redundancy design for each building consisting of three heat pumps, where if one were to fail the remaining two would meet the demand. In effect, this increases the installed heat pump capacity by a third.
• The peak heat demand will be covered by the proposed low carbon heating source.

We then applied the metrics to the heat demand on the following building characteristics:

• Age
• Insulated or Uninsulated
• Location

We then applied the high, medium and low-cost estimates developed from the data sources hierarchy. In the final step, we removed the costs to replace the existing fossil fuel system with a ‘like-for-like’ system, leaving only the additional cost of decarbonising heat. Where a building is connected to the gas grid, we used the costs for a gas boiler, otherwise the ‘like-for-like’ system is an oil boiler. Costs for gas and oil boilers are taken from SPONS 2024 (AECOM, 2024). The high-level methodology for developing the cost model is:

• Collect stakeholder data
• Strip away identified variables
• Combine with other data sources
• Apply to Public Sector buildings
• Apply variables from Step 2

Method 2 – Estimating heat demand on energy consumption

We used a different methodology for estimating the heat demand of each building. We used kWh consumption from the building dataset and combined this with CIBSE data on building types (CIBSE, 2012). We then used 30-year average heating degree days (DESNZ, 2024) to convert this to heat demand of the building. Costs from the cost data hierarchy are then applied to the heat demand of each building.

Method 3 – Estimating cost on floor area

We utilised cost data on estimates for a cost per metre squared variable instead of a cost per kW. The cost estimates are applied to the floor area of each building with the same age, location and insulation metrics as in methods 1 & 2.

Method 4 – Estimating cost on variable heat demand

Method 4 is similar to Method 1 with one change: we used a sliding scale cost benchmark depending on the size of the proposed low carbon heating system. The sizes are placed in ‘buckets’ and given a cost metric for each bucket. These are show in Table 11.

Method 5 – Comparing with stakeholder building data

We used the more accurate data received for NHS and Colleges estates to compare outputs from the model to the stakeholder building data for the number of buildings and gross internal area (GIA) of these buildings. The change in these overall figures was used to calculate revised cost estimates for the NHS and Colleges respectively.

Heat network cost estimates

We estimated the costs for the subset of buildings connecting to a heat network through a different methodology. We mapped the buildings dataset alongside all heat network zones developed by local authorities, which were shared with us as part of the LHEES Review. These zones were the first iteration produced by 31 Scottish local authorities. The buildings which fell within the boundaries of these zones were marked for heat network connection.

Using the NDA dataset for urban/rural ranking, costs for pipework were estimated using ‘hard’ or ‘soft’ cost estimates for digging. Hard refers to paved areas for laying pipework, and soft refers to non-paved areas. These estimates are given along a sliding scale with a greater proportion of costs estimated as ‘hard’ for urban environments and lower proportion for rural environments.

The estimates assume a pipework length required for connection of 100m with the low estimate assuming 50m and high estimate assuming 150m. The cost estimates are based on recent project costs available to the research and based on 2024 figures.

The cost to connect to a heat network will typically be through a network ‘connection cost’, which will include capital investment costs. Other capital and ‘connection costs’ were not included in the methodology due to being highly subjective to the pricing mechanism used by each heat network operator. The cost of Heat Interface Units (HIU) was not included, however, for the average building, including the costs would increase overall investment by 3%.

Identifying gaps and limitations

There are several limitations to the research which should inform the interpretation of the results. These include:

1. The technology costs are derived from a range of sources, and some sources include enabling costs while others just include the cost of the heat pump technology.
2. Data sources on costs are prior to or during the period of high inflation experienced between 2021 and 2024. While inflation has been factored into the year of the data source, the high level of inflation leads to the possibility of greater uncertainty or variability of costs across the specific technologies. The real costs could be greater or lesser than our inflation-adjusted figures based on the technology and the level of inflation it experienced. Further, the costs we provide are 2024 costs and these would need to be further adjusted for future reference. However, the quality of the data would further degrade and increase in uncertainty with subsequent adjustments and it is prudent to seek more up-to-date cost data instead.
3. NDA data is known to have limitations and is not a reliable reflection of the reality of the number, floor area, energy consumption or exact type and use of each building. Since only 18% of non-domestic buildings in Scotland have an EPC, the modelled data far exceeds the actual data, often resulting in significant variance from the real building characteristics. It is clear from receiving estates datasets from NHS and Colleges, that there are significant differences between these and NDA. For example, for NHS data there is a variance of double or more for floor area between NDA and NHS sets.
4. The decarbonisation pathway developed for each building is built on a series of assumptions about the most suitable technology. There could be more cost-efficient methods to decarbonising each specific building than our assumptions, such as meeting base load with a heat pump and peak heat demand with a cheaper alternative such as thermal storage or an electric boiler. In addition, larger, more complex buildings could have a combination of GSHP and ASHP as a peaking plant. There are various approaches which should be factored in at design stage that this research could not consider for a national-level model.
5. No costs for additional energy efficiency measures or renewables have been included and, therefore, the costs are only for heat decarbonisation. In reality, many buildings will have energy efficiency measures suitable to reducing energy demand proposed as part of decarbonisation works, along with renewable technology options. Therefore, the overall cost of the low carbon heating measure may be reduced with reduced demand and the overall cost of the project may vary depending on the package of measures selected by the public body.
6. The cost estimates are a snapshot in time of research and these results could change with improvements to the underlying data quality and availability.
7. A flat rate for hot water consumption is applied due to uncertainty of the existing data for heating to hot water ratios. In reality, this will vary significantly depending on the building use. For example, leisure centres with swimming pools may use significantly more hot water.
8. Sources of sector building heat demand uses temperatures from Berlin geographical measurements.
9. Availability of data: Building Asset Registers from Local Authorities were not available for data use. e-PIMS data was also not available for analysis.
10. Changes to the current proposed heat network zones will affect the results and the research would need to be updated in the future as the zones go through iterations. Ultimately, the number of buildings connected to het networks may vary depending on how they are developed across Scotland. Furthermore, we are unable to account for possibility of small-scale heat networks and ground loop systems outside of heat network zones. We are also unable to determine the buildings within a heat network zone which are unable to connect to a network.
11. This is because metrics for assumptions in the model are evidenced and the outputs have withstood various tests and sensitivity analysis. However, the data is not reliable for use at a more granular level and will vary on a building-by-building level. It cannot be used as a metric to determine cost effectiveness or performance of sector, organisation, or building projects.
12. Our estimates do not apply a discount rate or programme this cost over multiple years that it will likely be met. As the market for decarbonisation matures, we expect to see a reduction in costs with economies of scale, procurement strategies, growth in skills and capacity, market efficiencies and multiple other drivers for cost reduction.
13. Our analysis does not consider the operational cost of decarbonisation. The future of energy markets and electricity pricing is unclear. Subject to policymaking and infrastructure investments, these costs may reduce and result in a strengthening business case for decarbonisation. A reduction in operational costs is likely to drive demand for electrification of heat, shifting the perception of heat decarbonisation from a cost to an investment. This is expected to be coupled with a further reduction in the capital costs for heat pumps and heat networks (subject to sound supply chain support and regulations).
14. There are approximately 2,100 buildings in NDA data that has insufficient data to analyse as part of this research. We have assumed that these building require no change and therefore, no decarbonisation costs have been attributed to these buildings.
15. For the cost estimate for buildings connecting to a Heat Network, costs for HIUs have not been included. Taking one source and the average building heat demand of 150kW gives HIU cost of £9,000 per building (AECOM, 2024). The average cost for a building connecting to a Heat Network is £280,000, therefore HIU costs add 3% onto the overall cost. The cost increase is a maximum £25,000 for the largest buildings.

Methodology assumptions

The methodology for this research was shaped alongside the Steering Group, who agreed a list of assumptions. These assumptions were necessitated by the limitations as well as the available data and scope of the research.

1. Hot water decarbonisation is assumed to be covered by the new low carbon heating solution.
2. Cost estimates do not include the ‘like-for-like’ costs for replacing the fossil fuel heating system. The cost estimate will only cover the ‘additional cost’ of replacing the fossil fuel system with a low carbon heating system by subtracting the cost of the fossil fuel system.
3. All buildings in heat network zones are assumed to connect to a heat network as their decarbonising pathway. Refer to Figure 14, for full decision tree.
4. Costs are be based for all buildings in today’s money, the immediate cost for decarbonisation.
5. Costs for decarbonisation via heat network are based on only the connection costs, and not any required heat network construction or decarbonisation.
6. Technology costs are based on standard air-water ASHP and generic GSHP installations.
7. DNO costs are excluded from the main cost output. Previous research from ClimateXChange can be viewed for further information ^[3].
8. The scope was limited to only heat decarbonisation, excluding energy efficiency measures and renewables.
9. Significant enabling measures for specific buildings are excluded, for example, ventilation, thermal stores, heating emitter replacements, temporary boilers and building closure.
10. For Method 2, existing boilers were assumed to have an efficiency of 90%.
11. For Method 2, hot water heating hours were assumed to be 500 hours per annum.
12. Carbon emissions have been calculated using kWh figures from NDA and using Government carbon emissions factors (DESNZ, 2024).
13. Heat Network cost estimate: heat exchanger costs have not been included. On analysis, these would increase overall costs by approximately 3% for the average building.
14. The cost to connect to a Heat Network for the public sector building owner, is usually a connection fee, which can include the pipework costs, other investment costs and charges. Therefore, the costs will vary on a network by network basis.

Aim 2: Drivers of heat decarbonisation

This section describes the methodology for developing themes associated with drivers for heat decarbonisation.

Topic guide

We developed a topic guide to support 45-minute semi-structured interviews. The objective was to understand the key drivers for decarbonising heat, including the barriers and opportunities. We agreed on the following questions with the steering group:

1. In your experience, what are the key barriers for the following elements to decarbonising the public sector estate?
2. Costs and financing
3. Timescales
4. Stakeholder buy-in
5. Resourcing
6. What are the key opportunities for the following elements to decarbonising the public sector estate?
7. Costs and financing
8. Timescales
9. Stakeholder buy-in
10. Resourcing
11. What are the key drivers for heat decarbonisation in:
12. Your organisation / across your estate?
13. Public sector organisations across Scotland / the wider public sector estate?
14. What can Government do to remove these barriers / increase opportunities?

Participant recruitment

Following initial outreach with public sector stakeholders to facilitate data collection, we invited participants to engage in a semi-structured interview to discuss their experiences of heat decarbonisation projects completed to date and in progress. Many participants had already provided project-specific data or case studies which were utilised as a starting point for discussion. We used purposive sampling to recruit a cohort of participants, opting to recruit participants across as many sectors as possible.

We were not able to engage with participants in every major sector but covered most sectors via a combination of written responses and interviews. A limitation of the recruitment is that smaller organisations with limited resources could not engage with the research and therefore, their challenges were not identified. The breakdown of participants engaged by sector is in Table 12.

Data collection

We held Teams interviews with the participants. These were automatically transcribed and checked. We used a semi-structured approach to allow the identification of key themes and dive deeper into key areas and novel findings. The interviewer was able to facilitate comparison between the answers of different participant, allowing flexibility and exploration of topics in greater depth where appropriate. The four key discussion points in the topic guide provided structure to the conversations:

1. Barriers to decarbonising the public sector estate,
2. opportunities arising from decarbonising the public sector estate,
3. drivers for heat decarbonisation in public sector organisations, and
4. what stakeholders believe Scottish Government could do to remove identified barriers and maximise opportunities.

Framework analysis

We analysed the raw qualitative data from stakeholder interviews using framework analysis using the following steps:

• Familiarisation of raw data: the research team acquainted themselves with the raw data and began to identify emerging themes.
• Identifying themes: themes and sub-themes were formulated into a coherent thematic framework and discussion points and issues were identified. These were consolidated and interrogated to formulate the drivers for heat decarbonisation. Broad themes were defined first, and then broken down into sub-themes based on common threads of discussion identified across multiple interviews – e.g. ‘Cost’ as a broad theme was then broken down into ‘Capital costs’, ‘DNO costs’, and ‘Payback periods.’
• Indexing: the research team then used qualitative coding to categorise the data according to final themes.
• Charting and summarising: data was arranged into a discernible order.
• Interpretation/Mapping: the framework analysis concluded with researchers linking the data to the research questions by summarising participant viewpoints and developing an overarching narrative presented in this report.

Appendix B – Stakeholder views

Information and data

Central database

Many participants cited a lack of a central database of relevant data on buildings and projects (e.g. energy data, building asset registers). They highlighted that useful or reference data relating to projects or assets is dispersed across different teams or databases and collating it would require a significant amount of work.

“…we don’t currently collate all that information into one database so tying it all together will be a massive piece of work for over [all] non domestic buildings.”

Local Authority

This claim is also backed by our review of datasets as part of the data collation exercise for this research. For example, where asset registers were provided by public bodies, they did not comprehensively cover key information in a standardised format, such as UPRNs, floor area or heat demand for each building. The quality of data varied across public bodies and many datasets typically lacked full coverage for the key information across all buildings.

Sharing of successes

Several participants suggested that more could be done with the information surrounding positive outcomes of works delivered this far. This included publishing successes alongside public sector climate change reporting duties and sharing and promoting successful initiatives. Participants acknowledged that Scottish Government currently publish quarterly reports on successful publicly funded decarbonisation projects. However, they suggested that this could be strengthened through in-person visits to learn about successful decarbonisation projects. This would enhance awareness and understanding of low-carbon solutions and how they operate.

“We should be promoting what we have already done; getting people to come and look at the new plant. Showcasing successful funding projects too – we currently publish a quarterly guide but that’s it.”

Further Education

“We have an opportunity to showcase as an organisation what we’ve done and what is achievable. There is an opportunity to become a sector and even national leader, to prototype things.”

Further Education

Supporting the above finding, greater knowledge-sharing and collaboration has also been a theme throughout several council’s LHEES, including Fife, Aberdeenshire, Moray, West Lothian and The Highland Councils. These councils suggested that a data sharing model or platform could be implemented to improve awareness of building performance, and share best practice.

Organisational considerations

Estate challenges

Some participants with larger buildings or sites pointed to space constraints which preclude obvious solutions to heat decarbonisation.

“Our large hospital sites….have about 50% of all our NHS emissions. That one, multi-building site is our main acute hospital…The amount of heat produced at the moment to serve these sites is a difficult challenge with a heat pump and that coupled up with the lack of space on site…We don’t really have any space on site anywhere to install heat pumps, so there is going to have to be a change somewhere.”

Healthcare

This is not universally the case, as one participant in Further Education identified, some are “fortunate to have newer buildings up to standards and heat pump ready” and a “massive plant size” (capacity and floor space) compared with the boiler previously installed.

A Healthcare participant referenced the need to reconfigure current plants at large sites, which currently have biomass, CHP and steam boilers, to which governance arrangements through Private Finance Initiatives (PFI) may pose a challenge.

“It would be a nice tick in their [the PFI’s] box to decarbonise, but it’s not what they’re contracted to provide.”

Healthcare

An additional concern for the Healthcare sector was electricity demand resulting from machine upgrades.

“As time goes by, there are bigger and better machines that we keep purchasing. Specifically, in the imaging side…that comes at a cost of electricity as opposed to…power. So we can do a vast amount of upgrades of LEDs and variable speed drives and various other technologies, and then somebody comes along and goes ‘We’re going to put in a new CT scanner’ and you go ‘Oh well, thanks for that. That’s just reversed our progress’”.

Healthcare

In this context, the participant was indicating that there are competing demands for limited electrical capacity available. A requirement to install medical equipment will likely outweigh the case for heat pump installation. In a similar vein, one local authority participant expressed that strategic estate decisions could impede progress towards net zero and decision-making.

“Recently in the local authority there have been a number of new buildings that the council have upgraded or taken possession of, increasing their overall estate size. There are consultations to reduce the estate size, however, these recent acquisitions have been larger than those that are being removed. The renovation of the [building name redacted] has significantly increased the energy consumption of the estate with [the building] requiring precise conditions, meaning the plant runs near constantly. An additional acquisition of a sports centre will also increase the estate size.”

Local Authority

This can cause conflicts in capital planning in terms of the need for new facilities versus the need to decarbonise heat in existing buildings. New construction can potentially be more attractive option, out-competing retrofitting for limited budget. It should be noted, however, that with initiatives such as Single Scottish Estate, it is likely that the public sector property footprint will reduce in the longer term.

The characteristics and makeup of estates according to their varying function within the public sector often present unique challenges when planning for decarbonisation interventions. Case-specific and bespoke approaches are required to address these challenges.

Government policy

Competing priorities

Concerns were raised that as the Government introduces new legislation, local authorities must reconsider where to direct resources, sometimes to the detriment of decarbonisation initiatives.

“With such a large estate, plans are required to try and budget and plan resources for projects. This however, changes with new projects, failing plant, new government initiatives such as the free school meals and early years projects diverting resources away from decarbonisation projects, inadvertently increasing the consumption of the estate.”

Local Authority

However, participants noted that national net zero and public sector specific decarbonisation targets do drive action. The accountability of public reporting was highlighted as a particular motivation to act.

“[The driver] for us is looking at our carbon footprint…because we have a public duty to report on an annual basis…so there’s an understanding within the organisation that we have to look at the measures.”

Further Education

One participant drew attention to the need for greater policy focus on infrastructure requirements (e.g. grid upgrades). They highlighted the need for clarity and investment into electrical grid upgrades to facilitate decarbonisation of heat.

“Barriers are going to be the infrastructure and how long that’s going to take…unless there’s massive drive by legislation…it’s going to be the best part of another 25 to 35 years.”

Further Education

“Funding infrastructure is a massive part to play in this as well. If the network can’t cope with what we’re prepared to do, then we go down a route of battery storage etc.”

Further Education

One participant mentioned the link between legislative drivers and budget allocation, suggesting that legally binding targets were required as a “lever to take to senior managers” (Local Authority) to ensure decarbonisation projects were given ample weight amongst spending priorities. This participant highlights that clear regulations with legally binding targets are seen among the prominent organisational drivers for action.

Regarding national budgets, participants suggested that targets should also be accompanied “with a package of funding and realistic timescales” (Local Authority), asserting the link between legislation and funding to facilitate deliverability. Additionally, greater emphasis might be placed on infrastructure upgrades (both in terms of policy and funding provision) which will facilitate the implementation of low-carbon heating installations across public sector estates at scale.

Timescales

Local authorities raised that a lack of clarity with regard to the requirements and timescales within legislation on heat in buildings presented a barrier to engaging stakeholders to mobilise decarbonisation projects. The perception of deliverability is impingent upon a clear target in the regulation, accompanied with ample support and funding routes. The lack of these may present a barrier and potentially lead to inaction.

“That’s a year now since the [Heat in Buildings Bill] consultation came out…there’s an uncertainty about what it is we have to achieve and by when…until we get the legislation in place, that Council would say, why would we need to go and do this?”

Local Authority

“We’ve gone by the 2038 target that they talked about in the Heat in Buildings Strategy, but at one point in the consultation…they were talking about even bringing that forward…unless it’s going to be achievable, then people won’t even try.”

Local Authority

“It’s a strategic objective…unless we get actual legislation with timescales and that comes with a package of funding…people maybe won’t even try.”

Local Authority

This is exacerbated by the transitory nature of electoral cycles, which impedes the creation of long-term targets and strategic plans by making them vulnerable to change with new governments. One participant hypothesised about upcoming elections, stating that decarbonisation policy is often a casualty of changing cabinets. They stressed the need for consistency in policy across governments.

“The budget was announced yesterday for 25/26, so the end of this current session of parliament. March 26, the Parliament will be dissolved for elections in May. So it’s got to be something that transcends electoral cycles and party politics…and that’s the difficulty for the politicians. How do you make long term targets…strategic plans when the Parliament is re-elected every five years?”

Local Authority

This theme is consistent with discussions in local authority LHEES. Many councils raised issues around the uncertainty around policies in the Heat in Buildings Strategy/Bill, expressing that this depleted the influence they could exert for timely upgrade of buildings. Interviewees suggested that regulatory enforcements that are comprehensive, with consistent timescales, legally binding targets and accompanying funding and support, could all help address these barriers.

Stakeholders and partnerships

As an opportunity, one participant raised that collaboration with other public sector bodies, as well as public-private partnerships (PPPs) could facilitate decarbonisation projects that also reap benefits for the community.

“We’re going through an exercise at the moment engaging with private sector partners and other public sector like Scottish Water, to install renewable heat and battery storage systems on our sites now…There could be, and it’s likely there will be a community benefit element of that. So there’ll be some of those funds allocated to the area, to support communities.”

Healthcare

In other words, the participant saw an opportunity for collaborative or place/area-based decarbonisation projects, including heat, to create social value, in addition to the immediate benefits such as those to their organisation’s emissions, and relieving strain on grid capacity in the area.

Costs

Capital costs

A key theme amongst participants was lacking capital to initiate decarbonisation works.

“If someone gave me a magic wand and a big pot of money, a lot of this would have been done a long time ago.”

Further Education

“It’s going to cost how many millions to electrify heat? And we certainly don’t have it.”

Healthcare

This issue was closely associated with a reliance on public funding. One participant suggested that funding for non-domestic projects in the public sector needed to be increased. There were comments on the complexity, time and resource requirements of public funding applications. There was also recognition that various funding models might be required, including consideration for private sector investment. However, that was not considered as a clear and readily available option.

“The non-domestic side has very little capital funding available…if they want us to do it, funding needs to be made available – the way that it looks, they’re pushing us towards a self-private finance type arrangement because there’s just not enough money in the public funds.”

Local Authority

Supplier markup

A challenge arising later in the project development pipeline raised by one participant was a ‘markup’ pertaining to suppliers’ awareness that projects are being publicly funded.

“As soon as people find out you’re getting funded and it’s going through a funding stream, there seems to be a massive markup on that”.

Further Education

While participants called for more funding for non-domestic public sector decarbonisation, this participant identified that there is a risk that this could exacerbate capital costs by suppliers who increase their pricing.

Distribution Network Operator

Many participants specifically saw Distribution Network Operator (DNO) costs as a barrier, especially given the variability and lack of knowledge around these costs. One council stated that their DNO costs had been anything between £3,000 and £100,000 on various projects, while asserting that the higher costs and greater issues often occurred in areas with poorer grid infrastructure. Another healthcare participant felt that their area provider had ‘very high costs’.

DNO engagement was a primary aspect of many councils’ LHEES strategy. They engaged in communication around electricity grid capacity as this was among the major risks for decarbonisation. These councils recognise that early and ongoing engagement may facilitate greater understanding of what the requirements and associated DNO costs are. This would also benefit public sector organisations as they approach heat decarbonisation projects.

Payback Period

Participants indicated that it was difficult to manage long-term payback periods. This meant careful consideration was required with respect to the most cost-effective approach for their organisation, as opposed to always following the ‘fabric first’ principle.

“There’s a massive cost [to fabric measures] and are we going to get a return on investment at the same time when we could invest in decarbonisation of our gas systems?”

Further Education

By contrast, many saw the operational costs of heat pumps due to the higher cost of electricity as an important barrier to address.

“Because the price of electricity is so high, to put in a heat pump into one of our buildings actually results in an increase in our utility bills…It’s hard to convince someone to install a technology which is going to cost you more in the long run.”

Further Education

“Last financial year we were looking at about £20m for gas, and £39m for electricity, so £2m [of financial support] will help us to do some elements, but it’s at the margins when you look at those kind of figures.”

Healthcare

Accordingly, one participant highlighted the review of electricity market arrangements (REMA) as a major opportunity to evolve the energy markets by incentivising the electrification of heat through lower operational costs. This could address the challenges around the cost of electrifying heat, potentially making decarbonisation more cost-effective than a like-for-like replacement with a gas boiler.

“The UK Government [are in the]…third consultation about the review of the energy markets and they need to be doing something that’s going to incentivise the electrification of heat…to say it’s going to be cheaper in the long run.”

Local Authority

Broadly speaking, balancing considerations of upfront versus operational costs and payback period makes it difficult to plan how and when to decarbonise. The strongest incentive may be through evolving the energy market (a policy area reserved to the UK Government) to drive down operational costs.

Funding, finance and investment

Budgets

Participants highlighted several challenges around budgets within public sector organisations. Notably, tight public sector budgets restrict the possibility of delivering decarbonisation works and increase reliance on central government funding.

Participants also highlighted issues around budget schedules, including misalignment between budget cycles and the time required to complete major capital works. Decarbonisation of major assets can potentially extend into multiple financial years, when including planning and delivery. However, the restrictions on spending and availability of budget in limited annual cycles with an often unclear forward outlook can make projects more challenging.

“We can’t hold any reserves, so the funding that we get a year needs to be spent in that year if we were to as a college make any commercial monies…So we cannot save money for any major projects, so that is a stumbling block for us.”

Further Education

This participant noted that in the past colleges had often held reserves in the hopes of delivering a future project. The multi-year issue is compounded by the variability of funding throughout the year. A delay in grants being paid out may present issues for grant recipients who do not have significant amounts of money in their own reserves which would allow them to pay contractors and then wait several months for reimbursement. The same participant identified that this could reduce confidence in the current system of funded decarbonisation works. The variability and uncertainty of public sector budgets over long-term periods can also lead to missed opportunities to pursue long-term contracts which facilitate decarbonisation. This could include opportunities such as power purchase or heat supply purchase agreements, as one Further Education participant identified.

“There was a system…which was extracting energy from storage, networking through a type of heat pump system. But in order for us to tie in, it would be well supported and scalable to tie in with that company for a period of 20 years, and I don’t think anybody would be in a position to tie in a contract for as long as that.”

Further Education

These issues create a need for investigation into longer-term funding and alternative funding models, both, for organisational budgets and within funding schemes. This is also evident via local authority LHEES in which councils express a requirement to set out a long-term decarbonisation plan and accompanying long-term resourcing to facility its delivery.

“LHEES Strategies have been tasked to ‘set out the long-term plans for decarbonising heat in buildings and improving their energy efficiency across an entire local authority area’. Therefore, long-term resources are required within local authorities to allow the successful delivery of LHEES.”

Local Authority LHEES

Accessing funding

Access to public funding was frequently mentioned as an important facilitator to decarbonisation projects in the public sector. However, many participants had found these schemes to be challenging to access.

“We’re trying to meet government targets with one hand tied behind our back, and that comes down to how we can access funding and how can our board of management take these calculated risks, whether it is interest free loans or capital monies or a combination of both.”

Local Authority

One issue identified was timing applications and developing projects to the stage required to apply for public funding, which requires a great deal of at-risk funding in itself. Many participants’ outlook on funding schemes is that their current structure is not as conducive to the development of a healthy, predictable and long-term pipeline of projects. Participants highlighted the need for a shift toward more developmental and supportive funding style.

“[Funding has] a six week window for you to apply, and you pretty much have to have a shovel-ready project just waiting to go, which doesn’t really work if you’re trying to decarbonise a school because these projects need to be organised years in advance…So having these windows of opportunities for funding where everybody gets their application in in six weeks for a project that’s ready to go in March just doesn’t really add up at all.”

Local Authority

“I think they should make the funding easier to get as well…Give us a bit longer to try and make the application because we don’t have the time or the resources to go and work up projects and stick them on the shelf.”

Local Authority

Similarly, the resource requirements to complete a complex application within the brief window creates a significant strain on public sector organisations and requires the input of consultancies. The nature of these schemes could often result in additional work being created to deal with the application and administration, diverting the energy and money from decarbonisation projects.

“We need so many feasibilities up front…we’ve got consultants involved….we’re doing monthly monitoring claims. We generally need a full-time person and post to administer that fund.”

Local Authority

This is coupled with the requirement for matched funding contribution in most cases, which often means that sometimes only a limited portion of project costs are covered with the awarded funding. As a result, the same participant felt that public funding bids were often not worth the resource requirement put into them from within the Local Authority:

“It was less than a quarter of the actual project cost we’re getting through. I think generally the consensus is we won’t go for it again because it’s just been so, so difficult to pull the money through, so time consuming and it’s lining the projects up to that sort of funding as well.”

Local Authority

This sentiment was echoed by a participant who had sought funding through the Low Carbon Infrastructure Transition programme. They highlighted the lack of trust and rigorous evaluation regimes can add administrative burden, leading to additional resource allocation, delays and other issues.

“I’d say it [the Low Carbon Infrastructure Transition Programme] is maybe a little bit overly complex. I think the whole process of identifying projects right now, a business case, apply for funding, waiting on the funds being approved then getting approved in about September doesn’t really feel like a joint approach. It’s more like Government saying ‘Right, we’ve got some money, but you need to absolutely justify exactly what you’re doing and then we need to evaluate it’.”

Healthcare

The participant proposed an alternative, more simplified approach involving higher trust given to public sector organisations as partners.

“It should really be: ‘Develop your high-level plans and we will just give you the money every year’. Doing that they could cut six months of the year out and a whole process. And if it was a bit more collaboration reports, and a bit more trust in the seniors, with money allocated to each board to spend purely on decarbonisation, we’d get a lot more done a lot quicker.”

Healthcare

Greater efficiency was seen as important given the pressing timescales public sector organisations are working towards. One participant expressed that the process of allocating funding needs to change to facilitate meeting 2030 targets for NHS organisations.

In addition to simplifying public funding application processes, some participants felt that greater resource was required in key funding pots, especially in the non-domestic sector.

“The non-domestic side has very little capital funding available…there’s going to have to either be funding made available or the way that it looks, they’re almost pushing us towards a private finance type arrangement because there’s not enough money in the public funds.”

Local Authority

One Further Education participant also raised the sector-specific issue of restrictions on borrowing powers, stating they were unable to “apply for things like Salix (loans)”. The lack of a capital financing facility means a reliance on limited central government schemes and internal budgets.

In general, participants asserted that the funding landscape is complex, requiring them to pursue various limited funding routes to facilitate decarbonisation projects. They called for greater capital funding facilities to be made available and complex application processes to be simplified to break down barriers for delivery.

Financing models

As an alternative to relying on public funding, some participants felt that private finance initiatives (PFIs) presented an opportunity for public sector organisations with limited budgets to deliver retrofit works, with the right interventions from Scottish Government.

“…A PFI model where a company would come in and decarbonise everything at a cost and then a return, I think you might find it would be less keen to take that risk…. unless the Scottish Government came in and said we’ll underwrite this at a fixed price cost if you can manage that cost. Any cost rises over that 20-year period is down to the Scottish Government rather than us as an individual institute.”

Further Education

In the Healthcare sector, one participant already maintained two PFI relationships to manage their sites and felt they had ‘good relationships’ with these contractors. However, complexities were raised around long-term contracts and contract inclusions.

“They’re set in contract for 30 years to deliver our heat with the life cycles in place. And if we then ask for a change to contract there are complexities around that…I imagine it would be a nice tick in their box to decarbonise, but it’s not what they’re contracted to provide.”

Healthcare

At present, financial cases typically rely on energy efficiency measures which demonstrate direct financial savings over time. As such, private investment is viewed as a likely option or potentially even an inevitable eventuality, though it remains ambiguous as an opportunity for heat decarbonisation. While not currently widely utilised in the public sector, private funding models may present an opportunity to reduce or eliminate the major barrier of upfront costs. However, participants understand that these models need careful consideration and backing from the Scottish Government before they consider adopting them.

Resourcing

Capacity shortage

A key finding from our analysis was the impact of constraints on staff resource and lacking capacity to deliver multi-million-pound decarbonisation works. Those who did engage often identified that their usually small team would struggle to expand their current work remit to projects at scale.

“Even if somebody said tomorrow that to next year you have £50 million to deliver all the things you’re saying…we could never do it anyway because we don’t have the in-house resource, the technical skills.”

Further Education

From our experience of conducting this research, we found that many public sector officers responded to an initial request for information with supportive messages about our work. However, they stated that they did not have the capacity to collate data to a great level of granularity (especially when this was dispersed, see 9.4.1). They cited their ongoing struggles with delivery resources in their typically undersized teams. These issues were flagged by a range of PS bodies, including larger organisations such as local authorities.

Capacity challenges were exacerbated by high staff turnover, leading to continuity issues. Staff turnover was seen as a particular issue in Education estates teams, reducing confidence in decision making and the ability to plan and deliver major long-term decarbonisation programmes.

“We’ve got quite good continuity in the senior management team…. there are quite a few changes in other colleges and people come and go as estates people, and that doesn’t give confidence to the people that actually sign off these projects, if you’re changing your estates manager every couple of years.”

Further Education

Skills shortage

In addition to a capacity shortage, participants also highlighted a lack of skilled professionals in public sector organisations able to deliver heat decarbonisation projects. This can often lead to greater reliance on consultancy-based support, which comes at an extra cost to the organisation. Although, one participant highlighted that this support can be funded via grant schemes, but it still introduces limitations and reliance on third parties.

“In Facilities it’s predominantly catering and [Project Officer’s] background in office estates, so neither of us are experts in the decarbonisation field. So we need the support of people like [Consultant] to take us through this…the funding for that came through GPSEDS as well.”

Further Education

“We don’t have really internal expertise as such…so using the NDEEF framework and [Consultant] is really the only option for us.”

Further Education

Furthermore, when the complexity of public funding (discussed in 9.9.2) is met with a lack of expertise, this can further complicate the application process.

“There’s not a direct link between the Non-Domestic Energy Efficiency Framework and the GPSEDS process…so for the non-estates people and finance people, people [didn’t understand] how this is going to work.”

Further Education

Accordingly, one participant suggested that simplifying the terminology used around funding applications and providing clearer resources on how they work and what processes look like may support organisations who are newer to applying for public funding, and/or do not have internal expertise in this area.

On the other hand, one participant identified an opportunity to retrain professionals to meet the need for low carbon heating skills.

“You would think we’ve got a large housing stock and a large non-domestic estate, so if it could be funded, there’s massive opportunities in terms of skills, retraining, all that sort of stuff…We’ve got a lot of gas engineers….so they would need to be reskilled.”

Local Authority

Delivery

Supplier availability

Another major barrier to decarbonisation projects is the limited supplier and installer availability. Participants found the limited options for suppliers to impact not only deliverability but also price competitiveness. One participant highlighted that this situation has created a dilemma where the lack of a mature supply chain limits the ability to deliver projects, which in turn will not be able to develop until there are enough projects. These issues can be exacerbated in rural areas which require added installers travel times.

“Low number of suppliers available for heat pump installation means that always the same names responding to tenders – reduced competitiveness on price and also a capacity issue.”

Local Authority

“We’re lacking a mature supply chain – but it’s a chicken and egg situation – you won’t get [the supply chain] until there is a guaranteed pipeline of projects, so how is the market going to gear up?”

Local Authority

However, one participant contradicted this by stating they did not face supply chain issues as they relied heavily on internal resources with sufficient skills, connections and capacity. However, this organisation was well-placed with a rare level of relevant internal skill and capacity to be able to leverage the supply chain.

“Finding suppliers and resourcing is not an issue – plenty of people out there doing that type of work. Our staff come from construction background so know what’s what, and who we can purchase from. We’ve been doing this since 2008 so have a proven track record. It’s not new technology – it’s coming off the shelf basically, we’re ready to go.”

Education

The lack of sufficient supply chain capacity also echoes across local authority LHEES. Virtually all councils have identified a substantial green skills gap and supply chain issues. Specific roles and areas which are lacking include: heat pump installers, servicers and maintainers, post-installation support, specialists for historic/pre-1919 buildings, HVAC (heating, ventilation and air conditioning), plumbers, surveyors, retrofit coordinators and understanding of whole building approach. This is particularly noteworthy as this research identifies that 45% of the estimated decarbonisation costs will be associated with buildings built before 1919.

Similarly, a 2020 study highlighted by South Lanarkshire Council found that heat pump manufacturers were confident in their ability to scale up operations as demand increases, but upskilling and training were of concern (Eunomia, 2020).

Scheduling constraints

Participants from multiple sectors highlight that their scheduling constraints have proven to be a barrier when trying to carry out decarbonisation projects. Low-carbon heating installation works are intrusive to regular operations as they typically mean a lack of operational heating for a period. This becomes more complicated with other measures such as fabric and window replacements. This can pose limits for many building types, especially those which serve a core function for the public body. One way to address this is by conducting this work during less busy times, but this is not always possible and these opportunities may not be sufficient for the scale of works and number of buildings which require upgrades.

“There aren’t enough summer holidays between now and 2045 [to complete required works to reach net zero].”

Local Authority

“With most of the energy consumption throughout the Council estate coming from school buildings, they have been a priority in decarbonisation. The time required to change the heating system over from gas/oil to an ASHP requires either several phases for larger schools or can be done over summer for smaller schools. This requires a lot of planning in how rooms are decanted if required for phased works, and may require external decant space, which again, requires further funding.”

Local Authority

“The issue is we have a live hospital and live wards, and it’s difficult even doing windows – how can you replace windows in a live ward? Plus, you’ve got noise, vibration, and dust that all have to be scrutinised before we can progress. On top of that we have a varied building stock from the 1970’s and 80’s which come with a lot of challenges”

Healthcare

Similarly, uncertainties or delays with equipment deliveries are common, and cause similar issues. Unplanned disruptions to core services can impact project costs and viability as well as decarbonisation programmes as a whole.

“Our first of two projects took a year to complete. Both projects at different points impacted students during term time, with noise, disruption, and the heating down. Long lead in times impacted things too – windows took 16 weeks, ASHP were delayed, windows were coming from Germany, [and] planning permission.”

Education

“Lead times for some pieces of equipment still have long lead times of upwards of 2 months which can put projects on the back foot.”

Local Authority

Heat networks

The topic of investing in heat networks was raised by participants as both a barrier and an opportunity to decarbonising heat in the public sector. Some participants suggested that heat networks may be an opportunity for larger sites where funding otherwise is not available.

“The other campuses that are larger and within [the city] are more likely to need larger amounts of money that currently isn’t available, so there isn’t really any point looking too hard at those. There are district heating schemes, and one of the campuses is within an area that’s about to go into a district heating scheme…so that’s always been the focus.”

Further Education

Furthermore, one participant highlighted the potentially critical role which public sector anchor loads can play in enabling heat networks to emerge. Signing up to a ‘heat purchase agreement’ with a heat network operator can help the public body decarbonise its buildings, while also supporting the heat network development with a reliable public sector customer.

“As well as PPA, people have been starting to talk about heat purchase agreements as well…For their [heat network operator] financial modelling, we will underpin most of their strategies, if they can get a baseload onto their books, and that allows expansion or unlocks further opportunities in the area.”

Healthcare

The same participant mentioned that LHEES had helped drive these discussions, recognising the critical role which area-wide decarbonisation plays. This explores the idea of the public sector as a leading example and enabler of wider decarbonisation in the area, particularly through providing investment confidence.

“There’s been a lot of work undertaken through [LHEES] and being such a large geographic health board…we are across six local authority areas and there’s been a lot of engagement from them going back to that district heat network opportunity.”

Healthcare

However, this new opportunity also presents new challenges, notably on how to procure ‘heat purchase agreements’, with no prior experience in this area to draw on. It also raises the risk of being tied into an agreement with a single provider (i.e. the heat network operator) without an easy route to switch providers.

“There’s the procurement aspect: how do you, if you’ve got a single supplier in an area who says I can sell you heat, verify that is the best deal you can get?”

Healthcare

More broadly, participants referenced the infrastructure challenges of heat network development, specifically the timescales associated with this and unclear nature of the investments a present.

“Part of the local heat energy efficiency strategy highlighted we were a key anchor point for a district network heating system….but the barriers are going to be the infrastructure and how long that’s going to take.”

Further Education

The participant suggested that a “massive drive by legislation” as well as support with costs were necessary mitigation strategies to overcome this. This indicates the increasingly important role of the emerging regulatory regime pursuant to the Heat Network (Scotland) Act as well as the role of Ofgem as the regulator for heat networks and other legislative drivers.

Heat networks present a significant opportunity in providing economies of scale that will help decarbonise large sites and potentially large areas. This includes those organisations which may not have sufficient capital funds available to pursue an independent solution. However, more work is needed to develop appropriate infrastructure and better knowledge on procurement routes which will facilitate this in a cost-effective and reliable manner.

Grid capacity

Grid capacity concerns were frequently raised by respondents, highlighting that this can be a significant and potentially unavoidable barrier in decarbonising their heat. In cases where capacity needs to be increased, upgrades can take a long time, can have high costs and require significant engagement with the DNO. This is largely due to the complexities of managing network capacity, keeping the grid stable, and sometimes making substantial investment into the grid infrastructure.

“Similar to the supply chain concerns, lead times for connection into the electricity grid can be lengthy. A previous project changing a small primary school from oil heating system to ASHP took 9 months to receive an increased supply from the DNO. A connection for larger schools to connect into the network may require upgrades to substations, increasing the cost and timescales of a project.”

Local Authority

“Grid capacity is a barrier – [DNO] have very high associated costs.”

Healthcare

Alternative to grid upgrades are limited, uncertain and require significant innovation. However, some public bodies are considering these, especially in areas where grid upgrades will take a long time or will be cost-ineffective.

“If the network cannot cope with what we want to do, then we have to go round a route of battery storage or something similar.”

Education

“We have sites where there is no capacity available to install heat pumps, so we will have to come up with innovative ways to reduce the current [power draw] on the grid.”

Healthcare

These barriers have also been raised extensively throughout local authorities’ LHEES, where in many cases grid capacity issues have already prevented delivery. For example, in some areas properties are already suitable for heat pumps; however, as the grid was already at capacity none can be installed. This resonates with the experience of our participants and raises questions about the possibility to meet decarbonisation targets without substantial efforts in removing grid constraints.

Time

In addition to scheduling constraints, challenges around time frames and certainty were raised as concerns. With net zero target quickly closing, there is uncertainty around whether the scale of work requires will be possible in these timeframes. One participant raised that their target was likely at risk given what is possible within reason.

“… with only 5 years left to reach our interim 2030 target and 20 years to reach net zero. Projections have been conducted to determine how many projects are required to reach both targets and without [funding and resources] in place it would be unlikely that the 2030 target is met in the timescales.”

Local Authority

Additionally, a lack of certainty around how long projects will take to complete can compound the issue. This can have knock-on impacts with regard to stretching funding timeframes too. The planned timeframes often do not account for unexpected delays and unforeseen barriers in the way, meaning projects can take substantially longer than expected. For one participant, such an experience has raised questions about deliverability of decarbonisation measures at the estate and national levels.

“Timescales [can be an issue] with these things – we applied for funding for a project over 4 months and were contracted to do that, but it took over 2 years; there can be naivety around how long things will take. Scottish Government are flexible about this, but it was supposed to be spent withing the financial year.”

Healthcare

Procurement

Participants highlighted concerns around procurement processes, with a particular focus on the scale of procuring for the whole public sector. A procurement framework was suggested, fixing fees to avoid overpricing and taking advantages of economies of scale, rather than conducting procurement exercises for individual project. A lack of confidence in procurement exercises was also raised, largely owing to a feeling of lack of control when relying on contractors and consultants.

“Driving down costs through economies of scale would be most beneficial in this regard – could Scottish Government do a fixed fee procurement exercise with three or four suppliers that specialise and then would just need to tweak it based on the buildings they go to… If there was a cost already agreed, it might take some of the overinflated pricing out of it.”

Education

“Using NDEEF framework … was only option for us [for procurement] – it makes other colleges nervous that you have to give everything over to a consultant, as it becomes out of your control but it’s still your name on funding applications etc.”

Education

Appendix C – Additional Literature Review References

How to cite this publication:

Waheed, H., Hartfield, B., Green, N., Hunt, V., Sandles, B., King, D. (2025) Estimating the costs and impact of decarbonising heat in the public sector ‘, ClimateXChange. DOI: http://dx.doi.org/10.7488/era/6366

© The University of Edinburgh, 2025
Prepared by Turner & Townsend on behalf of ClimateXChange, The University of Edinburgh. All rights reserved.

While every effort is made to ensure the information in this report is accurate as at the date of the report, no legal responsibility is accepted for any errors, omissions or misleading statements. The views expressed represent those of the author(s), and do not necessarily represent those of the host institutions or funders.

This work was supported by the Rural and Environment Science and Analytical Services Division of the Scottish Government (CoE – CXC).

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1. Community Services include Crematoriums, Halls, Community Service Centres, Job Centres, Law Courts, Prisons and Waste & Recycling Centres. ↑

2. Other includes various residential and transport buildings. ↑

3. Network investment costs of the domestic heat and transport transition in Scotland. (ClimateXChange, 2023) ↑

Note: This research was carried out in 2024/25, based on data available, policy and market conditions at that time. Findings should be understood in the context of the market, data availability, and policy landscape having evolved since this research was conducted.

Habitat fragmentation is a major cause of biodiversity loss. It makes it harder for plants and animals to move between habitats, adapt to climate change and remain resilient to other pressures. Nature networks can help by creating corridors and stepping stones between habitats.

The Scottish Government has identified nature networks as a key action in its Scottish Biodiversity Strategy Delivery Plan. However, their wider benefits for communities are not always recognised. More evidence is needed to show the value of nature networks and support decisions that protect and create climate-resilient, nature-rich places across Scotland.

This report gathers existing evidence on the socioeconomic benefits of nature networks and habitat connectivity – linking existing habitats across the landscape and restoring or creating new habitats – with the aim of informing policy implementation at a local level. It includes two Scottish case studies in the Moray Council and Edinburgh City Council areas.

Key findings

• Nature connectivity can provide a range of socioeconomic benefits, including ecosystem services, health and wellbeing, community benefits, economic benefits, and greater climate resilience.
• These benefits are not guaranteed. They depend on the local context and can involve trade-offs between different benefits.
• Case studies in Moray and Edinburgh found similar potential benefits in both rural and urban settings.
• There is currently limited evidence and measurement of socioeconomic benefits in Scotland.
• The evidence base is not yet strong enough to clearly demonstrate the benefits to key groups, particularly farmers and landowners.
• Cost-benefit analysis could help demonstrate the value of developing nature networks to these groups.
• Community engagement is important to ensure that nature networks deliver benefits for local people and communities.

The report recommends clear guidance on the expected outcomes of nature networks, including their socioeconomic benefits, as well as flexible monitoring and evaluation that reflects local circumstances and minimises reporting burdens. Targeted engagement with key groups, including farmers, landowners and local communities, is also recommended to help ensure these benefits are widely shared..

This infographic leaflet by University of Glasgow Centre for Public Policy illustrates the range of wider socioeconomic benefits that an investment in nature networks can offer.

If you require the report in an alternative format, such as a Word document, please contact info@climatexchange.org.uk or 0131 651 4783.

Photo by Simeon Duwel on Unsplash

Research completed August 2026

DOI: https://doi.org/10.7488/era/7510

Executive summary

One of the key drivers of biodiversity loss is habitat fragmentation, or the “process by which larger areas of habitats are broken up into smaller patches that become isolated from each other” (Scottish Government & NatureScot, 2024, p. 14). Plant and animal species’ health depends on their abilities to move through and between habitats and landscapes to support genetic diversity, adapt to changes due to climate change, and build resilience to other habitat stressors. Therefore, developing natural corridors or stepping stones between habitats, which allow plant and animal species to move between habitats, ecosystems, or landscapes, can decrease their fragmentation and lead to improved biodiversity outcomes. The Scottish Government has embedded the delivery of ‘nature networks’ as a key policy action in the Scottish Biodiversity Strategy Delivery Plan. Nature networks are intended to generate these connectivity corridors and stepping stones between habitats to improve species and landscape resilience.

As nature networks are primarily a biodiversity policy action, other potential benefits for communities can be under-appreciated by local decision-makers. In order to ensure that climate-resilient and biodiversity-rich places are protected and developed across Scotland, decisionmakers need evidence of the wider value of nature networks.

Aims

We aim to bring together the existing evidence base on socioeconomic benefits associated with nature networks and habitat connectivity, linking of existing habitats in the landscape as well as restoring areas with newly created habitats, to inform policy implementation at a local level. To do so, we conduct a rapid evidence review of peer-reviewed academic literature and ‘grey’ literature for the socioeconomic benefits of nature or habitat connectivity. Then, we assess the evidence of socioeconomic benefits of nature networks in two Scottish case studies areas: Moray Council and Edinburgh City Council.

Findings

We find evidence of socioeconomic benefits associated with habitat and nature connectivity in the existing literature. The benefits we found were categorised as ecosystem services, health and wellbeing, communities and people, economic, and climate adaptation and resilience. However, the existing literature also points to trade-offs between socioeconomic benefits, some benefits depend on the context, and in some cases benefits do not arise.

The case studies in Moray and Edinburgh, representing rural and urban contexts, explore the expansion of nature connectivity and delivery of nature networks. They indicate that socioeconomic benefits, or anticipated socioeconomic benefits, have been observed across the categories of across ecosystem services, health and wellbeing, communities and people, economic, and climate adaptation and resilience. Similarly to the literature review, the case studies showed that these benefits are not universal but rather can involve trade-offs and depend on the context they are in.

In addition, the research finds that clear measurement of socioeconomic benefits associated with nature connectivity in Scotland is lacking. It finds also that the evidence base is not currently sufficient to support key messages to stake-holding groups—in particular, farmers and landowners—regarding the potential for generating socioeconomic benefits. In particular, cost-benefit analysis of nature network development would be most useful to these groups. Finally, the research stresses the importance of community engagement during the development and delivery of nature networks in order to ensure benefits arise from nature network development.

Recommendations

• Development of clear guidance on what nature networks are expected to deliver
• Development of a monitoring and evaluation system for socioeconomic benefits of nature networks that is dynamic, accounts for place-based characteristics, and relies on existing tools where possible in order to decrease reporting burdens
• Develop strategies to speak to particular stake-holding groups, such as farmers and landowners.
• Develop approaches to ensuring consistent community engagement and widespread distribution of socioeconomic benefits.

Glossary / Abbreviations table

Introduction

A biodiversity crisis is ongoing both globally and within Scotland. One of the key drivers of biodiversity loss is habitat fragmentation (Scottish Government & NatureScot, 2024). Plant and animal species’ health depends on their abilities to move through and between habitats and landscapes to support genetic diversity, adapt to changes due to climate change, and build resilience to other habitat stressors. Fragmenting connectivity between these habitats, particularly due to human activity such as the building of roads, urban expansion, green space removal, and lack of joined up approaches to nature across landholdings, leads to biodiversity decline. Therefore, improving connectivity by developing natural corridors or stepping stones between habitats can decrease their fragmentation and lead to improved biodiversity outcomes.

Policy Context

As part of the overarching strategy to address the decline of Scotland’s species resulting from habitat fragmentation (Scottish Government & NatureScot, 2024) the Scottish Government has embedded the delivery of nature networks as a key policy action in the Scottish Biodiversity Strategy Delivery Plan. Recognising that ecologically-connected landscapes are more resilient to climate change, nature networks are also a key objective of the third Scottish National Adaptation Plan (Scottish Government, 2024). Nature networks are intended to generate connectivity corridors and stepping stones between habitats to improve species and landscape resilience. They are intended to “radiate from, and extend into, all landscapes, across inner cities to towns and villages, rural areas, mountains, lochs and coasts” (Scottish Government & NatureScot, 2024, p.11), linking up the whole of Scotland through a series of coordinated and intentional natural corridors. This involves linking existing habitats to each other as well as restoring and creating new habitats (Scottish Government & NatureScot, 2024).

Nature networks are defined and delivered at local authority level, in partnership with other organisations (Scottish Government and NatureScot, 2024). It is intended that local communities help to contribute to the delivery of nature networks by offering local knowledge to deliver a place-based, locally informed network.

While each local authority’s nature network will be delivered separately, the implementation across Scotland will eventually create a pan-Scotland nature network. To fund the creation of nature networks, “public and private funding and finance will be delivered through properly resourced, clearly directed, long-term, simple, and accessible means” (Scottish Government and NatureScot, 2024, p. 7). Nature network development requires each local authority to conduct a thorough mapping exercise to develop a bespoke and place-based nature network plan, to implement the map by conducting connectivity and nature restoration work across the council area, and to maintain and continually expand the nature network over time. In addition, it requires each of these processes to be socially inclusive, co-created and bottom up (Scottish Government and NatureScot, 2024), which is both time-intensive and costly. Local authorities are tasked with delivering these networks, but most are operating under a reality of constrained budgets and limited capacity. With many critical issues facing Scotland, biodiversity is not always prioritised in cases where trade-offs must be made between priority policy areas.

Evidence gaps

The evidence base around the socioeconomic benefits of nature restoration in general is quite well-established (de Bell et al., 2017; Juntti et al., 2025; LoTemplio et al., 2023). This indicates that organised efforts to improve the connectivity of Scotland’s nature may provide important socioeconomic benefits to people and communities. However, the specific benefits associated with habitat connectivity or connected-up nature restoration are less easily accessible in the evidence base. Interrogating the evidence for socioeconomic benefits of nature networks in Scotland could help support public bodies, including local authorities, to dedicate resources to the implementation of nature networks as a means of delivering on other socioeconomic goals.

Filling this evidence gap to provide tailored evidence of the benefits of nature connectivity, rather than of nature in general, could support local authorities and partners to deliver nature networks. It may allow them to identify the multiple benefits that are most valuable to their particular areas and to approach nature network delivery in a way that emphasizes these place-based and unique priorities.

Research Aims

We seek to inform delivery of nature networks across Scotland by generating an evidence base of the ‘multiple benefits’ that nature network development could deliver across Scotland, beyond the valuable benefits to biodiversity.

As nature networks are primarily a biodiversity policy action, other potential benefits for communities can be under-appreciated by local decision-makers. In order to ensure that climate-resilient and biodiversity-rich places are protected and developed across Scotland, decisionmakers need access to evidence of the wider value of nature networks. We aim to bring together the existing evidence base on socioeconomic benefits associated with nature networks and habitat connectivity to inform policy implementation at a local level. We also seek to clearly define the state of the evidence, helping to identify remaining evidence gaps. We add to this evidence base by conducting two case studies of Scottish local authorities to determine the multiple benefits currently being realised by habitat connectivity projects. The research is guided by the following questions:

1. To what extent is there a consolidated evidence base of the multiple benefits of nature networks and habitat connectivity for communities? This includes benefits across climate adaptation, economic impacts, health and wellbeing benefits, and more.
2. What are the different categories of socioeconomic benefit associated with nature connectivity and nature networks?
3. Do the socioeconomic impacts of nature connectivity vary across scales and complexity of nature network implementation?
4. How are communities engaged with development or delivery of nature networks, and how does this impact delivery of multiple benefits?

Methodology

To address the above research questions, we take two main research approaches. First, we conducted a rapid evidence review (RER). This uncovers existing research across academic and grey literature which may evidence the multiple benefits of habitat connectivity in contexts comparable to Scotland. Focusing on global North countries from the period of 2010-2026, we considered evidence from 29 pieces of literature and used this to build a central account of the existing evidence for the socioeconomic benefits of nature connectivity. Through content analysis, we extracted data around the measurement of the multiple benefits of habitat connectivity.

Secondly, we present two case studies of nature networks from Scotland. We conducted 16 interviews with stakeholders and community members in January and February of 2026 across the Edinburgh nature network (urban) and the Moray nature network (rural). Content analysis of these interviews provides insights into the multiple benefits experienced in each area resulting from habitat connectivity and nature network delivery, particularly in the absence of published reporting of these impacts. For a detailed record of our methodology, see ‎Appendix A.

Analysing the existing evidence base on socioeconomic benefits of habitat connectivity

Introduction

To understand the existing evidence around the socioeconomic benefits of nature and habitat connectivity, we conducted a systematic rapid evidence review. This rapid evidence review conducted systemic searches of both the peer reviewed academic literature alongside grey literature to uncover existing reporting around the multiple benefits of habitat connectivity in order to generate a clear evidence base. This review sought to answer the following questions:

1. To what extent is there a consolidated evidence base that sets out the existing/potential impacts of Nature Networks for local communities, including making places climate resilient and benefitting people who live and work in those communities?
2. To what extent is that evidence base sufficiently robust to support key messages for future communication and engagement on Nature Network development?
3. Do benefits/impacts vary with scale and complexity of nature network implementation? How do these benefits change when implementing different scales of nature network, or assessing benefits at different geographical scales?
4. What are the different categories of socioeconomic benefit?

Results: existing evidence on socioeconomic benefits of nature networks

Clear categories of socioeconomic benefits emerged from this rapid review. The literature indicates that habitat connectivity contributes to the social, cultural, economic, health, and climate change resilience of communities across various contexts. We outline these categories and identify the benefits that have emerged across the grey and academic literature.

Ecosystem Services

A focus on the benefits of nature connectivity for the provision of ecosystem services, or the “goods and services derived from biophysical processes that benefit human well-being and support societal functions” (Ernstson, 2013, p.8) emerges in the literature. In the UK and Scottish context, flows of ecosystem services are understood to be provided by stocks of natural capital, or “the elements of nature that have value to society, such as forests, fisheries, rivers, biodiversity, land and minerals” (Department of Environment, 2026, p. 6). Taking a natural capital approach implies generating valuation, usually of an economic nature, of the environment, helping to “account for [nature’s] contribution to the economy” (Department of Environment, 2026, p. 7). The Millenium Ecosystem Assessment splits ecosystem services into four clear categories: provisioning, supporting, regulating or maintaining, and cultural benefits (Egerer & Anderson, 2020). Provisioning services are materials used by people or communities, like food. Regulating services include processes such as water purification or climate regulation. Supporting services include processes like nutrient cycling and soil formation (Butler et al., 2022). Each of these categories has particular implications for human survival or wellbeing. Connectivity can be similarly categorised into landscape, habitat, geo-physical, and eco-social categories (Butler et al., 2022). These support different types of ecosystem services, often overlapping to produce synergies of benefits. For example, growing food in urban gardens serves a connectivity purpose while addressing food insecurity and generating a positive economic impact from micro-agriculture (Butler et al. 2021) crossing provisioning and supporting services.

Figure 1: Ecosystem services wheels. NatureScot: www.nature.scot/scotlands-biodiversity/scottish-biodiversity-strategy/ecosystem-approach/ecosystem-services-natures-benefits

Evidence from Hungary indicates that ecosystem service provision in rural contexts is improved in protected areas (Kuttner et al., 2014). Yet importantly, non-protected areas which neighbour protected areas produce higher than average ecosystem services (Kuttner et al., 2014), suggesting that “large and effectively managed nature reserves” (p. 17) play a role in supporting ecosystem service provision even outside of protected areas, including by increasing connectivity. In forested contexts, delivery potential of multiple ecosystem services is most impacted by the age of the forest (Valdés et al., 2020), yet forest management practices can help to boost the delivery of ecosystem services which people rely on, such as wood production or recreation, while prioritising biodiversity conservation (Vangansbeke et al., 2017) in part through strategic prioritisation of connectivity.

Non-academic reporting from the WWF (World Wildlife Fund, 2026) finds that deforestation, which fragments forests, decreases the capacity of the forests to support agriculture and grow food, naturally capture carbon, and prevent soil erosion, all of which impact communities’ ability to thrive. The WWF (Leemans & Miklasinska, 2023) reports that Germany’s largest ecosystem restoration project, the Emscher Landscape Park, produces €21 million of direct ecosystem services. Its scale, spanning 20 cities and over 100 projects, perhaps enables an econometric measurement of ecosystem services of this quality.

Health and wellbeing benefits

Much of the literature around increasing habitat connectivity contains conceptual and general links between nature connectivity and human wellbeing. Indeed, the concept of ecosystem services “represent[s] the contributions that ecosystems make to human well-being” (Brockerhoff et al., 2017, p. 3009). Therefore, much of the literature on the multiple benefits of nature connectivity necessarily considers wellbeing. Taking a social-ecological approach and mapping ecosystem services can help to identify habitat connectivity priority areas, enabling decisionmakers to find a balance between ecological considerations and human well-being priorities (Ghasemi et al., 2025). Similarly, the WWF’s reporting around the benefits of habitat restoration points to the B-Lines project’s goal to strengthen the connectivity of insect pathways in the UK while “improving the health and wellbeing of local communities by bringing them closer to nature” (Leemans & Miklasinska, 2023, p. 5). This indicates that the goals of improving human health and nature connectivity can be linked by organisations or projects.

The evidence of benefits for human health is also reported. However, particular health indicators are not clearly agreed upon across the literature, and there is a lack of causal analysis linking connectivity measures to particular health outcomes. The Center for Large Landscape Conservation (2022) highlights the ties between health and increased outdoor recreational opportunities provided by the development of wildlife corridors. CEEweb for Biodiversity, a network of organisations from Central and Eastern Europe that works to conserve the region’s natural heritage, evaluated the benefits of wetland restoration projects through data evaluation and interviews with project leaders, finding general improvements in societal health (Siuta M & Nedelciu C E, 2016). Similarly, greening school yards can benefit public health by way of improving environmental factors like air quality, reducing urban heat island effects, and increasing students’ physical activity (Clauzel et al., 2025). Butler et al.’s (2022) review collects evidence around the services associated with particular nature connectivity features. It cites evidence that mental health benefits are associated with wildlife sightings and street trees (McEwan et al., 2020). Their review also points to evidence indicating that children living in close proximity to a trail system tended to have lower body mass index (Kim et al., 2020). Therefore, urban greening can address health challenges alongside social and climate priorities (Clauzel et al., 2025).

Health risks associated with heat can be addressed in urban areas through tree planting, which often also serve connectivity purposes in urban areas (Hardy et al., 2022; Korpilo et al., 2025). However, the evidence of these benefits remains limited (Korpilo et al., 2025).

Cultural ecosystem services: benefits to communities and people

While health and wellbeing benefits tend to centre around individuals, benefits to groups of people and communities also arise from increased nature connectivity. Sometimes called cultural ecosystem services, these are impacts on collectives, defined as “ecosystems’ contributions to the nonmaterial benefits that arise from complex and dynamic relationships between ecosystems and humans” (Brockerhoff et al., 2017, p. 3023). While these can be intangible and hard to measure, they may relate to cultural practices, spiritual values, knowledge systems, aesthetics, and recreation (Brockerhoff et al., 2017). Brockerhoff et al.’s (2017) review of the literature finds a range of benefits for communities and collectives associated with nature connectivity, including aesthetic, recreational, and safety benefits; benefits to social cohesion including improving community involvement and sense of place; and educational benefits.

Research shows the benefits of schoolyard greening for social cohesion and enhancing learning environments for students in four European cities (Clauzel et al., 2025). Similarly, multi-habitat seascape restoration can provide opportunities for alternative forms of learning, such as living laboratories (McAfee et al., 2022, p. 6). Garden-based citizen-science programmes focused on wilding can serve as an opportunity for residents to “strengthen their sense of place and increase environmental literacy” (Lerman et al., 2023, p. 677). The B-Lines project in the UK created 8 wildflower areas at local schools to engage community members in order to bring communities and people closer to nature while strengthening the connectivity of insect pathways (Leemans & Miklasinska, 2023).

Restoration of seascape connectivity projects have provided opportunities for community involvement, which can improve peoples’ interpersonal interactions, community agency, and feelings of attachment to nature (McAfee et al., 2022). Similarly, homeowners participating in certified biodiversity garden projects in Winnipeg, Canada reported “increased connection to nature and natural history knowledge, stronger place attachment, and several other well-being measurements including satisfaction and attention restoration” (Lerman et al., 2023, p. 677).

Restoration of multi-habitat areas can contribute to improved aesthetic value and recreational experiences for the surrounding communities (McAfee et al., 2022). Similarly, increasing the visibility of green amenities near households serves aesthetic purposes for residents (Pham et al., 2025). Aesthetic values and recreation opportunities emerged cross many case studies of wetland restoration in Central Europe, resulting from river and wetland connectivity, including removing dams (Siuta M & Nedelciu C E, 2016). Finally, Butler et al.’s (2022) review highlights research showing an inverse relationship between tree canopy and crime in two American cities (Troy et al., 2012; Wolfe & Mennis, 2012).

Economic benefits

The literature points to some benefits to businesses and the economy as a result of nature connectivity. This is emphasised more in the grey literature compared to the academic literature. WWF’s “Factsheet for the Economic Benefits of Investing in Nature Restoration” (Leemans & Miklasinska, 2023) reports that the “largest ecosystem restoration project in Europe” (p. 12), the Emscher Landscape Park, results in 21 million euros of ecosystem service provision. Similarly, the United States National Oceanic and Atmospheric Administration researched the impact of a $167 million investment in 125 habitat restoration projects, many of which involved connectivity and defragmentation (Samonte et al., 2017). Using input-output analysis on the expenditures of projects funded by the American Reinvestment and Recover Act, they found a huge economic impact. For example, restoration projects supported over 2,000 jobs; generated a $12 million increase in property values in Michigan alone; and generated carbon storage and sequestration benefits in California equalling $130,000 per year for 50 years. Overall, this resulted in over $143 million in expanded economic activity across the country. Importantly, the extent of the original investment and scale of the project enables equally significant returns on investment.

CEEweb for Biodiversity reports general, if unspecified, monetary returns from the benefits associated with increased tourism, ecotourism, recreation, job creation, and development of local businesses resulting from wetland connectivity restoration (Siuta M & Nedelciu C E, 2016). Relatedly, the Network EU Common Agricultural Policy Network (2023) reports that local business relies on habitat functionality. Biodiversity losses can result in resource scarcity, value chains disruption, and increases in operational costs, so “fully functional habitats are business assets in many ways” (p. 2) as connecting landscapes can mitigate risks and provide more diverse business opportunities for farmers and foresters. Additional case studies showed benefits to water management and flood control.

Indirect economic benefits are associated with green infrastructure initiatives such as the engagement of labour and job creation, purchase and use of materials, which can generate local economic benefits (Hardy et al., 2022). Economic benefits are also associated with restoring connectivity in seascapes. Improving the health of harvestable fish “helps promote the certification of sustainable sources high-quality seafood, and empowers managers, authorities, and consumers to champion sustainable production” (McAfee et al., 2022, p. 5). Evidence points to the economic returns on the process of constructing wildlife corridors, in particular around local job creation. Labour needed to remove fencing, plant native vegetation, and remove dams can be locally sourced, providing jobs and income to the local economy (Center for Large Landscape Conservation, 2022).

Some academic literature paints a more nuanced picture, finding that “the costs of restoring connectivity may be prohibitively high in terms of the benefits that can be expected” (Akpalu & Stage, 2021, p. 11). Yet the limitations of economic valuations lead Butler et al. (2022) to “advocate for a focus on societal values determined by local communities” (p. 3). While creating economic valuations of nature and conservation is becoming more common (Butler et al., 2022) “critics assert that assigning market values to nature fails to capture the full worth of resources, undermines natures intrinsic value, and creates inequities” (p. 3). Considering biodiversity and ecosystem services jointly can “optimise landscape-scale conservation and planning efforts and maximise their return on investment” (Butler et al., 2022, p. 5). Trade-offs between biodiversity and ecosystem services are also relevant and discussed in section 4.2.3.1.

The Scottish Government produced an Interim Evaluation of the Nature Restoration Fund which assesses the projects it has funded (Stevens et al., 2025), reporting specifically on outcomes of investment in nature connectivity and other nature restoration. However, it does not explicitly link investment in nature restoration to economic evaluations of the project outcomes. The report suggests that comparing data from different restoration projects is complex, and that evaluations must consider variations in cost, geography, and project complexity when comparing projects funded by different funding streams (Stevens et al., 2025).

Climate adaptation and resilience benefits

Nature connectivity can have important implications for both climate adaptation and resilience, which are increasingly important for individuals and communities as they increasingly experience the effects of climate change. It is associated with a range of climate adaptation benefits including “climate regulation and carbon sequestration, disease and pest control, soil formation and fertility, flood protection, [and] nutrient and water cycling” (EU Common Agricultural Policy Network, 2023, p. 1) and provision of soil, water, and air quality. In the United States’, $167 million of investment in costal restoration, involving connectivity restoration and development, contributed to storm and erosion protection and carbon sequestration (Samonte et al., 2017). World Wildlife Fund (2026) reports a key benefit of connectivity as reduction of both flood risk and drought.

Research considering the benefits of yard or garden management practices for climate resiliency and people finds that individual wilding of gardens does not necessarily make significant steps towards connectivity, land sharing, or “the management of yards as a habitat” (Lerman et al., 2023, 679). However, it does find that these activities can facilitate wildlife movement across gardens, neighbourhoods, and metropolitan regions towards protected land (Lerman et al., 2023). Their review finds a range of person-centred and community benefits associated with yard wilding: “increasing and maintaining plant biomass (e.g. trees and shrubs) and reducing management intensity (e.g. lawnmowing and fertilizer application)” (p. 2023) and improving living conditions by reducing extreme temperatures. Improving wetland and river connectivity in Central and Eastern Europe also helped regulate the local climate, creating more bearable temperatures (Siuta M & Nedelciu C E, 2016).

Hardy et al. (2022) cite research showing that nature fragmentation across built environments in urban areas reduces resilience to a range of severe weather events such as floods, storms, and extreme heat. This implies that nature networks would have mitigatory benefits against these events, each of which can damage the socioeconomic flourishing of a built environment. Increasing urban tree canopy serves not only as a habitat connectivity mechanism but can play an important role in urban climate adaptation by offering temperature regulatory service, air and water filtration, and soil stabilisation (Hardy et al., 2022, p. 2), which have clear benefits for local communities.

Complexities around socioeconomic benefits of nature networks

Alongside evidence of benefits that arise from nature connectivity are indications that habitat connectivity is not necessarily or universally beneficial to humans and communities. While the grey literature reviewed reported positively on benefits of nature connectivity, some academic evidence paints a more nuanced picture. Trade-offs exist between biodiversity and socioeconomic benefits; benefits are dependent on contextual factors such as scale of restoration; the economic return on investment of habitat restoration does not always financially break even. Data which clearly enables measurement of quantitative and causal relationships between restoration and benefit provision is still insufficient (Brockerhoff et al., 2017).

Benefits Trade-offs

Evidence indicates that there are clear trade-offs between the benefits associated with nature connectivity, with some benefits coming at the expense of others. For example, hydropower plants fragment rivers. Yet even in cases where it would have been socially preferred not to develop hydropower plants in the first place, restoring connectivity after hydropower development is equally not socially desirable (Akpalu & Stage, 2021). Even under a set of generous assumptions, restoring connectivity would likely be economically harmful if it entailed losing any more than one fifth of the hydropower being generated (Akpalu & Stage, 2021). This case draws attention to the trade-offs between increasing connectivity for the benefit of biodiversity, social desirability, and economic considerations.

While overlaps and synergies emerge between landscape, habitat, geo-physical, and eco-social categories of nature connectivity (Butler et al., 2022) and the ecosystem services they deliver, some conflicts also emerge between these categories. A more robust evidence base investigating how they interact is needed to “help build a common understanding of the value of connectivity to maximise its benefits” (Butler et al., 2022, p. 1). Taking an ecosystems services approach to targeting environmental interventions can help to identify priority areas, while acknowledging the trade-offs between ecosystem services such as “carbon storage, habitat quality, pasture production, timber production, and outdoor recreation” (Ghasemi et al., 2025, p.8). An integrated approach, which considers links between human activities and conservation in management interventions, is needed to “balance environmental conservation with human wellbeing” (Ghasemi et al., 2025, p.10).

Maintaining connected habitats in increasingly urbanised environments poses challenges. Establishing multiple urban centres is preferred in urban planning, yet this can work against maintaining well-connected habitat networks (Khiali Miab et al., 2022). Increasing the number of urban centres alongside habitat connectivity requires interventions as significant as “changing the distributions of jobs and people” (Khiali Miab et al., 2022, p. 1) across mid-sized municipalities and stronger collaboration between municipalities in order to be successful. Similarly, the aesthetic value nature provides near peoples’ residences do not always align with connectivity. In fact, residents in urban contexts tend to prefer more fragmented scenery, and sometimes the aesthetics of landscapes that have low ecological potential (Pham et al., 2025).

Trade-offs between ecosystem services, like wood production and recreation, and conservation of indicator species have also been observed in habitat restoration involving connectivity (Vangansbeke et al., 2017). Similarly, evidence shows that “the roads and trails that support eco-social connectivity can fragment habitats, deter wildlife, and impact watersheds, but at broader scales can justify and incentivise the protection of large, well-connected natural landscapes” (Butler et al., 2022, p. 14).

The relationship between isolation of protected areas and various ecosystem services like carbon sequestration, timber production, pasture production, habitat quality, and outdoor recreation in Egmont National Park in New Zealand was explored in order to better enhance habitat connectivity (Ghasemi et al., 2025). The authors find that provision of ecosystem services can be at odds with each other, underscoring that in the process of improving connectivity, conservation goals and agricultural activities must be weighed. Similarly, evaluating whether the value of socioeconomic benefits to people outweighs costs “will depend on how the value of non-market benefits are weighted against the costs of reduced agricultural and timber production” (Newton et al., 2012, p. 571). However, this will pose less of a challenge for the restoration of otherwise unproductive land.

Trade-offs also exist between habitat defragmentation and preventing forest fires, as one way to minimise the spread of fires in certain locations is to ensure landscapes remain fragmented (Brockerhoff et al., 2017). In the contexts where fires pose a particular threat, perhaps the benefits associated with landscape connectivity do not outweigh the threat to safety and biodiversity associated with fires.

Context-dependent benefits

Evidence indicates that contextual factors impact the delivery of multiple benefits from nature connectivity.

Scale can impact the benefits that nature connectivity delivers. Lerman et al. (2023) set an agenda for garden management actions that local people can take to promote biodiversity, climate resilience, and benefits to people. They assert that connectivity via garden rewilding is beneficial to climate adaptation and to people, but that effectiveness depends on linking up across larger scales and landscapes.

Similarly, coordinating river infrastructure decisions across larger areas can improve cost-benefit efficiency (Roy et al., 2020). The WWF (Leemans & Miklasinska, 2023) reports the ecosystem services of the Emscher Landscape Park to be worth upwards of 21 million euros. This is the largest ecosystem restoration project in Europe, bringing together 20 cities and over 100 complementary green projects. The project provides over 50,000 jobs in the region and expansive recreational activities that draw about a million visitors per year. This speaks to the scale of restoration needed to meaningfully accrue gains of such economic value.

However, increasing scale may also negatively impact the distribution of resources. Newton et al. (2012) find that restoration across agricultural landscapes is unlikely to deliver net economic benefits as a valuation of non-market benefits, like flood risk mitigation, cultural value, recreational, and aesthetic value, will need to be weighed against market losses in agricultural production.

There can also be particularities of nature connectivity benefits across different types of landscapes and land uses between urban and rural contexts. Investigation by Newton et al. (2012) into the cost effectiveness of landscape-scale restoration for ecosystem service delivery shows that because of the high cost of ecological network restoration in agricultural landscapes, this restoration is unlikely to generate economic benefits.

Lack of benefits

Evidence indicates that increasing habitat connectivity does not always generate socioeconomic benefits. No evidence for benefits of habitat connectivity for ecosystem services provision emerged in a study of 224 woodlands across Europe (Valdés et al., 2020). While the smallest and most ancient woodlands showed the highest multiservice delivery potential, “the amount of forest cover around each woodland had no effect on … multiservice delivery potential and individual services, which indicates that habitat availability within the landscape did not influence the service supply potential” (Valdés et al., 2020, p. 12). Similarly, re-establishing ecological activity in rivers fragmented by hydropower may not be socially desirable, even where the fragmentation was also not desirable, due to the additional costs associated with restoration and the economic loss resulting from removal of hydropower (Akpalu & Stage, 2021). Korpilo et al.’s (2025) review of the literature around urban greening concludes “simply greening cities and their streets does not mean that benefits will follow” (p. 1612).

Evidencing the benefits produced by connectivity

Better data is needed to evidence the benefits produced by connectivity. Brockerhoff et al.’s (2017) review points to a lack of quantitative evidence linking forest biodiversity and important ecosystem services. It stresses that the “the impacts of forest fragmentation and modern forest practices remain largely unknown despite these forests’ high conservation value and their considerable role in the provision of ecosystem services” (p. 3016). Planners and decision-makers need a clearer understanding of how co-benefits arise, including “more empirical and context-specific evidence on what type, where and for whom to increase or plant new vegetation” (Korpilo et al., 2025, p. 1612) in order to ensure that co-benefits arise from nature and nature connectivity development across cities. The lack of clear cost-benefit analysis of restoration is particularly important, as “any restoration measures will tend to be long-term in nature” (Akpalu & Stage, 2021, p. 2) and therefore require clearer evidence to support delivery. This type of analysis should include devising means of measuring both the financial and societal returns on investment of restoring nature connectivity, including potential differences between investment type.

Research also evidences a need for priorities of nature connectivity measures to be clearly defined. These priorities should be locally determined and serve place-based needs. This involves creating a clearer picture of “how the benefits provided to people are valued, and on how the value of non-market benefits are weighted against the costs” (Newton et al., 2012, p. 571). Where benefits are positively related to each other, maximising services is not difficult. However, where benefits or ecosystem services “show strong negative relationships at local scales” (Brockerhoff et al., 2017, p. 3025), place-based and bespoke prioritisation must take place to deliver benefits that are most important in each context. Even where trade-offs between benefits exist, innovative management planning across forests or other contexts could be used to create “a final scenario that combines biodiversity conservation with a restricted impact on” services like wood production or recreation (Vangansbeke et al., 2017, p. 3214). Thus, while prioritisation is a complicated and often subjective process, dedicated, place-based planning which engages diverse stakeholders and communities can overcome some challenges around issue prioritisation.

Collaboration is required for evidence of benefits to be most effectively gathered. Research sets out the need to break down administrative silos, enabling open and transparent conversations around how land is used and how it can provide the most benefits to both people and nature. While nature restoration projects are often focused on biodiversity, this should be understood “as a cross-cutting issue that creates synergies with other urban sustainability goals such as climate adaptation or social cohesion” (Hansen et al., 2023, p.1). The literature suggests some ways to do this. Lennon et al. (2017) show that traditional approaches to green infrastructure delivery can reinforce restrictive siloed decision-making. This has negative impacts on green infrastructure’s ability to transform land use in a way that promotes social-ecological resilience. The Connectivity Benefits Framework (CBF) put forth by Hardy et al. (2022) suggests a way to manage trade-offs through by “prioritis[ing] localised societal needs while protecting biodiversity and ecosystem function” (p. 1). Local authorities and delivery partners could prioritise collaboration across policy areas to ensure a connected-up approach to nature network delivery that offers socioeconomic benefits that are place-specific alongside biodiversity benefits.

Case Studies: Generating Evidence for the Socioeconomic Benefits of Nature Networks

Introduction

This section adds to the literature by generating evidence of the socioeconomic benefits associated with nature connectivity in Scotland. Informed by the evidence found in literature discussed above, we explored the socioeconomic impacts of nature connectivity through case studies of nature network implementation in Scotland.

This is a relatively new policy area, with different local authorities at different stages of implementation. Therefore, we looked at Scottish local authorities which have begun implementation of nature networks, or which have active nature connectivity projects that will contribute to the nature network, to generate a clearer picture of the socioeconomic benefits associated with nature connectivity in the Scottish context.

Scottish local authorities are implementing nature networks and contributing projects across their urban, peri-urban and rural landscapes. The benefits, trade-offs, community engagement, and other factors may differ between these contexts. Therefore, we conducted a rural case study in Moray and an urban case study in Edinburgh. In these case study areas, we sought to answer the following questions:

1. What are the different categories of socioeconomic benefit in Scotland?
2. What are the key impacts of nature networks related to climate adaptation?
3. Do benefits/impacts vary with the scale and complexity of nature network implementation? How do these benefits change when implementing different scales of nature network, or assessing benefits at different geographical scales?
4. In what ways has the community been involved in developing the nature network/contributing projects? What are the opportunities to further engage with the local community (i.e. schools, landowner groups, community climate hubs etc.) on nature network implementation?

The evidence review revealed categories of socioeconomic benefits that emerged from nature connectivity. These categories structured the case study approach, both by feeding into the design of semi-structured interviews and in presentation of results. Interview participants were asked about the benefits associated with their nature network or nature connectivity projects that aligned with these categories. They were also asked if (a) any other benefits or (b) any unexpected benefits have emerged to their knowledge. When the interviews were thematically analysed, these results fitted within the existing broad categories.

Rural Context: Moray Nature Network

Background

Moray, located in the north-east of Scotland, is the eighth largest council area in Scotland (Moray Council, n.d.), yet its population of 95,000 is ranked as the 24^th most populated of Scotland’s 32 local authority area (National Records of Scotland, 2025). It is made up of mostly rural landscape, with most of the population living in the five biggest towns of Elgin, Forres, Buckie, Lossiemouth, and Keith (Moray Council, n.d.). This rural landscape contains important natural environments, including “the Cairngorms [National Park], the Spey and the Moray Firth’s rich marine ecosystems… Moray is also one of the most forested areas in Scotland” (Moray Council, n.d., p. 2).

To investigate the socioeconomic benefits of the Moray nature network, and ongoing nature connectivity projects in the area, 7 interviews were conducted with key stakeholders and participants, including individuals from the Moray Council, the Moray Farm Cluster, catchment initiatives, climate action groups, representatives from the Moray council and Joint Community Councils, and a representative of the farming community. To maintain participants’ anonymity, they are referred to by participant numbers.

Level of implementation

The Moray nature network is currently in very early stages. At present, the nature network has been mapped and will be included in both the Local Development Plan, which is expected to be adopted in 2027, and Moray Council’s first Biodiversity Strategy, with anticipated adoption in 2026 (Participant 10). Nevertheless, according to one participant, “the nature network itself has also been in delivery long before we ever started talking about nature networks” (Participant 10). Nature connectivity across river corridors have been a priority of both the Findhorn and Spey Catchment Initiatives before development of the current nature network policy by the Scottish Government. Actions have focused on riparian woodland restoration, with particular emphasis on key salmon spawning tributaries (Participant 12). The Moray Farm Cluster similarly brings together 12 farms across 7,000 hectares, and has identified potential areas across their land holdings where increased nature connectivity would be most beneficial for biodiversity and farmers’ interests (Participant 11). The Moray Climate Action Hub is currently implementing small-scale projects which contribute to nature connectivity across the region (Participant 14).

This research brings together evidence of socioeconomic benefit of these various nature connectivity activities, which, when considered together and fully delivered, will contribute to the Moray nature network.

Governance and community involvement

Mapping of the nature network has been undertaken by the local authority. While the joint Community Council was engaged with the mapping process there have been challenges, particularly around engaging the community and stakeholders: “right from the beginning… it has been really difficult to engage, particularly with the rural sphere beyond that group. We invited lots of different organisations to engage with us, because obviously we don’t have contacts with every single landowner” (Participant 10). Although participation was sought from various organisations, including farming and land estates unions, the Council was keen not to engage with the interests of individual landowners at the mapping stage (Participant 10). At the time of this research, the Joint Community Council had been a part of online, informative meetings before the maps were produced by consultants, and attended one meeting just before it was finalised and published for consultation (Participant 15).

Yet, while so far community involvement with the Council’s nature network has been quite minimal, the council did get “quite a lot of engagement with our recent consultation on the draft biodiversity strategy” (Participant 10). In the biodiversity strategy the nature network will play a role, and point out that organisations like the catchment initiatives have deep engagement with their communities.

However, most of the small-scale initiatives in Moray pay close attention to the relationships between humans and nature in their development. The nature network framework itself “talks about connectivity, but it’s not just about physical biodiversity… it’s about people connecting to nature as well” (Participant 10). For instance, the Findhorn Catchment Initiative was designed “from the outset to have this integrated approach to weave together the actual nature recovery work with the kind of human relationships of the nature world and the socio-cultural relationship to nature recovery” (Participant 12).

Existing Monitoring and Evaluation

Due to the early stage of the nature network itself, measurement and evaluation of the socioeconomic benefits of connectivity and the nature network have not yet been developed or reported. Reporting around existing nature connectivity projects is also in early stages for existing catchment initiatives or has been specific to grant funders (Participant 12) and therefore not publicly available. One participant mentioned the Woodland Water Code as a vehicle through which benefits could be quantified or monetised, yet also pointed to the problem of scale: “at the scale that we’re working at, [it is] really unlikely to unlock any significant monetary benefit through the Woodland Water Code” (Participant 13).

Findings

Overall, even in the extremely early stages of the nature network and in absence of clear monitoring and evaluation, interviews exposed a range of benefits across multiple socioeconomic categories. These categories were health and wellbeing, communities and people, economic, and climate adaptation and resilience. The research also exposes the complexities of delivering socioeconomic benefits via nature connectivity, including trade-offs, specifics of urban/rural contexts, and limitations around scale. Although ecosystem services played a prominent role in the literature review, none of the interview participants focused on this as a category of benefit.

Health and wellbeing

Participants pointed to a few benefits related to health and wellbeing that can be connected to habitat connectivity and nature networks. Participant 15 anticipates that benefits “could come from improving people’s health. I think it’s reasonably well proven that increasing activity and contact with nature does improve people’s health.” The Moray Climate Action Network conducted their own research into why individuals in the region grow their own food, a process that could provide connectivity and/or connect with particular patches of the nature network, and found that “mental health and wellbeing came out on top of actually healthy food. All the stuff that we’re doing is actually good for your mental health” (Participant 14).

Similarly, a Moray Farm Cluster participant pointed to the mental health benefits not only of the outcomes of increased nature connectivity, but of the communal aspect related to governance of such initiatives. The isolated nature of farm work can contribute to poor mental health and higher suicide rates for those working in the farming sector. Participant 11 “noticed that bringing these 12 farmers together to work together on something good, something that creates a community among themselves… has been really, really positive, and they’ve all said that it’s felt positive.” The nature network therefore could not only improve human health by way of improving the health of nature but can also serve as a forum and issue around which people can gather, providing key mental health benefits.

Communities and people

There was significant evidence across interview participants of the benefits to people and communities, as nature connectivity projects are about “so much more than just the physical land” (Participant 10). Working towards restoring nature connectivity, and nature in general, provides an issue around which the community can rally. The Moray Climate Action Network has both a Community Growing Network and groups across community gardens (Participant 14). One of these groups took action to plant pollinator-friendly flowers in the corner of a car park, which spurred their interest in considering the effects of climate change. For this reason, they have planted native species across other areas as well, which are impactful for promoting habitat connectivity (Participant 14). This demonstrates the reciprocal benefits between community involvement and implementation of greater habitat connectivity. This sort of ad-hoc nature development work contributes to the wider goal of expanding connectivity and simultaneously improving people’s experiences of their physical spaces. Planting wildflowers in public spaces with an accompanying sign explaining the benefits for biodiversity results in community members’ mindset shifting. For Participant 14 it went from “cutting grass to within an inch of its life [to thinking wildflowers] actually look better, and now they’ve got other stretches for the nature network”. The community and aesthetic benefits that arise can therefore push forward support for biodiversity practices.

Particularly through the work of the Spey Catchment Initiative, the community benefits through increasing their cohort of nature volunteers who help with tree planting and other nature-based projects (Participant 10). An environmental education charity led restoration work in Elgin Oakwood, engaging “volunteers [to do] that restoration work, so then we’re developing skills as well as getting people outside, being fit and healthy and enjoying…being in nature… I see that as being a massive benefit in terms of getting people involved and understanding it as well as being physically involved” (Participant 10). A catchment initiative participant explains:

“What we’ve heard in feedback from community stakeholders around the natural ecosystem being healthy and connected and intact, [that] has intrinsic value for people’s experience and connection to the natural world. And that’s sort of like a self-fulfilling process. You know, we want people to love the river – whether they’re into swimming or hiking or cycling or whatever it is like, there’s huge well-being on a human level that comes from that. But also, our theory of change is very much rooted in [the idea that] the more people feel connected to this place and [have] a sense of belonging as part of it, [then] they’re more motivated to also do their part in taking care of it. So, there’s also sort of a pro nature conservation behaviour change that could potentially come from that deeper sense of connection and enjoyment of the landscape through the nature being healthier and more intact” (Participant 12).

Economic

Evidence of economic benefit from the case study in Moray focuses on wide-scale benefit rather than being based in econometric measurement of benefits. For instance, Participant 15 points to the economic benefits of increased health that could come from nature network development: “I think it’s reasonably well proven that increasing activity in contact with nature does improve people’s health and therefore that has a long-term economic benefit to the country.” Participants point to the benefit for tourism and outdoor activities. Participant 12 spoke about how “making the river more hospitable for the wild Atlantic salmon” can have direct impacts on angling and tourism.

Economic benefit can come in the form of preventative spending as well as profitability. Participant 14 points out both aspects: “it’s good for tourism, it’s good for the environment. Sometimes it’s cheaper to plant some trees instead of a wall when it comes to flooding, and for the shade, it’s 1,000 [more] benefits.” Findhorn Catchment Initiatives projects have “really leaned into community wealth building principles for all of [their] contractors. The people putting up fences or planting the trees or supplying the trees… we have really prioritised working with organisations within our catchments, or as close to as possible. So that’s just a very tangible [benefit from] keeping money locally.”

Participants indicated in general that farmers could benefit from connectivity, but that these benefits are contingent, costly, time dependent, and poorly evidenced. For instance, “all of the well-documented ideas of greater infiltration, potentially reduced runoff, can be locally beneficial to a farmer, but it’s going to take many, many years for them to see it and believe it” (Participant 13). Even where farmers and landowners could anticipate some benefit, “there’s no compensation I can give them for loss of grazing. So, until they join the dots and they see the benefits of a more biodiverse landholding, it’s difficult; you often find that upland sheep farmers are totally obsessed by sheep and don’t often have a great deal of interest in trees” (Participant 13).

Nature networks and connectivity can also draw in funds. Nature Restoration Funds awarded to the Moray Farm Cluster means that “they’ll be able hopefully to draw in a long term, sustainable income to their farms” (Participant 10). Local nature-related contracting organisations have been able to secure funding through catchment initiatives, contributing to community wealth-building (Participant 12).

The Findhorn Catchment Initiative, in their capacity as the coordinator between land holdings to create a forum for deer management, created a trickle-down economic impact. Deer management became a critical issue, as over-grazing was causing peatland degradation and damage to riparian woodlands. Culling the deer population created a chain reaction:

“We wanted to make sure that that kind of sustainable, healthy protein was staying in the local food chain. So, we have hosted a whole bunch of trainings and workshops on venison butchery and encouraging local communities to eat more venison. And then some people that we were collaborating with have, off their own account, set up a venison larder. So, they’ve now got a whole business of keeping venison locally. And so that kind of snowballed. But that theme is quite a good example of how the benefits build from, just like ‘we need less deer.’” (Participant 12)

Similarly, when it comes to potential opportunities to graze cattle in the lower Findhorn woods to support the habitat, “a by-product of that would be woodland-feed beef… so there’s these kinds of unexpected bonus economic opportunities that come out of just trying to support the habitat” (Participant 12).

Climate adaptation/resilience

A range of benefits for climate adaptation also emerged, with a particular focus on heating, flooding, water management, and soil health. These aspects of climate adaptation have direct impacts on people and communities in Moray.

Degradation of riparian woodlands has meant that in many rivers and burns, “temperatures are now going through the roof in summer because of lack of shading, and this is becoming a real top priority” (Participant 13). Even small-scale restoration work can be effective if “they’re in top priority areas that we really see as so important…it’s where it is that really matters” (Participant 13). Flood risk is also a main concern, partially due to degraded peatland: “no one can argue with the fact that if [the peatland] was restored, you would have much less volatile surges of water coming down through the system” (Participant 12). Planting also helps to prevent floods (Participant 14).

Equally, the flood prevention impacts that peatland restoration and planting can offer are valuable for water security and drought:

“if you look at last summer… the north-east was in water scarcity for a big chunk of the year. And that had a direct effect on distilleries being shut down and abstraction for farmers being reduced or paused. And so, the more the landscape can hold that water… [this has] multiple benefits” (Participant 12).

Increasing planting both prevents flooding and improves soil health, which is especially important as “[Moray’s] soil is in a really bad state. We can’t grow food without fertiliser these days because of the state” (Participant 14).

Therefore, the human benefits of nature connectivity are present: “if we are working to lower water temperatures, or mitigate flood risk, or improve water security in terms of climate resilience, [then] especially downstream communities are going to see over time a tangible benefit in that way. There’s a kind of resilience piece that nature restoration creates, which is ultimately a community benefit and benefits local businesses” (Participant 12).

Complexities in the delivery of socioeconomic benefits

Rural context

In order for socioeconomic benefits to arise, humans must interact in some way with the nature network. Yet, in the case of Moray, some of the nature restoration work is done in sparsely populated areas. The Spey Catchment Initiative focuses more on the upper catchment area for its restoration and connectivity work, which is less populated than the lower catchment. This is due to the fact that “there are fewer opportunities for nature restoration, [and] more constraints” (Participant 13) in the lower catchment. One participant questioned the ability of the nature network to increase usage of footpaths: “the Speyside way runs right along close to the Spey right along, top to bottom of our Community Council area, and that will be within the supporting area of the nature network. I doubt honestly if it’s going to increase footfall [just] because we’re on a nature network” (Participant 15). Participant 11 was hesitant that the nature network will draw more tourists than already visit the area: “not saying that it wouldn’t, but I think there’s quite a lot going on in that area anyway that’s tourism-based… it might increase wildlife watchers who probably do typically go to the highlands”.

Expanding habitat connectivity across rural landscapes necessitates working with landowners and farmers, who own or manage large tracts of land. While organisations like the Moray Farm Cluster demonstrate a willingness amongst farmers to engage with nature connectivity and other activities which benefit biodiversity or the climate resilience of the landscape, the costs associated with this participation are significant (Participant 11, 15, 16). The Moray Farm Cluster was developed out of a desire of farmers to do more for nature in a joined-up way that could spread costs and increase scale of action, bringing together 12 farms across 7,000 hectares (Participant 11). For these stakeholders, the biggest barrier is financial: “it’s all money… these farmers want to do [biodiversity work], there’s no resistance from them in terms of land use… [but] it obviously costs money. You’ve got to find money to actually do the work and then maintain those networks for decades to keep them in good condition” (Participant 11). The Moray Farm Cluster has worked closely with the council to ensure that their areas are included in the nature network plan with the aim that it will “give it some strategic significance for future funding bids, because [The Moray Farm Cluster] want to deliver it” (Participant 11).

Some reactions to nature network planning have demonstrated opposing viewpoints.

“[Some] people are just a bit suspicious of how the nature network effects landowners in the rural space. They don’t get it. They think it’s yet another designation being put on them that’s’ going to either restrict what they can do, or [that it might] deter investors in their natural capital projects” (Participant 10).

Other farmers are “very wary about giving up ground that is available for grazing unless it’s really poor ground” (Participant 13), demonstrating that contributing land to restoration or connectivity may be envisaged as ‘giving up’ land rather than an investment which will create a more resilient landscape. Even where evidence of the benefit to farmers is available, “all of the well-documented ideas of [how] greater infiltration, potentially reduced runoff, can be locally beneficial to a farmer, but it’s going to take many, many years for them to see it and believe it” (Participant 13).

This indicates that, in the rural context, tailored communication with landowners and farmers about the benefits associated with habitat connectivity and restoration could be improved. Econometric analysis of the costs and benefits, across short and long terms, of participating in nature connectivity projects could help support this message. Instilling the confidence in farmers to participate in nature network implementation could contribute to both wider socioeconomic benefits as well as economic and climate resilience benefits for individual landholdings.

Benefits trade-offs

Participants also pointed out that human interaction with the nature network is not necessarily desirable from a biodiversity point of view, and were keen to mention the trade-offs between biodiversity goals and benefits to humans. For instance, Participant 15 points out that “if you increase human access to the rural network too much then you slightly destroy the whole reason for the network… an area that already kind of has walking paths and things that people use, but it’s not necessarily looking to expand that, and maybe for good reason.” Participant 16 echoed a similar feeling:

“There are certainly places where you wouldn’t necessarily want to have [human access]. If [for example] you’re using a corridor for wildlife, you wouldn’t want people with dogs walking around it. So, I can see there’s very much that tension… I could see why there were health benefits associated with it, but actually, from an ecological side of it, it didn’t’ seem to make much sense.”

Therefore, it is important not to overstate the benefits associated with each piece of a nature network. Rather, some aspects will likely generate socio-economic benefits, while other aspects may intentionally seek to minimise human involvement in order to meet biodiversity goals.

Scale

Participants also asserted that many benefits will only be realised when habitat connectivity is implemented at scale. Participant 13 gives two examples: while planting six hectares up an upland stream will have biodiversity benefits, only doing “that times 100 will have an impact on natural flood management”. Similarly, taking 10 hectares out of a 3000 hectare-sized grazing area for riparian woodland restoration will likely not demonstrate significant benefit to water quality. Therefore Participant 13 asserts: “I think it’s important not to get too carried away that we can demonstrate that there are real, tangible, demonstrable benefits for schemes of the size that we’re talking about.”

Conclusion

Whilst at the time of writing this report, the Moray nature network has not yet been implemented, many nature connectivity actions have been taken across the region. These help to evidence some of the community benefits that have already been felt as well as those anticipated to increase in scale with the delivery of the network. Overall, some benefits for people and communities arise in terms of improving physical health, mental health, community cohesion, economic opportunities, and climate adaptation. However, existing reporting or clear measurement of these benefits is lacking. Complexities around the trade-offs between benefits, and difficulties posed by scale and Moray’s rural context, may indicate that the provision of socioeconomic benefits requires clear planning and weighing of the multiple benefits that are of most value to the community.

Urban Context: Edinburgh Nature Network

Background

Edinburgh is an urban area with the second highest population of all council areas in Scotland (National Records of Scotland, 2025a). However, it has the “highest proportion of greenspace of any large city in the UK. Around 48% of Edinburgh land is greenspace and the Council manages 24% of this” (Lawrence, 2023). City of Edinburgh Council prioritises nature in part by developing a Thriving Greenspaces Vision and Strategy 2050 (Lawrence, 2023) that works with partners to envision “that greenspaces are the heart of our communities, and help make Edinburgh an outstanding city for wellbeing, quality of life and heritage… [it aims for] greenspaces that are connected, thriving, valued, and resourced” (Lawrence, 2023). A delivery action plan is currently being developed (Edinburgh’s Thriving Greenspaces, n.d.).

In order to collate the socioeconomic benefits of the Edinburgh nature network, and ongoing nature connectivity projects in the area, eight interviews were conducted with key stakeholders and participants, including individuals from the Edinburgh City Council, NatureScot, the Scottish Wildlife Trust, Edinburgh University, Wilding Wee Spaces, and the Royal Botanic Garden, all of whom work or have worked directly in the development or ongoing delivery of the nature network or related projects.

Level of implementation

The Edinburgh nature network is significantly further along the journey to delivery in comparison to the Moray nature network. The Edinburgh nature network began development around 2020 with a city-wide mapping exercise (Participant 4). Since then, 200 actions have been identified across the city to deliver the nature network. 40 are currently in delivery (Participant 2). These actions range in scale; “some are very big and ambitious, and then some of them are more low-hanging fruit” (Participant 2). Many of these actions have been focused in Leith, which was identified as a priority area for greenspace development (Participant 2). These projects have been led by a range of actors such as project partners, conservation volunteers, schools and the Council. Organisations with an interest in progressing nature projects can fill in an online form and map where their projects are to be included, if informally, in the nature network (Participant 2).

Governance and Community Involvement

The Edinburgh nature network has been developed with co-creation embedded from the outset. Rather than traditional development where a plan is developed and then put out for public consultation, the Edinburgh nature network took an iterative, co-design approach. Beginning with a stakeholder mapping exercise to determine who needed to be in the room (Participant 4), these stakeholders were brought together in workshops. The workshops focused on “getting maps of all the habitats that they’ve got, printing out big old maps, getting people to a local community hall around a table talking about ‘where do you want to be connecting stuff up? Where can we feasibly do things?’ This was very, very people focused… but we were also engaging with subject matter experts on connectivity” (Participant 4). A very clear focus of the approach was “the development with stakeholders, with people, decisionmakers, with local communities, making sure the actions reflect things they want to see but also still rooted in science and evidence as well” (Participant 4).

The aim of the Edinburgh nature network was, from the beginning, focused on delivering benefits to people. In the development and mapping phases, “we weren’t just looking at nature for nature’s sake… but we also brought in the ecosystem services element, and we did different models on ecosystem services benefits” (Participant 4). These ecosystem benefits included air purification, noise regulation, temperature regulation, and access to nature. The idea was to develop the nature network such that these ecosystem services were able to be delivered across the city.

Existing Measurement or Evaluation

The Scottish Wildlife Trust created a monitoring and evaluation framework for the Edinburgh nature network that includes a core “Society” theme with indicators across greenspace use, experience of nature, outreach and education, and access and equity. However, evaluation against these metrics has not been published at this stage (Edinburgh Living Landscape, n.d.). The project GroundsWell has conducted separate work around the health and wellbeing aspect of particular projects associated with the nature network, such as park development. Part of this evaluation involved putting QR codes in parks where people could report their experiences, yet encouraging uptake has been difficult (Participant 5). One participant stated: “I think one of the things we’ve realised is that when people are out in a space enjoying themselves, the last thing they do is [get their phone out to fill out a survey]… it’s not been as highly used as we would have anticipated” (Participant 5). A current project with the University of Edinburgh is looking at natural capital accounting, urban greening, biodiversity, and net gain, “looking essentially at what are the best ways that we can monitor using frameworks that are out there, and the kind of returns you get in urban environments, because it can be quite difficult to report against when you’re working at smaller scales” (Participant 2). This project may shed more light on the delivery of multiple benefits across Edinburgh as a result of the nature network.

Findings

Respondents reported a range of benefits associated with the increased nature connectivity across Edinburgh, and the expectations around future benefits that will expand with increased delivery. These fell into the categories of ecosystem services, health and wellbeing, communities and people, economic, and climate adaptation and resilience. They also highlighted trade-offs between benefits and other complexities around the delivery of the multiple benefits of nature networks.

Ecosystem services

The Edinburgh nature network was mapped alongside not only habitat corridors but also the supply and demand of ecosystem services across the city. “Air quality, noise regulation, temperature regulation, water quality and flood regulation, health and wellbeing, and insect pollination” (Participant 1) were all modelled. While there is no up-to-date reporting on delivery of these ecosystem services resulting from the nature network, “the mapping framework [used in Edinburgh] is the same system that has now been used by NatureScot to develop their national natural capital tool” (Participant 3). This approach may therefore be useful for quantifying some of the multiple benefits that arise across Edinburgh with increased nature network delivery.

Health and wellbeing benefits

Two projects in particular have measured the health-related benefits associated with the nature network. The Good City Project by Bush and Ellis (2025) investigated more than 400 Edinburgh-resident young people’s experiences with nature. They found that 45% of their responding young people experience mental health, physical health, and leisure benefits associated with nature and connectivity in Edinburgh. The ecosystem services valued most by young people include “beauty, wildlife, leisure, inspiration, and mental and physical wellbeing” (Bush & Ellis, 2026, p 2). Importantly, access to these health benefits depend on their access to nature. As Edinburgh’s least green neighbourhoods are concentrated in Edinburgh’s central and coastal regions (Bush & Ellis, 2026), the health benefits experienced by young people can be unequally experienced across these neighbourhoods. The surveyed young people’s engagement with nature takes place mostly in their daily commutes to and from school, “leaving little room for personal decision-making” (Bush & Ellis, 2026), p. 2). Therefore, nature networks can play a key role in developing the nature pockets that young people interact with habitually, for example on their way to and from school, contributing to their health and wellbeing on a regular basis without requiring behaviour change.

Wildling Wee Spaces is a project that works across Edinburgh to restore and develop nature in small areas across the city, serving a clear connectivity purpose. Working extensively with schools to involve children in the re-wilding process, the project allows young people to reap the health and mental well-being benefits of engaging with their local nature. As one interview participant described, “that feeling [of being] connected to something bigger than yourself is probably underlying why getting outside is so helpful for health and wellbeing… we see all the time in outdoor education how children who are very dysregulated in the classroom are actually much more regulated outside, much more able to focus on learning tasks than they are when they’re in the classroom” (Participant 6). The project also engages with the fact that children are aware of and worried about climate change, and “taking practical steps to improve [their] immediate environment within the school… helps empower [them]” (Participant 6). This type of empowerment can help abate the negative mental health consequences of climate anxiety.

Communities and People

Many participants indicated that the nature network created a benefit for community engagement (e.g. Participant 1). From the inception of the nature network design, community groups have been engaged. One participant said:

“really engaged community groups [are] one of my favourites… they’re brilliant because a lot of the time they maybe don’t have the funds, but they’ve got their collective power together and they have this cohesive plan of what they want to see as a community. And then we’re providing them with the tools to be able to empower them and then deliver on that” (Participant 4).

Another participant noted that nature networks projects allow people to connect locally with people in their neighbourhood (Participant 2). After delivery of various projects, communities feel a sense of value: “We’ve had other people, even when [it’s been] early days of putting in a few trees, but there was so much more coming to the project, just going, ‘oh my god, you’ve put in trees. We feel cared for’” (Participant 2).

Educational benefits arise from the nature network particularly via the Wilding Wee Spaces project. Not only do school children get to spend time outside engaging with nature by rewilding their local spaces, “it can be a lot bigger than that. There’s so much more learning for the students and the pupils about these huge, big issues and how they manifest locally. Flooding is a really good example where we are working quite closely with the [Council] flooding team” (Participant 6) to inform students around why flooding happens and how it can be dealt with. The educational benefit extends to the type of learning children experience while rewilding: “once you’re outside, the learning you’re doing is so much more tangible and practical. It’s not a textbook telling you 2+2=4, you’re actually seeing [the learning]” (Participant 6).

Economic

Economic impacts were linked by interview participants directly to work of nature restoration and nature network development: “there were a lot of discussions around the issues that businesses face as a result of climate change… the impact on their structures and buildings, for example, and the financial impact that has on them with storm damage, etcetera” (Participant 1). However, there has not been measurement of direct economic costs and benefits associated with both climate change and the nature network development. One respondent said: “I think we’ve probably still got a bit more work that we could do around the economic side… that’s still quite a developing [area of work]” (Participant 2).

Participant 3 offered informed speculation that the flood regulatory aspect of nature networks would likely have an important economic impact, alongside the cost savings associated with a more active population with increased access to green space. Those are “large economic benefits that are really hard to calculate with great certainty, but they do lead to massive cost savings” (Participant 3). In addition, improving parks could build in opportunities for businesses to thrive, such as coffee and ice cream vendors, dog walkers, outdoor or after-school clubs, or nurseries, “where you provide a sort of habitat for [these] things to happen” (Participant 3).

Even in the absence of economic reporting, Participant 7 points out:

“people live in Edinburgh… because of the access to green space… [it has] fantastic access to green space compared to most cities in the world. There is absolutely no way we can quantify that, really. You could do rough estimations, but I don’t know how many people work in finance in Edinburgh because it’s a really nice place to live. And I think you could argue that the Edinburgh nature network was a pretty strong part of that.”

So, even in the absence of clear econometric reporting, participants were able to offer qualitative evidence of economic benefit associated with nature network development.

Climate adaptation/resilience

The nature network links in with existing city climate strategies and approaches (Participant 1). For example, nature network delivery ties in with the flood management team in order to generate multiple benefits. For instance,

“we are looking at a lot at, ‘is this a priority area where there is surface runoff and that’s contributing to those problems with water levels in the city?’ and then, ‘ok, what can we do if we’re increasing areas for nature within our parks—can we also increase drainage and have that kind of multi-benefit system?’… we’re always trying to think how we join up” (Participant 2).

This joined up approach may contribute to more effective climate adaptation, and may mitigate costs to the Council by coordinating projects.

Wilding Wee Spaces integrates flood risk into their programming with school children: “one of [the] schools actually had people from the flooding team within the council come visit their site and help do sessions with the class looking at the flooding in their area and deciding what kind of trees to plant, [and] where would help with flooding in their area, and deciding what kind of trees to plant [to] help with flooding in their playground” (Participant 6). This restoration activity therefore can contribute to climate resilience, determined by specific and place-based climate need.

Addressing flooding and temperature regulation were key priorities during development of the nature network (Participant 3) in order to adapt to warmer temperatures and more intense storms. Yet, Participant 1 estimates that:

“[in] the implementation phase, [it is] a little too early to see the adaptation benefits. A lot of the work that has been done, whether it’s putting in new sub features [and] creating new habitat alongside those… it’s all been done really in the last 12 to 24 months, a lot of the pilot infrastructure, so it’s too early to answer that I think.”

With clear climate priorities linked to nature network delivery across Edinburgh, climate adaptation benefits may need more time to materialise in a measurable way in some cases.

Complexities or lack of benefits

Urban Context and Trade-offs

The urban context inherently means that nature and humans are in close proximity to each other, requiring a clear weighing of biodiversity and human benefits. For instance, active travel networks can quite easily also serve habitat connectivity purposes. However, in particular instances these goals conflict. Closed railway lines which have evolved into active travel routes are also identified as local biodiversity sites, and the “connectivity that they offer and the linear nature of them is the ecological value. And there’s a tension between that, and wanting to expand the standards that we have to meet for active travel infrastructure… [such as needing] lighting where maybe areas are not lit at the moment, so there can be quite a lot of negative impacts” (Participant 1). Trade-offs between biodiversity goals and human interaction with nature therefore play a role in urban contexts similarly to rural contexts.

Further trade-offs between human interaction with nature include the potential for humans to do harm to natural spaces and nature connectivity projects. This can cause conflicts between attempting to “keep [nature] pristine and keep it for nature’s sake… but then there is that trade off of responsible access… [Some ecologists] concerns come from a place of seeing nature get trashed by people abusing it. And you see it all the time in summer. There’s always reports of people not taking away their trash, or wildfires” (Participant 4). Treading the line between human and biodiversity benefits can be challenging in urban areas, especially if a space is “earmarked as a biodiversity place… you [could] ruin one intervention at the kind of benefit of another, getting people out and involved” (Participant 5). For this reason, finding a balance is incredibly important because “in an urban area, you’re never going to have that perfect baseline of complete wilderness of habitat… it is about just making it the absolute best we can” (Participant 2).

Reaching target communities

Respondents touched on the difficulty of ensuring that benefits are distributed across populations equitably. The GroundsWell Project identifies that the primary users of developed parks are those that live within 50 yards of them, so extending usage is key to ensuring these benefits are felt across communities. One respondent reported that

“we’re good at creating a nice park, but it’s not always the case [of] ‘build it and they will come’. There needs to be some kind of behavioural level intervention that accompanies that to get people to use spaces. Things like social prescribing, or even just community level perceived safety is an issue in these areas as well. Although Edinburgh is generally safe, this specific part of Edinburgh [where this park is] is above average crime for the whole of Scotland. So, there’s other things going on that impede people using spaces” (Participant 5).

Participant 5 also points out that the greatest users of small parks identified in the GroundsWell Project were those who lived within 50 yards, and that usage dropped off with those residing further away. Therefore, it could be that additional steps, like targeted stakeholder engagement or communication, are needed to ensure that diverse groups of people engage with the nature network to gain socioeconomic benefits.

Scale

Scale emerges again as an impediment to delivering the full potential range of socioeconomic benefits. The GroundsWell project is collecting data on health indicators such as sleep, general health, and physical activity with the aim of creating a small longitudinal study that follows individuals through time, but due to the fact that “biodiversity interventions generally take 20 to 30 years sometimes to really embed and actually reach the benefit that they’re meant to” (Participant 5) ability to effectively measure benefits against these indicators is limited. The small scale of urban nature connectivity projects also poses a challenge to reaching certain goals. For instance, “if a local authority is thinking about offsetting [emissions] or something like that, this is not really the way to do it. You’re not going to make a huge benefit [on] the climate regulation [side]” (Participant 3).

Conclusion

The Edinburgh nature network has been in delivery since around 2020 and has delivered clear benefits across the city both for biodiversity and people. However, similarly to the Moray nature network evaluation, there is a lack of clear reporting around the multiple benefits it can help deliver. Although the nature network has a clear monitoring and evaluation framework, this data has yet to be openly published, limiting our understanding of its impacts to qualitative information provided by interview participants.

Overall, the Edinburgh nature network indeed provides benefits across health, wellbeing, the community, economics, and climate adaptation. Similar to the rural context, much of the same trade-offs and priority conflicts also arise in this urban context.

Conclusions and Next Steps

Conclusions

The research set out to determine the extent of the evidence base around existing or potential socioeconomic impacts of nature networks or nature connectivity, including evidence of increased climate resilience. The existing evidence base setting out the potential impacts of nature networks is quite strong. Revealed by both the literature review, and the case studies based on interviews with 16 participants in Scotland. The multiple benefits of nature networks are identified across particular categories, i.e. ecosystem services, communities and people, health and wellbeing, economic, and climate adaptation. Community stakeholders are included in both the mapping and delivery phases in order for the nature network to include the perspective and needs of these communities in terms of the benefits they will deliver outside of biodiversity. In the case of the Edinburgh nature network, extensive mapping of ecosystem services played a key role in the design of the nature network itself. Interview participants demonstrated a clear understanding of the multiple benefits that nature networks could deliver outside of biodiversity.

However, clear measurement of the existing benefits of nature networks in Scotland is lacking. In neither case study area are the socioeconomic outcomes associated with increased nature network delivery reported, econometrically or otherwise. Particularly in the Moray case, this is largely due to the very early stage of development of the nature network. While many habitat connectivity actions have been taken across the region, these have not yet been formally integrated to the nature network, let alone reported on as such. Reporting across these individual projects, where it exists, is not available publicly and, according to interview participants, is usually targeted at grant funders. Having such data more widely available, alongside clearer baseline data for comparison, would be helpful to decisionmakers in assessing the benefits and trade-offs of individual nature restoration actions and connectivity.

This research also seeks to assess the extent to which the evidence base is sufficiently robust to support key messages for future communication and engagement with nature network development. The evidence base clearly suggests a range of socioeconomic benefits that could arise from increased habitat connectivity across Scotland. This evidence base should inform local authorities that delivery of nature networks could positively impact local communities economically and by improving health outcomes, by supporting communities and people, and by increasing community resilience to climate change. However, the existing evidence is not currently sufficient to support key messages to other stake holding groups, including farmers and landowners, who will likely bear a significant expense (both in delivery of nature connectivity and in loss of income related to delivery) if they apply their land to a larger habitat connectivity scheme. Key messages for these groups could provide specific econometric evaluations of nature connectivity outcomes, relevant directly to farmers and landowners by including valuations associated with the impacts of connectivity as well as valuations around loss of grazing or planting capacity.

Participant 15 points out that not only is each nature network unique, but that “we must be prepared to allow [nature networks policy] to develop and change because things will change… climate change is going to change things. New research will change things, changes in populations of different animals will change things, and we must be flexible and prepared to modify it considerably if required.” The dynamic nature of nature network delivery will therefore also be impacted by a range of external forces, so accounting for these dynamics will be important to ensure that socioeconomic benefits can be realistically delivered.

We investigated if the benefits of nature connectivity vary with complexity or scale of implementation. Particularly in rural cases, the evidence indicates socioeconomic and climate adaptation benefits, like flood resilience, will vary with scale of nature network implementation and therefore impact people and communities to varying degrees. According to some interview participants, large scale restoration will be needed to meaningfully impact climate adaptation and its associated socioeconomic benefits via flood mitigation and cooling. Similarly, the small scale of nature development in urban settings will be likely ineffective in, for instance, offsetting carbon emissions or having a meaningful economic benefit to local businesses. However, local benefits for health and wellbeing, community engagement, and young people’s experiences of their environments emerge prominently in urban contexts, particularly for those who live in close proximity to parks and those who seek involvement.

Both the evidence reviews and case study interviews revealed that the process of establishing nature networks can generate socioeconomic benefits. Therefore, community engagement from the outset is key to maximising the potential for multiple benefits. In this research we sought to identify opportunities to engage with local communities, like schools and landowner groups, on nature network implementation and understand the ways in which communities have been involved in developing to the nature network. The case studies indicate that communities have been meaningfully involved in both the rural and urban nature network development and implementation, but that this engagement is both more accessible and direct in the urban environment. Particularly in the Edinburgh nature network, which has been in place for more than 5 years, community members and stakeholders were engaged in an iterative process of co-creation from the very beginning, and the community is still meaningfully engaged with delivery. Moray’s nature network is still being mapped and developed, and despite clear effort and goodwill of the local authority to engage the community, this engagement is harder to achieve due to its sparser population. The extent to which the community will be involved in the delivery of the nature network itself remains to be seen.

Lessons learnt

Clear reporting on agreed-upon categories of socioeconomic benefit is needed

The clearest evidence gap is measurement and open reporting of the direct benefits of nature connectivity, and nature networks, for people and communities in Scotland. While interview respondents offered qualitative evidence of ongoing or anticipated benefits of their projects, systematic measurement towards agreed-upon indicators of socioeconomic benefit is lacking.

The Scottish Wildlife Trust developed a monitoring and evaluation framework for the Edinburgh nature network which includes a Society theme. This theme sets out four indicators: greenspace use, experience of nature, outreach and education, and access and equity. Without clearer information on how this data will be collected, it is unclear if these indicators will be measured at the individual level, or a level above such as neighbourhood, community, etc. which could impact the insights generated by an evaluation. While this framework could shed light on people or communities’ experiences of the nature network, it does not specifically allow for measurement of some of the categories of benefit identified in this research, including health and wellbeing, community engagement, or climate resilience impacts.

Importantly, this framework fails to set forth an econometric indicator, which could measure financial impacts or benefits across stakeholder groups like homeowners or businesses. Should a similar monitoring and evaluation framework be introduced in rural nature network contexts, econometric evaluations would be particularly valuable for farmers and landowners.

Clear messaging for stakeholders is needed

The lack of systematic measurement of the socioeconomic benefits of nature connectivity and nature networks impacts the messaging around nature network delivery for some key stakeholders more than others. For the local authorities that are tasked with mapping and implementing their networks, qualitative evidence of multiple benefits could help encourage them to prioritise nature network implementation as a means of meeting a range of people- and community-centred goals that they must deliver on alongside biodiversity, such as managing air quality and contributing to climate change adaptation. However, for stakeholders like landowners and farmers, the economic benefits are by necessity of higher priority than other benefits.

Suggested Next Steps

Based on the evidence generated in this report, suggested next steps include:

Development of clear guidance on what nature networks are expected to deliver

The evidence presented here addresses the trade-offs that can arise between biodiversity goals and socioeconomic goals when it comes to nature networks. These arise in both urban and rural contexts. Because nature networks as a policy approach were created to address issues related to biodiversity, i.e. habitat fragmentation, there must be clear advice on how to implement nature networks such that they can deliver multiple benefits, particularly where delivering both categories of benefits are opposing and trade-offs are required. Because nature networks are by essence place-specific, the variance in landscapes, places, and contexts could be accounted for in this guidance. Applications of tools, such as the forthcoming Natural Capital Tool developed by NatureScot, can help inform decisions with regard to ecosystem services trade-offs, however expanded guidance could focus more on the socioeconomic categories evidenced here. It should also be dynamic and account for the place-based quality of nature networks.

Interview participants drew attention to the unequal distribution of benefits associated with habitat connectivity (Participant 5; Participant 6). For this reason, addressing issues of equal distribution of benefits should be considered as a part of the wider guidance around the delivery of multiple benefits. This could involve exploring measures to engage harder to reach communities such as urban residents who live farther away from parks, or farmers in rural contexts.

Development of socioeconomic monitoring and evaluation systems for nature networks

Creating a system of monitoring and evaluation of socioeconomic benefits could inform what these benefits look like: by building the measurement of socioeconomic benefits into nature networks as they develop, strategic decision-making around nature restoration and the benefits it can provide. This system should both be dynamic and account for place-based contexts, and also be mindful not to increase burden on delivery partners and local authorities. This could draw on existing tools, including NatureScot’s Natural Capital Tool and the Tree Equity Score UK, which could be applied to measurement and evaluation exercises. Because nature networks will vary across Scotland, a framework could encompass the range of benefits while allowing local authorities to prioritise benefits that are relevant to their contexts. This could ensure that consistent socioeconomic data is captured without adding pressure to local authorities to deliver on benefits with less relevance to their contexts.

This system should also take into account the subjectivity of each nature network for a few reasons. First, the evidence presented in this report demonstrates that benefits are not universal across regions but rather are contingent on the characteristics of the nature network, such as their urban or rural context. Second, “there isn’t similar levels of capacity within different local authorities” (Participant 7); rather, capabilities, priorities, and the extent of existing nature connectivity projects will vary across council areas. Monitoring and evaluation systems would be more likely to be adopted if they were flexible and/or tailored to account for these place-based needs and priorities.

Development of strategies that speak to the needs of particular groups, like farmers and landowners

This report demonstrates that the evidence of socioeconomic benefit to farmers and landowners is thin. While the costs associated with implementing nature networks rest largely on local authorities, farmers and landowners are private citizens upon whom costs would be disproportionately imposed in order to deliver nature networks, despite existing support such as compensation for taking nature friendly approaches through the agricultural reform programme, particularly in rural areas. Participant 13 argues that, particularly in the rural context, “the bottom line is we are only able to do anything by working with and through farmers and other landowners, so we’re always trying to find that thing that is not just an issue they can tolerate, but something that they might see as a long-term benefit.”

For many farmers and landowners, such as those who make up the Moray Farm Cluster, the will to participate in biodiversity augmentation is not lacking. For these stakeholders, contributing to nature network delivery, and therefore the biggest barrier is financial: “it’s all money… these farmers want to do [biodiversity work], there’s no resistance from them in terms of land use… [but] it obviously costs money. You’ve got to find money to actually do the work and then maintain those networks for decades to keep them in good condition” (Participant 11). Engaging meaningfully with these groups around nature network development could build better understanding of the desires, willingness, capacity, opportunities, and challenges, including financial constraints, faced by farmers and landowners. Farmers and landowners who are not informed on issues of biodiversity and its multiple benefits could be supported by offering clearer evidence and guidance around the costs and benefits they will incur from both action and inaction.

Development of approaches to ensuring wide distribution of socioeconomic benefits and community engagement

The evidence suggests that the socioeconomic benefits that come from habitat connectivity projects are not necessarily equally distributed across local authorities. Evidence around how communities interact with nature networks could inform our understanding of how their associated socioeconomic benefits are distributed across groups. This could differ across age groups, depend on people’s preferred mode of travel, and location of their residences.

Similarly, community engagement has the potential to skew influence, in terms of which voices feed into decision-making and delivery and therefore how socioeconomic benefits materialise from nature networks. Particularly in rural areas, widespread engagement can be challenging. For this reason, “it’s just really important to recognise that if you’re target audience isn’t going to show up at a community meeting, that doesn’t mean to say you’ve done a good community consultation. It means you’ve talked to the people that like to go to meetings… we have to engage with people where they are” (Participant 13).

Therefore, during the early stages of developing an approach to ensuring socioeconomic benefits of nature networks, it is worthwhile to consider approaches that ensure a) the widest distribution of benefits across populations and b) the meaningful engagement of target populations.

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Scottish Government, & NatureScot. (2024). A Framework for Nature Networks in Scotland. https://www.nature.scot/sites/default/files/2024-11/30×30-nature-networks-november-2024-accessible-1.pdf

Siuta M, & Nedelciu C E. (2016). Report on Socio-Economic Benefits of Wetland Restoration in Central and Eastern Europe. https://www.ceeweb.org/ducuments/publications/report_on_socio_economic_benefits_of_wetland_restoration_in_CEE.pdf

Stevens, B., Barthelmess, V., & Cole, L. (2025). Scottish Government’s Interim Evaluation of the Nature Restoration Fund. https://www.gov.scot/binaries/content/documents/govscot/publications/research-and-analysis/2025/08/interim-evaluation-nature-restoration-fund/documents/interim-evaluation-nature-restoration-fund/interim-evaluation-nature-restoration-fund/govscot%3Adocument/interim-evaluation-nature-restoration-fund.pdf

Troy, A., Morgan Grove, J., & O’Neil-Dunne, J. (2012). The relationship between tree canopy and crime rates across an urban-rural gradient in the greater Baltimore region. Landscape and Urban Planning, 106(3), 262–270. https://doi.org/10.1016/j.landurbplan.2012.03.010

Valdés, A., Lenoir, J., De Frenne, P., Andrieu, E., Brunet, J., Chabrerie, O., Cousins, S. A. O., Deconchat, M., De Smedt, P., Diekmann, M., Ehrmann, S., Gallet-Moron, E., Gärtner, S., Giffard, B., Hansen, K., Hermy, M., Kolb, A., Le Roux, V., Liira, J., … Decocq, G. (2020). High ecosystem service delivery potential of small woodlands in agricultural landscapes. Journal of Applied Ecology, 57(1), 4–16. https://doi.org/10.1111/1365-2664.13537

Vangansbeke, P., Blondeel, H., Landuyt, D., De Frenne, P., Gorissen, L., & Verheyen, K. (2017). Spatially combining wood production and recreation with biodiversity conservation. Biodiversity and Conservation, 26(13), 3213–3239. https://doi.org/10.1007/s10531-016-1135-5

Wolfe, M. K., & Mennis, J. (2012). Does vegetation encourage or suppress urban crime? Evidence from Philadelphia, PA. Landscape and Urban Planning, 108(2–4), 112–122. https://doi.org/10.1016/j.landurbplan.2012.08.006

World Wildlife Fund. (2026). Why Ecological Connectivity Matters World Wildlife Fund. https://www.worldwildlife.org/resources/explainers/why-connectivity-matters-to-wildlifeand-people/

Methodology

PRISMA guidelines (Page et al., 2021) were followed during this rapid evidence review to ensure comprehensive consideration of the literature. First, inclusion and exclusion search criteria were determined. Because the term “Nature Network” is both relatively new and unique to the Scottish context, the search criteria was broadened to include descriptors of habitat and nature connectivity. The search terms deployed on Web of Science, and supplemented with an additional search of Google, can be found in Appendix A.

Following this search, additional inclusion/exclusion criteria was adhered to in order to limit the field of literature to a reasonable pool while ensuring inclusion of literature that specifically relates to the research questions. To do so, only literature from the period of 2010 onward and related to the geographic region of Europe, North America, and Australia/New Zealand was included. This ensures that the literature is recent enough to have continued relevance, while being related to the Scotland in terms of overall geography, state development level, and governance norms. Results not written in the English language were eliminated, and only open-access search returns were included to allow for replication. Document types were limited to articles and book chapters. The final search pool contained 1,596 returns at the time of search (3 November 2025).

Each item returned was screened by a trained researcher by looking at paper titles, abstracts, and full texts according to the predefined eligibility criteria.

Table 1: Inclusion and exclusion criteria used to identify studies for the review.

Literature deemed potentially appropriate for inclusion were screened by the second researcher. Each piece of literature which survived screening was then analysed in NVivo.

Having completed the search and screening processes using the above criteria, 26 references were deemed to either meet criteria for inclusion in the evidence review or required a full reading to deem their relevance. At full reading 11 were excluded due to irrelevance, leaving 15 that were relevant enough (though some tangentially so) to be included in the rapid evidence review.

In addition to the systemic search, an additional Google search was performed to ensure relevant sources were collected for the review. Searching “socioeconomic benefits of habitat connectivity” and screening the first 10 pages of search returns yielded a further 9 academic papers for inclusion in the RER.

Included in the final content analysis were 24 pieces of academic literature, two of which were subsequently removed from the review as they did not evaluate benefits associated with habitat or nature connectivity, leaving 22 pieces of literature. Just three papers were written in or before 2015, with the remaining literature published between 2016 and 2025. Eight of the papers were reviews, theoretical, or presenting a framework, while the remaining 14 conducted empirical analyses which in some way measured the benefits associated with nature connectivity.

Grey literature was found in a less systematic way due to database search constraints. Google searches for “socioeconomic benefits of habitat connectivity” were conducted and the first ten pages of search returns were screened, at which point saturation was reached. From this search 9 pieces of grey literature were downloaded and analysed in NVivo, with two ultimately removed for irrelevance.

Figure 2: PRISMA 2020 flow diagram for new systemic reviews which included searches of databases and registers only.

Note: In addition to the systemic search, an additional Google search was performed to ensure relevant sources were collected for the review. Searching ‘socioeconomic benefits of habitat connectivity’ and screening the first 10 pages of search returns yielded a further nine academic papers for inclusion in the RER.

Rapid evidence review search terms

[1] “nature network*” OR (nature NEAR/5 network*) OR “habitat networks” OR (habitat NEAR/3 connect*) OR “habitat defragmentation” OR “ecological network*” OR (“protected area*” NEAR/3 network*) “green bridge*” OR ((nature OR wildlife OR habitat OR ecological NEAR/2 corridor*)) (Topic); [2] benefit* NEAR/15 (socioeconomic OR economic OR public OR people OR communit* OR sociocultural OR societal OR social OR “climate adaptation” OR recreation*) (Topic); [3] “co benefit*” OR “wider benefit*” OR “multiple benefits” (Topic); [4] ecotourism OR “social capital” OR “social connectedness” OR health OR wellbeing OR “well being” (Topic); [5] climate NEAR/3 (adaptation OR mitigation OR resilience) (Topic); [6] flood NEAR/2 (alleviation OR mitigation) (Topic); [7] carbon NEAR/3 (capture OR store OR storage) (Topic); [8] “clean water” (Topic); [9](provide OR provision OR improve* OR increas*) NEAR/2 “ecosystem service*” (Topic); [10] #2 OR #3 OR #4 OR #5 OR #6 OR #7 OR #8 OR #9; [11] #10 AND #1

Case Study methodology

The main research method used to conduct case studies was interviews with key stakeholders and those who have interacted with the nature networks. Ethical approval was sought and received by the University of Glasgow College of Social Sciences’ ethics committee. These interviews were garnered via the author’s own networks, Scottish government colleagues’ networks, and snowballing. Each interview participant was presented with a data protection policy info sheet, a participant info sheet, and a consent form, which they signed and returned to indicate their willingness for their interviews to be recorded and used as data.

Interview questions followed roughly the same question topics, but each interview participant was asked bespoke questions based on their positions.

Example interview schedule

Please introduce yourself to me including your organisation, role, and specific work on your nature network 

At what stage of development/age is your nature network? How would you describe its level of implementation/embeddedness?

We know that nature networks are important for biodiversity, but were there any other reasons that this nature network was implemented, particularly in terms of human/community benefits?  

Does the community get involved in decision-making or implementation? Could this be improved?  

How aware would you say the community is of the nature network? How do people in the community interact with the nature network? What would you say community members most “get out” of the nature network? 

Does your nature network play a notable role in climate change adaptation, for instance in preventing or dealing with flooding?  

Do community members, local businesses benefit from this? If so, how?  

How would you say that local businesses/ the local economy interacts with/gets out of the nature network?  

What other types of economic benefits have you observed as a result of the nature network? (i.e. preventing expenses incurred from flooding; driving up visitors to the area who interact with the local economy, etc)? 

Have you observed any unexpected benefits to the community as a result of the nature network?  

What evidence of socioeconomic benefits would be most useful to your organisation (or your local authority, etc) in order to support increased implementation of nature networks?  

Have you observed any resistance to/barriers to the implementation of your nature network, in or out of your organisation? If so, what do you think could overcome these?  

Is there particular evidence of benefits that could mitigate opposition?  

Has your Nature Network (or any related projects habitat connectivity projects) conducted any reporting on impacts/benefits that you could share with me?  

Interview methodology

Ethical approval to carry out this research was granted by the University of Glasgow College of Social Sciences on 18 November 2025. Interviews were conducted via MS Teams, and were recorded with participants’ consent. Teams auto-transcription feature was used to generate a transcript of each interview. These were reviewed by the research team, and corrections were made manually to any errors in the automated transcript. These transcripts were converted to PDF or Word document files. Content analysis of these documents was processed using the software NVivo, and was carried out by research team members.

Analysis pulled quotes from interviews which fit into the following categories in each case study: nature network level of implementation, governance and community involvement, existing measurement or evaluation, ecosystem services, health and wellbeing, communities and people, economic, climate adaptation and resilience, complexities or lack of benefits, capacity, money, awareness/participation, benefits trade-offs or lack of benefits.

How to cite this publication:

Salamon, H. (2026) ‘Assessing the Socioeconomic Benefits of Nature Networks’, ClimateXChange. DOI: https://doi.org/10.7488/era/7510

© The University of Edinburgh, 2026
Prepared by University of Glasgow on behalf of ClimateXChange, The University of Edinburgh. All rights reserved.

While every effort is made to ensure the information in this report is accurate, no legal responsibility is accepted for any errors, omissions or misleading statements. The views expressed represent those of the author(s), and do not necessarily represent those of the host institutions or funders.

This work was supported by the Rural and Environment Science and Analytical Services Division of the Scottish Government (CoE – CXC).

ClimateXChange

Edinburgh Climate Change Institute

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+44 (0) 131 651 4783

info@climatexchange.org.uk

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If you require the report in an alternative format such as a Word document, please contact info@climatexchange.org.uk or 0131 651 4783.

Scotland has a major opportunity to accelerate progress on decarbonising its heavy goods vehicle (HGV) fleet. Although HGVs make up less than 2% of vehicles on the road, they generate around 13% of road transport emissions, meaning targeted action in this sector can deliver disproportionate benefits.

Alongside its legally-binding net zero ambitions, Scotland is committed to the UK-wide phase out of non‑zero‑emission HGVs (by 2035 for vehicles under 26 tonnes and by 2040 for all new HGVs) creating a clear pathway for industry transition. Long‑term measures such as the rollout of zero‑emission HGVs are underway and steadily gaining traction as technology and markets evolve.

But Scotland has a valuable opportunity to pursue practical interim measures that cut tailpipe emissions from the existing HGV fleet in the near term. Retrofitting, which involves upgrading older vehicles to meet stricter emissions standards, and repowering HGVs with cleaner electric, hydrogen or biomethane engine systems could assist in meeting these goals.

Retrofitting significantly reduces local air pollutants but does not deliver meaningful carbon savings, unless dual fuel hybrid retrofitting is adopted. Repowering offers true zero-emission solutions and delivers substantial carbon reductions, directly supporting Scotland’s climate targets.

Key findings

• Rigid vehicles (about two-thirds of the fleet) and articulated vehicles in the Highlands and Islands present the strongest opportunities for intervention.
• Popular models of older, non-Euro 6 vehicles are prime candidates for retrofit and repower programmes. However, for many operators purchasing used Euro 6 compliant vehicles is a similar or lower cost option compared than retrofitting.
• Battery-electric and biomethane repowering show better payback potential and are more attractive for operators intending to retain vehicles for longer periods. The most appropriate measure is dependent on the type of haulage operation the vehicles are being used for.  
• Retrofitting could remove up to 584 tonnes of nitrogen oxide and 27 tonnes of particulate matter annually – equivalent to taking thousands of cars off the road each day – but only negligible carbon (CO₂) abatement.
• Repowering the same vehicles could eliminate 1.08 million tonnes of CO₂ annually – about 57% of current HGV emissions. This falls short of the 75% reduction target, indicating that action must eventually extend to Euro 6 vehicles.

Current policy strongly favours electrification of the HGV fleet through new zero-emission vehicles. But to meet Scotland’s ambitious emissions reduction targets, policy must support both interim and long-term solutions, address economic and operational barriers, and enable a just transition for operators across the country. Only through coordinated action and targeted investment can Scotland deliver meaningful tailpipe emissions reductions now while laying the foundation for a zero-emission HGV fleet in the future.

For further information, please read the full report.

If you require the report in an alternative format, such as a Word document, please contact info@climatexchange.org.uk or 0131 651 4783.

Page image: Jack Blueberry, Unsplash

Research completed: January 2026

DOI: https://doi.org/10.7488/era/7421

Executive Summary

Background

Scotland has a major opportunity to accelerate progress on decarbonising its HGV fleet. Although HGVs make up less than 2% of vehicles on the road, they generate around 13% of road transport emissions, meaning targeted action in this sector can deliver disproportionate benefits. Scotland’s ambitious, legally-binding climate goals necessitate investment. Scotland is also aligned with UK‑wide commitments to phase out non‑zero‑emission HGVs by 2035 for vehicles under 26 tonnes and by 2040 for all new HGVs. This creates a clear pathway for long term industry transition. Measures such as modal shift from road to rail freight and the rollout of zero‑emission HGVs are developing and steadily gaining traction as technology and markets evolve.

With these long‑term changes underway, Scotland now has a valuable opportunity to pursue practical interim solutions that cut tailpipe emissions from the existing HGV fleet, support operators through the transition, and deliver meaningful progress in the near-term. Retrofitting and repowering HGVs could assist in meeting these goals.

Euro emissions ratings are European Union regulated limits on tailpipe air polluting chemicals that are adopted in the UK. Euro 6 is latest standard and represents the current strictest standard for regulating vehicle pollution. Retrofitting involves upgrading older vehicles (primarily Euro 4/5) with technologies such as diesel particulate filters (DPFs) and selective catalytic reduction (SCR) to meet Euro 6 standards. This approach significantly reduces local air pollutants (NOₓ and particulate matter (PM)) but does not deliver meaningful carbon (CO₂) savings, unless dual fuel hybrid retrofitting is adopted (for example gas or hydrogen are combined with diesel and/or biofuels). Retrofitting is therefore best aligned with local air quality policies, such as Low Emission Zones, rather than Scotland’s overarching climate abatement goals.

Repowering refers to rebuilding HGVs with alternative powertrains, including battery-electric, hydrogen fuel cell, or dedicated biomethane gas systems. Repowering (specifically battery-electric and hydrogen) offers true zero-emission solutions at the tailpipe and delivers substantial carbon reductions, directly supporting Scotland’s climate targets. A key distinction is that retrofit primarily improves air quality, while repower is required for meaningful carbon reduction.

Findings

Our analysis of Scotland’s HGV market found that rigid vehicles (about two-thirds of the fleet) and articulated vehicles in the Highlands and Islands present the strongest opportunities for intervention. Older, non-Euro 6 vehicles (especially DAF rigid and Volvo/Scania artic models) are prime candidates for retrofit and repower programmes. They are amongst the more popular models, and so can create blueprints for repower technologies.

Retrofitting involves upgrading older vehicles (primarily Euro 4/5) with technologies such as diesel particulate filters (DPFs) and selective catalytic reduction (SCR) to meet Euro 6 standards. While this approach significantly reduces local air pollutants (NOₓ and particulate matter (PM)), it does not deliver meaningful carbon (CO₂) savings, unless dual fuel hybrid retrofitting is adopted. As a result, retrofit is best aligned with local air quality policies, such as Low Emission Zones, rather than Scotland’s overarching climate abatement goals. The economic case for retrofitting is weak for most operators, as payback periods often exceed typical fleet replacement cycles. Many operators opt for purchasing used Euro 6 vehicles, which offer compliance and reliability at comparable or lower cost.

In contrast, repower involves rebuilding HGVs with alternative powertrains, including battery-electric, hydrogen fuel cell or dedicated biomethane gas systems. Repowering (specifically battery-electric and hydrogen) offers true zero-emission solutions at the tailpipe and delivers substantial carbon reductions, directly supporting Scotland’s climate targets. Repower solutions, particularly battery-electric and biomethane, show better payback potential and are more attractive for operators intending to retain vehicles for longer periods. Battery-electric repower is best suited to depot-based, predictable routes, while biomethane gas repower is more appropriate for high-mileage, long-distance operations. Hydrogen repower, though promising for heavy-duty, long-haul applications, remains high-risk due to cost, infrastructure, and market immaturity.

Based on our analysis of all vehicles over 7.5 tonnes, retrofitting all Euro 4/5 HGVs in Scotland through DPF and SCR solutions could remove up to 584 tonnes of NOₓ and 27 tonnes of PM annually. This is equivalent to taking thousands of cars off the road each day. However, this approach achieves negligible carbon (CO₂) abatement. In contrast, repowering the same vehicles to electric (for instance) could eliminate 1.08 million tonnes of CO₂ annually. This is about 57% of current HGV emissions. Even so, this falls short of the 75% reduction target, indicating that repowering alone will not be sufficient, and action must eventually extend to Euro 6 vehicles and be paired with accelerated innovation and policy support.

Taken together, this indicates that retrofit is best viewed as a targeted, interim measure, while repower provides the more credible pathway for decarbonisation.

Conclusions

Current policy strongly favours electrification, with funding and incentives directed towards new zero-emission vehicles. Retrofit and repower options are technically eligible but under-supported, facing barriers such as limited funding, unclear certification, and operational uncertainty. Stakeholder engagement highlighted the need for a balanced approach – supporting retrofit and repower as interim measures while maintaining momentum towards full fleet renewal. Multi-year funding, procurement alignment, and standardised accreditation could help scale these solutions and deliver near-term tailpipe emissions reductions.

Scotland’s path to HGV decarbonisation is complex and requires a blended, route-sensitive approach. Retrofitting offers immediate air quality benefits but limited climate impact, while repowering, especially with battery-electric and biomethane, aligns more closely with long-term climate ambitions. The evidence from this research indicates that retrofit should be viewed as a transitional measure, primarily for LEZ compliance and air quality improvement, while repower provides a more credible pathway to emissions reduction. To support Scotland’s emissions reduction targets, the findings suggest that policy could prioritise repower solutions, while addressing economic and operational barriers and supporting a managed transition for operators. Only through coordinated action and targeted investment can Scotland deliver meaningful tailpipe emissions reductions in the near term while enabling a shift to a zero-emission HGV fleet in the future.

Glossary / Abbreviations table

Introduction

Background

Heavy Goods Vehicles (HGVs) present one of the greatest opportunities for emissions reduction in Scotland’s transport sector. Although they represent less than 2% of the vehicle fleet, they account for around 13% of road transport emissions (Transport Scotland, 2025a). Addressing this disproportionate impact could deliver significant progress towards climate targets over the next 5–10 years. HGVs continue to dominate freight because they are cheaper, faster, and more flexible than alternatives (MDS Transmodal, 2019).

The 2020 Climate Change Plan Update (CCPu) called for both carbon reductions and tailpipe emissions cuts. Published in November 2025, Scotland’s Climate Change Plan (2026-2024) draft acknowledges that, though policy progress has been made for reducing HGV emissions, the technology and market readiness are not yet sufficient for rapid progress in the interim (Scottish Government, 2025a). Scotland does not have its own bespoke deadlines for phasing out non-zero-emission HGV sales and instead aligns with wider UK Department for Transport (DfT) targets. New HGVs under 26 tonnes sold in the UK must be zero-emission by 2035, and all HGVs sold in the UK must be zero-emission by 2040 (DfT, 2022).

The CCC’s analysis for the Seventh Carbon Budget assumes that battery-electric vehicles are chosen to decarbonise all HGVs, projecting that by 2040, nearly two-thirds of HGVs battery-electric vehicles are electric (CCC, 2025). Direct electrification is more efficient than producing hydrogen, which is likely to remain a niche solution for vehicles that are hard to electrify. Transport Scotland’s current plans for electric HGVs (eHGVs) broadly align with this view, positioning Battery Electric Vehicles (BEVs) at the core of future decarbonisation (Transport Scotland, 2024a).

The current Programme for Government 2025-2026 (Scottish Government, 2025b) identifies several key pillars supporting the HGV sector. This includes the Freight Facilities Grant, which is £4 million to encourage a shift of HGV freight onto rail. It also includes support for zero-emission HGVs through the HGV Market Readiness Fund (see Transport Scotland, n.d), addressing the ‘chicken and egg’ problem by developing market readiness and identifying strategic investment proposals for both vehicles and infrastructure to build sector confidence. Finally, the Scottish Government has committed to skills investment for decarbonisation which funds a just transition to ensure the workforce and supply chain are prepared to work with alternative fuels.

Despite these commitments, on-the-ground deployment and scaling remain limited. Further work is required to pilot and assess the commercial and operational feasibility of the various options. The CCC notes that the long-term strategy is “significantly off-track,” (CCC, 2024, p.38) as road freight has not yet reduced substantially through modal shift, rail freight volumes remain uncertain, and zero-emission HGV technologies are still developing. For example, most freight in Scotland moves by road, so even doubling rail’s share from its current 3-4% (SPICe, 2026) to 6-8% would only make a small dent in emissions reduction.

This presents a pressing gap between long-term decarbonisation targets and the need for near-term emissions reductions from the existing fleet. UK targets aim to phase out new conventionally fuelled HGVs <26 tonnes by 2035 and remaining HGVs by 2040. While Scotland develops its long-term strategy, it is essential to understand how the existing HGV fleet can contribute to interim emissions reductions. This study assesses the role that retrofitting and repowering existing HGVs vehicle could play as interim measures in closing this gap.

Method

We developed the following methodology to understand the role retrofit and repower could play in decarbonising Scotland’s HGV fleet and whether a Scottish retrofit market is feasible over the next ten years. This approach allows the study to assess not only technical feasibility, but the likelihood of real-world adoption.

Identifying where retrofitting and repowering has potential across Scotland’s HGV market

We carried out a detailed desktop study to understand the current HGV landscape in Scotland. This included analysing commodity movements, regional variations in vehicle age, fuel type and manufacturer, and the distribution of fleet types across O-licence holders (respective data sources can be found in Appendix A). This helped us identify where retrofitting and repowering could be targeted for the greatest emissions reductions and which vehicle groups and regions may offer viable use cases.

Identifying what retrofitting and repower options are available

We reviewed current retrofit and repower technologies, how each system works and where they have previously been deployed at scale. Case studies from the UK and international markets were examined to understand what has succeeded elsewhere.

Identifying how retrofitting and repowering could be implemented at scale in Scotland

This stage analysed how retrofit and repower could realistically be deployed across Scotland’s HGV market. This involved a review of the policy framework, testing commercial and operational feasibility, the financial impact on operators, and how retrofit business models would function in practice. This approach allows the study to assess not only technical feasibility, but the likelihood of real-world adoption. To do this, we combined the findings from the first two stages with extensive stakeholder engagement, including:

• Two workshops (public sector and private sector), plus follow-up discussions with multiple organisations
• One-to-ones with five retrofit and repower providers
• One-to-ones with three original equipment manufacturers (OEMs)
• An operator survey to understand fleet profiles and interest in retrofit and repower
• Follow-up interviews with survey respondents for deeper insight

Developing potential pathways for Scotland

The final stage of the project brought together all findings to outline potential pathways for deploying retrofit and repower in Scotland. These pathways illustrate how different scenarios vary under varying levels of uptake.

What are retrofitting and repowering?

Retrofitting involves modifying an existing an existing vehicle to reduce emissions while retaining the original engine. Usually, retrofitting applies to older Euro Standards vehicles (Euro 5 or older) to bring them in line with the latest Euro 6 standards through the fitment of Diesel Particulate Filters (DPFs) and/or Selective Catalytic Reduction (SCR) technologies. Hybrid retrofit technologies, including electric, hydrogen and gas, retain the existing diesel engine but modify the vehicle so it can be assisted by an electric motor and battery or operate on an alternative fuel. This creates a ‘dual‑fuel’ system, allowing the vehicle to run on either fuel independently.

Repowering involves removing the existing powertrain and replacing it with an alternative system, stripping back the vehicle entirely to its chassis and rebuilding the engine. Repowering in this study refers to rebuilding diesel HGVs as low and zero emission alternative fuels, including gas power, hydrogen, and battery electric, which does include CO₂ savings. Several retrofit and repower technologies have been researched as part of this study. Table 1 provides a description of what they are and how the vehicles are modified. See also Table 19 in ‎Appendix E.

The key distinction is that retrofit primarily reduces local air pollutants, while repower can deliver substantial carbon emissions reduction, including zero tailpipe emissions in some cases.

There are multiple examples of retrofit and repower being applied across the UK and internationally. A detailed review of these national and international case studies, including key lessons and implications for Scotland’s HGV market, is provided in Appendix B.

Scotland’s HGV fleet profile – Identifying where retrofit or repowering interventions are most viable

This section analyses Scotland’s HGV fleet to identify where retrofit and repower interventions are most likely to be viable. It explains what kind of goods are transported, where they are going, and what types of HGVs are being used. This includes their size, age, and manufacturer by regional level. Understanding these is the first steps in identifying where retrofitting could be targeted for the greatest emissions reductions. The following statistics were derived through analysis of raw data provided in Excel spreadsheets (with references to data sources throughout the chapter). Key sources include Society of Motor Manufacturers and Traders (SMMT), Transport Scotland, UK Government and the Department for Transport (DfT). We interrogated these datasets using filtering, pivot tables, and formula-based calculations to extract relevant metrics and summarise trends.

The purpose of this section is to identify where retrofit and repower are most likely to be viable in practice, based on fleet characteristics and operating patterns.

Market Review

Commodities and Goods Moved

In 2023, Scotland moved 150.8 million tonnes of freight (Transport Scotland, 2023a). Transport Scotland data tells us about origin-destination commodity movement by HGV (2023a). This means tracking what goods (commodity) are being moved by from where (origin) to where (destination). We can confidently state that the bulk of this tonnage was carried by HGVs given the data does not include pipeline or rail freight. A small amount could be attributed to coastal shipping. The data shows that most freight (117.3 million tonnes, 78%) stayed within Scotland, while 17.9 million tonnes (12%) were exported and 15.6 million tonnes (10%) were imported. Food, drink, and tobacco were Scotland’s largest imports and exports, making up 38% of imports and 19% of exports. For internal movements, forestry products, agricultural materials, and minerals accounted for over half (51%) of HGV freight (Transport Scotland, 2023a).

In the key datasets, Scotland’s origin and destination areas are broken down into five regions by International Territory Level 2 (ITL2) (see Appendix A for visual guide): Highlands and Islands, North Eastern Scotland, Eastern Scotland, West Central and Southern Scotland. From this data, we found that three of Scotland’s regions (Highlands & Islands, Southern, and North Eastern Scotland) move more metals by HGV than any other commodity. In Eastern Scotland the largest origin and destination commodity is food. In many regions the highest destination commodity is the highest origin commodity. This could suggest that significant numbers of HGV trips are regional, rather than long-distance trips. Data used in Section 2.1.2 does confirm that a majority of trips are shorter, supporting the idea that there are more regional movements. However, further analysis of trip length and distance travelled per day would be required to confirm this.

Table 7 and Table 8 in Appendix A show the breakdown of top origin-destination commodities for each region in Scotland. Key findings are:

• Eastern Scotland is the largest regional HGV tonnage zone, 32% of Scotland’s HGV journeys start there and 31% end there.
• West Central and Southern Scotland each handle 20–25% of Scotland’s HGV tonnage (and are the second / third largest regional HGV tonnage zones).
• The North East and Highlands & Islands account for only 8–13%, representing the smallest share of HGV tonnage in Scotland.

Distance Travelled

In 2022, the DfT recorded 140 million tonnes freight tonnage across Scotland (DfT, 2022) This is slightly less HGV than Transport Scotland in 2023, but we use the DfT dataset because it also captures the typical movement and journey length of HGVs. The data captures tonnes moved by distance travelled to create a percentage of tonne kilometres. Figure 1 shows that in Scotland, over half (65%) of all freight trips travelled 100 km or less, with 19% moving no more than 25 km. Only around 8% of HGV journeys exceeded 300 km, indicating that most freight movement is relatively short distance. It should be noted that this data only captures single trip movements and does not consider that a single HGV may cover multiple trips in one day as alluded to in section 2.1.1.

Figure 1 Distance Travelled by HGV per trip in Scotland in 2022 (DfT, 2022)

This pattern of predominantly short-distance journeys suggests strong potential for depot-based repower solutions, particularly battery-electric vehicles.

HGVs in operation

In Scotland, 83% of operators run fleets of ten or fewer vehicles, 14% manage between 11 and 50, and only 3% operate more than 50 vehicles. This highlights Scotland’s strong base of small and medium-sized enterprises (SMEs) within the freight sector.

Both Transport Scotland (2023) and the DfT (2024a) estimate that around 36,500 vehicles are HGV. Among HGVs, 65–70% are rigid and 30–35% are articulated, according to the Zero Emission Truck Taskforce (ZETT, 2022) and the SMMT (SMMT, 2025). Figure 2. Table 9 in Appendix A shows how many businesses are registered in each ITL2 area with a license to operate HGVs. Strathclyde holds the largest share of registered HGVs, amounting to 38% of the national total (SMMT, 2025).

The dominance of small operators may limit uptake of higher-cost interventions, reinforcing the importance of commercially viable solutions.

Vehicle Fuel Split

A majority of Scotland’s HGV fleet remains diesel-powered. According to DfT 2024 data, 36,253 out of 36,436 HGVs (over 99%) use diesel. Only 39 are BEV, 78 run on gas, 63 use petrol, and three with other alternative fuels. The 2025 SMMT data similarly indicates that 99.8% of vehicles over 7.5 tonnes are still diesel, with 29 BEV, six hydrogen diesel, two petrol and 27 ‘other’ (likely gas). Both sources show minimal progress towards alternative fuel adoption within Scotland’s freight and HGV sector.

Vehicle Age and Euro Standards

The 2025 SMMT data lists all goods vehicles registered in Scotland, broken down by manufacturer, age, region and whether they are rigid or articulated. The data is broken down into nine historical Scottish regions, rather than the five ITL2 regions used in previous data analysis. These regions are Highlands & Islands; Strathclyde; Central; Dumfries & Galloway; Scottish Borders; Lothian; Fife; Tayside; and Grampian.

Only vehicles over 7.5 tonnes were included for age analysis, because many vehicles between 3.5t and 7.5t are light good vehicles (LGVs), converted vans or camper‑vans. According to this dataset, there are 31,607 diesel HGVs over 7.5 tonnes in Scotland. This is closely aligned with previous estimates outlined by both Transport Scotland and the DfT with converted vans or camper‑vans removed. Table 10 in Appendix A shows the total number of vehicles, the split between articulated and rigid, their average age and the share of the fleet meeting Euro 6 emissions standard. Euro 6 is assumed for any diesel vehicle registered from 2015 onwards [RAC, n.d].

Nationally, articulated HGVs have a higher share of Euro 6 compliance (86%) compared with rigid HGVs (63%). Rigids are generally older, averaging 10 years, while articulated vehicles average 6.7 years. This age difference may reflect operational and market factors. Articulated vehicles often cover longer trunking routes and reach high mileage sooner (DfT, 2024b), which may encourage operators to replace them more often. In contrast, rigid vehicles are more flexible for local delivery or secondary use, meaning they can remain in service longer. It is generally found that larger firms may replace trucks every 3‑5 years, while smaller operators often retain vehicles 7+ years (DfT, 2024c; AEA, 2010).

Regionally, clear patterns in Euro Standards emerge in Scotland’s HGV fleet (SMMT, 2025). Some key points to note are:

• Central Scotland stands out for its younger fleet, with 94% of arctics meeting the Euro 6 standard, compared to 72% of rigids.
• On average in Central Scotland, articulated HGVs are 5.6 years old and rigids 7.8 years, both younger than Scottish and UK averages.
• The Highlands region has the lowest proportion of Euro 6‑compliant articulated HGVs (77%).
• The Scottish Borders has the oldest rigid HGVs, averaging 12.5 years, a sign that older, higher‑emitting vehicles are still common there.
• Dumfries and Galloway show the largest gap between articulated and rigid: 87% of articulated HGVs are Euro 6, but only 52% of rigids meet the standard.

This highlights where retrofit or repower could be targeted to achieve the greatest emissions reduction in the near term.

Original Equipment Manufacturers

The 31,607 HGVs in the SMMT data (2025) are manufactured by 45 OEMs. This includes 40 known and 5 unknown manufacturers (of either British, German, Italian or United States descent). Nationally, the top eight OEMs in Scotland are shown in Table 2.

The most common rigid HGV models in Scotland are the DAF LF, DAF CF, Volvo FM, and Scania P Series. Together, they make up about 46.5% of all rigid (7.5t+) HGVs in the country. For articulated HGVs, the most popular tractor units are the Volvo FH, Scania R Series, DAF XF and MAN TGX, which make up around 58% of all articulated vehicles registered in Scotland (see Appendix A). The average age of the popular rigid models is older than that of the popular articulated models, which fits with normal replacement cycles identified above. The only exception is the Scania P Series, which does not follow this trend.

Table 19 in Appendix A shows how preferred OEMs vary by region for both articulated and rigid fleets, along with the total number of vehicles registered in each area. Overall, Scania is the most popular choice for articulated units, with Tayside being the only region where Volvo takes the lead instead. For rigid vehicles, all regions show a strong preference for DAF. Other commonly chosen OEMs at the regional level include Iveco, Mercedes, MAN and Renault Trucks.

Emerging picture for retrofit and repower

This section indicates where retrofit or repower interventions are most likely to be effective in achieving the greatest emissions reductions at a regional level across Scotland, based on the parameters of commodity, HGVs in operation, vehicle age, and vehicle manufacturer. It does not account for the external factors that influence how vehicles are used, such as the business models they operate under, the finance agreements in place, and how their routes are scheduled. These factors are explored in following sections of the report.

Commodity Movements

It is difficult to judge which commodities are suitable for retrofit or repower without knowing specific vehicle demand, load weights, and routing. However, general patterns can be identified.

Commodities that require refrigeration; such as food and pharmaceuticals, or use power take-off systems, like tippers and tankers, need extra auxiliary power. This makes energy modelling and repower choices more complex when they switch to alternative fuels. Commodities with tight delivery windows, such as parcels and fresh food, may also struggle because their duty cycles rely on diesel-like performance and cannot tolerate long charging or refuelling times (Fisher, 2024). High-payload commodities, such as aggregates and construction materials, already operate close to weight limits; adding battery weight may reduce payload too much. Chemical / fuel transport should avoid hydrogen because of safety concerns (Calabrese, M. et al., 2024).

Commodities like waste collection, local deliveries and general groupage are often good candidates. These fleets usually have predictable, stop-start routes that suit regenerative braking and regular depot returns, making charging or refuelling more manageable (Volvo Trucks, 2025). General groupage refers to when there are multiple small shipments from different customers that are consolidated into one larger load so they can be transported more efficiently and cheaply. Western Central and Eastern Scotland move a combined 12 million tonnes of general groupage and 9 million tonnes of waste per year (2023), more than the rest of Scotland combined.

HGVs in Operation

Given Eastern, Southern and West Central Scotland have the highest number of O-licence registered businesses, there is a larger and more varied pool of fleets to work with. This increases the chance of finding operators whose duty cycles, payloads and assets are suitable for early trials of retrofitting or repowering because these areas offer more vehicle types, business models, and operational patterns.

West Central and North Eastern Scotland also have the highest percentage of restricted O-licences. This means many operators in these regions only carry their own goods rather than providing haulage for others. It is likely that most HGV routes are linked to their own production sites, which suggests they could be strong early candidates for retrofit and repower because their vehicles usually return to base, and changes to duty cycles are easier to control internally. This is taken as an assumption at this stage.

Vehicle Age and Euro Standards

Vehicle age illustrates where greatest tailpipe emission reduction could be achieved by understanding the percentage of vehicles Euro 5 or older. While Euro 6 is not explored in detail here, it is important to note that focusing solely on Euro 4 and Euro 5 vehicles will not deliver the scale of tailpipe emissions reduction required to meet Scotland’s interim targets (e.g. 75% emissions reduction by 2030 and 90% by 2040), nor will retrofitting support the Scottish Government’s explicit ambition for carbon reduction (see Emissions Savings). Dumfries and Galloway has around 357 rigid vehicles that are not Euro 6, while the Scottish Borders has approximately 242. Articulated fleets should be targeted in the Highlands and Islands, which have about 874 HGVs below Euro 6, the highest relative percentage of any region in Scotland.

Throughout the rest of this report, we identify that there is no universally optimal lifecycle point for retrofit (see Table 22 in Appendix E and Section 3), as payback periods are generally too long for typical fleet replacement cycles. We find that repower solutions (notably gas and electric) offer better payback than retrofitting and could be viable if carried out towards the end of the operator’s usual vehicle replacement cycle.

Original Equipment Manufacturer

While retrofit and repower options could technically be fitted across most HGV models, focusing on common OEMs can help scale interventions efficiently. Vehicles from Scania, DAF, Volvo, Mercedes, MAN, and Renault are most common in Scotland. These could provide the greatest opportunity for consistent “blue-print” retrofit or repower programmes.

High Level Section Summary

Scotland’s retrofit landscape suggests beginning with older, non‑Euro 6 rigid fleets on common DAF platforms (LF/CF), particularly in Dumfries & Galloway and the Scottish Borders. This should focus on waste, local delivery and general groupage duty cycles that benefit from depot returns and stop‑start operation. For articulated units, the data suggests concentrating first on dominant tractor platforms (Volvo FH, Scania R, DAF XF, MAN TGX) in the Highlands & Islands, where Euro 6 uptake is weakest, using Central Scotland’s younger, Euro‑6‑heavy fleets to standardise repeatable programmes with the same OEMs. Across Scotland, prioritising DAF, Scania, Volvo and MAN provides the widest coverage for scalable retrofit/repower “blue‑prints,” while validating auxiliary loads, payload constraints, and operator business models before scaling.

Retrofit and repower feasibility and impact – identifying what options are available

Section 3 assesses the feasibility, operational implications and economic viability of retrofit and repower technologies in Scotland’s HGV fleet. This section explores what technologies identified in Table 1 could be implemented in Scotland based on feasibility, operational viability, and economic impact on operators. To support and complement this qualitative analysis, Appendix E presents the detailed quantitative evidence base, summarising the technical feasibility, operational impacts, and economic analysis for each retrofit and repower technology reviewed in this study. This provides a Red-Amber-Green (RAG) analysis to support high level early direction of the technology types for further exploration. The aim is to determine not only what is technically feasible, but which options are likely to be viable in practice.

Readers are strongly encouraged to use Section 3 in conjunction with Appendix E. While Section 3 synthesises the main themes and stakeholder perspectives, Appendix E provides the underlying data, comparative tables, and supporting calculations that underpin the qualitative conclusions. This side-by-side approach allows for a more comprehensive understanding of both the practical realities and the quantitative evidence base for retrofit and repower options in Scotland’s HGV sector.

Retrofitting

The following section provides an overview of the retrofitting technology reviewed as part of this study. More detail, including total cost of ownership (TCOs) and references to data capture are provided in Appendix E.

DPF and SCR retrofitting

Retrofitting is not a true zero-emission solution as it does not eradicate tailpipe emissions (Kelly and Gonzales, 2016). While these technologies can deliver significant improvements in emissions of NOₓ and particulate matter, they do not provide meaningful carbon reduction and are unlikely to be financially viable for most operators. Usually, retrofitting applies to older Euro Standards vehicles (anything Euro 5 or older) to bring them in line with the latest Euro 6 standards through the fitment of Diesel Particulate Filters (DPFs) and/or Selective Catalytic Reduction (SCR) technologies. Upgrading HGVs from Euro 4/5 to Euro 6 standard can significantly reduce nitrogen oxide (NO_x) and particulate matter (PM) emissions (Energy Savings Trust, 2024). Euro 6 engines have much stricter emission limits than Euro 4/5. Real world measurements (ICCT, remote sensing) show that Euro 4/5 HGVs typically emit 0.5-0.6 g NO_x per km, while Euro 6 emits 0.2-0.4 g or lower. DPFs reduce PM emissions by 90-98% (Eminox, 2025). Though PM reductions are small (hundredths of grams per km), percentage reductions are high.

Technical and environmental feasibility

Stakeholder engagement with technology providers and fleet operators revealed these technologies are all compatible with Euro 4/5 vehicles and provide a straightforward way to bring these vehicles up to current Euro 6 tailpipe emissions standards. DPF retrofits are particularly suited to urban and LEZ zones where PM is regulated. SCR is better for long-haul or highway routes where NOₓ is the concern. Combining the two retrofits ensures Euro 6 compliance.

These forms of retrofit technology are all mature and widely used across HGV fleets. They typically last for 5-10 years once fitted, depending on duty cycle and maintenance. DPF’s can reduce PM by up to 99%. However, they have no impact on carbon dioxide (CO₂) or NO_x. SCRs reduce NO_x (by 90-99%) (IPU Group, n.d) but provide no CO₂ emission reduction benefit. This is because CO₂ emissions are primarily determined by fuel consumption and engine efficiency, which remain largely unchanged through DPF and SCR systems, as these are add-on exhaust after-treatment devices rather than modifications to the engine itself. Only once the engine and combustion method/type of fuel are changed will there be notable changes to carbon emissions. The Zemo Partnership, a non-profit partnership that seeks to accelerate the UK’s transition to zero-emission transport in the UK, identified this issue in their review of low‑carbon options for HGVs (Zemo Partnership, 2009). Their assessment of different technologies found that at typical operating speeds, neither DPF or SCR after treatments deliver carbon abatement and can even increase fuel consumption, which in turn raises CO₂ emissions (by 1-2% for DPF usage and 2-4% for SCR usage). Though the technologies have improved in efficiency since the 2009 study, these retrofit options would still not reduce the CO₂ emissions of HGVs.

In terms of emissions targets, this will significantly improve air quality, albeit have no impact on primary GHG climate abatement targets stipulated by the CCC and Scottish Government. The end of this chapter reviews what emissions savings could look like should Euro 4 and Euro 5 HGVs be targeted with different technologies.

Operational impacts

Across our stakeholder engagement, the case for appendage retrofit, such as DPF and SCR, was mostly context-dependent but was generally seen as offering limited long-term value. They have little to no impact on operational performance and only take 1-3 days to install. All these factors make them a potentially low risk option for Scotland’s large share of SMEs.

Economic analysis

While capital costs for DPF or SCR upgrades appear attractive, a broader economic assessment shows retrofits are often not necessarily financially viable. Many operators replace their vehicles within 5-7 years, meaning HGVs eligible for retrofit may not have enough remaining life to justify the investment or achieve payback (Panik, 2022; Expert Market, n.d.; survey responses in Appendix C). When the initial cost of the retrofit, and the additional maintenance and cost of AdBlue are factored in, the technology does not achieve payback within a 5-year period unless the vehicle is to be used in a Low Emission Zone (LEZ) regularly. Retrofitting a vehicle nearing end-of-life is particularly unattractive given the risk of future regulatory requirements, such as stricter emissions measures in LEZs, which would render the retrofit non-compliant. This can impact operators’ inclination to invest in this type of retrofit. In reality, retrofits only make sense where a vehicle has sufficient remaining economic life, a scenario more applicable to buses, which can remain in service 12–15 years, than to typical HGVs.

For most operators, purchasing a used Euro 6 vehicle makes more sense than retrofitting older stock with DPF / SCR technology. The UK and European second-hand HGV market offers vehicles across body types, mileages, and configurations at competitive prices. Prices are often comparable to, or only marginally higher than, a full DPF / SCR retrofit. For example, £10,000-£50,000 for used Euro 6 vehicle (Autotrader, 2025) vs £15,000-25,000 for retrofit (Energy Saving Trust, 2024]. Fleet operators and retrofit technology suppliers engaged during this study highlighted that second-hand Euro 6 HGVs come with known performance, residual value, and OEM support, whereas retrofits carry additional downtime, maintenance needs, and warranty uncertainties. To support this, the OEMs we engaged with also prioritise selling new vehicles rather than modifying older ones, leaving retrofit opportunities to specialist third-party suppliers.

Hybrid dual-fuel gas retrofit

Hybrid retrofit technologies, including electric, hydrogen and gas, retain the existing diesel engine but modify the vehicle so it can be assisted by an electric motor and battery or operate on an alternative fuel. This creates a ‘dual‑fuel’ system, allowing the vehicle to run on either fuel independently. This in turn reduces tailpipe CO₂ emissions.

Technical and environmental feasibility

Dual-fuelled gas-powered HGVs can operate on CNG, LNG or biomethane in either compressed or liquefied form, in addition to diesel. Stakeholder engagement with gas technology providers revealed dual-fuel gas technologies are most compatible with vehicles under 10 years old (e.g. Euro 5/6). Older vehicles can be retrofitted in this way but the process is more complex. Dual-fuel gas retrofits are particularly suited to heavier vehicles (40t+), operating over higher mileages, and that are depot-based with partial access to gas refuelling.

This retrofit technology is mature and has been adopted by UK and EU fleets. Feedback from industry suggests gas is viewed by many as a transitional short / medium term solution as it reduces tailpipe emissions but is not zero-emission. The technology can last for 10 years+ with proper maintenance.

Dual-fuel gas vehicles can deliver 20% lower tailpipe CO₂ emissions and provide reductions in NO_x when compared to a diesel internal combustion engine (ICE) equivalent. The Low Carbon Truck Trial found dual-fuel systems to exhibit a wide range of CO₂ performance, with only about 6% Well-to-Wheel reduction in some cases (DfT, 2016). The main environmental challenge with this type of retrofit is the release of unburned methane during operation, known as ‘methane slip’ (Alternatech, 2025). Methane has a global warming potential around 30 times higher than CO₂, meaning small leaks from the exhaust can negate most of the expected emissions saving. Although methane-reducing catalysts are in development, they are not yet commercially mature.

Operational impacts

Dual-fuel gas retrofits maintain comparable operational performance, with only a moderate payload penalty (300–600 kg) and a slight reduction in range. Installation typically takes around five days, and ongoing maintenance is required for gas injectors, high-pressure tanks, and filters (Alternatech, 2025). The main operational constraint is Scotland’s limited CNG/LNG refuelling infrastructure. This often forces vehicles to revert to diesel, undermining both cost and emissions benefits. Additional training and safety requirements add further burdens, especially for smaller operators.

Economic analysis

Stakeholder engagement with gas technology providers indicates dual-fuel gas retrofits typically cost £15,000 per HGV, with around £400 per year in extra maintenance. Although some suppliers claim payback periods of just over 2 years, these rely on consistently replacing diesel with gas. Most Scottish operators cannot achieve this due to route patterns, limited refuelling infrastructure, and driver behaviour. Again, the Low Carbon Truck trial supports this, finding only one in five vehicles achieved payback within six years (DfT, 2016). This means that many Scottish operators would likely dispose of the vehicle before recovering costs. As a result, the business case for gas retrofit is weak for most Scottish fleets.

Summary of opportunity for retrofitting

Operational performance of retrofit technologies is highly dependent on duty cycle. Stop-start driving, short trips and cold running can prevent effective DPF regeneration, reduce SCR efficiency and limit gas substitution. This means that emissions improvements cannot be consistently guaranteed, particularly on rural or low-speed routes. Any financial return is therefore driven by regulatory compliance such as in LEZs and refuelling availability, rather than by operational or fuel savings.

Technology providers report strong experience in bus retrofits, but HGV work remains limited and focused on niche vehicles. Around 90% of retrofit activity is in the bus sector, which cannot simply be transferred to trucks due to higher drivetrain stress, more variable loads and duty cycles, and a stronger second-hand market that favours vehicle replacement.

As shown in Appendix C, 18 of 25 respondents in the survey indicated they would not be interested in a retrofit programme. This was mainly because financial, operational and market factors make HGV retrofits unattractive. Short lifespans limit payback, performance varies by use case, gas refuelling is scarce, and used Euro 6 trucks usually offer a simpler, lower-risk alternative. Limited OEM support and provider experience in the HGV sector further constrains uptake.

Several thousand Euro 4/5 trucks in Scotland could benefit by retrofitting to a Euro 6, particularly rigid fleets in the Borders and Dumfries & Galloway and articulated fleets in the Highlands & Islands (see 2.1 Market Review). However, stakeholders consistently report that buying used Euro 6 vehicles is more commercially viable than retrofitting. Retrofit remains most suitable only for specialist or bespoke vehicles that have long service lives and no easily available replacements.

Hybrid dual‑fuel gas retrofit is less attractive because the environmental benefits are undermined by methane slip, which can negate most CO₂ savings, while operational performance is inconsistent due to duty‑cycle limitations and Scotland’s sparse gas refuelling infrastructure. This results in a wasted retrofit where operators have retrofitted the vehicle for dual fuel, but are still only using diesel. This prevents a payback before the vehicle is sold or removed from the fleet.

Repowering

Repower technologies offer a range of potential outcomes, with feasibility and suitability varying depending on vehicle type, duty cycle, and infrastructure availability.

The following section provides an overview of the repower technology reviewed as part of this study and their feasibility, operational implications and economic viability. More detail, including TCOs and references to data capture, is provided in Appendix E. Repower options considered are gas, battery-electric and fuel-cell electric (hydrogen). Electric repowering received the most attention during engagement due to its zero-emission status, growing market uptake and more established supply chain, while gas and hydrogen were discussed to a lesser extent.

The suitability of each repower option differs significantly depending on operational context, and is assessed below.

Dedicated gas repowering

Technical feasibility

Dedicated gas-powered HGVs operate on CNG, LNG or biomethane. Stakeholder engagement with gas technology providers revealed gas repowering is compatible with vehicles under 10 years old (e.g. Euro 5/6). Similarly to dual-fuel gas vehicles, older vehicles can be repowered, but it is not recommended. Gas repowers are particularly suited to vehicles operating in lower weight categories (e.g. <40t), over high mileages that are depot-based, with reliable CNG/LNG or biomethane refuelling. This technology is mature and widely deployed across UK and EU fleets. Although it significantly reduces tailpipe emissions it is not zero-emission. The technology can last for 10 years+ with proper maintenance.

Operational impacts

Operationally, this technology has no range constraints. Some vehicles can cover 500km without needing to refuel. However, dedicated gas repower vehicles have historically faced some payload constraints, with a loss of 600 – 900kg. While this hasn’t been an issue for volume limited operations such as parcels and retail, it has caused problems for those carrying dense or weight-limited goods (e.g., aggregates, beverages, construction materials). Some vehicle OEMs have overcome this issue and developed their own vehicle capable of operating at 44t gross vehicle weight. The installation process also takes 2 – 4 weeks, which can significantly disrupt operations, especially for SMEs with limited fleet capacity.

One of the biggest limitations for this type of repower is that Scotland has very few refuelling stations, making it difficult for operators in some parts of the country to rely on gas for regular routes. The UK Government is actively trying to overcome this by backing projects to expand biomethane (Bio-CNG) refuelling capacity across the country, including Scotland (UK Government, 2024).

Economic analysis

Stakeholder engagement with gas technology providers suggested dedicated gas (CNG / LNG / Biomethane) repower systems can cost around £30,000. Maintenance costs are similar to that of gas dual-fuel retrofits, adding about £400 per year. The payback can be short (approx. 1.5 years), with the cost of biomethane being 30% cheaper than diesel. The UK government offers structural support through fuel duty incentives and broader initiatives for alternative fuels to help manage costs and encourage the use of lower-emission vehicles. This includes the fuel duty differential which applies to natural gas and biomethane and is substantially lower (over 50%) than the duty on diesel (HMRC, 2025). The government has committed to maintaining this difference until 2032, which provides long-term business certainty and underpins the economic case for using gas HGVs, effectively helping operators manage their running costs compared to diesel fleets. There is also the Renewable Transport Fuel Obligation (RTFO) which encourages biomethane and other renewable gases by requiring suppliers to include a share of renewable fuel (DfT, 2025). The Fuel Duty Freeze is currently extended to March 2026, which temporarily reduces rates (including for gas fuels) by 5 pence per litre, helping keep fuel costs lower (HMRC, 2025).

Summary

The economic, environmental, and operational evidence suggests that dedicated gas repower trucks, particularly biomethane, could support decarbonisation in Scotland’s HGV sector. It is especially appropriate for heavier vehicles on demanding duty cycles where electric options are not yet suitable.

Overall, gas repower offers a practical interim solution for high-mileage operations where electrification is not yet viable, but remains dependent on refuelling infrastructure.

Dedicated fuel cell electric (hydrogen) repower

Technical feasibility

Stakeholder engagement with hydrogen repower providers showed these technologies are compatible with Euro 5/6 vehicles with robust chassis and electronic controls. Hydrogen repower is best suited to heavier HGV weight categories, needing to do high mileages whilst needing fast refuelling. Hydrogen is a zero emission technology and is viewed by industry as a long-term solution for long haul decarbonisation.

This repower technology is still emerging and there are very few HGVs currently in use. Hydrogen trials are taking place across Scotland, particularly in Aberdeen (hydrogen production) and Glasgow (ZEHID HGV hydrogen trials). However, attempts to explore hydrogen as an interim repowering solution during engagement were met with limited enthusiasm and scepticism. It is not known exactly how long Hydrogen repowers last, but it is expected to be at least 10 years providing vehicles are regularly serviced.

Operational impacts

Unlike some of the other technologies reviewed as part of this study, hydrogen repower does not experience any limitations with range or payload loss. However, our research and stakeholder discussions indicate that there is still uncertainty about hydrogen repowers’ commercial and operational viability in the near- to medium-term, and deployment of HGVs remains niche. Downtime during fitment of the technology is 4-8 weeks. In both of the workshops for this study, hydrogen was consistently described as a longer-term solution for Scottish HGVs rather than a near-term option. Stakeholders highlighted major challenges around vehicle and fuel costs, limited refuelling infrastructure, and the lack of commercially available assets. Operators also expressed concerns about operational performance, safety requirements, and the need for specialised training. While hydrogen may have a future role in long-haul and heavy-duty applications, participants agreed it is not yet viable at the scale or speed required to meet Scotland’s 2030 targets.

Operationally, the hydrogen repower provider we spoke with noted that hydrogen fleets in Scotland face major logistical challenges in storage, transport, and distribution. The provider emphasised that these issues must be resolved before repowering at scale becomes feasible.

Hydrogen also faces limitations in a “technology-agnostic” strategy for hard-to-electrify sectors. Much of the hydrogen available today is produced via steam-methane reforming (“grey” hydrogen), which undermines its decarbonisation potential. Non-electric repowering options such as sustainably sourced hydrogen are scarce, and Scotland’s multi-fuel infrastructure remains sparse (SASHA Coalition, 2025). Replicating models such as the open-access Tyseley Energy Park in the English Midlands could build operator confidence and encourage investment. According to Transport Scotland (2025b), there are four hydrogen refuelling stations available in Scotland (two in Aberdeen and one each in Orkney and the Central Belt). This highlights that the network is limited and not yet proven for large-scale fleets. Expansion of the refuelling infrastructure would require time and substantial funding.

Economic analysis

Conversations with a hydrogen retrofit provider confirmed that hydrogen remains prohibitively expensive, both for vehicle retrofits and refuelling. The provider’s business model relies heavily on grant funding and public-private collaboration. This is a risky proposition for SME HGV operators, who may be unable to absorb the fuel cost premium or justify retrofit investment within typical fleet replacement cycles. Operators would require specialised training to handle hydrogen safely, potentially including flame-proof infrastructure at depots. Even in a “closed loop” model, where local hydrogen supply serves nearby fleets, scaling to a national or regional HGV retrofit programme would demand major capital investment. Without this, hydrogen trucks remain confined to small-scale pilots. These risks outweigh the potential benefits for many SMEs.

Maintenance costs are similar to diesel vehicles. The cost of a hydrogen HGV repower is around £200,000 per vehicle, with fuel prices ranging from £39.84/kg for green hydrogen to £23.52/kg for non-liquified compressed hydrogen storage (LCHS) (Geopura, 2025). Even when using a lower modelled fuel price of £15/kg, the technology does not achieve payback within a 5-year period. Scaling production would require immense volumes of renewable electricity (150–190 TWh/year), pushing operator costs higher (unless subsidised) and placing additional pressure on the grid.

Summary

Given high production costs, high vehicle costs, uncertain carbon intensity, limited refuelling infrastructure and operational barriers, our research shows that hydrogen repowering for HGVs in Scotland is high-risk.

Dedicated battery electric repower

Technical feasibility

Battery electric technology providers stated that their repower is compatible with Euro 5/6 vehicles under 12 years old with robust chassis and electronic controls. Providers say type of repower is best suited to predicable urban and regional routes and deployed on lower weight categories (e.g. rigids weighing <18t and arctics <42t) because the battery technology is still developing for longer, unpredictable routes with heavier vehicles. This repower technology remains in development and has so far been used mainly in refuse collection vehicles and buses. Battery electric repowers are expected to last upwards of 10 years providing the vehicles are well looked after. Battery electric HGVs produce zero tailpipe emissions. The UK Government is supporting their adoption, alongside hydrogen fuel cells, via demonstration programmes and infrastructure funding (e.g., the ZEHID Programme).

Operational impacts

eHGVs experience significant payload loss (2 tonnes depending on vehicle, battery size, and route) and are also affected by range constraints (300-500km). Maintenance of eHGVs is simpler, however, than their diesel counterparts, for example due to absence of oil changes, fewer moving parts and regenerative braking that prolong brake life (Baldwin, 2025]. This reduces the lifetime maintenance cost by about 20-30%. Vehicle downtime during fitment of the technology is around 1-2 weeks. However, an initial blueprint needs to be created for any new make and model of vehicle before it can be mass produced. This can take 7-8 months before being fitted using a plug-and-play approach.

Keeping vehicles working is vital for all operators. When new technology causes longer downtime, slower delivery times, or needs special repairs and equipment, it can make operations less reliable. This is a bigger problem for operators with smaller fleets because they have fewer spare vehicles to keep things moving. Even if electric repowered vehicles were offered at low cost, practical considerations such as duty cycles, access to charging, and fleet flexibility would still heavily influence uptake. Our stakeholder engagement suggests that many SMEs would potentially still be reluctant to adopt repower solutions.

Repower solutions are likely to be more viable for depot-based operations, where operators have the space and facilities to accommodate the required infrastructure. Centralised fleet management and the ability to stagger vehicle deployment allows these operators to trial new technologies with less risk of damaging business continuity. Having access to HGV charging infrastructure such as that offered by coach operator Ember at Dundee and Aberdeen (Zenobe, 2025) could shift operators’ perspectives on how they charge their vehicles without having to rely on back-to-base depot charging.

Economic analysis

Whilst the initial cost of producing the blueprint is higher, stakeholder feedback highlighted the production of the same HGV type and model is around a third of the cost (approximately £100,000) of a new eHGV. This is still more expensive than purchasing a new Euro 6 diesel vehicle (£80,000–£120,000) (Simpson, 2023). The operational savings of eHGVs can be high. eHGVs are estimated to consume 70–80% less energy than their diesel counterparts for the same distance. For instance, a truck covering 400,000 km could see diesel fuel costs of approximately £180,000, whereas electricity for an electric alternative would amount to around £140,000. Over five years that can save about £120,000 (Fielden, 2025). Suppliers of electric repower HGVs have suggested the payback period can be just over 3 years, although this is extremely sensitive to energy price assumptions, vehicle Capex, and access to smart charging.

Fleet operators we engaged with for this research who have or are looking to adopt eHGVs prioritise in investment for charging / refuelling infrastructure at their depots, as this is how they operate a diesel powered fleet. The cost of the infrastructure, hardware, civils, and grid connections etc. can be extremely expensive. Fast chargers (50kW) alone can cost £20,000 (Cenex, 2025). Alternatively, operators could use on en-route charging and public facilities. Transport Scotland have identified that there are currently 23 high powered en-route chargers for eHGVs with a minimum of 40 more needed (Transport Scotland, 2025d). Though development of these charging hubs is underway, the network in Scotland is still in its infancy and supports the understanding that depot charging will be essential for operators (Ross, 2025; Fastned, 2025). Additional complexities, such as electrical grid upgrades and engagement with distribution network operators, further inflate operational expenditure and planning burdens. This makes electric repower a high-risk strategy for many operators.

Summary

Battery-electric HGV repowering offers a credible zero-emission pathway for suitable fleets, particularly those with predictable, depot-based operations and access to charging infrastructure. Although the technology is still maturing, payload and range constraints are improving, maintenance costs are lower than diesel, and strong UK Government support is accelerating uptake. For operators able to invest in depot charging, who can manage initial lead times and who do not carry dense or weight-limited goods, electric repower can deliver meaningful long-term savings and support a strategic transition toward a fully zero-emission fleet (see Section ‎4).

Overall, electric repower is most viable for depot-based operations with predictable routes, but remains constrained by infrastructure, upfront cost and demanding duty cycles.

Comparison of cost/benefit for all technologies

Table 4 provides a breakdown of the net cost / benefit for each of the technologies reviewed as part of this study over a 5-year period.

This comparison highlights that while repower technologies offer stronger emissions and economic potential than retrofit, their viability depends heavily on operational context and infrastructure availability.

Original equipment manufacturers

Feedback from OEMs suggested HGV operator choices tend to be shaped by familiarity, reliability, and available trials rather than clear market dominance. This diversity makes market upscaling of retrofit and repower solutions more challenging, as compatibility varies widely across chassis, drivetrains, and specialised vehicle configurations, increasing engineering complexity and cost. Lessons from the bus sector, where repower programmes work due to a centralised, predictable market, do not translate easily to the more fragmented and faster-turnover HGV sector. OEMs are more inclined to sell new vehicles than modify older ones, leaving most retrofit opportunities to specialist third-party providers. Although repower systems often include their own warranties, OEMs caution that modifications may void original warranty cover, creating added financial and operational risk for operators (particularly SMEs), making retrofit and repower options less appealing.

Opportunity for repowering

Repower technologies offer a range of opportunities to support Scotland’s transition toward lower and zero-emission HGV operations, but their suitability depends heavily on vehicle type, duty cycle, and infrastructure access. As alluded to earlier in the report, 45% of all Scottish HGV freight is moved within 100 km, and most journeys begin and end within the same region (Transport Scotland, 2022d). This concentration of short, predictable routes presents a strong opportunity for battery-electric repowering, particularly for rigid vehicles operating depot-based cycles. For these operators, electric repowers could integrate well with existing practices, as shorter journeys are unlikely to rely on en-route charging and can be supported by depot charging infrastructure where grid capacity is more readily deployable (Scottish Government, 2019; SP Energy Networks, 2024). As electric HGV technology continues to mature, with improving ranges, lower maintenance costs, and significant government support, repowering offers a viable zero-emission transition pathway for a substantial share of Scotland’s fleet. Repowering may be more attractive than purchasing a new eHGV given it is one third of the cost and payback can be achieved in as little as 3.24 years according to calculations shown in Table 22, Appendix E.

For longer, more demanding journeys, which account for around 10% of Scottish HGV activity, repower suitability becomes more challenging. These routes often involve heavier loads, cross-regional travel, and the need for consistent long-range performance, making current electric solutions less practical due to range limits and gaps in national charging networks (Transport Scotland, 2024e; Transport Scotland, 2025d). In these contexts, dedicated gas repowers, particularly biomethane, present an opportunity to deliver meaningful tailpipe emissions reductions while maintaining operational flexibility for heavier vehicles on intensive duty cycles. These technologies align more closely with existing refuelling practices and can provide an interim decarbonisation route where electrification is not yet feasible.

Hydrogen repowering, while promising in principle for long-distance, high-payload operations, remains speculative and high-risk today. Current high vehicle and fuel costs, uncertain carbon intensity, and Scotland’s current limited hydrogen refuelling infrastructure restrict near-term viability. As such, without substantial cost reductions and infrastructure expansion, hydrogen is unlikely to play a meaningful repower role in the immediate decarbonisation strategy.

Overall, Scotland’s diverse freight profile creates differentiated opportunities for repower technologies. The analysis suggests that:

• Battery-electric repowers are best suited to rigid and lighter articulated vehicles operating short, predictable, depot-based routes, where zero-emission operation and depot charging are feasible.
• Biomethane gas repowers are most appropriate for heavier vehicles engaged in high-mileage, long-distance duty cycles, especially where reliable refuelling infrastructure exists and electrification is not practical.
• Hydrogen repowering may become viable for heavy-duty, long-haul applications in the future, but is currently limited by cost and infrastructure constraints.
• Retrofit solutions (such as DPF/SCR) remain relevant for older vehicles needing LEZ compliance, though their impact on greenhouse gas emissions is modest.

Emissions savings through repowering

Scotland’s Climate Change Act (2019) sets a target to cut greenhouse gas emissions by 75% from 1990 levels by 2030, with transport playing a key role (Transport Scotland, 2021). In 2018, HGVs produced about 1.9 MtCO₂e, roughly 12.6% of transport emissions (Transport Scotland, 2020). Although this figure is from 2018, emissions have only fallen by around 0.5% since 1990, so it’s a reasonable proxy for the baseline (see Transport Scotland, 2020).

This section shows the emissions savings that could be achieved through repowering HGVs. It focuses on the potential scale of impact, rather than deployment feasibility. Switching HGVs to electric or hydrogen makes them zero-emission, which also includes a complete carbon reduction. This highlights the fundamental difference between repower and retrofit, with repower offering substantially greater potential for carbon reduction. ‎Appendix F shows the tailpipe emissions savings that can be achieved through widely available DPF and SCR retrofitting and repowering HGVs.

Understanding respondent A’s emission savings

To illustrate potential tailpipe and carbon emissions savings, we have calculated used the case of ‘Respondent A’ from the survey that we issued as part of this research. Respondent A has two groups of HGVs fit for retrofitting: 50 Euro 4 and 50 Euro 5. Each vehicle travels approximately 300 km per day.

If the 50 Euro 4 and 50 Euro 5 vehicles were repowered to electric or hydrogen, there would be a 100% NOₓ and PM emissions saving. The total daily savings if repowered to electric/hydrogen would be: NOₓ 210 kg / day (= 350,000 cars) and PM 30 kg / day (= 300,000 cars). ‎Appendix F: Tailpipe emissions reductions shows detailed calculations for these.

With repower there are significant carbon emission savings. According to ICCT (2016) and EU VECTO baseline data, long-haul HGVs emit around 800–1,200 g CO₂ per km (0.8–1.2 kg/km), depending on weight and duty cycle. The difference in CO₂ emissions between Euro 4 and Euro 5 is negligible, so we group Respondent A’s 100 vehicles together. We average the CO₂ emissions for a diesel HGV at 1,000 g/km (1 kg/km) and know that electric/hydrogen = 0 g/km tailpipe CO₂. Savings can be calculated as:

Per truck per day:

• 1,000 g/km × 300 km = 300,000 g = 300 kg CO₂

For 100 trucks per day:

• 300 kg × 100 = 30,000 kg = 30 tonnes CO₂

For a Ford Focus 1.0L EcoBoost (Euro 6 petrol), the official CO₂ emissions are 105-114 g/km, depending on the exact variant and transmission. If we assume the car travelling 20 km per day (as per Transport Scotland 2023 data), we can calculate:

Emissions per day per car:

• 110 g/km × 20 km = 2,200 g = 2.2 kg CO₂ per day per car

Respondent A’s daily fleet CO₂ savings are equivalent to:

• CO₂: 30,000 kg ÷ 2.2 kg = 13,636 cars

This illustrates the scale of emissions reduction that could be achieved through repower at fleet level.

NOx

Streamlining – repowering DAF rigids over 10 years old

Focusing on popular models helps baseline and blueprint when considering battery-electric repowering. According to 2025 SMMT data analysis, DAF (notably the DAF CF and LF) make up 36% of the rigid fleet. We have identified in Chapter 2 and Appendix A that rigid HGVs in particular have a lower Euro 6 compliancy rate across Scotland. Understanding the share of DAF vehicles over 10 years old helps to show how emissions reduction can be targeted and offer the best emissions reduction potential in the interim.

Based on SMMT data, 2,225 diesel rigid DAF HGVs (over 7.5t) are Euro 5 or older.

We take the same calculations used for Respondent A to calculate the total emissions savings if the DAF fleet is repowered using zero-tailpipe emissions technologies (hydrogen or electric). The carbon savings per day can be calculated as follows:

Per truck per day:

• 1,000 g/km × 280 km = 280,000 g = 280 kg CO₂

For 2,225 trucks per day:

• 280 kg × 2,225 = 623,000 kg = 623 tonnes CO₂

The CO₂ savings are equivalent to:

• CO₂: 623,000 kg ÷ 2.2 kg = 283,182 Ford Focus cars travelling 20km per day

National baselining

National level assumptions can be made to estimate the emissions savings potential across the sector if all Euro 5 or older HGVs were repowered to electric or hydrogen. Based on SMMT data, 9,274 diesel HGVs (over 7.5t) are Euro 5 or older (5,249 Euro 4 or older and 4,025 Euro 5).

As well as information on average distance travelled by rigids (280 km), the ZETT’s Industry Overview and SWOT Analysis Report (2022) also highlights average articulated HGV mileage at 400 km. Based on about 65% of Scotland’s HGV fleet being rigid, we can weight this to estimate daily average mileage of around 320 km for a typical HGV in Scotland.

• NOx: 9 g/km × 320 km × 9,274 = 26.71 tonnes/day
• PM: 1.5 g/km × 320 km × 9,274 = 4.45 tonnes/day
• CO₂: 1000 g/km × 320 km × 9,274 = 2,968 tonnes/day

This demonstrates that repowering the existing Euro 4 and Euro 5 fleet could deliver substantial emissions reductions, but would still be insufficient on its own to meet Scotland’s interim carbon emissions reduction targets.

Emissions conclusions

While retrofitting offers meaningful reductions in NOₓ and PM, repowering to electric or hydrogen delivers far greater benefits, completely eliminating tailpipe emissions and achieving substantial carbon savings.

If solely DAF rigid vehicles were targeted and all 2,225 Euro 4/5 DAF rigids were repowered, this would remove around 227.3 thousand tonnes of CO₂ per year, which equates to 12% of the CCPu’s 2030 interim target. As shown in Table 6, repowering all Euro 4 and Euro 5 HGVs would remove about 1.08 Mt CO₂, or 57% of current HGV carbon emissions, which is still short of the 75% reduction target. This shows that full repowering of these vehicles alone will not meet Scotland’s interim goals for reducing GHG emissions from the sector.

Caveats and variables

We do not quantify emission reduction savings for gas repowering on a case-by-case level. At a high level however, gas repowered vehicles can deliver significantly stronger tailpipe emissions savings than their dual-fuel counterparts. According to a recent independent report, modern CNG HGVs emit less than half the NOₓ and particulates of the cleanest diesel vehicles, plus ~15% GHG (CO₂e) reduction with fossil CNG, rising to 84% GHG saving for biomethane (CNG Services, 2025). This is further supported by additional evidence that suggests biomethane from organic waste can deliver >80% CO₂ emission reductions, >70% NOₓ reduction and ~99% less PM versus diesel (GreenFleet, 2021). Appendix E includes a high-level summary of emissions reduction.

Calculations in this section are based on multiple data sources and represent high-level estimates of potential emissions reductions. What has not been estimated in these assumptions are the extraneous variables – factors that are harder to measure quantitatively, such as driver behaviour, weather, and traffic conditions. For more accurate future estimates, extraneous variables like driver behaviour, weather, and traffic will need to be considered for each fleet on a case-by-case basis.

Policy environment and market enablers

Both the Scottish and UK Governments have set legally binding climate targets to decarbonise road transport, supported by strategy and policy designed to accelerate the shift to zero-emission vehicles. Scotland’s targets are five years ahead of the UK’s wider net-zero trajectory, with interim targets of a 75% emissions reduction by 2030 and 90% by 2040. Key policies relevant to HGV retrofit and repower are as follows (for more detail see Appendix D).

• Scotland’s Climate Change Plan Update (Scottish Government, 2020 and 2025)
• A HGV Decarbonisation Pathway for Scotland (Transport Scotland, 2024f)
• Scottish Government Programme for Government 2025/2026 (Scottish Gov, 2025)
• Low Emission Zones (LEZs) in Glasgow, Edinburgh, Aberdeen, and Dundee
• Net Zero Nation Strategy (Scottish Government, 2021)

These policies provide a strong regulatory and strategic framework. However, this framework is more clearly aligned with long-term electrification than with interim retrofit or repower solutions. Legal targets set by the CCC and compliance mandates via LEZs ensure operators reduce emissions. Programs like the Programme for Government and the HGV Decarbonisation Pathway and the HGV Market Readiness Fund support this through funding, infrastructure planning, and transitional support as operators move to cleaner technologies. This section assesses how the current policy environment supports, or constrains, the deployment of retrofit and repower solutions.

4.1 Stakeholder insights

Workshops with public and private sector stakeholders (See Appendix F) highlighted that current policy continues to prioritise electrification for road transport, while hydrogen is seen as suitable for niche sectors such as long-haul operations, industry, or aviation. The workshop with the private sector added more detail about how this focus can unintentionally block progress for retrofit and repower solutions. Several participants noted that although retrofit and repower are mentioned in strategy documents, funding and infrastructure priorities still overwhelmingly favour full electrification. They suggested this creates a “policy blind spot” where retrofit options are technically eligible but rarely supported in practice, reducing confidence for manufacturers and operators to invest.

Participants felt that hydrogen policy is unclear and disconnected from real-world freight needs, with no clear plan for refuelling infrastructure or vehicle rollout. As a result, most operators tended to see hydrogen as a distant or uncertain option. Gas was mentioned as a fuel that once seemed like a good short-term transition but has since lost policy backing due to its limited carbon benefits and methane slip concerns. Many operators felt cautious about investing in new technologies without stronger, more consistent policy direction. From engagement, participants noted that policy landscape (in terms of net zero options in Scotland) is clearly trending towards battery electric, which could influence the technology choice in repowering.

Building on this, stakeholders highlighted that while government strategies often talk about “technology neutrality,” in practice most funding and incentives are directed toward new electric vehicles rather than adapting the existing diesel fleet. This was seen as a missed opportunity, given the potential of retrofit and repower to deliver quicker, lower-cost emission reductions, especially for operators using older diesel fleets who cannot yet afford full fleet replacement.

The discussions also reinforced the idea that policy certainty and coordination are essential. Both public and private sector participants emphasised that short-term, competitive government grants and loans can discourage investment and slow innovation. The private sector workshop called for a more joined-up approach across national and local governments, aligning climate, air quality, and transport policies so retrofit and repower can sit alongside zero-emission vehicle strategies rather than compete with them. Participants noted that procurement and regulation such as LEZ enforcement or targeted grants for fleet upgrades, could help create demand for retrofit services if designed properly.

Finally, new themes emerged around industry readiness and confidence. Stakeholders said there is strong technical interest in retrofit and repower, but the lack of standardisation, certification frameworks, and warranty assurances makes operators cautious. The availability of and learning from current incentives/schemes is highlighted in Appendix D. Smaller hauliers felt that policy mechanisms do not yet reflect their financial realities or operational risks. The group agreed that addressing these barriers, through clearer policy signals, guaranteed funding cycles, and quality assurance frameworks, would help build trust in the retrofit market and allow it to scale more effectively across Scotland.

4.2 Policy summary

Scotland’s policies strongly support HGV decarbonisation, particularly through electrification, with clear targets and funding streams for new zero-emission vehicles. Based on our assessment of policy documents and engagement with stakeholders, retrofit and repower options appear under-supported. While technically eligible in some frameworks, our research and findings suggest limitations on funding, unclear certification, and uncertain operational guidance. Hydrogen and gas policy is also fragmented, creating further uncertainty for operators considering alternative fuels.

Limited policy direction may constrain development of the retrofit market and reduce the potential for interim emissions reductions. Conversely, significant investment in retrofit technologies may extend the operational life of existing vehicles, which could delay uptake of new zero-emission HGVs. Factors such as multi-year funding, fleet procurement alignment, and introduction of retrofit and repower initiatives, running parallel to the transition to new zero-emission fleets could contribute to a balanced approach. This approach could enable interim decarbonisation while maintaining momentum toward Scotland’s long-term net zero targets.

Overall, while the policy framework strongly supports long-term decarbonisation, it provides less clarity and consistency for interim solutions such as retrofit and repower.

Potential scenarios – identifying how options could be implemented at scale

This section sets out potential pathways for retrofit and repower in Scotland’s HGV Fleet. The scenarios presented illustrate different approaches to deployment, highlighting trade-offs between emissions impact, feasibility and timing. They draw upon the fleet characteristics identified in Section 2 and the feasibility assessment in Section 3.

Scenario A – Target low carbon retrofit (2026-2030)

This scenario focuses on targeted retrofit as a near-term measure to improve air quality, with limited impact on carbon emissions. This pathway focuses on operators, particularly SMEs, with a high concentration of Euro 4/5 vehicles. It targets two priority areas:

• Operators with depots located in air quality management areas where Euro 6 upgrades are essential to meet local air quality requirements and protect public health
• Operators in regional hotspots with low Euro 6 uptake i.e. articulated fleets in the Highlands and Islands, and rigid fleets in Dumfries & Galloway and the Borders. Intervening in these areas would deliver wider tailpipe emissions improvements and help prevent regional disparities, ensuring progress is not limited to traditional focus areas such as Glasgow and Edinburgh

This scenario sees Scotland prioritising DPF and SCR retrofits, while zero-emission vehicle adoption continues to grow. Niche applications of dual-fuel hydrogen or gas systems could still be viable where there is a clear business case and the technology is operationally feasible. Overall, this pathway provides a quicker and more cost-effective way to clean up the existing fleet than purchasing new zero-emission vehicles or undertaking full repowers.

The pathway could begin with local authority and public-sector fleets to build demand and confidence in retrofit solutions. We have identified that retrofitting Euro 4/5 vehicles to Euro 6-like standard is generally less financially attractive than buying a second-hand Euro 6, so targeted policy and incentives are essential. Scrappage schemes, clean vehicle retrofit accreditation scheme (CVRAS)-style accreditation, or LEZ compliance funding would help make retrofits more viable, reducing emissions in urban areas while maintaining operational continuity for rural and regional fleets.

As we have identified from the SMMT data (2025), there are just under 10,000 HGVs over 7.5t that are diesel Euro 4/5 (or older). There is no publicly available Scottish data showing the exact annual conversion rate from Euro 4/5 to Euro 6 for HGVs. We assume that transitioning all Euro 4/5s to Euro 6 by 2030 is too ambitious and unlikely. A more plausible target would be about 20-30% of this stock, based on fleet replacement cycles and some upscaling of retrofit programmes.

Further limitations include scaling up retrofit technology providers, assurance and warranty considerations, and accreditation availability, which were outlined in the stakeholder engagement. This pathway remains a true interim measure, with CO₂ savings negligible compared to full zero-emission deployment, as tailpipe emissions are still present. The emissions reduction for Scotland is considerable when factoring in PM and NO_x, as identified in the Emissions Reduction section of Chapter 3. For instance, retrofitting all Euro 4 and 5 HGVs over 7.5t would equate to 1.6 tonnes of NO_x and 76 kg of PM removed each day.

Additionally, there is a significant risk for operators (particularly those with smaller fleets) that investment in retrofit technologies may become stranded within a few years if evolving legislation, procurement frameworks, or supply chain emissions requirements (Scope 2/3) accelerate the transition to zero-emission vehicles. This uncertainty may deter investment in retrofit solutions and underscores the importance of clear policy signals and transitional support to manage the risk of early obsolescence.

Scenario B: Scaling electric repower (2026 – 2040)

This scenario prioritises electric repower as the primary pathway to emissions reduction, particularly for depot-based and predictable operations.

Stakeholder engagement shows strong interest in electric solutions, highlighting an opportunity to explore electric repower of HGVs. Public sector fleets are particularly suited to this approach, as they usually operate more predictable, regimented cycles that make charging easier to plan.

Electric repower is attractive because battery electric powertrains are falling in cost. Repowering a vehicle currently costs around 30-40% of a new electric HGV, with prices expected to fall further as the market develops (Tighe, 2025). Scotland’s experience with electric buses and utility vehicles offers a proven foundation that helps strengthen the business case for HGV electrification. Repowering electric HGVs also delivers on long-term zero-emission compliance while extending vehicle lifecycles by 8-12 years (Magtec, 2025), offering good payback opportunities and potential for a second-hand resale market. Scotland could work towards its long-term strategy in the interim with electric repower while the new zero-emission market matures.

Phasing out diesel across all 31,607 HGV freight vehicles between 2026 and 2040 would require replacing or converting 2,258 vehicles per year. This annual uptake is not realistic in the near term, given the current state of the electric HGV market, both in terms of assets and infrastructure. Focusing initially on rigid vehicles would be easier, as they comprise around two-thirds of the fleet. Concentrating on popular models like the DAF LF and DAF CF (rigids) and Scania and Volvo (articulated) creates a ‘repower blueprint’ that improves cost, efficiency, and speed for retrofit providers, as they apply the technology to the same assets. Even if a blueprint was created for common vehicles, then the rate of electrification would need to grow exponentially – starting modestly in the 2020s while the technology is still smaller scale and increasing through the 2030s. We can see from, the emissions reduction analysis that repowering all Euro 4/5 rigid DAFs (over 7.5 tonnes) only scratches the surface by reducing HGV carbon emissions a mere 12% (with a target of 75% in the sector [based on 1990 levels] by 2030). Nevertheless, electric repowering presents a strong opportunity to build early momentum in the 2020s, helping to reduce emissions now and easing the pressure to transition the remainder of the fleet later through the 2030s.

Large private operators are well placed to trial electric repower, as they can usually better-absorb vehicle downtime and gain operational experience before committing to the higher capital cost of new zero-emission fleets (KleanDrive, 2025). Smaller operators could participate where funding is available, routes are predictable (typically RDC-to-RDC), and charging infrastructure is accessible. A practical starting point would be rigid fleets in urban and semi-rural areas, particularly Dumfries & Galloway and the Borders, since rigid vehicles are easier to electrify due to chassis configurations and payload capacity, and we know there are more rigids in this region than articulated vehicles.

The main barrier to this pathway is infrastructure. Electric repower requires scaling up the network of providers. From our engagement we understand that OEMs are not currently offering widespread services. Grants and incentives will be key to encouraging trials, building market confidence, and expanding capacity. However, the most feasible early opportunities are in urban areas with shared depots and sufficient grid capacity. Rural and semi-rural areas, such as the Highlands, risk being left in a technology blind spot without additional support.

Scenario C: Electric repower supported with dedicated gas (2026 – 2040)

This scenario combines electric repower with biomethane solutions to address both short-distance and long-haul operations.

Scenario C builds on the electric repowering pathway set out in Scenario B but adds dedicated gas or hydrogen repower as complementary options. The purpose of this mixed approach is to reduce the pressure on battery-electric solutions and provide practical alternatives in areas where electrification remains technically or economically challenging. This creates a more resilient transition and avoids over-reliance on a single technology.

A combined approach is particularly important for long-haul transport. Battery-electric HGVs currently face limitations because their energy density is lower than diesel, meaning they require large, heavy battery packs to achieve long-range operation. This makes certain routes, such as long-distance trunking between Scotland and England, difficult to electrify in the short to medium term. High-energy plant and specialist equipment face similar issues. Many machines have continuous auxiliary loads and operate across long duty cycles, making pure battery systems costly or impractical.

Dedicated gas could be explored to start to plug these gaps. Biomethane is an especially attractive option due to its renewable nature and contribution to the circular carbon economy. Using gas-powered trucks in the near term, even if they begin on non-renewable CNG or LNG with marginal tailpipe emissions savings, helps stimulate that demand for biomethane (Zemo Partnership & LowCVP, 2021).

As more assets are repowered or manufactured to run on gas, increasing market demand encourages additional investment in anaerobic digestion capacity and helps develop a stable, long-term biomethane supply chain. This supports a sustainable alternative fuel market that can operate alongside, rather than in competition with, electric vehicles.

As set out in Scenario B, electric repower remains the central pathway. However, uptake and scalability may not expand at the pace required to meet Scotland’s interim and long-term climate targets. Including smaller markets for gas and hydrogen therefore provides resilience, ensuring that Scotland maintains progress toward low- and zero-emission outcomes even if the battery-electric market grows more slowly than planned. This scenario effectively keeps gas and hydrogen “on standby” as a failsafe to bolster the transition while the electric market matures.

Taken together, these scenarios show that while retrofit can deliver near-term air quality benefits, meaningful emissions reduction would be achieved primarily by repower, particularly electric solutions. Overall, scaling repower solutions offers the most credible pathway to carbon emissions reduction, while retrofit plays a more limited, transitional role focused on air quality.

Conclusion

We investigated the potential for retrofitting and repowering to decarbonise Scotland’s HGV market, the available options, and how these can be implemented at scale. This was informed by stakeholder focus groups, surveys, expert interviews, and the analysis of multiple data sets. Scotland’s path to HGV decarbonisation is complex and requires a clear distinction between short-term and long-term solutions.

Retrofitting through SCR and DPF only tackles air quality, reducing NOₓ and PM but leaving CO₂ emissions largely unchanged unless dual fuel systems are explored. There is a near‑term opportunity in these air‑quality retrofits for older Euro 4/5 trucks where LEZ compliance is critical. For most operators, however, replacing older HGVs with second-hand Euro 6 vehicles is more commercially viable than retrofitting the older stock due to payback periods being too long. Therefore, retrofitting is likely to have a limited role in Scotland’s interim transition to zero emission HGVs. Retrofitting therefore offers immediate air quality benefits but has limited impact on carbon emissions, while repowering aligns more closely with long-term decarbonisation.

In terms of repowering technology, battery-electric repower aligns most closely with Scotland’s long-term ambitions and is cheaper for operators than purchasing a new eHGV. Our findings would suggest that it is well suited to the large share of freight moved on short and predictable routes. Nevertheless, eHGV uptake is currently constrained by supply chain maturity and infrastructure readiness. Fleet operators have shown concerns about electric repower, capital outlay, downtime, and payback uncertainty. Electric repower therefore holds strong emissions-reduction potential but feasibility depends on supply chain readiness and reduction of financial and operational risks for operators.

To avoid technology lock-out, dedicated gas repower, particularly biomethane, could potentially fill the gap for heavier, longer-distance operations where electrification is limited. The technology is technically mature, cost-effective to operate and offers substantial tailpipe emissions reductions. However, Scotland does not currently have gas refuelling infrastructure at scale, which restricts deployment. This challenge mirrors the issues faced by dual fuel gas and diesel retrofit systems: when gas is unavailable, vehicles revert to running on diesel, undermining both emissions benefits and payback expectations. In addition, any gas‑based solution must carefully manage methane slip, as even small releases can significantly reduce overall environmental performance.

This research would suggest that the role of hydrogen is currently limited due to high costs, safety requirements, and the limited availability of green hydrogen. This project has primarily identified hydrogen as a non-option for large-scale repower because current policy and market signals favour electrification. Secondary support scaling of gas repower appears more feasible than hydrogen. However, hydrogen should not be discounted entirely. It may play a useful niche role in longer term climate abatement, specifically in heavy-duty, long-range applications where neither electric nor gas systems are currently feasible. In these cases, hydrogen could function as a strategic buffer, preventing technology lock-out and keeping the pathways to future zero-emission options open.

To enable the greatest number of conversions to repowered vehicles with the least engineering effort, focusing on popular models helps to create blueprints, especially for battery-electric repowering. Rigid vehicles account for roughly two-thirds of Scotland’s HGV fleet and present the strongest near-term opportunity for impact. For the purpose of blueprinting, rigid DAF models offer a strong starting point. Articulated fleets, particularly in the Highlands and Islands, also present opportunities. However, there are added challenges for electrification such as load and distance due to the region’s geography, which places greater pressure on vehicle range.

The timing of intervention is critical. Electric or gas repowering solutions offer short payback windows and can provide additional benefits to operators such as reduced operating costs. If an operator were to repower a vehicle at the end of their normal 5 – 7 year replacement cycle, they could effectively extend the life of the vehicle considerably, effectively providing a near-new asset and encouraging operators to maximise asset longevity. The extensive refit and refurbishment make repowering similar to having an almost new vehicle. This can encourage operators to shift behaviour towards maximising asset longevity, which can significantly reduce overall lifetime vehicle costs. This is highly case-specific and depends on factors such as asset ownership, duty cycles, and auxiliary loads. However, it highlights that lifecycle economics strongly favour repower over retrofit for most mainstream HGVs

Due to the regional variation in HGV fleet makeup, we found that substantial emissions reduction opportunities exist in Dumfries and Galloway, the Scottish Borders, and Highlands and Islands. These areas have notably lower Euro 6 compliance rates, and addressing this disparity could support a more balanced national approach to climate change mitigation.

Euro 4/5 vehicles should be targeted before Euro 6 to see the greatest emissions reductions. These older engines and vehicles are heavier polluters and present the largest opportunity for improvement. Operators are far more likely to be seeking replacements for Euro 4/5 vehicles, as they tend to be more costly to maintain, less reliable, and increasingly non‑compliant with tightening regulations. As a result, intervention at this stage is both more impactful and more commercially meaningful for operators, whereas Euro 6 vehicles already meet stricter standards and deliver comparatively smaller gains from retrofit or repower. However, the evidence presented in this research demonstrates that focusing solely on the older Euro 4 and Euro 5 (over 7.5t) HGVs through retrofitting or repowering would not deliver the interim target of a 75% reduction in GHG emissions by 2030. Even if every Euro 4 and Euro 5 vehicle were converted or replaced with electric alternatives, the maximum achievable reduction would be approximately 57% of Scotland’s annual HGV emissions. This shortfall underscores a critical reality: to meet the 75% target, emissions reduction measures must extend to Euro 6 HGVs during the interim period. However, this requirement introduces significant complexity and may render the target overly ambitious. Further research, market engagement and policy innovation would be needed to engage the HGV sector in decarbonising the newer Euro 6 vehicles in the current fleet.

In summary, electric repower offers the strongest long-term zero-emission operation for short to medium routes, while biomethane and other gaseous fuels provide a practical option for heavy, long-distance operations. Hydrogen may become viable in the future as infrastructure and economics develop. A route-sensitive approach, aligning technology choices with operational duty cycles, provides a realistic pathway for reducing tailpipe emissions while maintaining fleet reliability and flexibility. By focusing on regional opportunities, and lowering financial and operational risks for operators, Scotland could progress toward an equitable transition that delivers tailpipe emissions reductions now while laying the foundation for a zero-emission HGV fleet over the long term.

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How to cite this publication:

Nankivell, J. and Chawner, J. (2026) Decarbonising Scotland’s HGVs through retrofit and repowering, ClimateXChange. https://doi.org/10.7488/era/7421

© The University of Edinburgh, 2026
Prepared by Ipsos UK on behalf of ClimateXChange, The University of Edinburgh. All rights reserved.

While every effort is made to ensure the information in this report is accurate as at the date of the report, no legal responsibility is accepted for any errors, omissions or misleading statements. The views expressed represent those of the author(s), and do not necessarily represent those of the host institutions or funders.

This work was supported by the Rural and Environment Science and Analytical Services Division of the Scottish Government (CoE – CXC).

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Appendices

1. Scotland’s HGV fleet profile

*Mtkm = million tonne kilometres. Mtkm is a standard freight transport metric and measures freight by weight of goods moved (tonnes) multiplied by distance travelled (kilometres). If you move 1 million tonnes of goods over 1 kilometre, that equals 1 million tonne kilometres (mtkm).

2. Case studies

Balfour Beatty hydrogen retrofit project – Scotland (Launched 2024)

Overview

In 2024, Balfour Beatty began retrofitting heavy vehicles with a hybrid hydrogen system. They successfully retrofitted three vehicles in Scotland with this technology: two salt spreader HGVs and one Impact Protection Vehicle. After being trialled on the Connect Roads M77/Glasgow Southern Orbital project, the HGVs achieved a carbon emission reduction of approximately 26%. Moving forward, Balfour Beatty is conducting further tests and research to identify potential improvements. They have also established a green hydrogen supply chain, on-site storage, and refuelling infrastructure for these vehicles.

These retrofits followed a two-year collaboration with ULEMCo, Logan Energy, and PlusZero Power. Funding was secured both internally and externally, including £243,000 from the Scottish Government.

The primary motivation for this initiative was to demonstrate the viability of hydrogen technology, with the long-term ambition of converting Balfour Beatty’s entire fleet. While they have not yet reached their 30% emission reduction target, the project has yielded several valuable lessons to motivate further industry uptake and innovation.

Balfour Beatty has stated that while hydrogen may not be the ultimate solution for decarbonising heavy plant and equipment, it presents a fast and effective interim measure to reduce emissions. An article in driving hydrogen news (Lister, 2024), highlighted additional benefits of hydrogen hybrid systems, including:

• Equipment retains the option of operating in diesel-only mode, which is advantageous while hydrogen infrastructure continues to develop
• Vehicle operation remains unchanged, removing the need for additional driver training
• Vehicles automatically switch to hydrogen mode once engines reach optimal operating temperatures

To support new fuelling procedures, operatives have been issued with antistatic clothing to prevent the ignition of hydrogen gas due to static electricity. Balfour Beatty has also partnered with Hydrasun to ensure staff are professionally trained in hydrogen handling, significantly mitigating safety risks.

Despite its potential, the company has acknowledged that hydrogen supply may pose a barrier to the initiative’s scalability. However, the availability of hydrogen in Scotland is projected to improve in 2026, as multiple government and private sector investments materialise. Currently, Balfour Beatty relies on a single green power supplier, PlusZero Power, via the Aberdeen City Hydrogen Energy Storage facility operated by Aberdeen City Council. Any downtime or maintenance at this facility could halt operations.

Furthermore, the company has discovered that mobile hydrogen supply units are essential for the construction sector. On-site refuelling is crucial, particularly for plant machinery that cannot be easily transported to highways, as off-site refuelling leads to costly downtime. After assessing multiple refueller units, Balfour concluded that suitability depends on the intended end-use and expected volume requirements, which can significantly impact lead times. While still in its preliminary stages, Balfour Beatty’s hydrogen retrofit programme demonstrates both the potential and the complexity of decarbonising heavy vehicles. Lessons from this initiative may inform broader transport and infrastructure policy across the UK (Balfour Beatty, 2024a, 2024b).

Implications for retrofit and repower in Scotland

The Balfour Beatty hydrogen retrofit programme demonstrates that decarbonising heavy vehicles through hybrid hydrogen systems is technically feasible and can deliver meaningful emissions reductions. While not fully zero-emission, these retrofits provide an effective interim solution, allowing vehicles to operate in diesel mode while hydrogen infrastructure continues to develop. The programme highlights the importance of operational integration. Vehicles automatically switch to hydrogen mode, eliminating the need for additional driver training, and safety measures such as antistatic clothing and staff training mitigate hydrogen handling risks.

The initiative also underscores the critical role of infrastructure and supply chain planning. On-site and mobile refuelling are critical for certain sectors to prevent costly downtime, while reliance on a single supplier creates scalability risks. This underscores the need for a resilient and well-structured logistics network. Collaborative partnerships with technology providers and funding support, including government grants, have been key to the project’s success. Overall, the programme offers valuable insights for HGV retrofit and repower in Scotland. It shows that careful assessment of vehicle type, route profiles, and refuelling requirements, combined with strong safety protocols and infrastructure planning are necessary to enable interim decarbonisation while supporting the transition to fully zero-emission fleets.

References

Balfour Beatty, 2024a. Balfour Beatty fuels its decarbonisation effort by retrofitting heavy vehicles with a hybrid hydrogen system. [online] Available at: https://www.balfourbeatty.com/media-centre/latest/balfour-beatty-fuels-its-decarbonisation-effort-by-retrofitting-heavy-vehicles-with-a-hybrid-hydrogen-system/

[Accessed 1 September 2025].

Driving Hydrogen, 2024. Balfour Beatty retrofits hydrogen hybrid system to HGVs, proves success. [online] Available at: https://drivinghydrogen.com/2024/08/27/balfour-beatty-retrofits-hydrogen-hybrid-system-to-hgvs-proves-success/ [Accessed 1 September 2025].

Highways Industry, 2024. Balfour Beatty fuels decarbonisation effort by retrofitting heavy vehicles with a hybrid hydrogen system. [online] Available at: https://www.highwaysindustry.com/balfour-beatty-fuels-decarbonisation-effort-by-retrofitting-heavy-vehicles-with-a-hybrid-hydrogen-system/ [Accessed 1 September 2025].

Veolia UK – Retrofit of Refuse Collection Vehicles – UK (Launched 2024)

Overview

In 2024, Veolia announced the successful completion of vehicle-to-grid (V2G) trials, enabling waste collection trucks to feed stored energy from their batteries back into the UK power grid. This initiative was launched in response to the UK Government’s goal to decarbonise the National Grid by 2035, set against projections that national energy demand could double by 2050.

The trials were delivered in partnership with electric vehicle charger manufacturer Turbo Power Systems (TPS), vehicle repower specialists Magnetic Systems Technology (Magtec), EV charge point management software provider Fuuse, and technology partner Advantics.

The system enables the batteries of waste collection trucks to both charge from the grid and discharge stored energy back into it. This dual functionality means that trucks can supply power during periods of peak energy demand, while also storing surplus renewable energy for future use. This is made possible through bi-directional charging technology, which allows electricity to flow in both directions between the grid and the vehicle battery.

Waste collection vehicles were chosen for these trials due to their large battery capacity, approximately six times that of a standard electric car, and because they are typically idle during peak grid usage times in the evening.

Initial trial results showed that two specially designed bi-directional vehicles were able to charge and discharge a total of 110kW of energy. According to Veolia, this amount of energy is sufficient to power approximately 110 homes for two hours during peak demand periods.

Following the successful trials, Veolia has announced plans to test this technology further in partnership with Westminster City Council, which is already undertaking an ambitious electrification programme. Westminster has committed £20 million to deploy 45 zero-emission electric refuse collection vehicles and aims to eventually electrify its entire fleet of approximately 80 trucks. Each electric refuse truck is estimated to reduce CO₂e emissions by up to 89% compared to a traditional diesel-powered vehicle.

Looking ahead, Veolia aims to electrify all 18,000 of its refuse vehicles across the UK by 2040. If successful, this could provide up to 200MW of flexible power capacity per day, contributing to national energy resilience and sustainability. With municipal vehicles operating predictable daily routes and returning to depots overnight, they represent ideal candidates for future V2G applications, offering dual benefits of carbon reduction and energy resilience. Veolia’s pioneering V2G trials not only showcase innovative uses of electric fleet technology but also reinforce the vital role of municipal services in supporting national energy resilience (Veolia, 2024a; Veolia, 2024b; Zemo Partnership, 2024).

Implications for retrofit and repower in Scotland

Veolia’s V2G trials show the potential for large municipal vehicles to act as both transport assets and grid resources. By using depot-based RCVs with predictable duty cycles, the trials proved that bi-directional charging can deliver meaningful grid benefits while supporting decarbonisation. For HGVs in Scotland, this highlights an opportunity. Repower programmes could be designed not just to reduce emissions / carbon abatement in the vehicles themselves, but also to create new revenue streams through grid services, improving the overall business case for electric repower in particular.

The case study highlights several barriers. Implementing V2G requires major depot upgrades, investment in specialised hardware, and careful management of battery degradation. Operators, particularly SMEs, face challenges such as high upfront costs, downtime during repowering, and uncertainty around grid service revenues. Without financial incentives, market guarantees, or infrastructure support, this service is unlikely to be adopted quickly and is better suited to larger fleets with greater capital or those seeking to explore V2G options for electric repowered vehicles.

For Scotland, the main lesson is that targeted pilots with municipal fleets could provide proof of concept. By focusing on fleets with depot-based operations and predictable routes, supported by tailored finance and early engagement with grid operators, retrofit and repower options could become more feasible.

References

Veolia (2024). Veolia successfully completes pioneering V2G trial in the UK: Waste collection trucks become a flexible energy source to boost energy security. [online] 12 January 2024. Available at: https://www.veolia.com/en/our-media/press-releases/veolia-successfully-completes-pioneering-v2g-trial-uk-waste-collection [Accessed 15 September 2025].

Current-News (2024). Veolia completes V2G trial using UK waste collection trucks. [online] 15 January 2024. Available at: https://www.current-news.co.uk/veolia-completes-v2g-trial-using-uk-waste-collection-trucks/ [Accessed 15 September 2025].

chargedevs.com. (2024). Veolia completes refuse truck vehicle-to-grid trial in the UK. [online] 12 January 2024. Available at: https://chargedevs.com/newswire/veolia-completes-refuse-truck-vehicle-to-grid-trial-in-the-uk/ [Accessed 15 September 2025].

BEAR Programme – Scotland (Launched 2018)

Overview

The Scottish Bus Emissions Abatement Retrofit (BEAR) Programme is a government-led initiative aimed at reducing harmful vehicle emissions in Scotland’s most polluted urban areas. First introduced in 2018 by Transport Scotland, the programme focuses on supporting low emission retrofitting of buses and coaches, ensuring they meet at least Euro 6 emission standards

This initiative directly supports the implementation of LEZs across Scotland’s four largest cities (Glasgow, Edinburgh, Dundee, and Aberdeen) as well as other designated AQMAs. LEZs are designed to reduce harmful pollutants such as nitrogen dioxide (NO₂) and PM (PM10/PM2.5) that contribute to poor public health outcomes in urban environments.

Funding from the BEAR programme supports the installation of CVRAS-approved technologies, primarily:

• Selective Catalytic Reduction (SCR) systems – which target and reduce NOx emissions from diesel engines.
• Diesel Particulate Filters (DPFs) – which remove harmful PM.
• Repowered drivetrains – including transitions from diesel to low- or zero-emission powertrains, where feasible.

Between 2018 and 2022, the BEAR programme invested £21 million, supporting the retrofit of over 1,100 buses and coaches across Scotland. In 2023–2024, an additional £3.26 million was allocated to support continued compliance with expanding LEZ regulations.

Each eligible operator could receive up to £1.14 million in funding, depending on fleet size, retrofit technology, and location of operation. Priority was given to operators based in or frequently operating within LEZ cities or AQMA regions.

Scotland’s BEAR initiative exemplifies how public funding can catalyse private sector action on decarbonisation and air quality improvement. By enabling fleet operators to upgrade existing diesel vehicles, the programme avoids premature scrappage while supporting compliance with tightening environmental regulations. Crucially, the BEAR programme also sets a precedent for other UK and international cities considering emissions reduction without full vehicle replacement, which is often cost-prohibitive for smaller operators.

While the BEAR programme has achieved significant coverage, challenges remain. Retrofitting is technically complex, particularly for older fleets, and there is a limited number of CVRAS-approved suppliers in the UK market. Additionally, integrating retrofits with future zero-emission fleet strategies (e.g. battery electric or hydrogen buses) requires strategic alignment to avoid duplication of investment.

However, BEAR offers a replicable and scalable model of how retrofit-first approaches can bridge the gap between current diesel fleets and future net-zero goals. The Scottish Government has signalled continued interest in supporting vehicle retrofits as part of its broader Climate Change Plan and Transport Scotland’s National Bus Strategy.

Implications for retrofit and repower in Scotland

BEAR demonstrates how targeted public funding and regulatory alignment can unlock large-scale retrofit adoption. BEAR tied financial support to approved technologies and measurable outcomes, ensuring confidence that emission reductions were delivered in practice. The main success factors were the combination of funding, certification, and monitoring. This offers a clear framework that could be adapted to HGV retrofit and repower, where operators face similarly high upfront costs and concerns about technology performance.

For HGVs, the BEAR experience highlights both opportunities and limitations. Financial incentives remain critical to bridging the cost gap, especially for SMEs that dominate the freight sector. Assurance mechanisms can build trust among operators, regulators, and customers. At the same time, the bus sector benefits from depot-based, predictable operations, which make retrofits easier to implement and monitor. The HGV market is far more fragmented, with diverse duty cycles and operating models, meaning that any retrofit scheme would need greater flexibility in eligible technologies and stronger alignment with infrastructure investment. Nevertheless, BEAR shows how retrofit-first policies can act as an essential bridge, extending the life of existing fleets, delivering near-term emissions benefits, and supporting compliance with LEZs while Scotland scales up zero-emission vehicle and infrastructure deployment.

References

Transport Scotland. (2023). Scottish Bus Emissions Abatement Retrofit Fund. [online] Available at: https://www.transport.gov.scot/public-transport/buses/scottish-bus-emissions-abatement-retrofit-fund/ [Accessed 15 September 2025].

Transport Scotland. (2021). Up to £5.7 million available for bus retrofitting. [online] 30 July 2021. Available at: https://www.transport.gov.scot/news/up-to-57-million-available-for-bus-retrofitting/ [Accessed 15 September 2025].

Transport Scotland. (2021). £6.2 million to reduce bus emissions. [online] 15 December 2021. Available at: https://www.transport.gov.scot/news/62-million-to-reduce-bus-emissions/ [Accessed 15 September 2025]

Lothian Buses – KleanDrive Electric Repowering Scotland (2023)

Overview

In 2023, KleanDrive delivered a large-scale electric repower programme for Lothian Buses, converting 18 Volvo B5TL diesel double-deckers into full battery-electric vehicles. The project aimed to demonstrate the commercial and operational viability of repowering as an alternative to new electric bus procurement, while extending vehicle life and reducing lifecycle emissions. The work was commissioned directly by Lothian Buses and delivered by KleanDrive, who supplied the full electric drivetrain and repower solution. Funding came from operator investment, as government grants currently do not support repowering. KleanDrive also collaborates with financial partners to offer alternative financing models for future projects.

The repower programme replaced the original diesel drivetrains with modular Zero emission electric powertrains including motors, inverters and control systems, optimised for the buses’ duty cycles. Retrofitting costs approximately one-third of a new electric bus, and significantly extended vehicle life (10+ additional years). The plug-and-play drivetrain system was fully assembled and tested off-vehicle, enabling rapid installation by local mechanics. The repowered buses retained full performance suitability and offered a range of up to 190 miles, depending on conditions. Cosmetic refurbishment allowed the converted buses to look and operate like new.

The most significant constraints were the need for charging infrastructure and the upfront development cost of the vehicle “blueprint. However, while the initial prototyping is expensive, it can be reused for future vehicles of the same chassis, improving cost-effectiveness at scale. Lothian Buses’ repower programme demonstrates the feasibility, economic advantages, and operational performance of electric repowering as a decarbonisation pathway for existing fleets. With a modular, ISO 26262-certified drivetrain and fast installation process, KleanDrive’s approach offers operators a scalable and lower-cost alternative to a new vehicle purchase.

Lessons from this project highlight the importance of infrastructure planning, model-specific blueprinting, and supportive policy to accelerate wider adoption across UK bus and HGV fleets. In 2025, KleanDrive has also announced initiatives with First Bus converting 30 existing Wrightbus Streetdeck double-decker buses from diesel to electric and Welch Group to convert 18-tonne rigids.

References

See: Lothian Buses (2023) Kleanbus will convert 18 Volvo B5TLS from Lothian Buses to electric. Available at: https://kleandrive.earth/sustainable-bus-kleanbus-will-convert-18-volvo-b5tls-from-lothian-buses-to-electric/?foo=bar

See: KleanDrive (2025) KleanDrive has announced the conversion of 30 Streetdecks for operator First Bus. Available at: https://kleandrive.earth/elementor-24918/?foo=bar

See: KleanDrive (2025) KleanDrive and Welch Group announce HGV Electric Repower partnership. Available at: https://kleandrive.earth/elementor-24963/?foo=bar

Mexico City – DPF Retrofit for HGVs (Launched 2005)

Overview

In 2015, Mexico City launched its pilot DPF retrofit programme for buses. The programme was run through the Centre for Sustainable Transport, a Mexico City-based non-governmental organisation, which was awarded $511,000 in grants for the project. Funding was provided by the US Environmental Protection Agency (EPA) and EMBARQ (part of the World Resources Institute).

The pilot built on the successful real-world testing of retrofits in 2005 by SEDEMA with CTS-Embarq Mexico, the US EPA, and USAID. These earlier tests found DPFs to be effective in reducing both particle numbers and the mass of particulate emissions. The project combined ultra-low sulphur diesel with retrofit technologies, including DPFs, to reduce PM emissions and other pollutants by up to 90%.

Twenty buses were selected: eight 2001 AYCO International models, eight 1991 Mercedes-Benz Prototype models, and four 2002 Mercedes Torino models. The buses operated for a period of ten months. Tailpipe emissions were measured at various stages of the trials using the Ride-Along Vehicle Emissions Measurement (RAVEM) system. This records hydrocarbons (HC), carbon monoxide (CO), carbon dioxide (CO₂), nitrogen oxides (NOx), and particulates in real time. Measurements were taken under baseline conditions (before improvements were made), at stabilisation (after 4,000 km of operation), and at performance (after 55,000 km of operation).

Training was provided for 20 mechanics and 40 bus operators, who learnt how to install and use the emission control devices, as well as driving techniques to ensure optimal performance. The third round of emissions testing showed that retrofitted vehicles maintained, and in some cases improved, reductions in exhaust pollutants. DPFs proved highly effective, cutting PM emissions by 83–92%, while diesel oxidation catalysts (DOCs) delivered only modest reductions of 22–29% and were largely ineffective against fine PM. This suggests that repowering or replacing older vehicles may be a better option for addressing emissions from the dirtiest buses. NOx reductions of around 5–10% were partly attributed to the use of ultra-low sulphur diesel (ULSD), although results varied significantly depending on driver behaviour, which also influenced CO₂ and fuel consumption. The project further underscored the importance of proper maintenance, particularly fixing exhaust leaks before and after installing retrofit equipment, to ensure long-term performance.

Drawing on these results, EMBARQ recommended a two-part strategy. Firstly, retiring or replacing the oldest and most polluting vehicles with modern buses equipped with advanced emissions controls. Secondly, retrofitting newer fleets with DPFs and ULSD fuel to achieve up to 90% cleaner operations. Although retrofitting older, mechanically controlled vehicles can deliver modest improvements, the most hazardous ultra-fine particles are best addressed through fleet renewal. Taken together, this retire/replace/retrofit approach offers a cost-effective and scalable pathway to improve air quality in cities with air pollution issues.

Implications for retrofit and repower in Scotland
The Mexico City DPF retrofit programme highlights how structured monitoring and evaluation can ensure retrofitted vehicles deliver measurable emission reductions. By targeting specific vehicle types, ages, and OEMs, the programme shows that retrofits are effective for newer fleets but less so for the oldest vehicles, where repower or replacement may be needed. Though the programme was launched in 2005, the motive of the project and the evaluation methods can be replicated at scale for 2025. What is interesting is that repowered drive trains were not a viable option in 2005 (at least not on the scale of today) and so retrofit would have been only real option. However, this demonstrates that a Scotland HGV fleet retrofit / repower programme does not have to re-invent the wheel, learning from case studies like Mexico twenty years ago.

This shows that retrofit can be a cost-effective interim solution for early abatement, while longer-term zero-emission technologies are scaled up. The case also emphasises the importance of training, maintenance, and operational procedures, providing lessons for Scotland on combining financial incentives, technical support, and monitoring to maximise the impact of HGV retrofit and repower initiatives.

References

Schipper, L., Wayne, W.S., McKain, D.L., Clark, N.N., & Rivero Borrell, E. (2006). Cleaner buses for Mexico City, Mexico: From talk to reality. Transportation Research Record: Journal of the Transportation Research Board, 1987(1), 42–53. https://doi.org/10.1177/036119810619870010 [Accessed 12 September 2025]

Stevens, G., & Schipper, L. (2005). A benefit-cost analysis of retrofitting diesel vehicles with diesel particulate filters in Mexico City. Environmental Science & Technology, 39(16), 6163–6170. https://doi.org/10.1021/es0508837 [Accessed 12 September 2025]

United States Environmental Protection Agency (EPA). (2005). Cleaning up the fleet: Case study from Mexico City. [PDF document]. Retrieved from https://archive.epa.gov/international/air/web/pdf/cleaning_up_the_fleet.pdf [Accessed 12 September 2025]

Quantron Hydrogen Fuel Cell Repower, Heavy Duty Vehicles – Germany and UK (Launched 2021)

Overview

In 2021, German-based Quantron AG launched its hydrogen fuel cell programme in partnership with Ballard Power Systems. This collaboration integrated Ballard’s advanced FCmove™ heavy-duty fuel cell modules into Quantron’s platforms and marked the beginning of the company’s commercial roll-out of both light and heavy-duty hydrogen fuel cell electric vehicles (FCEVs) across Europe.

The partnership led to the development of two flagship products. The QLI FCEV, Europe’s first hydrogen fuel cell light-duty truck, has already entered fleet service, including five vehicles deployed by IKEA in Austria. The manufacturer claims a range of up to 450km, refuelling times under ten minutes, and multiple body variants, the QLI demonstrates the viability of hydrogen for urban and regional logistics. Complementing this, the QHM FCEV Aero was developed for long-haul transport. This heavy-duty model can travel up to 700km on a single tank of hydrogen, 1,500km in a “Scandinavia” configuration, and features an aerodynamic nose design that reduces drag by 20% and extends range by approximately 10%. By integrating tanks directly into the chassis, Quantron preserved trailer compatibility while avoiding bulky rear “backpack” designs.

Demonstrations and early commercial uptake have followed rapidly. In the UK’s Tees Valley region, Quantron is delivering 14 hydrogen vehicles (12 light transporters and two heavy-duty trucks) as part of a 20-vehicle trial. The project is supported with £7 million from the UK Government as part of the Tees Valley Hydrogen Transport Hub Competition and delivered in partnership by Innovate UK. A green hydrogen refuelling station is also being built as part of this project. In Germany, deployments include a pay-per-use arrangement with Hylane (a leading zero-emission commercial vehicle rental company in Europe) for last-mile operations, showing how flexible business models can accelerate fleet adoption.

Recognising that hydrogen vehicle adoption depends heavily on refuelling infrastructure, Quantron formed a strategic joint venture, HEMTRON, with Oilinvest Group. This partnership leverages Oilinvest’s existing network of more than 2,450 Tamoil and HEM fuel stations to develop hydrogen refuelling capacity across Europe.

Quantron has also positioned itself uniquely in the market by offering its Quantron-as-a-Service ecosystem. This model bundles vehicles, financing, maintenance, insurance, telematics, and hydrogen refuelling into a per-kilometre package. The company projects that, as hydrogen production costs decline, its hydrogen trucks could achieve cost parity with diesel models as early as 2026.

Together, these developments show that Quantron’s retrofit / repower, and vehicle integration strategy is more than technological innovation. By combining vehicle engineering, infrastructure partnerships, and service models, the company is making hydrogen fuel cell technology both practical and competitive in the heavy transport sector.

Implications for retrofit and repower in Scotland

This example highlights how hydrogen retrofit or repower could reduce emissions while simultaneously creating wider benefits beyond the transport sector. The development of green hydrogen refuelling hubs and partnerships, such as HEMTRON in Europe, illustrates the potential for an integrated value chain where energy, jobs, and skills are generated across multiple sectors.

The Quantron model shows that providing bundled solutions (including vehicle financing, maintenance, insurance, telematics, and refuelling) reduces operational barriers for fleet operators, increasing adoption feasibility. While hydrogen remains more complex and resource-intensive than battery retrofits, the case reinforces that interim retrofit or repower solutions can be positioned strategically to decarbonise Scotland’s HGV fleet while supporting a broader low-carbon economy in secondary sectors.

References

Euro 6 Diesel Coach Converted to Bio-CNG (referenced at Bio-GNV in France) – France (Launched 2025)

1. Ballard Power Systems and Quantron AG (2021) ‘Ballard Power Systems and Quantron AG announce a strategic partnership for the development of hydrogen fuel cell electric trucks’, PR Newswire, 7 September. Available at: https://www.prnewswire.com/news-releases/ballard-power-systems-and-quantron-ag-announce-a-strategic-partnership-for-the-development-of-hydrogen-fuel-cell-electric-trucks-301370178.html (Accessed: 15 September 2025).
2. Quantron AG and Ballard Power Systems (2023) ‘Quantron hydrogen fuel cell trucks ready for delivery in Europe’, CCJ Digital, 5 September. Available at: https://www.ccjdigital.com/alternative-power/hydrogen-fuel-cell/article/15546292/quantron-hydrogen-fuel-cell-trucks-ready-for-delivery-in-europe (Accessed: 15 September 2025).
3. Ballard Power Systems and Quantron AG (2023) ‘Quantron and Ballard Power Systems introduce fuel cell-powered trucks ready for delivery’, Fuel Cells Works, 1 September. Available at: https://fuelcellsworks.com/news/quantron-and-ballard-power-systems-introduce-fuel-cell-powered-trucks-ready-for-delivery/ (Accessed: 15 September 2025).

Overview

A groundbreaking project launched in France in early 2025 saw the world’s first conversion of an IVECO Crossway Euro VI diesel coach to run on Bio-CNG (Bio-GNV). This initiative was the result of a collaboration between the engineering firm CRMT and the transport operator Berthelet, with additional involvement from the public transport authority Transdev and the Pays de la Loire region. The converted coach was subsequently put into service as a school bus.

The conversion involved replacing the diesel engine with a methane-powered equivalent, installing a full CNG fuel circuit, fitting a depollution system, recalibrating the gearbox controls, integrating a CNG auxiliary heater, and mounting a fuel tank that delivers a range of approximately 300 km (ideal for regular school routes). The repower used Bio-GNV, meaning biomethane derived from renewable sources, rather than conventional fossil CNG. This repower achieved notable environmental and economic benefits including a 70% reduction in nitrogen oxides (NOₓ), 80% reduction in fine particles (size > 23 nm), a significant decrease in CO₂ emissions and extended vehicle lifespan. The conversion was roughly 50% of the cost of purchasing a new coach and ensured full compliance with current and future regulations (Crit’Air 1 certification and LEZ access).

Beyond the immediate retrofit, the project signals CRMT’s readiness to scale the solution. Following this success, the organisation is preparing industrialised retrofit kits for rapid deployment and is exploring scaling options, aided by streamlined installation processes learned from this first prototype. This Bio-GNV coach demonstrates that performance, sustainability, and cost control can be combined, offering an innovative, available, and credible alternative to diesel – a crucial step toward wider decarbonisation of public transport fleets.

Implications for retrofit and repower in Scotland

The French Bio-GNV project provides valuable lessons for interim HGV retrofit and repower strategies. It demonstrates that predictable routes, such as regional deliveries, can achieve meaningful emissions reductions without the need for immediate full zero-emission replacements.

Financially, the French case highlights the cost-effectiveness of retrofit and repower approaches, which could make interim decarbonisation more viable for SMEs and other operators that may struggle to invest in new zero-emission HGVs. Operational feasibility is another key takeaway. The converted coach maintained adequate range and functionality, showing that repowered vehicles can meet day-to-day operational requirements without causing downtime or disruptions. This demonstrates that hydrogen and gas repower could be explored alongside electric repower as different use cases require tailored predictability, access, cost, and reliability of different fuel types.

The case also illustrates the importance of scalability and standardisation. CRMT is preparing industrialised retrofit kits to streamline future deployments. This suggests that Scotland could adopt similar models to roll out HGV retrofits efficiently with accredited suppliers once trials and successful pilots have taken place. However, HGVs typically have more varied duty cycles and payload requirements than coaches, and renewable fuel supply chains must be robust to support wider adoption.

References

CRMT (2025). Inauguration of a world first in Sarthe: the first Euro VI Diesel coach converted to BioGNV by CRMT. Available at: https://www.crmt.fr/en/news/ [Accessed 10 Sep. 2025].

Gaz-Mobilité (2025a). Rétrofit bioGNV: la région Pays de la Loire pionnière avec la conversion de cet autocar diesel Euro VI. Available at: https://www.gaz-mobilite.fr/actus/retrofit-biognv-conversion-autocar-scolaire-diesel-euro-vi-pays-de-la-loire-4146.html [Accessed 10 Sep. 2025].

GNVMagazine (2025). Transdev and Pays de la Loire unveil an Aléop bus equipped with a biogas engine. Available at: https://www.gnvmagazine.com/en/transdev-and-pays-de-la-loire-unveil-an-aleop-bus-equipped-with-a-biogas-engine/ [Accessed 10 Sep. 2025].

Survey Results and Analysis

Appendix C provides a breakdown of the responses to the operator survey.

The survey comprised of 29 questions (including open ended comments box answers). 25 operators responded to the survey with details on their fleets and their thoughts on and propensity to retrofitting and repowering. Answers can be grouped into eight themes:

• Basic fleet information
• Operating centres
• Key focus for future alternative fuels
• HGV mix
• Views on retrofitting
• Factors determining vehicle replacement
• Motives for retrofitting
• Take on key support themes

Basic fleet information

Operating centres

HGV mix

Views on retrofitting

The views on retrofitting were mostly nonchalant or negative. Seven of the 25 respondents said they would consider retrofitting, while 18 said they would not consider retrofitting. The negatives were attributed to initial cost, lack of supporting infrastructure and both the uncertainty/changes to maintenance regime. Those who were interested in retrofitting cited good access too incentives and grants, urban access, innovation leading, sustainability and long term cost savings.

Vehicle replacement

The most common answer for vehicle replacement was old age (14), followed by mileage and reliability (each 9), carbon footprint of vehicle (5), new technology emerging (3), driver retention and resale value (each 2) and other factors (1) that were not specified.

Motives for retrofitting

Many respondents reiterated they had no interest in retrofitting (12), followed by a key interest in hydrogen shown (5), willingness and open to retrofitting (2) and identifying at this stage that cost and financing affects their decision (1).

For those who were not willing to retrofit, respondents mostly cited it was due to high initial cost (16), followed by limited availability of retrofit options (7) and range and refuelling concerns (7).

Take on key support themes

When asked about what could support the sector to encourage retrofit and repower, most of the respondents said they would find investment in infrastructure very helpful (17), followed by financial support (14) and policy and regulation (11).

Policy Document Review

Appendix D provides more detail on the five policies outlined in the report and incentives / support mechanisms. The policies have been reviewed in line with their impact on retrofitting and repower in Scotland.

Scotland’s Draft Climate Change Plan: 2026-2040

Scotland’s draft Climate Change Plan (CCP) for 2026–2040, published in November 2025, outlines policies to achieve net-zero emissions by 2045. The plan prioritises decarbonising heat, phasing out petrol and diesel cars by 2030, expanding woodland and peatland restoration, and promoting renewable energy. It aims for significant emissions reductions across sectors such as transport, industry, and agriculture, while supporting a just transition for communities.

The CCP sets ambitious interim emissions reduction targets, aiming for a 57% cut by 2030, 69% by 2035, 80% by 2040, and 94% by 2045 compared to 1990 levels. For the transport sector, the plan prioritises expanding electric vehicle infrastructure, investing in public transport and active travel to encourage a shift away from single-occupancy car use, and promoting zero-emission HGVs and freight systems through alternative fuels and logistics solutions. It also targets decarbonisation of aviation and maritime transport, supports regional pilot projects such as hydrogen and electric mobility in rural areas, and emphasises alignment with national and local strategies to ensure coordinated carbon reduction efforts.

HGV Decarbonisation Pathway for Scotland – ZETT

Scotland’s HGV Decarbonisation Pathway, launched in March 2024 and developed through the ZETT, represents 18 months of cross sector collaboration – including representatives from haulage, energy, manufacturing, government, finance, and unions to assess and overcome barriers to alternative fuel HGVs in Scotland (Scottish Government, 2024a). It identifies four core challenges including:

1. Access to energy infrastructure
2. New financial models
3. Confidence in technological and commercial change
4. Workforce skills

While the long-term vision focuses on zero-emission technologies, the pathway acknowledges that immediate widespread adoption of such technologies may not be feasible due to various constraints, including technological maturity, infrastructure readiness, and financial considerations. Therefore, the pathway supports interim solutions to bridge the transition to full decarbonisation, highlighting opportunities achievable through retrofitting and repowering existing HGVs.

For instance, interim measures include accelerating infrastructure development with appropriate support mechanisms to encourage uptake of eHGV chargers and alternative fuels, alongside increased use of low-carbon fuels such as renewable diesel and hydrogen, including dual-fuel and zero-emission fuel cell retrofit strategies.

Scottish Government Programme for Government

The Programme for Government 2025–26 sets out the Scottish Government’s annual priorities to deliver on its statutory climate targets and broader net zero commitments (Scottish Government, 2025). It emphasises accelerating the decarbonisation of transport, expanding renewable energy infrastructure, and supporting businesses and communities in the transition to a greener economy.

The EV fund identified in the programme suggests there may be funds available to support retrofit / repower efforts (charging, hydrogen, etc.). The programme identifies government market signals as a critical commitment to drive retrofit and repower supply chain development. This is intended to make these options viable interim solutions, particularly for mixed-duty HGV operations, while the zero-emission market continues to mature.

Low Emission Zones (Glasgow, Edinburgh, Aberdeen, Dundee)

Scotland’s LEZ’s were introduced in Aberdeen, Dundee, Edinburgh and Glasgow between May 2022 and June 2024 to restrict access for the most polluting vehicles and improve urban air quality (Transport Scotland, 2024a). Vehicles must meet minimum emission standards (Euro 4 for petrol cars, Euro 6 for diesel cars and vans, and Euro 6 for buses, coaches, and HGVs) otherwise the driver may incur a penalty charge starting at £60. The schemes operate 24/7 and rely on ANPR enforcement. They are backed by grant funding via the Low Emission Zones Support Fund, which helps vulnerable individuals and small businesses to upgrade vehicles or switch to cleaner transport modes.

LEZs create a regulatory mandate. If an existing HGV is non-compliant, it either must be replaced, retrofitted, repowered, or risk penalty. This creates demand for retrofit / repower solutions. Transport Scotland has highlighted that financial support should accompany LEZs to mitigate the risk of business failures, as the absence of incentives could pose significant challenges for SMEs and the broader freight network (see Scottish Government, 2024). While LEZs encourage the transition to low and zero emission HGVs, supporting retrofit and repower markets, they must align with Scotland’s Just Transition by enhancing support mechanisms to help operator fleets achieve LEZ compliance.

Net Zero Nation Strategy (2021)

Scotland’s Net Zero Nation strategy provides a five-year framework to engage the public in delivering climate action, built around the principles of Understand, Participate, and Act (Scottish Government, 2021). The strategy emphasises engaging communities in shifting towards sustainable travel choices such as increased walking, cycling, and public transport use while supporting acceptance of policies like the wider transition to zero emission vehicles.

While the Strategy does not explicitly mention retrofit / repower, its framing of a “just transition” and “accelerated decarbonisation” supports the motive that any interim measure to accelerate decarbonisation does not exclude SMEs from markets or force premature scrappage. Retrofit and repower also cover the Strategy’s circular economy alignment; it extends vehicle lifespans and avoids unnecessary waste.

Stakeholders consistently highlighted incentives and funding as key to encouraging retrofit and repower adoption. The support required differs by operator type: larger operators often seek funding linked to broader infrastructure partnerships, while smaller operators prefer direct support for retrofit assets.

Understanding the rules of each funding stream is critical. Some require accredited technology or approved partners to unlock grants. Notably, future funds are expected to focus on zero-emission solutions, favouring repower over low-emission retrofit. Key schemes include:

Direct Retrofit and Repower Support:

Zero Emission Repower Accreditation Fund (ZEVRAS [and CVRAS]): CVRAS-approved kits typically make vehicles accepted for Scottish LEZs. This is aligned with the Low Emission Zone Support Fund and caps approved retrofit funding support (for HGVs) at £16,000 per vehicle.

Low Emission Zone Support Fund: £2 million available 2025-2026 with 80% funding for retrofitting LGVs (capped at £5000) and HGVs (capped at £16,000).

Research, Development and Trialling – Supporting the Same Motive:

HGV Market Readiness Fund: £2 million available 2025-2026 with up to £20,000 per operator for assessments and strategic review of HGV decarbonisation routes. Can support demonstrations and market enablement for zero-emission HGVs (including repower solutions) where they help prove commercial readiness of tech/infrastructure.

Zero Emission HGV Infrastructure Demonstrator Fund: more complex research and development where operators are supporting with delivery partners to trial low and zero emission HGV technologies. John G Russell Transport are currently planning their hydrogen and electric truck trials in Scotland (new zero emission vehicles), while Welch Group in Cambridgeshire (England) are actively working with repower suppliers to run a repowered truck alongside new zero-emission HGVs and conventional diesel HGVs.

Drive35: £2.5 billion over a ten-year period for research and development support for zero-emission technologies. Drive35 is not a “fleet-purchase” pot, but it is quietly shaping the ecosystem operators would rely on for their day-to-day fleet operations. For instance, increases demand and capacity (thus the economy of) zero and low emission HGV technologies.

Further Examples to Leverage from or Indirectly Offer Support:

Bus Emission Abatement Effort (BEAR) and ScotZEB: Not directly fundable for HGVs, but: copy the commercial templates, share depots where practical, and tap the same suppliers trained on Scottish zero emission powertrains/charging.

Freight Facilities Grant: Though not for retrofit and repower directly, the movement of projects funded by this grant will explore decarbonisation opportunities through modal shift. By shifting a trunk leg off the road, operators avoid the full operating/maintenance cost of HGVs for that mileage. Resultingly, the capital that would have been tied up in purchasing a new diesel unit can be diverted to retrofit and repowering for the remainder of the HGV fleet.

Office for Zero Emission Vehicles (OZEV): OZEV have several funding streams that might not be directly for retrofit / repower but can be leveraged to support it. For instance, the depot charging scheme offers up to £1 million per operator to install chargers, which could encourage electric repowering of some of their fleet, significantly de-risking an operator’s infrastructure buildout.

Retrofit and repower summary

Appendix E provides an overview of the technical feasibility operational impacts and economic analysis of each of the technologies reviewed as part of this study.

Technical Feasibility

Table 19 provides a high-level overview of the technical feasibility of each of the technologies. This includes the best operational use cases / duty cycles, vehicle compatibility, strategic value, current availability, longevity, and potential emissions savings for each of the technologies. Where appropriate, boxes have been RAG rated:

• Green: Indicates a strong or favourable assessment. The technology is considered highly viable or effective for the criterion in question.
  
• Amber: Indicates a mixed or moderate assessment. The technology may be viable in certain contexts or with caveats – there may be some barriers, uncertainties, or limitations that need to be addressed.
  
• Red: Indicates a weak or unfavourable assessment. The technology faces significant barriers, is not currently viable, or has major drawbacks for the criterion in question

Operational Impacts

Table 20 provides a high-level overview of the operational impacts of each of the technologies. This includes additional maintenance vs. standard diesel ICE, level of risk and dependency on refuelling infrastructure, impacts on payloads / range and the time it takes to fit the technology.

Economic Analysis

Table 21 provides a high-level economic analysis for each of the technologies including capital costs, fuel/running costs, payback potential, and TCO. Calculations are based on the following baseline assumptions.

Notes and caveats

• These are illustrative, consistent calculations to compare technologies under the same baseline usage and the diesel price. Actual results vary by exact vehicle model, local fuel/energy prices, duty cycle, grant funding, and maintenance regimes.
• The EV and hydrogen outcomes are extremely sensitive to energy price assumptions, vehicle capex (may be lower with purchase or grants), and access to smart charging or hydrogen at scale. If electricity price falls or capital subsidies apply, EV payback improves sharply.
• Dual-fuel and dedicated-gas economics assume access to gas (CNG/biomethane) at depot prices, public refuelling limits and payload penalties affect operational viability.
• DPF/SCR are primarily compliance/emissions measures — they rarely pay back from fuel savings alone unless Clean Air Zone/LEZ fines are avoided or subsidies exist

The 5-year TCO and payback figures have been estimated as follows:

1. DPF retrofit

• Capex: £4,000
• Fuel penalty: 2% → 0.02 × 42,245 = 845 L × £1.45 = £1,225/year
• Maintenance: £550/year
• Total extra annual cost: £1,225 + £550 = £1,775
• 5-year opex: 5 × £1,775 = £8,875
• 5-year total cost: £4,000 + £8,875 = £12,875
• Payback: N/A (compliance measure, no fuel savings)

2. SCR retrofit

• Capex: £17,000
• AdBlue cost: £2,112/year
• Maintenance: £300/year
• Total extra annual cost: £2,112 + £300 = £2,412
• 5-year opex: 5 × £2,412 = £12,060
• 5-year total cost: £17,000 + £12,060 = £29,060
• Payback: N/A (fuel savings negligible)

3. Combined DPF and SCR retrofit

• Capex: £20,000
• Fuel penalty (DPF): £1,225/year
• AdBlue cost: £2,112/year
• Maintenance: £700/year
• Total extra annual cost: £1,225 + £2,112 + £700 = £4,037
• 5-year opex: 5 × £4,037 = £20,185
• 5-year total cost: £20,000 + £20,185 = £40,185
• Payback: N/A

4. Dual-Fuel (Diesel + Gas) retrofit

• Capex: £15,000
• Diesel displaced: 40% → 0.4 × 42,245 = 16,898 L
• Fuel saving (per L equivalent): £0.45 → 16,898 × 0.45 = £7,604/year
• Maintenance: £400/year
• Net annual saving: £7,604 − £400 = £7,204/year
• 5-year gross saving: 5 × £7,204 = £36,020
• 5-year net benefit (savings − capex): 36,020 − 15,000 = £21,020
• Payback: 15,000 / 7,204 = 2.08 yrs

5. Dedicated Gas (CNG / LNG / Biomethane) repower

• Incremental capex vs diesel: £30,000
• Fuel saving: 30% of diesel spend → 0.3 × £61,255 = £18,377/year
• Maintenance: £400/year
• Net annual saving: £18,377 − £400 = £17,977/year
• 5-year gross saving: 5 × £17,977 = £89,885
• 5-year net benefit: 89,885 − 30,000 = £59,885
• Payback: 30,000 / 17,977 = 1.67 yrs

6. BEV repower

• Capex / premium: £100,000
• Energy consumption: 1.1 kWh/km × 120,700 km = 132,770 kWh
• Electricity cost: 132,770 × £0.24 = £31,865/year
• Diesel avoided: £61,255/year
• Maintenance saving: £1,500/year
• Net annual saving: £61,255 − £31,865 + £1,500 = £30,890/year
• 5-year gross saving: 5 × £30,890 = £154,450
• 5-year net benefit: 154,450 − 100,000 = £54,450
• Payback: 100,000 / 30,890 = 3.24 yrs

7. Hydrogen repower

• Capex / premium: £175,000
• H₂ consumption: 10 kg/100 km → 120,700 / 100 × 10 = 12,070 kg/year
• Hydrogen cost: 12,070 × £15 = £181,050/year
• Diesel avoided: £61,255/year
• Net annual extra cost: £181,050 − 61,255 = £119,795/year
• 5-year extra operating cost: 5 × 119,795 = £598,975
• 5-year total cost: 200,000 + 598,975 = £798,975
• Payback: None at £15/kg H₂

Appendix F: Tailpipe emissions reductions

Table 5 sets out the Euro 4/5 to Euro 6 emissions savings where we see NO_x and PM savings.

Understanding Respondent A’s tailpipe emissions savings

To illustrate potential tailpipe emissions savings, we have calculated used the case of ‘Respondent A’ from the survey that we issued as part of this research. Respondent A has two groups of HGVs fit for retrofitting: 50 Euro 4 and 50 Euro 5. Each vehicle travels approximately 300 km per day. Daily savings calculations (in line with Table 5) are as follows:

Euro 4 trucks:

• NOx: 0.6 g/km × 300 km × 50 trucks = 9,000 g = 9 kg NOx
• PM: 0.03 g/km × 300 km × 50 trucks = 450 g PM

Euro 5 trucks:

• NOx: 0.5 g/km × 300 km × 50 trucks = 7,500 g = 7.5 kg NOx
• PM: 0.02 g/km × 300 km × 50 trucks = 300 g PM

Combined fleet savings:

• NOx: 9 + 7.5 = 16.5 kg/day
• PM: 450 + 300 = 750 g/day

To make these savings easier to understand, we compare them to a typical UK car, a Ford Focus 1.0L EcoBoost (Euro 6 petrol – see Ford Media Centre, 2016), which drives 20 km per day (based on findings of typical passenger car journey lengths from Transport Scotland, 2023).

Emissions per day per car:

• NOx: 0.03 g/km × 20 km = 0.6 g/day
• PM: 0.005 g/km × 20 km = 0.1 g/day

Respondent A’s fleet savings are equivalent to:

• NOx: 16,500 g ÷ 0.6 g = 27,500 cars
• PM: 750 g ÷ 0.1 g = 7,500 cars

This shows that retrofitting / upgrading a small HGV fleet to Euro 6 can have the same effect as removing thousands of cars from the road for a day in terms of NOx and PM emissions reduction.

If the 50 Euro 4 and 50 Euro 5 vehicles were repowered to electric or hydrogen, there would be 100% NOₓ and PM emissions saving. According to the ICCT (2016), the average Euro 4 NOₓ emissions are 9 g/km and PM emissions are 1.5 g/km, while Euro 5 averages 5 g/km for NOₓ and 0.5 g/km for PM. For Respondent A’s fleet, this equates to:

Euro 4 trucks:

• NOₓ: 9 g/km × 300 km × 50 trucks = 135,000 g = 135 kg / day
• PM: 1.5 g/km × 300 km × 50 trucks = 22,500 g = 22.5 kg / day

Euro 5 trucks:

• NOₓ: 5 g/km × 300 km × 50 trucks = 75,000 g = 75 kg / per day
• PM: 0.5 g/km × 300 km × 50 trucks = 7,500 g = 7.5 kg / per day

Total daily savings if repowered to electric/hydrogen:

• NOₓ: 135 kg + 75 kg = 210 kg / day
• PM: 22.5 kg + 7.5 kg = 30 kg / day

When comparing to the calculation against the car (see above), the reduction seen from full repower is much greater than just retrofitting:

• NOₓ: 210,000 g ÷ 0.6 g = 350,000 cars
• PM: 30,000 g ÷ 0.1 g = 300,000 cars

Streamlining tailpipe emissions savings – Focusing on DAF Rigids Over 10 Years Old

We have identified in Chapter 2 and Appendix A that rigids in particular have a lower Euro 6 compliancy rate across Scotland. According to 2025 SMMT data analysis, DAF (notably the DAF CF and LF) make up 36% of the rigid fleet. Understanding the share of DAF vehicles over 10 years old helps to show how emissions reduction can be targeted. We review those over 10 years old as these vehicles are not Euro 6 compliant and so offer the best emissions reduction potential in the interim. Focusing on popular models helps baseline and blueprint when considering battery-electric repowering too.

Based on SMMT data, 2,225 diesel rigid DAF HGVs (over 7.5t) are still Euro 5 or older. The SMMT data shows that there are 1,353 Euro 5 and 872 Euro 4 (or older). Unlike Respondent A, we cannot assume all vehicles travel 300km per day. However, in the ZETT’s 2022 Industry Overview and SWOT Analysis Report, the average daily mileage of rigid HGV is 280km in Scotland. We can use this data to baseline emissions savings similar to Respondent A:

Euro 4 trucks:

• NOₓ: 0.6 g / km × 280 km × 872 = 146,496 g = 146.5 kg / day
• PM: 0.03 g / km × 280 km × 872 = 7,325 g = 7.3 kg / day

Euro 5 trucks:

• NOₓ: 0.5 g/km × 280 km × 1353 = 189,420 g = 189.4 kg / day
• PM: 0.02 g/km × 280 km × 1353 = 7,577 g = 7.6 kg / day

Combined fleet savings:

• NOx: 146.5 + 189.4 = 335.9 kg / day
• PM: 7.3 + 7.6 = 14.9 kg / day

When we compare the emissions reductions to the Ford Focus 1.0L EcoBoost (Euro 6 petrol), which drives 20 km per day, we see a significant drop in emissions. The equivalence when converting all DAF rigid Euro 4/5s to Euro 6 equals:

• NOx: 335,900 g ÷ 0.6 g = 559,830 cars
• PM: 14,900g ÷ 0.1 g = 149,000 cars

National Baselining

Based on SMMT data, 9,274 diesel HGVs (over 7.5t) are Euro 5 or older: 5,249 Euro 4 or older and 4,025 Euro 5. As well as information on average distance travelled by rigids (280 km), the ZETT’s 2022 Industry Overview and SWOT Analysis Report also highlights average articulated HGV mileage at 400 km. Based on about 65% of Scotland’s HGV fleet being rigid, we can weight this to estimate daily average mileage of around 320 km for a typical HGV in Scotland. National level assumptions can then be made to estimate the emissions savings potential across the sector:

Euro 4 trucks (5,249 vehicles) – (note: reduction could be even greater as some of these vehicles may be older, Euro 3, Euro 2 etc.):

• NOx: 0.6 g/km × 320 km × 5,249 = 992 kg/day
• PM: 0.03 g/km × 320 km × 5,249 = 50 kg/day

Euro 5 trucks (4,025 vehicles):

• NOx: 0.5 g/km × 320 km × 4,025 = 640 kg/day
• PM: 0.02 g/km × 320 km × 4,025 = 26 kg/day

Appendix G: Stakeholder engagement

Two stakeholder workshops were conducted to gather insights from both public and private sector representatives. The first workshop involved 8 participants from governing bodies, not-for-profit organisations, and executive non-departmental public bodies, focusing on motivations for retrofit and repower and the role of public bodies in funding and policy levers. This was supplemented by 3 one-to-one follow-up interviews for deeper insight. The second workshop brought together 13 private sector participants, primarily from industry bodies representing key sectors within Scottish freight and logistics, to discuss practical challenges to decarbonisation and emissions reduction and to align industry perspectives with public sector findings. In total, 21 participants took part; 8 in Workshop 1 and 13 in workshop 2.

1. https://www.rha.uk.net/Portals/0/Membership/Annual%20Cost%20and%20Pay%20Surveys/Cost_Tables_2023.pdf?ver=2022-12-19-125925-587#:~:text=Typical%20miles%20per%20annum,different%20for%20your%20own%20fleet. ↑
   

2. Daf CF, DAF trucks ↑
   

3. https://www.webfleet.com/en_gb/webfleet/blog/how-much-diesel-does-a-truck-use-per-mile/#:~:text=Average%20diesel%20consumption%20per%20mile,consumes%20for%20the%20same%20distance. ↑
   

4. https://www.gov.uk/government/statistics/weekly-road-fuel-prices ↑
   

5. https://www.adblue-guide.com/buy-adblue-cheapest-price#:~:text=20%2Dlitre%20can%3A%20%C2%A32,VAT%20%2F%20litre ↑
   

6. https://fleetdecarbonisationtoolkit.energysavingtrust.org.uk/t/decarbonisation-strategy/total-cost-of-ownership/heavy-commercial-vehicles/ ↑
   

7. https://www.cenex.co.uk/app/uploads/2024/02/BETT-End-of-Trial-Dissemination-Report.pdf ↑
   

8. https://www.letstalkleasing.co.uk/news/hydrogen-car-fuelling-costs ↑
   

9. CNG fuels ↑
   

10. https://www.glasgow.gov.uk/article/3982/Glasgow-s-LEZ-Key-Information ↑
    

    
    

Carbon capture and storage (CCS) is a way of reducing emissions by capturing CO₂ produced by industrial activity or power generation, transporting it, then storing it deep underground.

As CCS projects develop in Scotland, public understanding and confidence will be key to their success. Nationally, awareness of CCS remains low and opinions are ambivalent. At a local level, concerns about safety, cost and environmental impacts can contribute to the failure of CCS projects. The Acorn project, which will store captured CO₂ beneath the North Sea, is Scotland’s most significant CCS development and highlights the importance of building trust with local communities and the wider public.

This report reviews the evidence on public perceptions of CCS, the factors that shape them, and the lessons for effective public engagement. It draws on published research and interviews with experts from academia, government, regulators, the third sector, and industry.

Key findings

• Public awareness of CCS is low and people tend to feel neutral, but opinions can change quickly as they learn more, or depending on the stage of a project.
• Many people see CCS as an unproven technology, increasing uncertainty and concern about how well it works.
• Safety is a key concern. People want reassurance that carbon CO₂ can be stored safely underground long-term, and many have safety concerns about the chemicals used during the capture process.
• People are concerned about costs and impacts, including higher energy bills, delays to cleaner alternatives, and disruption such as noise and traffic during construction.
• Trust is essential. Projects are more likely to gain public support when developers are open, honest and responsive, and when communities see clear local benefits.
• Local context and the type of project matters. Previous experiences with industry, the history of an area, and attitudes towards other energy projects all influence how CCS is perceived.
• Early, honest and ongoing engagement works best. Involving communities in decisions is more effective than simply providing information or reassurance.

Lessons learned

• Understand local views from the start, especially in communities likely to be affected by CCS projects, such as those near Acorn.
• Don’t assume public support. Offshore storage, industrial heritage or support for one project does not guarantee support for future CCS developments.
• Local context matters. Understanding local priorities and concerns is key to effective engagement. Previous experiences with industry and economic change may also influence how communities view new projects.
• Start engagement early and keep it going. Communities should have genuine opportunities to ask questions, raise concerns and help shape decisions throughout a project’s lifetime.
• Build trust through action and honesty. Deliver promised benefits, monitor project performance and share results openly. Explain potential risks clearly, how they will be managed, and what will happen if problems arise.
• CCS should be part of a wider conversation about Scotland’s journey to net zero. Raising awareness nationally can help provide context before local discussions take place.

For further information, please read the full report.

If you require the report or annex in an alternative format, such as a Word document, please contact info@climatexchange.org.uk or 0131 651 4783.

Research completed January 2026

DOI: https://doi.org/10.7488/era/7241

Executive summary

Aims and methods

Carbon capture and storage (CCS) is a way of reducing emissions by capturing the CO₂ produced by power generation or industrial activity, transporting it and permanently storing it deep underground. As CCS projects advance, evidence is accumulating on the importance of understanding public perceptions. At national level in the UK, public awareness is still low and opinions are ambivalent. This creates both opportunities for dialogue and a risk that public attitudes are malleable to misinformation. At a local level, unaddressed public concerns such as safety, and a general lack of public engagement can contribute to the failure of CCS projects.

Public perceptions are highly influenced by national and local contexts. In the Scottish context, the Acorn project is the most significant CCS development. It will capture emissions from major industrial sites and permanently store them deep beneath the North Sea seabed. As the Acorn project in Scotland progresses and the country advances CCS and carbon removals as part of its Climate Change Plan, it will be important to consider public perceptions. The aim of this research was to review existing evidence on public perceptions of CCS, the factors which shape it, and lessons for public engagement with local communities and the wider public. We conducted a literature review and interviewed 20 expert stakeholders from academia, governments, regulatory authorities, third sector, and industry (project developers and emitters). Stakeholders were selected based on their experience with CCS projects, in the UK and internationally. The literature reviewed included public perception surveys but a survey to assess current public perception in Scotland was outside of the scope of this project.

Findings

We found that the public generally knows little about CCS and is mostly neutral towards it. However, perceptions can change quickly and vary depending on the context in question and across the CCS value chain. There is a persistent belief that CCS is immature or unproven at scale, which can exacerbate public concerns. Safety is a key concern, particularly at local level. This is most prominently linked to the long-term integrity of storage sites, and can be amplified by a lack of understanding of the subsurface. Public concerns may also manifest around capture sites and include potential health risks from the use of amines in carbon capture units. Other important concerns include fossil lock-in (that CCS will be used to prolong the life of fossil energy production), cost (additional consumer costs imposed by CCS, trade-off between investing in CCS and in alternatives), and disruption (e.g., noise and congestion during construction, ongoing impacts during operation).

A “social licence to operate” (SLO) refers to the approval or acceptance granted by the public beyond formal consent. Addressing the public’s concerns in a meaningful and transparent way is the first step in obtaining a SLO for CCS. Trust is one of the most vital precursors to an SLO and once lost can be difficult to regain. For example, following the failure of a CCS project in the Netherlands widespread scepticism around CCS continued in the country, with its first commercial-scale project only launched 10 years later. The equitable distribution of benefits to local communities is another essential precursor to an SLO. At the same time, compensation can be perceived as bribery, particularly if it is purely financial. Public perceptions of other infrastructure projects such as fracking will also influence whether an SLO is granted or not.

A range of factors affect how the public ultimately perceives CCS, and whether an SLO can be granted. The specific project and technology are also factors. Offshore CO₂ storage is slightly preferred but depends significantly on the relationship communities have with the sea. Capturing industrial and biogenic emissions is perceived as slightly better than those from fossil-based energy production. Imported CO₂ is generally less accepted for capture than CO₂ generated domestically. The historical context of a community is another key factor, including industrial heritage, previous experience with transition management, legacy incidents, and prior interactions with CCS actors.

The quality of public engagement itself is another key factor in how CCS will be perceived. Across the evidence base, early, tailored, and sustained communication from credible messengers is highlighted as vital for public confidence in CCS, both at national and project level. Although there is some disagreement on the ultimate impact of increased public awareness, it was found that at national level CCS needs to be visible in the debate around climate change mitigation and Just Transition. At a local level, two-way communication which treats communities as partners who can contribute to decision-making, rather than passive audiences, is the most effective. CCS communicators need to be honest about all aspects of their projects, including risks, and remain visible across the project lifecycle.

Lessons learned

Understanding current public opinion on CCS in Scotland, particularly in communities near the Acorn project, is an important precursor to successful public engagement and long-term trust. Offshore storage should not be assumed to mean acceptance of CCS, given the existing importance and use of the sea by local communities. A CCS SLO is reliant on public confidence that project risks will be managed, and is not fixed in time. As such, current acceptance of the Acorn project does not mean acceptance of future projects or new capture sites connecting to the SCO₂T pipeline. The SCO₂T pipeline is the onshore pipeline network that links industrial centres directly to the Acorn project. The prominence and importance of industry in local communities, while beneficial in ensuring familiarity with industrial development, also does not automatically mean acceptance of CCS. If past experiences with industry are negative, CCS may by association have a negative connotation. This also applies to experience with transition management and the perception of “unjust transitions”, such as Scotland’s coal pit closures in the 1970s.

Public engagement is very context-specific. However, there are several general lessons learned. More frequent, visible debate around CCS, as part of a broader discussion on Scotland’s climate targets, will be an important foundation for engagement. The subsequent local engagement needs to be preceded by a deep understanding of the audience (“social site characterisation”) and appropriately resourced for early and ongoing two-way engagement. Following through on promised benefits and providing a clear plan for monitoring and disclosing project performance will also be important for trust-building and ultimate acceptance. Taking public concerns seriously, even if they are misinformed, will be key. Evidence from Scotland itself shows that the public does not want to be endlessly reassured on CCS, but rather honestly told how risks will be mitigated if they materialise.

Abbreviations table

Introduction

Background

Carbon capture and storage (CCS) has the potential to be a key tool for decarbonising hard-to-abate industrial sectors and enabling negative emissions (International Energy Agency, 2022). Broadly, it involves a chain of technologies to capture carbon dioxide (CO₂) from emission sources (e.g., an industrial manufacturing plant) or from the atmosphere, transport it, and inject it deep under the subsurface for permanent geological storage. CO₂ can be transported through pipelines, as well as in trucks, trains, barges, or ships. It can be stored onshore or offshore (below the seabed). In either case storage happens at a minimum depth of 800m below the surface.

CCS has been deployed commercially since the 1970s, primarily to enhance oil and gas recovery (IEAGHG, no date). As a climate change mitigation tool, project development has only recently accelerated. The European Union (EU) sees CCS as a key component in its 2050 pathway to net zero (European Commission, 2024). It recently obligated oil and gas suppliers to prepare 50 million tonnes (Mt) of CO₂ storage capacity on its territory by 2030. The United Kingdom (UK) is advanced in CCS development, having awarded government subsidies to four projects, including the Acorn project in Scotland. These and other planned CCS projects in the UK all involve capturing CO₂ from industrial sources and storing it under the seabed: the HyNet project in the Irish Sea and the East Coast Cluster, Viking, Bacton, and Acorn projects in the North Sea. The Scottish North Sea, where Acorn will develop its CO₂ storage, is estimated to hold the majority of the UK’s North Sea storage potential.

CCS is a relatively new technology in the context of climate change mitigation and has been less visible in the public debate compared to measures such as renewable energy and electrification. Public awareness of CCS is generally low, and its social acceptability is often assumed in studies estimating its deployment potential (Parliamentary Office of Science and Technology, 2017). However, a growing body of research and practical experience from frontrunner projects cautions against such assumptions. There have been challenges with social acceptability in projecting the rollout and impact of CCS, and in planning actual CCS projects. One of the most widely cited examples is the Barendrecht project in the Netherlands. This project was abandoned during the development stage in 2012, partially due to concerns around the local impact of onshore CO₂ storage and a lack of public engagement to address these concerns. Public confidence took a long time to recover, onshore CO₂ storage was banned, and the Netherlands is only now constructing its first commercial-scale CCS project (Carbon Gap, 2026). Other examples from Germany and the United States reinforce the potential impact of public resistance to CCS (Clean Air Taskforce, 2024; Oltra et al., 2012; The Copenhagen Post, 2009).

The experience of public resistance offers lessons for future project development. For example, in the wake of the Barendrecht project, the Dutch ROAD project prioritised local stakeholder engagement and intensive public communications (Lockwood, 2017). However, there is still room for improvement. In many cases, public engagement continues to be top-down and one-sided, which risks undermining the credibility of CCS and public trust in the project developers and national governments promoting it (Clean Air Task Force and Lockwood, 2022). The fact that CCS is not well-known and involves subsurface storage which is invisible to the public, creates a basis for concern, particularly around storage safety and environmental impact (Lambert et al., 2025). In addition, despite being most effective as a climate solution for heavy industry (E3G, 2023), CCS can also be applied to fossil energy production, including coal and gas power. This has created a concern around CCS being used to prolong the use of fossil fuels, known as “fossil lock-in”. Finally, it has an association with the oil and gas industry as most CCS project developers in Europe are oil and gas companies, given their ownership of suitable storage sites and transferable skills. Perceptions of the oil and gas industry may therefore shape public response to CCS projects.

Scotland is in the early stages of CCS deployment. The country has no dedicated strategy on CCS but highlights it as a key opportunity in its Green Industrial Strategy (Scottish Government, 2024). In Scotland’s Climate Change Plan, carbon capture, utilisation, and storage (CCUS) is seen to have a key role in industrial decarbonisation (Scottish Government, 2025a). The broader-termed Negative Emissions Technologies (NETs) are also cited as key measures. This encompasses CCS where carbon is captured from the atmosphere or the combustion of biomass. According to Scotland’s draft Climate Change Plan (CCP), over the 2036-2040 period NETs would be avoiding 12.2 Mt of CO₂ emissions (Scottish Government, 2025b).

At the time of writing, Scotland’s only Government backed commercial-scale CCS project, the Acorn project, is still in the planning stage, with storage licenses granted but no infrastructure yet built. The project would involve CO₂ capture from several emitters, including a gas-fired power plant at Peterhead and industrial facilities in North-Eastern Scotland and the Central Belt. The CO₂ would be transported through a repurposed gas pipeline (the SCO₂T pipeline) to an export terminal at St Fergus, then piped offshore and stored in the Scottish North Sea. Scotland focuses on offshore CO₂ storage in the North Sea, with Acorn’s CO₂ storage site located 100 km off the coast of Aberdeenshire (The Acorn Project, 2026). Some near-shore basins have recently been explored as potential storage sites (Cavanagh et al., 2024). The Scottish North Sea is a vast CO₂ storage resource, estimated at around 50 giga-tonnes (Crown Estate Scotland, no date). Given this, the potential for Scotland to become a CO₂ storage hub which imports emissions from abroad for storage has begun to permeate the public discussion (Optimat, 2025).

Beyond its potential contribution to climate change mitigation, CCS has been highlighted as a tool for safeguarding heavy industry, preventing economic downturn and job loss in industry-dependent areas. It has also been outlined as a measure to enable the Just Transition of the oil and gas sector. Workers could be reskilled to operate CO₂ storage facilities as hydrocarbon production is phased out in line with climate goals (Scottish Carbon Capture and Storage, 2019). Both these aspects are pertinent in the Scottish context, given its strong oil and gas employment base and its industrial heritage. This is particularly relevant in communities surrounding the Acorn project’s planned capture sites and export terminal in Aberdeenshire. At the same time, Scotland has significant maritime skills which can be leveraged for the development of CCS, but there are also potential conflicts of sea use with shipping, fishing, and offshore wind energy.

Research aims and methodology

A robust understanding of how the public perceives CCS and how they can be meaningfully engaged on the topic is an important component for project deployment. The broad aim of this research was to review the existing evidence base on public perception and engagement, and extract lessons learned for Scotland’s CCS project pipeline. To do this, we collected evidence from the literature and stakeholders to answer the following questions:

• What evidence do we have on how the public perceives CCS?
• What are the main public concerns around CCS and precursors to its acceptability?
• What influence do technology and social factors have on public response?
• What are the opportunities, challenges, and risks of public engagement with CCS?
• How does the quality of communication affect public perception and response?
• What lessons can be learned from CCS public engagement in other jurisdictions?

We reviewed international literature on CCS perceptions and engagement. In total, we reviewed 58 academic articles and 69 grey literature items primarily reports from think tanks such as Clean Air Task Force, and project reports such as the Decatur project in the United States. The literature reviewed included public perception surveys but a survey to assess current public perception in Scotland was outside of the scope of this project. See ‎Appendix A for more detail on our methodology.

We also interviewed stakeholders from academia, civil society, government, and project developers and emitters from industry in the UK or abroad. The interviews were based on the same research questions outlined above and tailored to each stakeholder. An aspect of particular focus in our stakeholder consultations was lessons on CCS perceptions and engagement from other jurisdictions, including England, Norway, Denmark, the Netherlands and France. We engaged a total of 20 stakeholders through virtual interviews or questionnaires.

This report presents the findings of our evidence review. It is structured into three main chapters, covering findings on public perceptions of CCS (Chapter 4), factors influencing public response (Chapter 5), and public engagement around CCS (Chapter 6). We close each chapter by outlining key lessons learned relevant to Scotland from the presented findings. The final section of this report summarises the evidence review findings and these key lessons learned, focusing on potential next steps for public engagement about CCS in Scotland.

Public perceptions of CCS

General public perceptions of CCS

The evidence review consistently indicates low levels of awareness of CCS in various countries (Anders, Liebe and Meyerhoff, 2024). This is similar in the UK, where polled publics display overall low public awareness and high ambivalence (Clean Air Task Force, 2023b). Some sources indicate there is slightly higher awareness in Scotland – 24% stating that they know at least “a fair amount” about CCS, compared to 20% at UK level (Department for Energy Security and Net Zero, 2024a). Stakeholders highlight a persistent public belief that CCS technologies are immature or unproven at scale.

More generally, public perceptions of CCS are affected by a range of factors. Higher awareness can be a precursor to support and reduce perceived safety risks, but in some cases can generate negative perceptions (Department for Energy Security and Net Zero, 2024). Prior research using focus groups in the UK has found that people with lower levels of knowledge around CCS often rely on comparisons to other subsurface or industrial technologies, most commonly fracking (Mabon and Littlecott, 2016). Therefore, historic interactions with technology could be critical determinants of support for CCS projects.

Positive perceptions of CCS in the UK cluster around industrial employment, regional economic benefits, and climate necessity (Department for Energy Security and Net Zero, 2024b). In 2023, a survey of 363 Scottish participants showed more awareness of CCS than comparable regions in the UK (Wales and Northern Ireland), with higher shares both supporting and opposing it. By 2025, support had fallen slightly below these comparable regions (41%, compared to 43% and 45%, respectively), and the share of those opposing it had increased from 8% to 13% (Department for Energy Security and Net Zero, 2023; Department for Energy Security and Net Zero, 2025). This increase was driven by a rise in the share of those strongly opposing CCS. The increase in opposition mirrors the rest of the UK but is stronger in Scotland. Beyond these surveys, recent in-depth evidence on Scottish opinions of CCS is sparse. In a small focus group in Scotland, Brunsting et al. (2013) found positive attitudes towards CCS, including seeing CCS as a pathway to preserve existing jobs in industrial areas, and also highlighting the potential the benefits of being a global CCS leader.

The literature shows that when CCS is presented as an isolated technical solution, public reactions tend to be cautious or negative. However, several studies show that when CCS is presented as essential for climate mitigation and part of a broader low-carbon transition, public opinion becomes more favourable (Gough and Mander, 2022; Shah et al., 2022). Support is further impacted by perceived necessity. In a UK polling study, 45% of respondents stated that CCS should be used only if it is the cheapest decarbonisation option, and 28% thought it should be used only if it is the only available option (Clean Air Task Force, 2023b).

A raft of other factors affects public understanding and support of CCS. They include proximity to sites, which can cause both more positive and more negative attitudes (Große-Kreul et al., 2024; Sovacool et al., 2025). Trust in government and industry is a widely-cited key factor (Clean Air Task Force and Lockwood, 2022; Anders et al., 2024). Experience with past projects is also a significant factor. Spain’s failed CASTOR CCS project, which generated seismic activity due to insufficient monitoring has caused local public opinion to turn negative (CCUS SET-Plan, 2024). In contrast, the Pycasso project in France had positive results due to early-stage public consultation and engagement addressing local concerns (Zero Emissions Platform, 2024). Two stakeholders also raised the role of the media in shaping public understanding of CCS. Media outlets and their associated storylines can play an influential role in shaping public discourse around trust, technology scepticism and awareness (Swain, 2025).

Public perception across the value chain and across levels of discussion

Public perception of CCS can also vary across the value chain. This is because the perception of risks and benefits changes depending on whether capture, transport, or storage is being proposed. It can also be varied because CCS value chains are long and involve different project developers interacting with different communities (Zero Emissions Platform, 2024). Capture is generally viewed as more beneficial, whereas storage raises safety concerns (CCUS SET-Plan, 2024; Clean Air Task Force and Gładysz, 2025).

Limited research is available on the differences in public perceptions between CCS at a socio-political level (e.g., CCS as part of a broader discussion on Scotland’s net zero targets) and at a local level (e.g., a specific CCS project being debated). However, it is expected that a concrete CCS project will generate different perceptions of risks, challenges, and opportunities than a theoretical discussion about CCS technologies (Miu et al., 2023). Stakeholders agreed that further research was needed on this topic. Some stakeholders maintain that practical concerns, particularly those around storage safety, are likely to be at the local/project level rather than the national/socio-political level. On the other hand, broader concerns such as the risk that CCS props up an unsustainable fossil fuel industry, may be more prevalent at national level.

Examples of public resistance

Public resistance is a persistent concern for CCS projects. Although 77 projects are live today (Global CCS Institute, 2025), resistance has stopped or delayed several projects. In many cases, public confidence in CCS technologies takes a long time to recover following these instances of public resistance. It is important to recognise that a lack of active protest does not indicate approval to develop CCS in any area and under any circumstance.

A widely quoted example of public resistance is the Barendrecht project in the Netherlands. This project provides key insights into why CCS projects may fail. Notably, engagement processes were not seen as open, and residents saw the project developer, Shell, and the national government as acting defensively about any concerns raised (Oltra et al., 2012). The benefits of the project for local people were not clearly articulated (Kuijper, 2011). Campaign groups in collaboration with local politicians mobilised to share anti-CCS messages which had a high level of public penetration (Terwel, ter Mors and Daamen, 2012). Similar challenges emerged in the failed Beeskow project in Germany with residents believing engagement was tokenistic and biased to enable the project to move forward. Failure to address major health concerns around carbon leakage into aquifers exacerbated public concerns and opposition (Oltra et al., 2012).

Main public concerns

Safety

The literature on CCS, as well as most stakeholders interviewed in this study, agree that long-term safety is one of the main public concerns around CCS. It is primarily related to CO2 storage and to some extent transport, although CO2 capture can also raise safety concerns (see Section 5.1). Safety concerns include leakage risk, induced seismicity, groundwater contamination, and monitoring. There is strong evidence that acceptance improves where project designs clearly demonstrate robust governance and contingency planning (Stavrianakis, Nielsen and Morrison, 2023; Zero Emissions Platform, 2024; Global CCS Institute, 2025).

Safety concerns are typically more prominent at the local level, and can be driven by uncertainty or lack of trust in the mitigation of leakage. Stakeholders noted that safety concerns can also be affected by a fear of the unknown, due to a lack of familiarity with subsurface technology. Furthermore, safety concerns are not isolated just to the area of where a project is deployed: people will not support a project if the safety risks are moved elsewhere (Witte, 2021).

Stakeholders drew a clear line between unaddressed safety concerns and the fate of some CCS projects, including Barendrecht. However, many of them maintain that safety-related risks are elevated because the risks are unfamiliar, and publics with low awareness are susceptible to arguments from those opposing CCS. For example, some publics draw analogies to historic incidents such as the Lake Nyos gas release, even though these are not truly comparable (Baxter, Kapila and Mfonfu, 1989). In the US, despite intensive and early public engagement in the Illinois Decatur project, when the stored CO₂ migrated from its original subsurface position, it sparked public outrage. This happened even though the CO₂ migration did not affect the local groundwater – a major public concern in the US (Clean Air Taskforce, 2024). The state of Illinois subsequently banned CO₂ storage in 14 counties.

Safety concerns are present in the UK (Department for Energy Security and Net Zero, 2024a), and go back to the White Rose and Peterhead projects in the 2010s (White Rose, 2016; Peterhead CCS Project, 2015). Even earlier, Scottish CCS (2010) had identified earthquakes, landslides and water contamination as potential public concerns in Scotland. Project developers we consulted told us that safety is always under consideration as a public concern they may need to respond to, even when not yet manifested by the public (HyNet North West, 2020).

Fossil lock-in

Among climate‑concerned publics and civil society groups, concerns can emerge around CCS as a moral hazard that allows governments and companies to defer more transformative change and enable further dependence on fossil fuels (Whitmarsh, Xenias and Jones, 2019; Merk, 2022; CCUS SET-Plan, 2024). This is termed “fossil lock-in”, and stakeholders note that those concerned with it may be more informed on CCS than the broader public. This may be more prominent at a socio-political level rather than as a pressing issue for local communities. However, this is not easily generalisable.

Fossil lock-in can also fuel anti-CCS NGO sentiments related to whether the technology is a valid use of taxpayer money, as noted by some stakeholders. They also note that there is a perception that CCS is a solution lobbied and funded by oil and gas industry, with likely vested interests to continue oil and gas production. Some stakeholders highlighted that these are valid arguments, and can significantly affect perceptions, particularly when NGO voices are highly trusted.

Cost and disruption

The concern that CCS is an extremely costly solution is an important barrier to public acceptance, including in the UK and Scotland (Department for Energy Security and Net Zero, 2024b). Public cost concerns can be around the additional costs for consumers due to CCS. For example, increased energy costs due to added cost of carbon capture on power plants, or that investment in CCS will reduce investment in other low carbon solutions (Gough and Mander, 2022; Tardin-Coelho, Bharadwaj and Ashworth, 2025; Clean Air Task Force and Gładysz, 2025). Stakeholders echoed these concerns, relating both to the viability of CCS and the belief that the taxpayer should not be the one to foot the bill for industry’s “clean-up”. The latter was highlighted as an ethical concern that could be used as a key argument by anti-CCS NGO groups. Views on costs are heterogenous across different demographics. Waring and Longo (2025)find that higher income, female gender, older age, and higher levels of environmental concern are linked to higher willingness to pay for CCS.

Multiple stakeholders point to the disruption caused by CCS as a public concern. They highlight that if a project is local to a community then construction noise, traffic and congestion effects, or visual impact from large capture units could lead to local opposition. One project developer estimated that up to 80% of the questions and feedback they had received related to outright opposition to CCS developments due to the locally disruptive effects of construction or traffic, or to concerns around this level of this disruption, e.g. how long local roads would close for. The UK government’s survey on public opinion of CCS has indicated a perception of CCS as locally disruptive and too expensive as one of the main drivers of opposition (Department for Energy Security and Net Zero, 2024b). A decline in quality of life or in property values may also raise public concern (Zero Emissions Platform, 2024; Clean Air Task Force and Gładysz, 2025; ACCESS Network, 2024).

Other concerns

Safety, fossil lock-in, and costs are widely-cited public concerns around CCS, but it is worth highlighting several less frequently mentioned ones including:

• Perceived low effectiveness in tackling climate change, highlighted in UK literature (Department for Energy Security and Net Zero, 2024a) (Traverse, 2021) and our stakeholder consultations. This includes perceived low investment efficiency compared to alternatives, exacerbated by the perception that the technology is unproven at scale.
• Specific sectoral impacts e.g., impacts on agriculture and tourism (Zero Emissions Platform, 2024; Clean Air Taskforce, 2024). Land use and marine life are concerns in the UK (UK Government, 2025). In Scotland, the impact on fisheries and wildlife was flagged as a potential concern in the past (Peterhead CCS Project, 2015).

Main precursors to a Social License to Operate

A “social licence to operate” (SLO) refers to the level of acceptance or approval granted by local communities and wider publics to a project or sector, beyond formal consent. Addressing public concerns is a necessary precursor to obtaining an SLO, but it is also shaped by trust, awareness, and how the benefits of CCS are distributed.

A CCS SLO is not just generated at a local level, but rather is shaped by regional, national and international perspectives on CCS (Witte, 2021). Ultimately, it is dependent on whether CCS seems consistent with a credible national net zero strategy, particularly for storage (Gough and Mander, 2022). Several stakeholders also suggest that maintaining an SLO is a multi-actor process, involving project developers, local authorities, and national government, with flexible roles to match the local context of a project.

It is also important to note that an SLO is not fixed and can be “revoked” by newly emerging concerns. Managing this risk involves maintaining trust and transparent engagement, as well as a good safety record, across the project’s lifetime (Clean Air Task Force and Gładysz, 2025). It should also not be assumed that acceptance of one development will translate into acceptance of another, or of expanding the current one. The SLO also depends on the scale at which benefits and risks accrue. For example, a proposed coal-fired power plant with CCS in Ayr, Scotland, faced significant opposition due to fears around local pollution risks, despite the climate benefits (CCUS Projects Network, Parmiter and Bell, 2020). Some international sources suggest the differentiation of local-scale SLOs, which include demonstrating safety and providing proof-of-concept, and wider public engagement, which should focus on connecting with the bigger picture (Greenberg, 2020).

Trust in CCS actors

Trust in industry and government is one of the most important precursors of CCS SLO (Terwel et al., 2009; Clean Air Task Force and Lockwood, 2022). When it is low, acceptance of CCS is low, higher local risks are perceived (Gough and Mander, 2022). Critically, the provision of additional information does not increase levels of support (Terwel et al., 2009).

Trust is built through partnership, transparency, and procedural justice ((Nielsen, Stavrianakis and Morrison, 2022; Tardin-Coelho, Bharadwaj and Ashworth, 2025). The public must feel that their concerns are being taken on board, that they will not be bypassed in decision-making, that their input will have real effect, and that the actors they trust can influence decision-making (CCUS SET-Plan, 2024; Miu et al., 2023). If communities are treated as partners rather than passive audiences, positive perceptions of CCS can increase (Clean Air Task Force and Gładysz, 2025; Bellona Europa, 2023; Traverse, 2021).

Procedural injustice, with communities feeling like concerns are ignored and projects are imposed against local wishes, has been an important factor in the failure of some CCS projects, most prominently Barendrecht (ACCESS Network, 2024). Trust is easily lost when people feel excluded or misled (Gough, Cunningham and Mander, 2018), or when they perceive that information is being withheld, that concerns are not being taken seriously, and/or that risks are not thoroughly assessed (Scottish CCS, 2010). Once lost, trust from local communities can be difficult to regain (Miu et al., 2023) even if using high-quality information and engagement. Older research in Scotland shows that such engagement can be viewed as biased propaganda if it supports the standpoint of a project developer in which trust has been lost (Scottish CCS, 2010).

Process transparency is also important. A perception of vested commercial interests, especially if projects are publicly funded, is a further barrier to trust (CCUS Projects Network, Parmiter and Bell, 2020). The UK CCUS Public Dialogue highlights that the public wants contracts to be transparently awarded to “ethical” companies with good track record (Traverse, 2021). One stakeholder noted that industry-government cooperation is good for trust-building, preventing CCS being perceived as an industry-led profit-making tool.

Awareness and experience

Evidence around the influence of awareness on CCS perceptions is mixed (see Section 5.2). Stakeholders suggested that trust can also be garnered through general exposure to the term “CCS”. They raised that embedding CCS in the wider discourse is a precursor for local acceptance. Integrating education on the subsoil into the national curriculum could support an increased understanding of technology processes and risks, as well as potentially increasing skills and knowledge for future generations of employees in the CCS industry.

Stakeholders stressed the importance of raising awareness of CCS within a “toolkit” of other solutions without overplaying it, including showing that CCS can be applied immediately, compared to longer-term solutions. Insight from an interview with a Danish stakeholder shows that Denmark’s cross-party agreement on CCS was key to securing an SLO, as was ensuring that it is applied in a targeted way and accompanied by investments in other solutions, e.g., renewables.

The CCS SLO is also influenced by experience with other infrastructure projects seen to be similar to CCS, as well as general past experiences with industry (Linzenich, Arning and Ziefle, 2021). Stakeholders corroborated this, raising that local history is particularly important for an SLO, specifically prior local experiences with industry. Section 5.2 provides detail on how local history and experiences might affect public perception of CCS.

Compensation and benefits distribution

SLO will also depend on the provision of meaningful benefits, clearly articulated to communities impacted by CCS. The role of compensation and benefits redistribution is still an emerging research area, and there is no centrally agreed way to provide compensation.

Broadly, the literature shows that communities are more likely to support projects when there is appropriate compensation for the impacts in the area (Boomsma et al., 2020; Anders, Liebe and Meyerhoff, 2024). However, in some communities, particularly historically disenfranchised ones, financial compensation can be perceived as community bribery especially if there is pre-existing distrust (Miu et al., 2023). Most stakeholders agreed and noted the risk of the public perceiving they were being “paid off”, as this would suggest that CCS is a bad thing. Therefore, some communities may need financial compensation to be coupled with a long-term trust-building process (Boomsma et al., 2020).

CCS projects must have a coherent narrative around the benefits enabled by CCS, which go beyond compliance or profit-making (Zero Emissions Platform, 2024). Benefits should be balanced with project risks and tailored to relevant local conditions, creating local value for money (NORSAR et al., 2024). This can be through direct financial benefits, e.g., Danish ringfencing of local taxes for community funds, or indirect, through the provision of employment or other socio-economic or environmental benefits. Project developers can consider the remediation of existing problems to improve acceptance, for example removal of obsolete infrastructure (CCUS Projects Network; Parmiter and Bell, 2020).

In a Just Transition context, the social benefits of CCS, including industrial revival, employment and reskilling, are pertinent (Global CCS Institute, 2025). Jobs are consistently highlighted as a key benefit to be returned to local communities through creation of new jobs or safeguarding existing (Zero Emissions Platform, 2024; Department for Energy Security & Net Zero, 2024; Traverse, 2021). Some stakeholders noted examples of US upskilling programmes to enable local communities to work on the CCS project. The communication of job-related benefits should transparently indicate which of these will be temporary or permanent, and which will be local or further afield.

Other perceived benefits of CCS in the UK may include technological leadership and redefining regional identities (Department for Energy Security and Net Zero, 2024; Traverse, 2021). Stakeholders also note benefits to the local environment as potentially relevant in the UK. Early dialogue with local populations may indicate the most relevant benefits, with the understanding that the benefits desired by local communities may be biased towards short-term benefits (CCUS SET-Plan, 2024; Clean Air Task Force and Gładysz, 2025). As early as 2015, the Peterhead public engagement strategy suggested co-creating benefits with local communities (Peterhead CCS Project, 2015).

Finally, CCS benefits should be distributed justly (Clean Air Task Force and Gładysz, 2025; Sovacool et al., 2025). This is pertinent to long CCS value chains, which can span multiple communities, with benefits accruing at certain points along the value chain which may not reflect proximity to project risks. Stakeholders noted that employment is a contributing factor to positive perceptions, but only if jobs are marketed as available for the local community, rather than prioritising or promoting out-of-region talent.

There are some concrete examples of the role of benefits. For example, the mayor of Jurançon in southern France became supportive of the Total-Lacq CCS project after Total agreed to give €1.5M for environmental and social benefits (CCUS Projects Network, Parmiter and Bell, 2020). In Port Talbot, residents have expressed cautious support for CCUS, conditioned by investments in areas in need of regeneration (Sovacool et al., 2025).

Key lessons for Scotland

Like in other countries, Scotland’s attitudes towards CCS remain uninformed and ambivalent, in part due to a lack of public discourse. This ambivalence is a potential opportunity to create informed dialogue, as well as a risk given the malleability of attitudes to anti-CCS narratives. Understanding public perceptions is a precursor to developing CCS projects. One Danish stakeholder highlighted that even early-stage prospecting phases involve significant operations, and as such communities must be deeply understood even in the earliest stages of the project. Questions from the public will become more specific if projects progress and more companies are granted storage licenses, as would be in line with Scotland’s ambition to build a CO₂ storage hub in the Scottish North Sea. Key public concerns to address in the early stages are safety and environmental impact around CO₂ storage and transport (including offshore operations), fossil lock-in, and disruption.

There is near universal agreement that public concerns and SLO will vary significantly depending on the context, and public support will be shaped by various factors (see Chapter 5). This further reinforces that an understanding of local perceptions, preferences, and concerns in Scotland will be required to establish coherent narratives around CCS. Although strong climate change and net zero narratives will play a role in strengthening the national debate on CCS, economic and Just Transition benefits also will be key to the SLO for Scottish CCS projects. As one stakeholder highlighted, some Scottish communities have a very real lived experience of a Just Transition narrative and are inherently more interested in knowing how not to repeat the mistakes of the past in terms of transition management. The distribution of economic and environmental benefits to affected communities will be key, and any compensation mechanism may run the risk of being perceived as bribery.

Factors influencing public response to CCS

Chapter 4 has already introduced some of the factors affecting public perceptions of CCS. In this chapter, we review in more detail how these factors influence public perceptions, both in terms of concerns around CCS and the precursors to its SLO, based on a review of the literature and consultation with stakeholders.

Technology and design choices

Evidence is varied around how the public responds to different CCS technologies and project designs. Some sources suggest that the primary driver will be the perceived risks and benefits, which can indirectly be affected by technology and design specificities.

A frequently debated but still underexplored determinant of CCS perception is whether CO₂ storage is onshore or offshore (Boomsma et al., 2020). As highlighted in Section 4.1.1, CO₂ storage generally raises safety concerns. A certain level of risk is perceived regardless, and perceptions are context-specific. However, generally offshore projects have been more readily accepted; a recent Danish case study emphasised this by highlighting a greater willingness to pay for offshore storage (Kim and Ladenburg, 2024; Zuch, 2025). “Not-In-My-Backyard” (NIMBY) attitudes are regularly cited in the grey literature (NORSAR et al., 2024), although some academic literature finds that stronger support for CCS is often observed amongst local communities than distant ones (Whitmarsh, Xenias and Jones, 2019).

Although generally more acceptable, offshore storage can be opposed if it is perceived to negatively impact coastal communities and livelihoods (CCUS Projects Network, Parmiter and Bell, 2020). Stakeholders corroborated this. If a community depends on the sea for its economy, public resistance may be more likely. The notion of compensation also becomes more nuanced with offshore sites, where it is more challenging to identify impacted communities (Boomsma et al., 2020).

Project experience shared by stakeholders shows similar variation. For example, offshore CO₂ storage in Denmark has faced little opposition, but CCS has been more negatively framed in the media since the launch of onshore storage sites. In the Netherlands, the 2012 ROAD project faced less negative attention than Barendrecht, attributed in part to its offshore storage plans. A decade down the line, the Dutch Porthos project, also involving offshore storage, has higher levels of acceptance, although public engagement was also much improved following Barendrecht (CCUS SET-Plan, 2024).

There is limited research on how the type of CO₂ transport influences public response, although it is also linked to safety and disruption concerns (see Sections 4.2.1 and 4.2.3). Some sources suggest a preference for barge, truck, or tank-based CO₂ transport over pipelines (Bellona Foundation, 2022). Others find the opposite. They postulate that this is due to familiarity with pipelines, and a perception of disruption caused by traffic from road transport (von Rothkirch and Ejderyan, 2021; Große-Kreul et al., 2024; Stavrianakis, Nielsen and Morrison, 2023). Additionally, CO₂ pipelines can be long and span multiple communities (see Section 4.3.3). As such, the distribution of pipeline benefits needs to be addressed, as communities which are disrupted by pipeline development will likely not receive the opportunities CCS presents (von Rothkirch and Ejderyan, 2021). This could be important for Scotland, given the planned use of onshore pipelines in the Acorn project.

The perceived risks of pipelines can also be proactively managed. The Dutch Porthos project, where the onshore pipeline ran near a village, added a safeguard to the project design specifically to quell public safety concerns around mitigating leakage. This was done despite modelling showing that effects would be negligible even in the event of a leak and was a “no-regret” option that helped gain public trust and acceptance of the technology itself.

Although most public concerns and SLO precursors relate to the storage and transport part of the value chain, the choice of technology for CO₂ capture may also generate safety concerns, for example, the carcinogenic effects of amine solvents used in capture units (ACCESS Network, 2024). This was also cited by the Peterhead CCS Project (2015) as a public concern emerging around the planned capture facility at the time. Most consulted stakeholders were unconcerned with public perceptions of the safety of CO₂ capture, but one raised the example of Norway’s Mongstad project, where public concerns around amine health risks were seen as a potential “showstopper”.

In general, in almost all cases, energy efficiency and renewables remain preferred solutions over CCS, with the public generally seeing a trade-off between CCS and other technologies (Linzenich, Arning and Ziefle, 2021; Kim and Ladenburg, 2024; Vögele et al., 2018). Once again, these factors are highly contextual. Support for CCS also varies based on whether CCS involves industrial emissions, fossil energy, or carbon removals. Industrial CCS (ICCS) and carbon removals have tended to be more readily accepted than fossil energy CCS, linked to concerns around fossil lock-in (see Section 4.2.2) (Arning et al., 2019; Whitmarsh, Xenias and Jones, 2019; Witte, 2021). However, there are technology specific tensions including concerns for the cost of products where ICCS is used, pathways for long term storage in carbon removals, and perceived impact on land use (Buck, 2021; Tardin-Coelho, Bharadwaj and Ashworth, 2025).

There is also limited evidence on whether the public prefers CCS clusters over isolated (single-source-single-sink) projects. Some sources emphasise that hub-and-cluster models are perceived as more credible than standalone projects, as they signal long-term commitment and shared infrastructure (Greenberg, 2020; CCUS SET-Plan, 2024). Stakeholders highlighted that cluster projects also tend to be built out in areas with pre-existing industrial experience, which can enable an SLO (Section 4.3.2). However, cluster-only CCS developments would likely exclude the cement industry, which is typically located in more rural areas because of necessary land space for quarries.

Finally, there are differences in perception between whether stored CO₂ is imported or domestic. Imported CO₂ is consistently less accepted than domestic storage (Merk et al., 2022; Anders et al., 2024; Mohammed et al., 2024) unless tied to clear local benefits, strict liability frameworks, and port safety (Gough and Mander, 2022). This applies to countries advanced in CCS as well. For example, in Norway, support for storage is 81%, for domestic CO₂ and 40% for imports (Zero Emissions Platform, 2024). Some sources go as far as suggesting that CO₂ should be captured locally to incentivise public acceptance (Reinhold Poulsen, 2021).

The UK’s CCUS Dialogue finds mixed perceptions. The typical concern on whether importing CO₂ is equivalent to importing waste is reflected in queries of whether this would make the UK a “dumping ground”. In the small Scottish focus group for this study, some participants cited the potential economic benefit of charging other countries for CO₂ storage, while others expressed that only Scottish CO₂ should be stored in Scotland (Traverse, 2021). Older research has indicated some recognition of the role of Scotland as a carbon importer and the associated economic benefits, within a small Scottish focus group (Brunsting et al., 2013). However, this would need to be retested on a larger sample and considering current narratives around climate change and decarbonisation.

Stakeholders corroborate this variation in perceptions noting the challenge of perceptions around CO₂ as waste. One project developer told us that even CO₂ from England could face lower acceptability compared to Scottish CO₂. Another suggested that people may be concerned about imports from abroad based on what is known about fracking. On the other hand, there are potential positive narratives around imported CO₂, such as “powering” their own country with the stored CO₂, or solidarity and meeting collective climate goals. The latter is an important narrative in Denmark, but may not work in all countries, as quoted by a Danish stakeholder. Several stakeholders noted that acceptance of imports would depend on local benefits or compensation, including job creation.

Historical, industrial and social contexts

The literature and stakeholders were in broad agreement that local context is one of the strongest mediating factors in public responses. Support varies between countries and within countries, depending significantly on local priorities, including resource protection and competing economic activities.

As indicated in Section 4.3.2, proximity to industry or historic industrial experience can affect the SLO of CCS. Prior experience and familiarity with industry often increases the likelihood of support for a CCS project (von Rothkirch and Ejderyan, 2021). Stakeholders corroborated this, sharing the example of the industrialised Teesside area, where the population is familiar with industrial development and understand the inherent risks. In these cases, the involvement of industry in CCS is seen as a good thing, as a narrative of “cleaning up their own emissions” – but trust is only generated if industry is funding the intervention. Communities with historic exposure to industry or a longstanding presence of hydrocarbon producers may also accept CO₂ storage more readily (Witte, 2021; CCUS SET-Plan, 2024). The visibility of infrastructure and its perceived fit with existing industrial landscapes also matter.

On the other hand, positive perceptions can be undermined where communities have historically seen projects fail to materialise. In the UK, areas with histories of environmental injustice or unmet infrastructure promises exhibit higher baseline scepticism, regardless of project design (Department for Energy Security and Net Zero, 2024a). The UK CCUS Dialogue also found public concerns such as “promises being broken” (Traverse, 2021, p. 26). Perceptions of CCS can also be negatively affected in communities which have experienced accidents or hazards (Sovacool et al., 2025).

Another key determinant is experience with legacy incidents. In Spain, the failed CASTOR CCS project cost €4.7 billion and has driven lower public acceptance, coupled with the lack of a clear CCS policy framework (CCUS SET-Plan, 2024). Some stakeholders suggest that high trust in government can mitigate the persistence of legacy incidents in the collective memory. For example, the overall success of Norwegian CCS is broadly attributed to the political culture with high levels of support for CCS, and a recognition of the oil and gas industry as a driver of wealth and national pride.

The effect of experience is not restricted to CCS experience. People interpret CCS using familiar technologies which they perceive to be similar to CCS, although there may be little to no real similarity. One area which may require monitoring is the public reaction to fossil fuel-related incidents, e.g. pipeline accidents, which have in the past been seen as adjacent to CCS (McLaughlin et al., 2023). Judgements have also been made based on historical incidents perceived to be similar, for example in Lancashire, where residents drew on previous experiences with fracking to inform their mistrust of future CCS projects (Gough, Cunningham and Mander, 2017a). Recent climate effects may increase support for CCS – for example, support for CCS rose in Spain shortly after a major drought (von Rothkirch and Ejderyan, 2021). However, recent evidence from the US shows that this is more ambiguous, and influenced by the political context of the time (Shah et al., 2022). Whether or not the above interpretations still hold today and apply to Scotland, is less clear than the overall finding that public perception of CCS is susceptible to past experiences with other technologies, incidents, and events.

The literature identifies demographic characteristics which may affect local support. Some studies note that men are more likely to report higher levels of CCS awareness than (Anders, Liebe and Meyerhoff, 2024; Whitmarsh, Xenias and Jones, 2019; Zuch and Ladenburg, 2023). This contrasts with the finding that women are more willing to pay for CCS than men, highlighting a potential gap between awareness and support (Waring and Longo, 2025). Those concerned for the climate are also more likely to support CCS deployment (Anders, Liebe and Meyerhoff, 2024; Zuch, 2025). Similarly, higher-educated individuals are more aware of CCS. However, the impact on public response of increasing CCS knowledge is nebulous. Research on this is limited, but some older sources find that familiarity leads to acceptance (Arning et al., 2019), while others that it amplifies perceived risk (Braun, 2017). Stakeholders consulted for this study noted that familiarity is a key precursor for acceptance on a local level and can be boosted through education and increased communications around subsurface operations.

Communication source and timing

Message framing and narratives

How a CCS message is framed in communications influences public perception. Messaging that is accessible, evidence-based, and non-persuasive tends to generate more trust and engagement than communications perceived as promotional or controlling (Shackley et al., 2013). Climate and economic-focused frames raise acceptance, while overly risk-focused or overly reassuring messages both reduce credibility potentially eroding trust (von Rothkirch and Ejderyan, 2021). Framing CCS as part of the wider strategy for tackling climate change, including pairing it with bioenergy or CCU, increases CCS support; while mentioning even very modest costs can reduce it (Whitmarsh, Xenias and Jones, 2019). At the same time, technocratic communication often fails to resonate with publics, particularly where values-based concerns, such as fairness and long-term responsibility, are not acknowledged (Macgillivray and Livesey, 2021). Similarly, Sovacool et al. (2025) argue that framing CCS purely in terms of efficiency or cost-effectiveness undermines legitimacy, and rather framings that address justice, accountability, and governance are more effective. Some sources highlight that CCS could be more supported if it is framed as innovative (Clean Air Task Force, 2023a). On the other hand, providing distinct examples of successful CCS projects, grounded in tangible local contexts, may alleviate the perception of risk from CCS as an “unproven technology” (Traverse, 2021).

Behind the message framing itself, the coherence of narratives and message framing between communicators is a driver of credibility and public response. Coherent narratives around benefits are particularly important (see Section 4.3.3). Stakeholders exemplified Denmark, which has a written mandate that citizens, municipalities and regions must be involved with this narrative development. Such involvement may prove useful for understanding which communities would not be receptive to CCS, as highlighted by one stakeholder. Other actors’ role in narrative development, such as the media, should also be considered (Energy Policy Group, 2022b). Finally, CCS narratives can shift if wider narratives around climate change or Just Transition wax and wane, which can in turn affect the SLO.

Communication source

The credibility of CCS is highly shaped by the messenger who communicates on it (CCUS Projects Network, Parmiter and Bell, 2020). This is particularly key as CCS is a technology which the public is less aware of and so is more liable to be treated with suspicion (Energy Policy Group, 2022a, NORSAR et al., 2024). This suspicion has also been flagged as a specific concern in the UK, including in terms of “shifting” from a focus on proven technologies (UK Government, 2025).

How the choice of communication source impacts public perceptions of CCS is modulated by trust in that communicator (see Section 4.3.1). NGOs, universities, and independent experts are regularly noted as more trusted communication sources than industry or government (Eberenz et al., 2024; Große-Kreul et al., 2024). This also holds for the UK specifically but ultimately varies between local contexts (Traverse, 2021). The wider political context also matters. One stakeholder highlighted that since Brexit, and exacerbated by the Covid-19 pandemic, there has been a general distrust of “expertise” amongst the public.

Whoever the trusted actors are in a particular context, public trust increases if they are coordinated by “local champions” and supported by independent analysis (Zero Emissions Platform, 2024, Energy Policy Group, 2021, NORSAR et al., 2024). Key allies for CCS communication are suggested to be scientists, NGOs, and politicians, media experts, journalists, and respected community members. Opinion formers and community leaders are also essential to building local acceptance of projects (Scottish CCS, 2010). Support from environmental NGOs was also essential for the Porthos project in the Netherlands in gaining public acceptance (CCUS SET-Plan, 2024).

The importance of local stakeholders or champions as CCS messengers was stressed by consulted stakeholders, to “humanise” the industrial development which CCS projects bring. One stakeholder emphasised that best practice engagement would firstly identify who local community figureheads are and ensure their buy-in as a first port-of-call. Examples given included local sports club owners, vocal residents on community social media pages and pub owners. It was highlighted that this was very specific to the local context.

Involving multiple agencies in communicating on CCS can be helpful in balancing information but this must be done coherently (CCUS Projects Network, Parmiter and Bell, 2020). Cross-industry groups can also play a role, with one stakeholder pointing to the Humber Energy Board as a good-practice example. As highlighted above, coherent messaging between national and local levels is key. One stakeholder observed public suspicion of CCS could rise if CCS had not previously been part of national dialogue.

Communication timing

There is near-universal agreement across the literature and consulted stakeholders that public communication and engagement must start early and be sustained across the project lifecycle (Global CCS Institute, 2025; CCUS Projects Network, Parmiter and Bell, 2020). Early-stage communication, before key decisions are perceived as fixed, is essential for building trust (Shackley, Mabon and Evar, 2013).

A lack of early engagement is often cited as a driver of project failure, for example at Barendrecht (Zero Emissions Platform, 2024), alongside other factors cited earlier in this study. On the other hand, the Getica CCS demonstrator in Romania conducted educational and information activities as early as feasibility study stage (Energy Policy Group, 2021). In the UK, the CCUS public dialogue also highlights that communities are more receptive when CCS is introduced during agenda-setting phases, whilst engagement after key siting or design decisions have been made is perceived as procedural tokenism (Traverse, 2021). Macgillivray and Livesey (2021) point out that late-stage engagement often shifts public focus from substantive risk questions to issues of fairness and trust.

International evidence and feedback from consulted stakeholders reinforce the essential nature of early engagement. Stakeholders pinpointed that early engagement must focus on clear communication of costs and benefits. Caveats should be considered; one stakeholder highlighted that early engagement may open the project up to questions that might not be able to be answered.

Continuous, iterative engagement over a CCS project lifetime is essential. Stakeholders emphasised that communities should know where to voice concerns throughout the project lifecycle. Some noted that continuous engagement would also be necessary to ensure future project buy-in, mitigate potential negative attention from the media or vested interests, and secure trust in messengers. If the same messengers keep showing up consistently, over a long period of time, they are more likely to be trusted.

Key lessons for Scotland

Of the significant range of factors influencing public perceptions of CCS, several will be more relevant to Scotland and the country’s upcoming CCS project pipeline.

Possibly the most important lesson for Scotland, given the impending launch of the Acorn project, is the need for early, sustained, and credible engagement. Timing and continuity are critical success factors for public buy-in. In Denmark, engagement began five years before any project license were awarded, to lay foundational knowledge on the importance of CCS. The most credible communicator will depend on the particularities of the local context. Regardless of who they are, they will need to remain approachable and consistently visible across the project lifecycle. Their communication must be two-way, honest and balanced to avoid over-provision of information. Continuous transparency will be at the heart of public acceptance, including a recognition that CCS projects are learning by doing, do not have all the answers, and may face factors outside of their control.

Even though CO₂ storage in Scotland will predominantly be offshore, safety concerns are likely to play a prominent role in public discussions, given the relative novelty of CCS technologies in Scotland’s net zero portfolio. Furthermore, given the importance to Scots of the marine habitats and renewable energy potential of Scotland’s seas (Scottish Government, 2019), the ability of CCS projects to safeguard marine life and renewable energy projects is likely to influence public perception around project safety. Finally, concerns around safety, but also around cost and fossil lock-in, are susceptible to return if they are not managed long-term, through continuous public engagement (see Chapter 6).

Public response will be influenced by Scotland’s history and familiarity with industry and oil and gas. In general, CCS may face less public opposition at a local level if projects are built in areas familiar with industrial activity and involve repurposed infrastructure. This is a positive starting point in Scotland, where the Acorn project transects areas with a rich industrial history and uses legacy gas infrastructure. However, this should not be assumed to automatically generate a positive response. Trust in Scottish industry, particularly the oil and gas sector, is variable, and lived experiences of poor transition management by industry and government will further raise concerns on CCS becoming a “broken promise”. These may be particularly sensitive, as some communities, such as in Scotland’s Central Belt and Fife regions, may still be grappling with the effects of “unjust” transitions in the 1970s and 1980s surrounding the closure of Scotland’s coal mining industry. Early engagement of communities in industrial areas is essential to identify current attitudes towards CCS and the actors involved in project deployment.

This early, place-specific engagement and assessment of perceptions, “social site characterisation”, as defined by Brunsting et al. (2013), can also distinguish perceptions influenced by technology and design factors. Given that the Acorn project plans to involve capture from fossil energy production and industrial sites, perceptions may vary between the project’s capture sites, with a possible preference for industrial CCS. Perceptions, and the ultimate SLO of Scottish CCS, may also vary depending on the planned role of CO₂ imports as part of building out Scotland’s North Sea storage hub. On the one hand, narratives around CO₂ imports may boost positive perceptions around leadership, but on the other they risk creating associations with waste dumping. This may be a particularly sensitive subject in the broader context of perceptions of fairness by Scots, including a belief that emissions should be dealt with by those responsible (Sovacool et al., 2025, University of Glasgow, 2024) Transparent communication around plans to import CO₂ are best received if they include a clear presentation of economic benefits, safeguards around storage integrity, and regulatory mechanisms to preventing the acceptance of imports propping up fossil fuel use abroad.

Scotland’s wider political environment and current national debate will also influence perceptions of CCS. For example, cost concerns and doubts about the perceived effectiveness of CCS may be amplified by recent budgetary constraints and funding announcements, with many actors concerned about their expense. This is particularly important given the UK’s reliance on a Regulated Asset Base model for CO₂ transport and storage infrastructure, involving significant subsidies and financial safeguards to project developers. Stakeholders point out that these cost concerns often do not consider potential future savings once the CCS market matures, which can be addressed through awareness-raising. Other concerns can be much more related to Scotland’s control over CCS funding, for example whether it is reserved to the British Government. Scepticism of a Westminster-managed transition may also extend to the language used in CCS communications, with one stakeholder highlighting that terms such as “levelling up” can be seen as political buzzwords.

An understanding of public perceptions and the factors shaping them will drive the design of public engagement on CCS. In the next chapter, we draw on literature findings and stakeholder inputs to present lessons learned on public engagement with CCS.

Public engagement with CCS

Opportunities and challenges of public engagement with CCS

Public engagement can be seen as an opportunity that benefits CCS projects, stakeholders, and the public. Good public engagement can raise awareness, build trust, secure public buy-in, and even establish a talent pipeline for a skilled CCUS workforce (Zero Emissions Platform, 2024; Sovacool et al., 2025). Consulted stakeholders highlighted the chance to highlight the benefits and economic potential of CCS, build genuine relationships in communities, and address public concerns head-on, including those of stakeholders with competing interests. In the Scottish context, the permitting process already requires consideration of alternative developments, and an engagement strategy to pre-empt undue issues with other users of the seabed. If such engagement is early and genuine, it can generate trust throughout the consultation process, and potentially secure political backing for future CCS projects.

There are several key challenges to public engagement with CCS. Stakeholders noted a general lack of public understanding both of CCS and its potential, which can lead to ambivalent, disinterested attitudes, low response rates in consultations and other engagement activities. Project developers generally quoted low response rates, such as less than 0.1% attendance at town hall meetings. Response rates have been slightly higher where storage sites are located closer to shore, such as the HyNet project. Others pointed to the risk of anti-CCS agendas being more readily received by publics with limited knowledge of CCS, particularly if these agendas are communicated with high levels of emotional content.

Other challenges highlighted by stakeholders include legal challenges by organised groups, such as the HyNOT group protesting the HyNet project. These can garner media attention and transform public ambivalence into discontent. Another prominent challenge is combating misinformation without adversarial messaging, and managing pre-existing negative bias against CCS, requiring collaboration with trusted actors to stop continuous opposition. In some cases referenced by stakeholders, success was simply to stop anti-CCS actors from publicly opposing development at every step in the consultation process, rather than to change the minds of the adamant voices against CCS as a concept.

Delivering public engagement around CCS also poses risks if it is not perceived as genuine (Terwel, ter Mors and Daamen, 2012). Even when there are pathways to share local views, if participants believe that their opinions will not lead to genuine change, trust can be damaged (ibid.). To address this risk, engagement should be transparent, two-way, proactive, and place specific. It should leverage local networks, take place early, provide clear pathways for communities, and respect the time scarcity of local residents by providing a variety of different ways to engage.

There is disagreement on the importance of general information and education of the public on CCS. Some literature sources consider it to be vital, to reduce the amplification of perceived risks and the susceptibility to influence by misinformation and controversy (Clean Air Task Force and Gładysz, 2025; Zero Emissions Platform, 2024). Some stakeholders agree that broader societal engagement is very important and not yet happening in the UK. Such engagement necessarily includes communicating the costs and benefits, which technologies are important and how they will be deployed. Not doing this broader engagement risks that the first time that communities hear about CCS as a concept is when a project is being developed in their locality. One stakeholder noted a “bad practice” example where the first interaction of local homeowners with a CCS project was to be asked by land agents about the mortgage position on their properties, with little context given. The stakeholder perceived that this prompted fear at the outset. Another stakeholder noted that this can damage trust surrounding the technology, working on the logic that if the technology was so important, it would be better-known. It was suggested that strengthening national-level dialogue whilst remaining consistent with current messaging around the economic and climate potential is key. This could be devolved regionally, with more specific dialogue on why certain regions have been selected for CCS.

In contrast, stakeholders also warn about risk of over-provision of information and point out that there is a limit to how transparent public engagement should be. One stakeholder noted a risk that being fully transparent can lead to opposition. For example, open-access information on pipeline leaks can be used to provoke fear. Others noted that despite the importance of transparency, the public may have specific questions for which there are no answers yet. In this case, it is important to communicate clearly a timeline of key dates and phases indicating what information will be available and when.

Some stakeholders consider that rather than a general education effort, CCS simply needs to be more visible as part of the UK’s national debate on climate and energy. One noted that the educational aspect of engagement has typically been left to project developers, rather than being more widely delivered in a national dialogue. Enabling more visibility of CCS in national discourse can also mitigate misinformed reporting driven by anti-CCS agendas.

Main public engagement models

Public engagement models exist on a spectrum from non-participation to citizen power (Arnstein, 1969). The method employed will depend on the rationale for the engagement. This can be simply for instrumental (aiming to achieve a set outcome, persuasion-focused “manipulation”), normative (aiming to do the right thing), or substantive purposes (aiming to co-create the outcome powers, where the local community has the final say) (European Environment Agency, 2023; Scottish CCS, 2010). The less the opportunity for public input, the higher the likelihood of opposition. Conversely, at higher levels of participation, the trade-offs include longer timelines, higher effort required from project actors, and the risk of project alteration to the public’s preference rather than the best choice for the project to be tenable. Table 1 sets out the main types of public engagement and their implications for CCS.

The literature and stakeholders highlight the essential nature of appropriately resourced, two-way communication tailored to the specific audience being engaged (NORSAR et al., 2024; CCUS Projects Network, Parmiter and Bell, 2020; European Commission, 2024). High-quality public engagement includes specific measures to engage “hard-to-reach” groups and meets residents through local approaches in coffee shops, schools and community spaces (Süsser et al., 2024;Zero Emissions Platform, 2024). They also provide a diverse range of methods for participants to engage, prioritising face-to-face approaches and interactive messaging where possible. In some cases, citizen juries could improve awareness of CCS, as well as offer an opportunity to test and refine communication strategies (Zero Emissions Platform, 2024). Visible safety monitoring is highlighted as an important way to prove to citizens that their concerns are being taken seriously (Clean Air Task Force and Gładysz, 2025; CCUS Projects Network, Parmiter and Bell 2020). Some CCS projects have even involved citizens in these monitoring efforts, which is an example of participatory engagement (CCUS Projects Network, Parmiter and Bell, 2020).

Despite the higher effort required, many sources insist on the essential nature of sustained two-way public engagement on CCS, given the risks outlined in Section‎ 6.1. Engagement should happen across the project lifecycle, starting with a solid understanding of pre-existing attitudes, perceptions, and preferences, including the “societal readiness level” for CCS (NORSAR et al., 2024). Based on this understanding, inclusive engagement plans can be developed at broad and project-specific levels, providing all relevant stakeholders with the opportunity to participate in discussions on CCS. At project level, tailoring communication to the issues of importance to different communities, involving communities in decision-making, and ongoing transparency including data-sharing and incident reporting are key (Clean Air Taskforce, 2024). One stakeholder defined “engaging well” as sticking to the facts, having answers in place to respond to concerns, and communicating clearly how any public opinions will be considered in the planning process. This included being clear on the degrees of permissible public involvement and the reasons behind this (Scottish CCS, 2010).

Lessons from other jurisdictions

In this section, we present additional lessons from other jurisdictions on public engagement with CCS, at national and project level. These are distinct lessons learned from those presented earlier in Chapter 6, or they reinforce them with specific examples on the ground.

Jurisdiction-level findings

At EU level, evidence emerges on the potential for mandating public engagement. The EU Innovation Fund, which funds CCUS projects, includes requirements for knowledge dissemination meant to increase peer-to-peer discussions at local level (Bellona Europa, 2025). In the United States developers seeking funding for CCS projects are obliged to develop a Community Benefit Plan including plans for community engagement, environmental justice, and workforce development (Bellona Europa, 2023). The requirements on public engagement for CO₂ storage are more extensive than those for similar injection activities (US Environmental Protection Agency, 2010). In Victoria, Australia, publishing detailed project information and consulting communities first is a regulatory requirement (International Energy Agency, 2022).

National-level findings from other jurisdictions also reinforce the importance of committing to meaningful public engagement, as highlighted in Section 6.2. In the Netherlands, despite the failure of the Barendrecht project, the engagement framework of the 2019 Dutch Climate Agreement set a precedent for involving civil society on CCS strategy development (Clean Air Task Force, 2022). In our consultations, stakeholders from Denmark, one of the EU’s most advanced countries in CCS, reiterated the importance of public meetings, close dialogue, information campaigns, readily available expertise to answer questions and concerns, and obligations on project developers to keep communities informed. They added that at the local level, project developers should be preceded by public body representatives to set the scene and local messengers are essential to collaborate with. Other stakeholders with experience in Denmark and the UK pointed out that even a local accent can improve credibility.

Project-level examples

Concrete CCS projects reinforce some of our findings on public engagement, for example the importance of consistent visibility and transparency to the public (see Section 6.2). In Canada’s Shell Quest project, the set-up of a Community Advisory Panel improved public trust in the project (International Energy Agency, 2022). The project offered groundwater sampling services to locals for two years to monitor CO₂ storage integrity, until asked to cease by landowners (CCUS Projects Network, Parmiter and Bell, 2020). In the US, the Decatur project in Illinois adopted a range of public engagement activities including a roadshow, media partnerships, and working with a community college including an outreach centre (CCUS Projects Network, Parmiter and Bell, 2020). Being public facing is also a feature of Norway’s Longship project, which hosts a visitor centre for public engagement and knowledge sharing (Clean Air Task Force and Gładysz, 2025).

The Tomakomai project in Japan is an example of successful public engagement which offers direct evidence for the importance of identifying local concerns early, conducting participatory engagement, and continuous transparency. The project developers conducted social site characterisation and established a CCS Promotion Association reflecting all key stakeholder groups in the region. They also set up a public information centre, offered site tours, openly published monitoring data, developed tailored communication materials and organised annual open fora (Sawada and Tanaka, 2020). A key aspect was the continuous focus on monitoring, with ongoing public disclosure and the receipt of continuous feedback (Mabon, Kita and Xue, 2017). Importantly, the project also reacted quickly to potential threats to public approval. After an earthquake struck the area, the developer commissioned an independent expert panel to assess whether CO₂ injection had generated any seismic activity, pre-empting speculation (Kawabata, 2023).

Examples of failure in public engagement are also important to learn from. As mentioned throughout this report, the Barendrecht project has been extensively studied in this sense. Other projects also reinforce lessons on public engagement such as the risk of over-provision of information (see Section 6.1). For example, despite working to understand local concerns and build tailored solutions, the Carbfix project in Iceland published seismicity data without methods for communities to interpret it, increasing public concern. In this case, concerns only stabilised once an independent expert panel and coordinated communication protocol were introduced (Thorsteinsson and Gunnarsson, 2014; Andrić et al., 2018). Alongside over-informing, over-promising can also be risky. Australia’s Gorgon project failed to meet its CO₂ storage targets, which undermined public confidence (Clean Air Task Force and Gładysz, 2025).

Key lessons for Scotland

Lessons on public engagement from the literature and stakeholders apply to national-level debate on CCS in Scotland, and to interacting with communities local to the Acorn and future projects. At national level, lessons learned on public engagement can be mapped to the “Understand, Participate, Act” pillars of Scotland’s Net Zero Nation public engagement strategy (Scottish Government, 2021). Such a streamlined approach to CCS communication could improve social engagement and unpick which of the lessons learned are CCS-specific, and which can be applied to wider infrastructure or net zero projects (Table 6‑2).

The lessons outlined in Table 2 are umbrella issues within which project-specific public engagement will need to develop at specific sites. Similarly, it is useful to map findings onto project-specific public engagement of a typical CCS project lifecycle, focusing on the stages most relevant for Scotland. Table 3 charts the main lessons learned on public engagement against the appraisal, planning, construction and operation phases of a CCS project. More detail is provided in Appendix C (Table 4).

Although less relevant for Scotland’s current project pipeline, successful public engagement continues in the final CCS project stage of decommissioning, storage site closure, and post-closure monitoring. In this stage, a clear assignment of monitoring responsibilities, coupled with continuous and accessible information on the behaviour of the sealed CO₂ storage site, will be an essential part of maintaining long-term public trust.

Conclusions and lessons learned

There is a growing body of academic research on public perceptions of CCS, increasingly supplemented by valuable lessons from the deployment of CCS projects. They broadly indicate that:

• Scotland, as many other countries, displays low awareness of CCS in the general population, with ambivalent opinions susceptible to change.
• Among the key public concerns around CCS, safety, cost, fossil lock-in, and disruption are likely to be present in any forthcoming debate on CCS.
• Scotland’s rich industrial heritage may boost positive baseline perceptions of CCS.
• Past experiences with transition management, concern for the marine environment, and a general lack of public dialogue on CCS may hinder its SLO.
• Key precursors to acceptability will be confidence in project developers, reassurance regarding storage risk mitigation, and genuine bidirectional public engagement which delivers coherent messages early on and continuously across project lifecycles.
• Benefits redistribution to affected communities will be key. Employment benefits in Just Transition areas are likely to be essential, alongside environmental co-benefits.

Despite the challenges and risks associated with it, public engagement on CCS can increase awareness and improve trust, if done well. Research and project experience indicates several key findings for Scotland:

• Public engagement starts with enabling more visibility of CCS in the public debate on net-zero and Just Transition, in parallel with social site characterisation by project developers at the appraisal stage of CCS projects
• Two-way engagement methods in which trusted actors communicate benefits, risks, and mitigation measures have the highest chance of fostering meaningful dialogue with local communities and improving acceptability of CCS projects. They can be deployed at key decision points in the project.
• Continued public engagement using a range of methods will be required across project construction, operation, and decommissioning. Particularly in the operation stage, robust monitoring of project performance, including the behaviour of CO₂ being transported and injected, can significantly improve trust in the project if results are disclosed transparently and well-explained.
• Successful examples of public engagement include the Porthos and Northern Lights projects in Europe, as well as projects in the US, Japan, and Canada. Lessons learned from these projects can be leveraged as part of Scotland’s existing public engagement strategy on net zero. This strategy and its associated “Understand, Participate, Act” framework for public engagement with climate change is a potential enabler for CCS engagement, although not entirely transferable.

Even if public engagement is exemplary in the short to medium term, as Scotland moves forward with its net zero transition, it is important to acknowledge that the SLO of CCS is neither guaranteed nor fixed in the long term. If Scotland expands its CCS project portfolio and utilisation of its North Sea storage capacity, acceptability may need to be revisited as more communities find themselves hosting CCS projects or CO₂ begins to be imported. Conversely, some jurisdictions with a history of strong opposition to CCS are now some of the most advanced in project deployment, such as Denmark and the Netherlands. The key differentiators are learning from previous experiences, attending to public concerns early, and respecting local community contexts. These actions will influence how the public ultimately perceives, reacts, and ultimately accepts or rejects CCS.

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Appendices

Appendix A: Additional detail on research methods

Our literature review encompassed academic literature as well as “grey literature” such as reports from think tanks and non-governmental organisations, non-academic research institutes, governments, and industry. We used relevant keyword combinations on Google Scholar, Scopus, and Web of Science (for academic articles) and via Google searches and relevant organisation websites (for grey literature). We screened article summaries for relevance, and logged articles into a common Excel spreadsheet, summarising whether and how each article answered the above research questions.

Keywords used in academic and grey literature searches

(“carbon capture and storage” OR “carbon capture and sequestration” OR “CO2 storage” OR “CCS” OR “CCUS”) AND (“social license to operate” OR “social license” OR “social licence” OR “public perception” OR “public acceptance” OR “community acceptance” OR “social legitimacy” OR “public response” OR stakeholder engagement” OR “public engagement”) AND (“CO2 imports” OR “carbon dioxide imports” OR “cross-border CO2 transport” OR “transboundary CO2 transport”)

Grey literature sources reviewed

1. Policy documents (e.g., strategies, action plans) & government/Parliament reports (EU, UK, Denmark, Norway, Netherlands), with a focus on North Sea countries
2. Reports/policy papers from think tanks and NGOs with concerted research activity on CCS (e.g., Clean Air Task Force, Bellona Europa, Energy Policy Group)
3. Reports/policy papers from CCS associations and networks: Scottish CCS, CCS Association, Global CCS Institute, Zero Emissions Platform, European Commission SET-Plan IWG9
4. Project-specific literature (e.g., site closure reports for unsuccessful projects, progress reports, research investigations by competent authorities), covering European countries e.g. Barendrecht (Netherlands), Belchatow (Poland), Northern Lights (Norway), Porthos (Netherlands), Greensand (Denmark), and specific examples of public engagement from non-EU projects: Tomakomai (Japan), Decatur (USA), Quest (Canada).

Appendix B: Guiding questions for stakeholder interviews

Public perceptions and concerns around CCS

• In your work so far, what have you found to be the main public concerns around CCS?
• Conversely, what have you found to be the precursors to a Social License to Operate (SLO) for CCS projects (i.e., continued acceptance of CCS technologies and projects)?
• Do public concerns and SLO precursors change depending on whether the CO₂ is imported from a different jurisdiction or is from the UK?
• Have you observed any role for compensation/project benefits redistribution to local communities in obtaining and maintaining a CCS SLO?
• Are there differences between acceptance of CCS across multiple levels and across the CCS value chain?

Interviewer’s note: multiple levels could mean, for example, at “socio-political level” (general acceptance of CCS as a solution) and “local level” (acceptance of a specific CCS project); across the value chain could mean, for example, acceptance of capture technologies, transport infrastructure, storage sites.

• What do you think must be done to maintain acceptance across levels and the value chain, and whose responsibility is it?
• What do you think is the role of industrial clusters in influencing public opinion on CCS?

Public engagement with CCS

• Public engagement with CCS will likely be a key component of project pipelines, as well as securing a strategic place for CCS in national transition pathways. What opportunities and challenges do you see for public engagement programmes at project level and conversely at broad, topical level (e.g., general communication of climate change mitigation)?
• Similarly, what risks does engaging the public with CCS bring, and how can these be mitigated?How might risks and their mitigation measures differ between project-specific and broad, topical levels?
• In your work so far, what have you found to be the effect of communication source (i.e., the messenger), timing, and format of public engagement on public perception and response to CCS? (please also feel free to draw on lessons from public engagement with other large-scale infrastructure or subsurface projects in the UK or Scotland, if relevant)
• Similarly, what influence have you found technology and design choices to exert on public perception and response to CCS?
• Interviewer’s note: for example, the choice of capture technology or industrial application, the choice of transport method, the project financial design (proportion of public funding), liability and insurance, monitoring and verification of storage sites.
• Similarly, what influence have you found historical, industrial, and socio-economic contexts exert on public perception and response?
• Interviewer’s note: for example, local community experience with subsurface projects, importance of industry in local economy, and level of poverty or unemployment, respectively.
• Do you have any examples of where the above contexts have impacted perception of CCS?

Lessons from other jurisdictions

• We are looking for key lessons from other jurisdictions that could provide lessons for Scotland’s future public engagement with CCS. What lessons do you think can be learned from public engagement in other jurisdictions’ CCS projects? (please feel free to refer to specific projects or larger engagement efforts at regional, national, or international scale)
• Based on your knowledge of the Scottish and UK context, what do you think are aspects of particular interest or concern regarding public perception and engagement around CCS?
• Are there any additional lessons you think are relevant from public perception and engagement around other large-scale infrastructure or subsurface projects in Scotland and the UK (e.g., natural gas pipelines, mining)
  

Appendix C: Additional detail on key lessons for public engagement across the project life-cycle

How to cite this publication:

Miu, L., Wells, R., Hill, D., Grebot, B., Bedford, T. and Whitmarsh, L. (2026) ‘Public perceptions of Carbon Capture and Storage’, ClimateXChange. 10.7488/era/7241

© The University of Edinburgh, 2026
Prepared by Logika Group and University of Bath on behalf of ClimateXChange, The University of Edinburgh. All rights reserved.

While every effort is made to ensure the information in this report is accurate as at the date of the report, no legal responsibility is accepted for any errors, omissions or misleading statements. The views expressed represent those of the author(s), and do not necessarily represent those of the host institutions or funders.

This work was supported by the Rural and Environment Science and Analytical Services Division of the Scottish Government (CoE – CXC).

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Achieving Scotland’s target of net zero greenhouse gas emissions by 2045 will require significant emissions reductions across all sectors of the economy. Road transport and building heating remain among the most challenging sectors to decarbonise, despite progress elsewhere. Carbon pricing is a mechanism that can incentivise emissions reductions by increasing the cost of carbon-intensive fuels and encouraging the uptake of lower-carbon alternatives.

This research explores the potential role that carbon pricing instruments could play in reducing emissions from Scotland’s transport and building heating sectors. It reviews evidence on the effectiveness of carbon pricing and models the potential impacts of different carbon pricing scenarios in Scotland. The analysis is intended to provide early-stage evidence to inform future discussion and does not contain or assess policy proposals.

Key findings

• The literature indicates that carbon pricing can contribute to emissions reductions in transport and building heating, but the impact tends to be uncertain and relatively modest.
• Carbon pricing could reduce emissions by an additional 2.9–11 MtCO₂ between 2027 and 2045, with higher carbon tax producing the largest emissions reductions.
• Most emissions savings arise from reduced fuel use, particularly in buildings, rather than large-scale switching to electric vehicles or heat pumps.
• Carbon pricing could result in additional direct costs to Scottish consumers of between £1 billion and £8 billion between 2027 and 2045, primarily through higher fossil fuel prices.
• The average additional cost to households is relatively modest, estimated at £29–£172 per year.
• Lower-income households are more affected, with costs representing up to 1.4% of median income for the lowest-income groups.
• The disproportionate impact on low-income consumers can be alleviated through revenue recycling, which should be further investigated as a next step.

For further information, please read the full report.

If you require the report in an alternative format, such as a Word document, please contact info@climatexchange.org.uk or 0131 651 4783.

Research completed February 2026

DOI: https://doi.org/10.7488/era/7240

Executive summary

Research aims and scope

To achieve net-zero by 2045, Scotland will require deep emissions reductions. Carbon pricing is a mechanism for imposing a cost on greenhouse gas emissions to incentivise emitters to cut pollution. This research assesses whether and how carbon pricing instruments could contribute to decarbonising the road transport and building heating sectors, which lag behind other parts of the Scottish economy in emissions reductions. This study provides early-stage analytical evidence on the potential role of carbon pricing in these sectors, as part of a wider decarbonisation strategy. It does not contain or examine policy proposals.

The study has two objectives. First, it reviews evidence on the performance of carbon pricing instruments applied to transport and buildings. Second, it models and assesses the impact of introducing carbon pricing instruments on these sectors in Scotland. The analysis is limited to carbon taxes (flat-rate charges on the carbon content of fuels) and cap-and-trade systems, also known as emissions trading systems (ETS), where suppliers buy allowances covering emissions from the fuels they sell, at a market price.

We model four scenarios: two carbon tax levels (£25/tCO₂ and £75/tCO₂) and two cap-and-trade system scenarios (with and without a soft price cap). In each scenario, a carbon price is applied to transport and building heating fuels. This cost is then either fully (100%) or partially (50%) passed on by fuel suppliers to household and business consumers. Our approach uses a simple investment model in which consumers are assumed to either reduce their fuel consumption or invest in low-carbon heating (heat pumps) and transport alternatives (electric vehicles (EVs)).

We model the potential emissions reduction effects of these carbon price scenarios relative to a baseline scenario which aligns with the Climate Change Committee 7^th Carbon Budget. This baseline already reflects a relatively ambitious emissions reduction pathway, which has important implications for the assessment. Against this baseline, we present the modelled effects of carbon pricing on emissions reductions, the anticipated direct costs to consumers, and the potential revenues to government.

We do not assess any potential options for using the revenues from carbon pricing to further support decarbonisation. We also do not assess the corresponding secondary effects of revenue recycling on emissions abatement, technology uptake or mitigation of adverse effects on specific consumer groups. This also has implications for our assessment, as investment in low-carbon alternatives could be higher if carbon pricing revenues were recycled through targeted subsidies, such as for purchasing EVs or heat pumps.

Findings

Evidence on the performance and impact of carbon pricing

The literature indicates that carbon pricing can contribute to emissions reductions in transport and building heating, but the impact tends to be uncertain and relatively modest. This impact is significantly affected by differences in national context, including the affordability of low-carbon alternatives and complementary policies. As such, there is no strong consensus in the literature on the magnitude of the effect of carbon pricing.

In higher-income countries, carbon pricing is typically regressive, i.e., it imposes proportionately higher costs on low-income households. Recycling carbon pricing revenues can alleviate this burden, which can further improve the social feasibility of carbon pricing.

Modelled emissions abatement under carbon pricing in Scotland

The model projects a cumulative emissions abatement of 2.9-11 million tonnes (Mt) between 2027 and 2045, on top of that already expected to be in the baseline scenario. The highest anticipated emissions reduction is in the higher £75 carbon tax scenario where costs are fully passed on to customers. In this scenario, annual emissions are 3.6% lower in 2030 than the baseline, and 13% lower in 2045. The lowest emissions abatements were in the lower £25 carbon tax scenario, where costs are partially passed on. Our modelled ETS prices generate less emissions abatement than steadier price signals under a carbon tax. The model shows that most additional emissions reductions occur in the buildings sector.

Our modelled emissions reductions due to carbon pricing are relatively modest. This is partly due to simplifying assumptions in the model, but also to the already ambitious baseline, which leaves limited scope for further gains from carbon pricing alone. The modelling suggests that consumers would primarily respond to the carbon price by reducing their fuel consumption rather than switching to low-carbon alternatives. Persistent barriers to investment, especially in lower-income groups, and without modelled revenue recycling, drive consumers to reduce demand rather than invest in alternatives.

Modelled consumer costs and distributional impact

Under our modelled carbon price, consumers either invest in low-carbon technologies, or they pay the carbon cost of the fossil fuels they continue to use. In our model, over the entire period 2027-2045, Scottish consumers are assumed to incur a direct additional cost of between £1 billion and £8 billion. Crucially, these costs are mainly the additional direct fuel costs incurred by consumers under a carbon price. As such they are not directly comparable to abatement costs cited in the literature, which generally include only the cost of deploying low-carbon alternatives.

Despite the substantial costs from the modelled carbon pricing instruments cited above, they are relatively modest at a household level, between £29 – £172 per year. However, they are more significant for lower-income households, representing up to 1.4% of the median income of the lowest-income households. The disproportionate impact on low-income consumers can be alleviated through revenue recycling, which as noted above we do not assess.

Lessons learned

Our research finds that if added to an ambitious baseline policy mix, carbon pricing instruments could generate small additional emissions reductions in Scotland’s transport and buildings sectors. Given that our modelled baseline is ambitious, the abatement effects we find are small. However, carbon pricing schemes could deliver a signal for consumer behaviour change if baseline emissions reductions fail to materialise. At the same time, complementary policies can ensure that consumers can overcome investment barriers, and alleviate the burden of carbon costs for those who cannot yet invest.

This research is early-stage and relies on simplifying assumptions for modelling the impact of carbon prices. Additional research is needed to further assess carbon pricing against less ambitious baseline policy mixes, and including a wider range of low-carbon technologies such as heat networks and low-carbon liquid fuels. Crucially, modelling the effect of revenue recycling can help identify how the use of carbon pricing revenues can increase the effectiveness of emissions abatement and reduce the impact on those most vulnerable.

Abbreviations table

Introduction and background

Context and rationale of research

In 2025, there were 113 carbon pricing instruments implemented in 55 countries and 44 subnational jurisdictions around the world (World Bank, 2025). Although varying in design and levels of impact (see Section 3.3), they are all underpinned by the “polluter pays” principle, ensuring that the social cost of greenhouse gas (GHG) emissions is borne by the polluter (UK Government, 2022). The rationale behind carbon pricing is that pricing carbon emissions will drive emissions reductions by polluters, if the carbon price is higher than the cost of abatement (World Bank Group, 2025).

Carbon pricing instruments are of particular interest where the pace of decarbonisation is slower than the average. They have recently come into focus for decarbonising the transport and building sectors, with the launch of an EU-wide Emission Trading System (the EU ETS2) which prices carbon emissions from these sectors (European Commission, no date). The UK ETS covers the electricity, industry and domestic aviation sectors, while transport and building heating emissions are primarily covered through non-price policies, such as standards (Sturge et al., 2024a). As with the wider UK, in Scotland, transport and buildings emissions reductions lag behind other sectors (Climate Change Committee, 2025a; Scottish Government, 2025a). This indicates a potential role for carbon pricing as a complementary decarbonisation instrument.

By their nature, carbon pricing instruments are “stick” rather than “carrot” policies. They create a price pressure which incentivises decarbonisation, but do not implicitly include supporting mechanisms for polluters to switch to less emissions-intensive activities. As such, carbon pricing instruments require complementary policies to achieve their decarbonisation potential while minimising the financial burden on consumers and economies. They also function best as part of wider policy portfolios because of their ability to mitigate shortfalls in the pace and/or rate of decarbonisation incentivised by other policies (Raiser and Rault, 2025a). They can also be politically controversial. For example, the European Union (EU) and its Member States have had long-standing debate on the design of the EU ETS2, the (EU’s) carbon pricing scheme for transport and building emissions. Since its original design, the scheme has been significantly relaxed, primarily due to concerns over potential consumer impacts (European Commission, 2025). The impact on low-income consumers of carbon pricing can be mitigated through revenue recycling mechanisms, to avoid exacerbating existing inequalities such as the disproportionate incidence of fuel poverty amongst low-income groups.

The aim of this research is to examine evidence and provide further analysis on the potential for carbon pricing to accelerate emission reductions in the transport and buildings sectors in Scotland. The scope is limited to two types of carbon pricing instruments: cap-and trade systems (also known as ‘emissions trading systems’ – ETS) and carbon taxes. ETS are policy measures establishing a market where GHG emitters from target sectors must purchase allowances (permits) to cover their emissions, from a pre-set jurisdictional cap on emissions. The pre-set cap decreases year on year. Carbon taxes are pre-determined rates applied to the carbon content of fuels, energy vectors, or products.

A third type of carbon pricing instrument is carbon credit markets (World Bank Group, 2025). These are largely voluntary, are not typically applied for sectoral emissions, and their effectiveness is debated (Romm, Lezak and Alshamsi, 2025). They are not within the scope of this report.

The research questions of this study are:

1. What options already exist for pricing carbon, and what evidence is there around their cost-effectiveness, distributional impact, and shortfalls?
   
2. What are the environmental, economic, social, and distributional implications of cap-and-trade and carbon tax instruments on Scottish transport and buildings, and their associated limitations and feasibility?
   
3. Based on (1) and (2), what options are the most promising as cost-effective measures to decarbonise the Scottish transport and buildings sectors while protecting those most vulnerable?

First, we review evidence on carbon pricing schemes in the transport and building heating sectors in selected countries (Sections 3.2 – 3.4). Second, we model and analyse effects of four carbon pricing scenarios on Scotland’s transport and building heating sectors (Section 4.1 – 4.5). Conclusions and lessons learned are then formulated (Section 5).

It is important to note that the study in no way implies a policy proposal to introduce new carbon pricing measures in Scotland. Rather, it is early-stage research which provides preliminary evidence by modelling carbon pricing schemes, alongside a review of secondary literature. Additional methodological information and data is presented in the report appendices.

Carbon pricing schemes on transport and building sectors

The two types of carbon pricing schemes reviewed in this study, cap-and-trade and carbon tax systems, have been applied around the world, including on the transport and building sectors. Below we briefly describe 7 such schemes, selected based on comparability to Scotland, availability of information on their performance, and direction from the project Steering Group (SG).

The EU ETS2 is new carbon pricing scheme, covering fuels combusted in road transport and buildings. It will function on the same principles of the EU ETS, but is completely separate from it. Allowances will be made available to fuel suppliers, who must purchase and surrender allowances equivalent to the CO₂ emissions from the combustion of the fuels they sell. The system will have a ‘soft price cap’. That is, when the price of allowances exceeds €45 (approx. £39) in 2020 terms over a certain period, market stabilisation mechanisms will be triggered to release allowances from a reserve, which will drive down the price. Revenues from the ETS2 will be collected into a Social Climate Fund, to be used by Member States to alleviate the impact of carbon pricing on consumers. The scheme will start in 2028, after an agreement to postpone it (International Carbon Action Partnership, 2026).

British Columbia’s Direct Carbon Tax (DCT) was the world’s first subnational carbon tax, applied to all fuels, including transport and heating fuels. It started with broad sectoral coverage, accommodating sectoral exemptions over time, and rose from CAD 10/tCO₂ (approx. £5/tCO_2­­) in 2008 to CAD 95/tCO₂ (approx. £51/tCO₂) in 2025. Revenue was recycled through tax cuts and transfers to individuals and firms (Sloan et al., 2024). This tax paved the way for the federal (i.e., national) Canadian carbon tax (Fairbrother and Rhodes, 2023). However, in 2025 the Canadian and British Columbia carbon taxes were scrapped to focus on pricing carbon from large industrial emitters (Government of Canada, 2025).

Sweden’s DCT, in force since 1991, covers all fossil fuels, including road transport and building heating (Sloan et al., 2024). The tax rate has increased from €22/tCO₂ (approx. £19/tCO₂) in 1991 to €134/tCO₂ (approx. £116/tCO₂) in 2025. Around 90% of the tax revenues come from gasoline and motor diesel charges, totalling around €2 billion (approx. £1.74 billion) in 2023 (World Bank, 2023; Statistik Databasen, 2025). Revenues are not earmarked for specific purposes (Government Offices of Sweden, 2025).

Austria’s National ETS, launched in 2022, complements the EU ETS by pricing carbon emissions from sectors not covered by the latter, including transport and buildings. The allowance price was pre-set and as of 2025 stood at €55/tCO₂ (approx. £48/tCO₂), which is above the soft price cap of the EU ETS2 (see below). Revenue from emissions allowances goes directly into Austria’s main government budget, with ‘climate bonus’ payments returned to all Austrian households as a set price per person. This means poorer households, which typically emit less, gain more than richer households. The scheme has consistently been revenue negative, with government expenditure for rebates being greater than income from carbon pricing. From January 2028 it will be replaced with the EU ETS2 covering road transport and buildings (International Carbon Action Partnership, 2025a).

Norway’s National DCT, introduced in 1991, is levied on fossil energy products, including those used in road traffic and natural gas used for heating (Norwegian Ministry of the Environment, 2005). The tax level was NOK 944 (approx. £70/tCO₂) in 2025, and is planned to more than double by 2030 (to approx. £148/tCO₂), to support transport emission targets. Norwegian emissions from heating buildings are already relatively low, reflecting a pre-existing ban on the use of fossil oil as a heat source in 2020, and generally low use of natural gas. The carbon tax revenue is used to reduce other taxes (Norwegian Ministry of Climate and Environment, 2022).

Germany’s National ETS, launched in 2021, complements the EU ETS. It is being phased in with a fixed carbon price, rising to €55/tCO₂ in 2025 (approx. £48/tCO₂), and a flexible allowance supply determined in line with Germany’s emissions reduction targets. The scheme covers all main fossil fuels, including those used in heating and transport. As of 2024, total revenue generation was €12.97 billion (approx. £11.25 billion) (International Carbon Action Partnership, 2025b). Revenues are directed to the “Climate and Transformation Fund”, used to finance technologies and climate protection measures within Germany, as well as refinancing electricity price and carbon leakage compensation (Deutsche Emissionshandelsstelle, 2025).

Performance and impact of carbon pricing schemes

In this and the following sections we review wider literature around the performance, impact, shortfalls and limitations of carbon pricing schemes covering the transport and heating sectors, focusing on the ones listed above. This is not a systematic literature review, rather its purpose is to set the context of subsequent modelling and analysis for Scotland.

Emissions abatement

The literature indicates that carbon pricing can contribute, and has contributed, to emissions reductions in heating and transport, by stimulating investment in clean technologies. Details of the emissions reductions found in the reviewed literature are set out in Appendix D (Table 14). However, technology adoption likely reflects many factors, including other influences on fossil fuel use such as the effect of different policies, underlying fuel prices, and national economic and social characteristics. It is also influenced by the availability of alternative technologies, as well as the elasticity of demand for transport and heating fuels, i.e., how responsive fuel demand is to price changes. In general, demand for these fuels, particularly heating fuels, is less responsive to price changes. As such, the EU expects that the ETS2 will not generate major demand reductions, but that some technologies could be profitably switched to low-carbon alternatives (European Commission, 2021). Another study modelling the expected impact of the EU ETS2 found that emissions reductions would likely be higher in road transport than in heating, due to the relatively quicker turnover of car ownership compared to boilers (Fazekas et al., 2021).

The literature shows a mostly positive rate of emissions reduction in transport and buildings under carbon pricing schemes (see Appendix D, Table 14). The exact figures are not easily generalisable, due to the range of factors affecting technology adoption including the wider policy and national contexts for specific instruments, as well as methodological differences. Research uncertainty is also a factor, particularly for studies on newer or hypothetical carbon pricing systems, which rely on modelling. This is partly because carbon pricing on heating and transport is expected to generate behaviour change in individuals and the complexities of behavioural modelling introduce further research uncertainty.

Studies on certain jurisdictions with long-running carbon pricing find mixed performance (Appendix D, Table 14), due to differences in the design of schemes as well as the parameters used in different research. In BC, some studies cite short-run aggregate emission reductions of between 5-15% (Murray and Rivers, 2015), while others find a decline only in transport emissions or even increased transport emissions (Pretis, 2022; Winter, 2024; Arcila and Baker, 2022). Studies in other countries find similar decreases. For example, a 1.7% in transport emissions and 6.9% in building heating emissions in Germany between 2022 and 2023, 7.7% in per capita transport emissions in Sweden between 1990 and 2005 and 4% decrease in total Austrian CO₂ emissions within the first five years of the national ETS (Emissions Trading Authority at the German Environment Agency, 2025; Yu, 2024; Streicher, Kettner and Schratzenstaller, 2025).

In the UK, modelling of a hypothetical ETS on transport and buildings finds that a £40-£80/tCO₂ carbon price could drive economy-wide emissions reductions of 6.1-10.6% in transport and 10-14.7% in heating buildings (Sturge et al., 2024). This study finds that greater emissions reductions occur in the heating sector, partly due to existing excise duties on transport fuels. This is in contrast to a study on the EU by Fazekas et al. (2021), which finds higher emissions reductions in the transport sector compared to the heating sector under a modelled EU ETS2. Bretschger and Grieg (2024) find that a hypothetical carbon tax on transport fuels in the UK reduces emissions by 0.352 tCO₂/capita/year relative to the baseline. There are fewer relevant studies that focus on the Scottish context. The most recent relevant study from 2014 did not look specifically on transport and heating buildings. However, it found that a carbon tax of £50/tCO₂ would allow Scotland to achieve 37% aggregate emissions reductions by 2020 relative to 2000 emission levels (Allan et al., 2014). These projected emissions reductions are not additional to an existing ETS, as the goal of the 2014 study was to model what a carbon tax could achieve in case of Scottish independence or further devolution of fiscal powers. It should also be noted that the study was published before Scotland agreed its net-zero targets and before the implementation of the UK ETS.

In addition to abating CO₂ emissions, some literature finds that carbon pricing can also reduce non-CO₂ emissions, including nitrous oxides (NOx) and particulate matter (PM 2.5) (European Commission, 2021). Sileci (2023) models PM2.5 reductions of 5.2-10.9% (2008-2023) driven by reductions in transport fuel demand under BC’s carbon tax. The resulting positive health outcomes may partially or fully offset the costs of carbon pricing.

While the literature shows generally positive effects of carbon pricing on emissions abatement in heating and transport, there is no strong consensus on the ultimate magnitude of the effect. This is a finding in itself, and reinforces that the contribution of carbon pricing to emissions abatement is highly context-dependent.

Economic and distributional impact

Abating emissions through carbon pricing comes at a cost to consumers, as the price of fossil fuels absorbs the cost of associated emissions, and as such increases. The literature shows a range of economic and consumer impacts of carbon pricing schemes, detailed in Table 15 (Appendix D). In BC, studies find small consumer impacts of approx. €0.015-€0.048/l of gasoline, but with a negligible effect on economic growth (Fairbrother and Rhodes, 2023). However, the tax was initially revenue negative (GIZ and UNDP, 2019). If revenue positivity were a priority, the tax may have had a higher economic impact. Similarly, modelled analyses found no projected negative impact on income or economic growth from the UK’s fuel duty, as the increase in public services financed by fuel tax revenue counterbalances impact on households (Bretschger and Grieg, 2024; European Commission; BloombergNEF, 2025).

Such economic impacts are not evenly distributed. They can vary by geography as well as by consumer type (Winter et al., 2023; Pretis, 2022). For example, Swedish commercial buildings already use a higher share of clean heating than residential ones (Ministry of Finance, 2023), and so are less impacted by a carbon price. Importantly, carbon pricing schemes tend to have a regressive impact across income groups in higher-income countries, especially those targeting transport and building heating fuels (World Bank, 2020; Ohlendorf et al., 2021). This is because such carbon pricing schemes directly impact end consumers. Suppliers of transport and heating fuels have limited options to decarbonise their fuel supply themselves, and so are likely to fully pass through the carbon price to end consumers (European Commission, 2021). There will probably be a disproportionate impact on low-income groups because for these groups the incidence of fuel poverty is higher. These groups also spend more of their income on fuels, and a higher share of this is essential consumption, especially heating (Federal government of Germany, 2024; European Commission, 2021; Fazekas et al., 2021; Sturge et al., 2024b). Middle-income consumers may see a more pronounced impact from transport carbon pricing, as they are more likely than low-income groups to have a private vehicle (European Commission, 2021). Lower-income households also face investment barriers to low-carbon technologies, such as lack of capital, increased likelihood of living in rented accommodation, and other constraints (Fazekas et al., 2021).

Although less clear, the distributional impact of indirect health benefits from carbon pricing have also been noted in the literature. Reductions in air pollutants enabled by carbon pricing typically benefit lower-income and vulnerable households to a greater extent, as they tend to suffer greater exposure (European Commission, 2021). On the other hand, Sileci (2023) finds greater health benefits in less polluted, less dense, and better-off areas in BC. This suggests that carbon pricing may exacerbate pre-existing pollution-income gaps.

Revenue recycling

Carbon pricing revenues can be used to mitigate their economic and distributional impact (European Commission, 2021). This is aligned with the expectations of the “double dividend” theory of environmental taxation, in which a wide range of literature indicates that using environmental tax revenues to mitigate distortionary taxes provides both environmental and economic benefits. The EU ETS2 is expected to have a negative effect on Gross Domestic Product (GDP), unless revenues from the scheme are recycled. Recycling revenues into low carbon technology investments is found to lead to a more positive GDP impact than use of revenues for outright tax reductions (Fazekas et al., 2021). A 2014 modelling study on Scotland found that if revenues of a hypothetical £50/tCO₂ carbon tax are recycled by reducing income tax rates, emissions and unemployment would fall, and GDP and real wages would increase, compared to expanding general government expenditure (Allan et al., 2014). The study does not account for wider UK climate change policies, and given its publication date, findings should be treated with caution.

Various options are available for carbon price revenue recycling, and their suitability varies by country. Generally, a combination of mechanisms, including direct income support, is required to address equity, efficiency, and environmental concerns (Streicher, Kettner and Schratzenstaller, 2025). Many existing revenue recycling schemes include measures targeted at specific income groups, for example tax credits for lower-income groups in BC, or income tax reductions for low- and middle-income households in Sweden (GIZ and UNDP, 2019; Fairbrother and Rhodes, 2023; Ministry of Finance, 2023). Others target support for specific low-carbon measures, for example temporary aid schemes for renewable heating in Sweden or energy efficiency, clean heat, and low-carbon mobility in EU Member States (Ministry of Finance, 2023; European Commission, 2025).

If recycled revenues are not targeted at specific consumers, carbon pricing schemes can be revenue-negative. For example, Austria’s Regional Climate Bonus recycles carbon pricing revenues through a flat-rate income support to all residents. Total payments were estimated to exceed carbon pricing revenues by €930 million in 2022 (Austrian Court of Audit, 2021). Unintended effects may also occur unless the schemes are carefully managed. For example, the redistribution of revenues through tax relief for commuter trips in Germany may favour higher-income households (European Environmental Bureau, 2022). Revenue redistribution can also offset the reduction in fossil fuel demand driven by carbon pricing, as found in Norway. Here, the impact of CO₂ taxes is mitigated by redistributing revenues to reduce other road transport taxes, thus reducing the cost of transport and counteracting emissions reductions (Norwegian Ministry of Climate and Environment, 2022). However, modelling of a UK ETS on transport and buildings finds such counteraction effects to be insignificant (Sturge et al., 2024b).

As with emissions abatement, the economic and distributional effects of carbon pricing are highly context-dependent, as are the potential impact of revenue recycling. As such, there is no strong consensus in the literature on optimal mechanisms for use of carbon pricing revenues. However, the reviewed literature does outline the importance of closely assessing consumer impact before implementing carbon pricing instruments. This includes particular attention to low-income households and groups at risk of fuel poverty, on which research generally agrees that the impact will be disproportionate.

Shortfalls and limitations of carbon pricing schemes

While carbon pricing schemes could deliver emissions abatement and manage associated consumer impact, they present risks, shortfalls and limitations. Their impact is often difficult to quantify precisely, given the wider policy environment and market forces.

Complementary policies

A near-universal finding on the performance of carbon pricing schemes is that they are more effective in reducing emissions if they are part of a mix of complementary policies (Raiser and Rault, 2025). The price of ETS allowances is significantly influenced by the stringency of complementary policies and ambition of targets. (Günther et al., 2024). For example, Sweden’s and Norway’s successes in decarbonisation are partly dependent on integration of carbon pricing with subsidies, alternative fuel quotas, other taxes and support mechanisms, as well as research and development incentives (Ma, 2023; Norwegian Ministry of Climate and Environment, 2022). Multilevel policy mixes can be mutually reinforcing if they are designed with a view to maximising efficiency and minimising overlap (European Commission, 2021; Winter, 2024).

Existing taxes and levies must be carefully considered to avoid double burdening of consumers. The UK has a long-standing excise duty system on the transport and heating sectors, and an existing environmental tax charged on business energy use (the Climate Change Levy), which could introduce a risk of double counting of emissions taxes (UK Government, 2016). This could be mitigated by phasing out or adjusting these taxes as the ETS on affected sectors is phased in (Sturge et al., 2024b). The EU is also designing compensation regimes and coordinating with Member States to mitigate overlaps between the EU ETS2 and national schemes (European Commission, 2021; Federal government of Germany, 2024, Bach et al., 2023).

Complementary policies can also inadvertently reduce the effectiveness of carbon pricing. For example, if subsidies encouraging the deployment of clean technologies in a certain sector are introduced alongside an ETS, they risk lowering carbon prices. If an ETS covers the electricity and heating sectors, and simultaneously there are subsidies available for renewable electricity deployment, electricity producers could decarbonise more quickly, increasing the number of available ETS permits and thus depressing the carbon price. The lower carbon price could in turn disincentivise the decarbonisation of heating producers and reduce the efficiency of the overall ETS scheme. This is also known as the waterbed effect. (Raiser and Rault, 2025). This is why market stabilisation mechanisms such as the EU ETS2 Market Stability Reserve (MSR) are seen as essential (Marcantonini et al., 2017).

Carbon taxes and ETS schemes each have relative advantages and disadvantages if being considered for standalone application. They can also be applied simultaneously, but the effects of doing so are context-dependent. In some cases, applying them to the same emissions base could render one of them redundant. However, they can also complement each other. For example, a carbon tax acting as a price floor can help stabilise volatile prices in an ETS. This was shown to be successful in the UK ETS for electricity sector emissions (Raiser and Rault, 2025; International Carbon Action Partnership, 2025c).

Social and political feasibility

Ultimately, emissions reduction from carbon pricing is driven by the magnitude of the price signal which itself creates challenges for social and political acceptability (Arcila and Baker, 2022). These have been evident throughout the negotiation of the EU ETS2 and the current debates surrounding its implementation (Germanwatch, 2025). Elsewhere, the literature shows varying public reactions and degree of support across countries, but also across time. For example, after an initial backlash, the BC carbon tax received greater public acceptance once revenue recycling progressed (Pretis, 2022; GIZ and UNDP, 2019). This link between social acceptance and revenue recycling is found more broadly across the literature. In Sweden, social acceptability was found to depend on the perceived quality of existing social insurance programmes and the measures taken to address collective, rather than personal, distributional impacts (Nordbrandt et al., 2025; Lindvall et al., 2024).

Apart from through revenue recycling, public acceptability of carbon pricing may increase if the policy is introduced gradually. This can allow consumers to adapt to the scheme before it causes major lifestyle changes, thereby reducing adjustment costs. Moreover, effective communication techniques can increase feasibility of carbon pricing by highlighting benefits, reducing misperceptions and tackling biases. This includes making the financial and environmental benefits of the scheme prominent in communications. For example, this could be through showing revenue recycling to individuals via their payslips, or by using positive language, such as ‘climate contribution’ instead of ‘carbon tax’, to frame the scheme (Barrez and Bachus, 2023).

Political feasibility will strongly depend on social acceptance of carbon pricing, as well as wider social challenges. Political support for carbon pricing can be increased if schemes are designed to clearly address environmental and economic issues (Knaggård and Hildingsson, 2025). The administrative burden of carbon pricing schemes must also be considered and can affect political feasibility. Carbon tax systems can often be implemented relatively inexpensively for governments, using existing fuel tax infrastructure (Stavins, 2022; Ministry of Finance, 2023). ETSs tend to be more administratively complex and generally require a separate regulatory authority. This complexity may be less burdensome if an ETS is already in place on other sectors, as is the case in the UK.

The Scottish context

The ultimate impact of any carbon pricing scheme will depend on its national context, including existing policies, climate ambitions, and socio-economic challenges. In Scotland, the ambitious national commitment to reaching net zero emissions by 2045 will require steep reductions in emissions from road transport and buildings. According to the draft Climate Change Plan (CCP), the transport sector will need to reduce emissions by 74% between the 2026-2030 and 2036-2040 periods. The buildings sector will need to reduce emissions by 42% between the 2026-2030 and 2036-2040 periods (Scottish Government, 2025a). Scotland’s Heat in Buildings Strategy (2021) set out even steeper reductions for emissions from building heating: 68% by 2030 (Scottish Government, 2021). This strategy is due to be revised in 2026.

Reaching these climate targets is expected to require a significant ramp-up in the pace of adoption of low-carbon transport and heating. The Scottish Government estimates that 1.9 million homes and 13,000 commercial properties must transition to heat pumps or heat networks by 2045 (Scottish Government, 2025a). For transport, the UK Climate Change Committee (CCC) projects an increase in the share of battery electric vehicles from 4.8% in 2025 to nearly 30% in 2030 and 94% in 2045 as part of a balanced pathway to net-zero emissions (Climate Change Committee, 2025b). At the same time, Scotland’s transport and buildings sectors have been slower to decarbonise than other sectors, and recent emissions projections under the Climate Change Plan update of November 2025 are less optimistic than in the previous Climate Change Plan (CCP) from 2020 (Scottish Government, 2025b; Climate Change Committee, 2025a).

Carbon pricing policies could play a role in accelerating the pace of decarbonisation in Scotland’s transport and buildings sectors, as part of a wider policy portfolio. Scotland has numerous policies addressing decarbonisation in transport and buildings, including: subsidy schemes for building energy efficiency and low-carbon heating heat standards for new buildings proposed energy efficiency standards for existing buildings a phase-out of new petrol and diesel car sales by 2030 interest-free loans for EV purchases and a zero-emissions vehicle mandate (Scottish Government, 2025a; Scottish Government, 2025b; Scottish Parliament, 2025; Scottish Government, 2022; UK Government, 2025c; Transport Scotland, 2023). Transport fuels are also covered through wider taxation schemes with implicit impact on emissions, such as the UK fuel duty. Under the fuel duty, EV owners will pay per-mile rates equivalent to around half of that charged to internal combustion engine vehicles (HM Treasury, 2025). Such policies and support schemes could be key complements to carbon pricing, by ensuring that consumers can effectively respond to a carbon price signal by investing in new technologies or adjusting their demand.

Reducing consumer impact and avoiding policy regressiveness would be important in the Scottish context, where household disposable incomes are still recovering from recent inflation shocks (Scottish Government, 2024c). Distributional impact, meaning impacts on low-income and other vulnerable consumers, is a key concern given Scotland’s a legally binding target to reach a 5% rate of fuel poverty by 2040 from current rates of 39% (Scottish Parliament, 2019). 20% of the population is also at risk of transport poverty (Scottish Parliament Cross Party Group on Sustainable Transport, 2025). These socio-economic characteristics mean that any additional cost burden from carbon pricing needs to be managed especially carefully. However, if accompanied by revenue recycling mechanisms designed to alleviate distributional effects, carbon pricing instruments could also become effective tools in addressing fuel poverty. Revenue recycling mechanisms can also remove barriers to investment in low-carbon measures, such as heat pumps, for low-income and vulnerable populations.

Effects of a carbon price on Scotland’s road transport and buildings

In this section, we model the effects of a carbon price on Scotland’s road transport and building sectors, and discuss the implications given the Scottish context outlined above.

Overview of carbon pricing model

To simulate the effects of a carbon price levied on Scotland’s transport and building heating fuels, we constructed a simple investment model. The model simulates the application of a carbon price to transport and heating fuels based on their carbon content. Figure 1 shows the general modelling framework of the model used in this study, which simulates:

1. the change in fuel consumption by several “consumer archetypes” in response to changing fuel costs (including the addition of a carbon price)
   
2. decisions by these archetypes to invest into alternative low-carbon technologies under the carbon price.

The above consumer archetypes are defined as: household consumers (differentiated by income level); and commercial consumers for heating (small and large offices, retail spaces, and other non-residential spaces, such as warehouses) and transport (light goods vehicles (LGVs) and heavy goods vehicles (HGVs) for business purposes).

Our model also includes a baseline scenario, which simulates a mix of existing and expected policies on Scotland’s transport and building sectors. The primary variables we model in our carbon pricing scenarios are: emissions abatement, the costs incurred by consumers and fuel suppliers, and the distribution of costs between commercial and residential consumers and across residential consumer income deciles. We cite our findings relative to the baseline scenario, for example additional emissions abatement and additional spending on fuel.

General modelling framework

The model is implemented in Excel. It is initiated through a baseline scenario, which accounts for the impact of existing and expected UK and Scottish policies on consumption behaviour, as well as projected economic and demographic changes in Scotland. We then model a carbon price on top of these policies and projected changes, implemented through a carbon tax (2 scenarios – low tax and high tax rates) and an ETS (2 scenarios – with and without a soft price cap). Full details are provided in Appendix A. This price then generates a consumer response additional to the baseline scenario: adjusting fuel consumption, or investing in a lower-carbon technology if it makes economic sense. The technologies we model are limited to heat pumps and electric vehicles (EVs), given their anticipated prominent role as low-carbon alternatives and the constraints on modelling additional technologies imposed by the simplicity of our model. The carbon price is pre-set in the carbon tax scenarios, and derived from a simulated ETS market in the ETS scenarios. Demand for heating and transport is assumed to be relatively inelastic, more so for heating than for transport. Additional details are provided in Appendix A.

Model scenarios, data sources and assumptions

Our baseline scenario follows the CCC 7^th Carbon Budget (7CB) Balanced Pathway trajectory until 2030, which provides the best available holistic picture of policy evolution. After 2030, our baseline scenario diverges from CCC projections, particularly for heating, due to the more conservative assumptions we make about technology uptake. These assumptions are necessary simplifications and broadly mean that in our model low-carbon technologies are only deployed when their incumbent counterparts are retired. Second-hand markets and leasing for vehicles are not considered. Our scenarios also do not assume the full range of supporting policies and regulatory changes that are modelled in the 7CB scenario, which accelerate technology deployment.

Despite this divergence, our baseline scenario remains ambitious, as it includes current and key expected decarbonisation policies (see Appendix A for the full list of policies). This was an intentional design choice, aiming to assess the effect of carbon pricing as part of a policy portfolio, rather than in isolation. However, the ambitious nature of the baseline scenarios means that emissions reductions are already steep before carbon pricing effects are even modelled. This impacts the modelled emissions abatement and costs of carbon pricing instruments (see Section 4.2).

Features of the four carbon pricing scenarios and our main assumptions are detailed in Appendix A. The carbon tax is set to start in 2027, and the ETS in 2028. This was necessary to avoid circularity in the model. The period over which carbon pricing is analysed in this study, referred to as the “study period”, is 2027-2045 (with no ETS in 2027). The low carbon tax rate is set at £25/tCO₂ and the higher at £75/tCO₂, with the rates selected based on low and high ranges of carbon taxes in EU Member States. In the ETS scenarios, the price is dynamically modelled based on ongoing emissions reductions and pre-set market rules (see Appendix A). Carbon prices in these ETS scenarios reach £110-£133/tCO₂ by 2045. For each of the four scenarios, we simulate the effects of a full pass-through rate in which the carbon price is fully borne by consumers, and a 50% rate in which suppliers and consumers each pay half the carbon price.

The data sources used in this model are outlined in Appendix B. They are primarily sourced from national-level statistics and projections (e.g., Climate Change Committee, 2025b). The ETS scenarios are constructed based on the design of the EU ETS2 (see Appendix A).

We make a series of simplifying assumptions in the model. Namely, we do not model non-price factors influencing technology uptake, such as energy literacy. We also model the perceived affordability of alternative technologies indirectly, varying across income groups, and set affordability factors artificially based on income deciles. This is due to challenges with obtaining robust data on affordability of investments across income groups. We use simplified cost curves and S-curve technology deployments. This means that the uptake of heat pumps and EVs in our model follows the S-shaped curve typical of adoption trajectories for low-carbon technologies. The S-shaped curve represents slow adoption whilst new technologies are more expensive than incumbents, then rapid acceleration once cost parity or advantage is reached and finally tapering off as the market approaches saturation. Our model also does not include a minimum acceptable fuel consumption, as for the modelled carbon prices we do not see a reduction in consumption beneath levels required for maintaining quality of life. Further assumptions and detail are available in Appendix A.

Limitations

The simplicity of the investment model is intentional, given how complex it is to model multiple sectors. This imposes a limit on how realistic the simulated effects are. It is intended as a starting point to assess the order of magnitude of potential impact. Detailed explanations of the model limitations are presented in Appendix A.

An important limitation is that because we assume that technologies are only switched when they approach their end of life, rather than over a shorter term, the uptake of new technologies modelled in this study may be relatively conservative. For example, in the real world, a household may replace a car before their current car reaches the end of its life. The complexity of ETS schemes also means that the carbon price trajectory in an implemented scheme may unfold quite differently than set in the modelling. Detailed policy interactions are not modelled due to the inherent complexity. Another important limitation is that we do not model the effect of revenue recycling on technology uptake. This affects the modelled consumer behaviour, as revenue redistribution through low-carbon subsidies could drive more appetite for investment. We do not treat price elasticity of substitution (i.e., responsiveness to differences between the price of fossil and low-carbon alternatives) directly in the model. It is assessed implicitly in the calculations underpinning technology switching by consumer archetypes, however it is an additional limitation. Finally, the modelled impact of carbon pricing will necessarily depend on assumptions about whether agent behaviour is forward-looking or myopic (Allan et al., 2014). In our model, we assume that agents react purely on an economic basis, comparing the costs of different technologies with prices and technology capital costs in the year of investment decisions. In reality, consumers will be at least partially forward-looking, and will make decisions to invest or not in low-carbon alternatives based on more than economics.

Modelling results

Carbon prices

The simulated yearly ETS carbon prices are shown in Appendix C. The carbon prices start at £62.5/tCO₂ in 2028 and reach £76/tCO₂ and £78/tCO₂ in 2030 and £134 and £110 in 2045, for the scenario with and without a price cap, respectively (Table 1). The differences in average carbon price between the ETS scenarios with and without a price cap are minor (£95/tCO₂ and £101.7/tCO₂, respectively). The price-capped scenario has a much more volatile carbon price due to the MSR alternately releasing and withdrawing allowances to keep the market stable and prices low (see Appendix A). ETS prices in both scenarios are lower than indicated in literature for the EU ETS2 (BloombergNEF, 2025). This is primarily because the baseline scenario is already ambitious.

Table 1. Carbon prices under the four modelled scenarios (£/tCO₂).

The effects of the above carbon prices on fuel prices are shown in Figure 2 for natural gas prices, where the effect of carbon pricing under the four scenarios is most noticeable. The 50% passthrough rate calculations are not shown for brevity, but are included in Appendix C. The £25/tCO2 carbon tax drives only modest uplifts, whereas the £75/tCO2 carbon tax and ETS scenarios provide stronger upwards pressure on fuel prices. As expected, the ETS scenarios exhibit greater short-term price fluctuations compared to carbon taxes, which comes on top of the existing volatility of natural gas prices. The overall reduction over time in underlying natural gas prices in all scenarios is due to external market forces, primarily the large wave of new liquefied natural gas (LNG) supply which reduces prices over the long term (Department for Energy Security and Net Zero, 2024). Diesel and petrol price trends are also shown in Appendix C.

The simulated carbon prices and their impacts on fuel price levels generate emissions abatement and costs to consumers, manifested differently across income groups. The following sections present the headline modelling results for these parameters.

Emissions abatement

Our model shows a cumulative emissions abatement relative to the baseline scenario of 2.9-11 MtCO₂ over the study period (2027-2045). The highest reductions are in the £75 carbon tax scenario with full passthrough, and the lowest in the £25 carbon tax scenario with 50% passthrough (Figure 3). Under the ETS scenarios, cumulative additional reductions are in the range of 6.4-6.8 Mt, with slightly higher reductions in the price-capped scenario driven by higher price volatility especially in later years.

In 2030, aggregate transport and building emissions under the modelled carbon pricing scenarios would be up to 3.7% lower than in the baseline scenario, with the highest reductions in the capped ETS scenario with full pass-through. This is only slightly higher than the £75 carbon tax with full passthrough. By 2045, aggregate emissions are up to 13% lower than the baseline, with the highest reductions in the £75 carbon tax with full pass-through (Figure 4). This indicates that while short-term emissions reductions are comparable between a high-range carbon tax and ETS, in the longer-term carbon taxes lead to a more consistent response to the carbon price signal, compared to ETS schemes where the carbon price fluctuates significantly.

In our model, the primary consumer response to a carbon price is a reduction in fossil fuel consumption, rather than a change in technology, despite demand for fossil fuels being inelastic (i.e., having low responsiveness to price changes). This is due to the relatively small impacts of carbon pricing on the overall levelised cost of heat or transport, as well as investment barriers for heat pumps and EVs. However, several important caveats apply. Firstly, we do not model revenue recycling, which could be used to remove technology investment barriers, for example through subsidies. Secondly, our model assumes that technologies are only replaced at the end of their life, due to data availability challenges. As such, our assumptions around technology switching may be conservative, particularly for EVs, given that vehicles may be replaced before the end of their life. Thirdly, our baseline scenario is already quite ambitious in terms of expectations on technology uptake, being aligned with the 7CB pathway. Finally, consumers will not reduce their fuel consumption indefinitely. While the reduction in consumption in our model does not approach this level, stronger carbon price signals would likely push more consumers towards technology switching, rather than continued reduction in fuel consumption.

In all scenarios, the primary source of emissions reductions is the domestic buildings sector, with cumulative emissions reductions of 2.6-9.5 MtCO₂ over the study period. On the other hand, cumulative emissions reductions in the transport sector are at most 1.55 MtCO₂ over the study period, which occurs in the £75 carbon tax scenario. This reflects the baseline scenario already seeing significant EV uptake, leaving little room for the carbon price mechanisms to make additional gains.

In all scenarios, transport and heating emissions fall as lower-carbon technologies become cheaper and their uptake accelerates. Emissions persist particularly in domestic heating across all scenarios (Figure 5). Introducing a carbon tax at £25/tCO₂ delivers a limited abatement effect compared to the baseline, largely through prompting a reduction in the consumption of petrol, diesel and natural gas. This implies a limited effect of this low tax rate on technology switching. Raising the carbon tax to £75/tCO₂ accelerates emissions reductions and delivers the lowest emissions levels in 2045. Material emissions reductions in domestic heating are expected relative to the baseline, due to a reduction in natural gas consumption and some additional uptake of heat pumps. However, even at £75/tCO₂, residual emissions remain across all sectors by 2045, suggesting that complementary policies are needed to incentivise a substantially larger rate of technology switching.

The ETS scenarios sit between the two carbon tax scenarios in terms of overall expected impacts on emissions. The fluctuations in emissions pricing means that the effect on yearly consumption levels alternately increases and decreases. The increase to a constant price under the higher-range carbon tax scenario delivers slightly larger emissions reductions.

Technology deployment levels underline the differences in abatement between carbon pricing scenarios (Figure 6). Higher carbon prices are expected to have the most notable impact on commercial heating, which sees limited deployment in the baseline scenario. Domestic heat pumps and EVs see some increase in deployment under higher carbon pricing scenarios. However, as indicated above, deployment additional to the baseline is low due to the ambitious nature of the baseline, the relatively small carbon pricing signal, and the assumptions used in this study.

Although our model shows modest additional emissions abatement driven by carbon pricing, such instruments can be valuable complementary policies to an ambitious existing policy mix. In particular, if emissions reductions under the baseline scenario fail to materialise as expected, a continued carbon price signal could incentivise low-carbon switching, insuring against the risk of exceeding Scotland’s carbon budgets.

Cost to consumers

In our model, carbon pricing generates emissions reductions through incentivising investments into low-carbon technologies (heat pumps and EVs) and disincentivising consumption of fossil fuels by raising price levels. Throughout this section, “investment” refers to investment by consumers in low-carbon technologies. The effectiveness of each carbon pricing scenario will depend on the balance between these two effects and how they change over time. As indicated in Section 4.2.2, consumers’ primary response to a carbon price is to reduce their fuel consumption, rather than invest in low-carbon technologies. This is reflected in relatively stable levels of investment under the carbon pricing scenarios over across the time period. Investment levels are similar to the baseline scenario under carbon taxes, but the ETS scenarios have lower levels of total capital investment by consumers than the carbon tax scenarios and the baseline scenario. This is largely due to the ETS scenarios incentivising larger uptake of heat pumps in the domestic sector pre-2030 whilst the subsidy for heat pump is modelled at current levels of £7,500 per unit (see Section 4.4).

Whilst the scenario with largest capital investments (the £75 carbon tax with full pass-through) does not generate a marked increase in total investment in low-carbon technologies relative to the baseline, it does drive a reduction in fossil fuel consumption. However, this reduction is not enough to offset the additional fuel costs due to the carbon price. As such, fuel consumption costs paid by consumers increase by £7.8 billion/year compared to the baseline. The domestic heating sector accounts for nearly 50% of this additional cost, reflecting the lower price elasticity and the baseline uptake already incentivised through heat pump subsidies. This is an undesirable effect, as it will mean that consumers who cannot switch their heating systems yet are forced to pay a higher fuel price, or reduce their heating use. Investment barriers are likely a significant factor in the observed low switching rates, and will be particularly important in the lowest income deciles (see Section 4.2.4). We note again that some of the restrictions on technology switching reflect assumptions built into the model such as switching only occurring when the existing technology reaches its end of life. As such, these findings may be conservative. The preference to reduce fossil fuel consumption rather than invest in low-carbon technologies occurs across all carbon pricing scenarios.

The different carbon pricing levels also translate into different levels of government revenue raised through the respective schemes (Figure 6). Those with 50% passthrough generate slightly higher revenues, given that fuel suppliers are assumed to not reduce their sales and simply pay their half of the carbon costs. Between the scenarios themselves, the £75 carbon tax with 50% passthrough generates the highest revenue to government (exceeding £10 billion across the total time period), higher than the ETS scenarios (£6-6.5bn), despite the latter having higher average carbon prices over the study period. This is because the ETS scenarios drive a sharper reduction in consumption in earlier years, reducing the effective tax base, whereas the £75 carbon tax does not reduce consumption as sharply, therefore consumption and associated revenues stay higher for longer. Whilst not explicitly modelled here, recycling these tax revenues to support targeted interventions could enable an acceleration in emissions reductions by removing some of the cost barriers of low-carbon technologies (see Section 4.5.2).

The overall cost per tonne of CO₂ abated in each scenario is the additional system cost (investment and consumption costs are borne by consumers and suppliers), divided by the additional emissions reductions. Under these conditions our model finds that the system abatement costs range from £591/tCO₂ (£25 carbon tax with 50% pass-through) to £1,217/tCO₂ (uncapped ETS scenario with 50% pass-through). These costs include the carbon costs paid by a population which is assumed to be relatively demand-inelastic. As such, they are not directly comparable to the abatement costs cited in other literature for the UK. These costs also accrue above baseline where substantial emissions reductions have already been realised, and are not supported through revenue recycling. This preliminary finding indicates that revenue recycling and complementary policies will be key to enable the full cost-effectiveness of carbon pricing instruments as emissions reductions tools.

Distribution of costs

This section examines the distribution of the modelled costs across commercial and residential consumer archetypes, and across residential consumer income archetypes^[1]. The consumer costs are materially different across incomes and archetypes, due to variations in the total energy consumption, travel footprint and ability to afford the high upfront costs of low-carbon technologies. Across all scenarios, commercial buildings and the lowest income deciles are the archetypes which consistently incur the highest additional consumption costs relative to the baseline (Figure 7). The highest difference in costs across all archetypes is in the £75 carbon tax with full passthrough – as much as 8% higher than the baseline costs. Domestic consumers in higher income deciles see a much smaller impact on their fuel bills, as despite higher energy consumption they are already more likely to own an electric vehicle and/or heat pump and can more easily switch to low-carbon technologies. Commercial transport also sees a lower impact across all carbon pricing scenarios, as diesel vehicles are more prominent and carbon pricing leads to a smaller percentage increase in cost under future price scenarios.

Impact on emissions

This section analyses the implications of the model results for emissions abatement and modelled changes in the fuel mix.

Relative to 2023, when Scotland’s GHG emissions were 39.6 MtCO₂e (Scottish Government, 2025b), a policy mix aligned with the CCC’s 7CB decarbonisation trajectory for Scotland can keep both buildings and transport emissions within Scotland’s carbon budgets, regardless of whether carbon pricing is in place. Carbon pricing slightly enhances these emissions reductions. Our modelled results show emissions reductions between 2027 and 2045 lower than the 16.3-25.8% reductions in transport and building emissions modelled by others at UK level (Sturge et al., 2024), but they are similar to those envisaged in the design of the EU ETS2 (European Commission, 2021). It is worth highlighting that additional measures, such as energy efficiency or modal shift, represent lower-hanging fruit that in a real carbon pricing environment may be further incentivised. As our simple model excludes these measures, it may underestimate emissions abatement.

The primary driver of emissions abatement under carbon pricing is a reduction in fuel consumption to avoid carbon costs. This mostly occurs in the residential buildings sector, where modelled heating demand is reduced by an additional 525-2,444 GWh per year on average, relative to the baseline scenario. The highest additional demand reductions are in the £75 carbon tax and the uncapped ETS scenario (both with 100% passthrough), and the lowest in the £25 carbon tax scenario with 50% passthrough. This demand also shifts from natural gas to heat pumps, although additional effects compared to the baseline scenario are minor (Table 2 and Table 3). Pricing emissions from heating fuels drives the deployment of an additional 11,000-115,000 heat pumps on average each year, relative to the baseline scenario. The highest deployment (115,000) is in the capped ETS scenario. If the capital cost of heat pumps is further reduced by recycling carbon pricing revenue (see Section 4.5.2), uptake could be further increased.

On the other hand, modelled results suggest the transport sector only weakly responds to a carbon price. Overall, transport energy demand is reduced by an additional 52-390 GWh per year on average, with the highest additional demand reductions in the uncapped ETS scenario with 100% passthrough, and the lowest in the £25 carbon tax scenario with 50% passthrough. Petrol and diesel consumption change negligibly relative to the baseline scenario. This contrasts with some literature findings on the relative ease of changing travel behaviour compared to heating systems (Fazekas et al., 2021). In our case, the modelled carbon price levels do not – in isolation – significantly shift the relative cost of car ownership between EVs and internal combustion engine vehicles (ICEs). Not accounting for second-hand car sales in the model may also contribute to somewhat lower estimates of additional switching to EVs. Emissions reductions in commercial transport are primarily from light goods vehicles (LGVs), but are marginal compared to the baseline scenario where the fleet already switches almost fully to EVs by 2045.

Although the modelled technology uptake driven by carbon pricing is relatively low, it is worth highlighting other environmental effects which they may imply. An increased uptake of EVs may add to existing challenges in end-of-life battery disposal recycling. The baseline scenario foresees an uptake of 24.4 million EVs across the study period, reducing domestic road transport emissions to nearly zero by 2045. Over 1 million of these will be approaching the end of a typical 20-year life by 2045, and ensuring their reuse and recycling will be key, particularly if they are deployed in rural or island areas where appropriate waste management systems may be scarcer. In the buildings sector, increased heat pump installation and maintenance must be appropriately managed to prevent refrigerant leaks and other life-cycle environmental impacts (International Energy Agency, 2022).

While our modelled carbon pricing instruments deliver limited additional emissions abatement, it is worth highlighting that this does not diminish their role in supporting existing decarbonisation policies. Indeed, as highlighted in Section 4.2, our already-ambitious baseline scenario is partially responsible for the muted investment response to carbon pricing. If the policies assumed in the baseline scenario are discontinued (or if future ones fail to materialise), carbon pricing could act as a “backstop” policy to continue incentivising a switch to low-carbon heating and transport alternatives. Furthermore, as mentioned in Section 4.2.3, revenue recycling (which we do not model) could further incentivise investments in low-carbon technologies and increase the associated emissions abatement.

Cost to consumers

In this chapter, we analyse the consumption and investment costs incurred by consumers under the selected carbon pricing scenarios. Our analysis is not a commentary on the cost-effectiveness of carbon pricing, but rather it sets out the costs to consumers in the absence of revenue recycling. It serves to provide a first indication of the magnitude of consumer payments under carbon pricing, and to reinforce the importance of revenue recycling (further addressed in Section 4.5.2).

As shown in Section 4.2.3, in our carbon pricing scenarios the total payments by consumers per tonne of abated CO₂ range from £591 in a £25 tax with 100% passthrough scenario to £1,217 in an uncapped ETS scenario with 50% passthrough. Payments are higher in scenarios with 50% passthrough rates because suppliers, who pay half of the carbon costs in these scenarios, are assumed to not have the ability to reduce their emissions. Across scenarios with 100% passthrough, payments are higher in ETS scenarios, reflecting the effect of price volatility on costs. As ETS prices fluctuate, overall consumption responses are weaker than under a steadily rising carbon price that reaches a peak.

Consumer costs comprise the additional fuel costs paid by consumers who do not switch their heating or transport technologies, and the cost of investments in low-carbon alternatives by those who do decide to switch under the pressure of a carbon price. The total cumulative amount that consumers in Scotland pay under the selected carbon pricing scenarios ranges between £1.5 billion and £8 billion over 2025-2045, 0.5-3.7% higher than in the baseline. The highest total cost is in the £75 carbon tax scenario with full cost pass-through. The majority share of these consumer payments (82-83% in all scenarios) is for additional fuel costs, and as such is a transfer to the Scottish Government, collected either as taxes or payments for ETS permits. As such, the total costs to consumers are not comparable to official GHG abatement costs for the UK, which are much lower (Climate Change Committee, 2019).

Crucially, revenue redistribution, which we did not model, could reduce the ultimate net cost to consumers of carbon pricing. As indicated by the majority share of fuel costs in consumer costs, if revenue is not recycled, under a carbon price consumers would mostly reduce their consumption, rather than invest in alternatives. However, the savings from demand reduction only partially cover the carbon cost of fuels, leading to additional fuel payments of between £1.3 billion and £7.8 billion. What proportion of these additional fuel costs is offset for consumers depends on whether and how carbon pricing revenues is recycled.

When it comes to the consumer investments in low-carbon alternatives, differences between the carbon pricing scenarios and the baseline scenario are minor. In all carbon pricing scenarios, additional investments primarily occur in the heating sector, as opposed to the transport sector. This is primarily because the baseline scenario already shows strong investment in EVs, due to an assumed fall in EV costs for and a ban on new ICE purchases from 2030 (see Section 4.1.2). Additional investments in clean heat are higher than in transport, and are highest in the commercial buildings on a cumulative basis across the study period. This is because residential heat pump deployment, which carbon pricing does encourage, primarily occurs in the short-term and benefits from the heat pump subsidy assumed in our model. Specifically, carbon pricing incentivises earlier heat pump adoption whilst the subsidy is still at its current value of £7,500. We model a gradual phase out of the subsidy from 2029 onwards, which slightly increases the investment cost to consumers over time.

In the baseline scenario a larger stock of fossil technologies remains until the mid-2030s, when the heat pump subsidy begins to taper off, thus increasing heat pump unit costs, and the modelled phase-out of gas boilers and ICE sales triggers rapid technology switching. Thus, in the baseline scenario investment in heat pumps is higher because it occurs later and from a larger pool of fossil technologies.

This may indicate that the earlier technology switching incentivised by carbon pricing, particularly in ETS scenarios, could relieve consumers of a potentially steep investment cost due to the abrupt ban on fossil technologies and tapering off of heat pump subsidies as modelled in this study. However, the limited uptake of heat pumps in recent years indicate that cost is not the only consideration that consumers are accounting for when making decisions about domestic heating.

The above model assumptions mean that in the ETS scenarios, where carbon prices are highest, cumulative investment by consumers in low-carbon technology over the 2027-2045 period is lower than in the baseline scenario, with most of the difference due to the timing of residential heat pump deployment. In the carbon tax scenarios, additional investments in EVs and heat pumps across 2025-2045 are £69 – £119 million, or on average £4 million – £6 million annually. This is on top of the baseline scenario, where average annual investment costs reach £2.3 billion per year. As with additional fuel costs, the ultimate net cost to consumers of investing in low-carbon technologies depends on revenue recycling mechanisms – for example, by using some of the revenues to subsidise (or continue subsidising) heat pumps or EVs.

Beyond what consumers pay, technology switching under carbon pricing will require additional investments in supporting infrastructure. Increased electrification from heat pumps will necessitate wider grid and energy network investments. Using estimates from Love et al (2017), peak demand from households due to the use of heat pumps could rise by up 0.2 GW compared to the baseline scenario. Furthermore, local distribution networks will need to be reinforced to avoid overloading infrastructure. A baseline policy scenario aligned with the CCC 7CB and enhanced with carbon pricing could require an increase in substation capacity of up to 21 percentage points higher in the capped ETS scenario with full cost pass-through, compared to the baseline scenario. This is based on a conservative assumption that an additional 20% uptake of heat pumps requires additional 14% increase in substation capacity. These infrastructure costs were not included in our model, but are essential to support high electrification and decarbonisation pathways.

Other cost implications of carbon pricing schemes should not be discounted. For example, the administrative cost to the Scottish Government of implementing such schemes. This cost is not yet known, however administrative complexity and associated burden may be higher under an ETS. The administrative costs of administering the UK ETS were estimated at around £7 million to government and £4 million to businesses (Department for Business, 2020). In case of a carbon tax, government administrative costs are likely to be compared to those of an ETS, as a new tax could be administered using existing government structures.

The above findings do not reflect the broader economics of carbon pricing, but focus on the gross additional consumers payments for fuels and for investing in low-carbon technologies, under a modelled carbon price. In the following section, we present how these additional payments vary across groups, and reflect on revenue redistribution mechanisms to alleviate consumer cost impacts.

Social implications

In this section, we present the cost to Scottish society of the modelled carbon prices, discuss distributional impact, and outline potential mechanisms to alleviate this impact.

Social and distributional implications

Scottish consumers will bear most of the additional cost generated by carbon pricing. The ultimate costs they bear will depend on how much of the carbon cost is passed through by fossil fuel suppliers. The level of cost pass-through is ultimately a business decision and difficult to elucidate in a simple model.

The main additional cost faced by consumers under our modelled carbon pricing schemes is the carbon cost of the fossil fuels they continue to consume. For context, this is a relatively minor share of the baseline scenario consumer costs – on average 0.79%-4.44% on a yearly basis. On a per-household basis, the average yearly consumption costs due to carbon pricing in the four modelled scenarios are £29-£172 (Appendix C, Table 9), with the highest costs incurred under the £75 carbon tax with full cost passthrough. These additional costs are relatively evenly split between heating and transport (60% and 40%, respectively). Households are the hardest-hit by heating carbon costs, while transport costs are slightly higher for commercial customers than domestic ones.

The distribution of costs across household income groups shows that low-income groups are likely the hardest hit, in line with findings from our evidence review. Averaged across 2027-2045, the lowest-income households which keep using natural gas are estimated to pay 0.2%-1.4% of their assumed median income (£10,000/year) annually in additional carbon costs relative to the baseline, compared to 0.1%-0.2% in the highest-income group (Appendix C, Table 10). In transport, the differences are less pronounced, however the second- and third-lowest income groups (household income up to £30,000/year) are the most impacted (Appendix C, Table 11). They are estimated to pay on average 0.2%-0.3% of their median income in additional petrol costs. Our findings thus indicate a higher distributional impact in the heating sector, as found in studies on the EU ETS2 (European Commission, 2021).

Fuel poverty is a challenge in Scotland, and in our baseline scenario, lower-income groups already spend a disproportionate share of their income on heating and transport fuels. Without mitigation measures, both ETS and carbon taxes risk deepen this disproportion compared to the baseline scenario, most prominently in the £75 carbon tax scenario. As such, again without mitigation, carbon pricing may risk increased fuel poverty even with reduced consumption to cope with carbon prices. The ETS price cap does not change the difference between the lowest and highest income groups in what proportion of their income they spend on natural gas and petrol, indicating that a price cap on its own will not reduce the disproportionate burden on low-income households.

Our model finds substantial potential for emissions reductions arising from technology switching in low- and middle-income groups (up to £50,000/year), largely due to the fact that they have higher shares of natural gas boilers than higher-income groups. To achieve this potential, low- and middle-income groups will require targeted support for investing in low-carbon alternatives. They may also face non-cost barriers such as restrictions by landlords on heat pump installations, given they are more likely to rent rather than own their homes Scottish Government, 2023). Specific support may also be required for rural, highlands and island populations, where fuel poverty is already more pronounced (Scottish Government, 2021, Wilson et al.,2024), and switching to low-carbon transport faces more infrastructure barriers (Thomson et al., 2023).

The cost of any carbon pricing scheme comes against the backdrop of an ongoing cost of living crisis in the UK. Average gas and electricity bills in Scotland rose steeply in 2022 and remain high – approx. £948 and £2,250 per year, respectively (UK Government, 2025b). However, Scottish citizens are generally positive or neutral towards short-term climate policy (Scottish Government, 2025), broadly supportive of stronger net-zero policy, and generally support progressive taxation to fund public services. Some evidence suggests a slim majority (58%) are prepared to support a small additional cost due to net zero policy (Hawkey, 2024). This could indicate some support for carbon pricing, but will be heavily dependent on actual willingness to pay and will vary substantially across income groups.

Revenue recycling mechanisms

The modelled carbon pricing scenarios could potentially raise £3.5-£10.3 billion revenues for the Scottish Government over the study period (see Figure 8 and Appendix C, Table 12). The available evidence suggests recycling this revenue would be a key requirement for Scottish carbon pricing, to avoid disproportionately impacting low-income and other vulnerable groups, as well as to improve political saliency and public acceptability. Various revenue recycling options are available, each with advantages and drawbacks (see Appendix D, Table 15). Any planned use of government revenue for supporting consumers will need to account for a gradual decrease in consumption of fossil fuels reduces in response to the carbon price, which will affect the carbon price revenues as well as potentially other revenues, such as transport fuel duty. Revenue recycling could also be important for social feasibility, as despite being generally supportive of climate action and progressive taxation, the Scottish public cites cost as one of the main barriers to climate action (Scottish Government, 2025; Oxfam, 2024; Hawkey, 2024).

A combination of revenue redistribution methods is likely preferable (Streicher, Kettner and Schratzenstaller, 2025), for example short-term financial support to vulnerable groups, coupled with targeted subsidy schemes and public investments in infrastructure and public transport. Targeted financial compensation in the form of lump-sum payments, rebates, or dividends could be suitable options. They could be regionally differentiated or means-tested on a constellation of factors including income, but also relative risk of transport or fuel poverty, or overall deprivation risk. A focus on rural and island areas would be needed to mitigate the higher prevalence of fuel poverty, however, urban areas will also require attention given their higher prevalence of severe poverty (Scottish Government, 2025d)) and higher emissions from heating and transport (Department for Transport, 2023).

If some of the modelled government revenues are targeted for financial support to specific groups, the remaining revenue could contribute to subsidising clean heat and transport technologies or investing in enabling public infrastructure. For illustration, if the 2027 revenue from a £75 carbon tax with full passthrough were redistributed to cover the additional carbon costs of fossil fuel consumption in Scotland’s five lowest-income classes, enough revenue would remain to fully subsidise the purchase of over 19,000 domestic heat pumps or over 7,700 EVs. Regional targeting of investment can increase public spending efficiency. For example, the government may wish to subsidise EVs in deprived rural areas with high transport emissions, such as West Dunbartonshire, but invest in public transport in deprived urban areas with high transport emissions, such as Glasgow City or North Ayrshire (Department for Transport, 2023).

Conclusions

Our model shows that carbon pricing could drive an additional 2%-13% in annual emissions abatement in Scotland’s road transport and building heating, by 2045. The highest abatement is expected in a £75 carbon tax scenario with 100% passthrough, which would provide a stable carbon price signal estimated to reduce emissions by an additional 11 Mt over the 2027-2045 period, compared to the baseline. ETS instruments also generate abatement, but their greater inherent price volatility means overall abatement is lower. In all scenarios, the primary driver of emissions reductions is a reduction in fossil fuel demand, with limited switching to low-carbon alternatives, compared to the baseline. This is strongly driven by the fact that our baseline already includes ambitious decarbonisation policies, aligned with CCC projections. However, if this baseline decarbonisation fails to materialise, a continued carbon price signal could encourage low-carbon switching and insure against the risk of exceeding carbon budgets.

The particularities and assumptions of our model significantly influence the direct costs incurred by consumers under carbon pricing. For each tonne of CO₂ abated, we estimate that consumers and suppliers incur direct costs of between £591 (£25 tax with 50% passthrough) and £1,217 (uncapped ETS with 50% passthrough) over the study period (2027-2045). These are not abatement costs, rather they are the sum of investments in low-carbon alternatives by consumers who deem them economically preferable and own a technology close to its end of life, and the carbon costs consumers and suppliers pay if they continue using and selling fossil fuels, respectively. The latter carbon costs are the bulk of consumer payments, because in our model consumers primarily respond to the carbon price by reducing their demand. Some of this is due to the already-ambitious baseline scenario. It is also important that we did not model revenue recycling, which if implemented could increase technology switching, particularly in low-income groups. The potential for non-economic benefits, such as improved health outcomes, is also not modelled.

Low-income consumers pay the most in additional fuel costs as a share of their income, in our modelled carbon pricing scenarios. Households with income below £10,000/year could be spending 1.4%-8% more on fuel than in the baseline scenario. Most of these consumers continue using fossil fuels, and pay the carbon price, because in our model they cannot afford to invest in heat pumps or EVs. The £75 carbon tax with full pass-through has the highest distributional impact, both in terms of the added spending on lowest-income households, and the discrepancy in spending between low- and high-income households.

This distributional impact could be mitigated if carbon pricing revenue is recycled and targeted at low-income consumers. Our model shows that government revenues could reach £10 billion over the 2027-2045 period. We only assess the impact of putting a price on carbon, without considering the subsequent use of carbon pricing revenues. Such revenue use would alter the outcomes of our model. For example, reducing consumer costs and incentivising additional investments, thus abating emissions further. Revenue recycling could be targeted as support to low-income households, complemented by public investments in enabling infrastructure. Revenue recycling could also be important for social feasibility.

Lessons learned

Carbon pricing schemes have been applied around the world, but there is still significant uncertainty around their impact on emissions and consumers. Broadly, they are shown to contribute to emissions reductions in sectors where decarbonisation is progressing more slowly, such as transport and building heating. The literature further indicates that carbon pricing on these sectors risks being regressive in high-income countries, and that its performance depends on how their revenues are recycled. To avoid the impact being regressive, revenue recycling would need to target low-income groups more at risk of fuel poverty and facing barriers to switching to low-carbon alternatives. Further research into the potential economic benefits of carbon pricing revenues is an important next step.

Our findings indicate that carbon pricing could enhance Scotland’s emissions reduction trajectories in road transport and building heating. While additional emissions reductions are modest if existing policies are already ambitious, carbon pricing instruments can be key supporting policies, incentivising decarbonisation if other policies fail to deliver. A focus on high and steady carbon prices, whether through a flat tax rate or an appropriately designed ETS, offers the most significant emissions reduction potential. However, the cost to Scottish consumers imposed by carbon pricing instruments will need to be mitigated. More precisely, reducing barriers to investment in low-carbon technologies can ensure that consumers do not just respond by restricting their fuel demand. This is particularly the case for low-income households, for whom targeted support would be required to alleviate distributional impact – which is highest when carbon prices are high and steadiest.

This research is a first step in assessing the potential of carbon pricing instruments, and is necessarily a simplified representation of possible effects. Future research should examine a wider range of potential low-carbon alternatives in heating and road transport, including heat networks and biomass heating in buildings, and biofuels and e-fuels in transport. Refining assumptions around investment barriers would also increase the reliability of our results. Modelling the distributional impact across non-income categories (e.g., rural vs urban) and the effect of revenue recycling would also sharpen recommendations on the ultimate design of carbon pricing schemes. Future research could also assess the administrative costs associated with carbon tax and ETS schemes, based on the likely level of oversight and intervention required by the Scottish Government.

How carbon pricing helps Scotland achieve its 2045 climate targets is ultimately dependent on the design of these instruments, and how they fit into the existing policy environment. Ultimately, the role of carbon pricing is to provide a signal as to the true cost of emitting CO₂ – when other policies come up short, it can insure against losing traction in emissions reductions. How this happens, and how effectively it incentivises consumer change, depends on the careful investigation of complementarities and trade-offs. This is an essential topic for future research to deepen our understanding of how carbon pricing can help achieve Scotland’s 2045 climate targets.

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Appendices

Appendix A Additional methodological details

Main investment model

The model is initiated through a baseline scenario, which accounts for the impact of existing policies on consumption behaviour. Our baseline scenario is based on cost inputs from the 7^th Carbon Budget (7CB), with results initially calibrated to the 7CB Balanced Pathway emissions trajectories for the first five years out to 2030 (including starting levels). This decision was justified by the fact that the 7CB provides the best holistic picture of how domestic energy and climate policy are likely to evolve under the UK and Scotland’s net zero commitments in the short term (to 2030). After 2030, we model continued emissions reductions driven by the uptake of EVs and heat pumps, assuming that these technologies are taken up when fossil technologies are retired, and if the cost of the alternative makes economic sense to the consumer, constrained by “affordability factors” which we set based on income (see “Detailed modelling assumptions” below).

The current and future policies included in our baseline scenario, which result in an emissions reduction trajectory aligned with the 7CB Balance Pathway, are the New Build Heat Standard, a phase-out of new gas boiler installations in Scotland by 2035, no new sales of internal combustion vehicles from 2030, minimum efficiency standard targets for domestic buildings, and fuel efficiency standards for internal combustion vehicles. The Scottish Government’s current heat pump subsidy (£7,500 per unit) is also modelled, and assumed to taper off at a rate of £500/year from 2029 (the end of the UK Boiler Upgrade Scheme), which under future heat pump cost reductions slowly exposes the consumer to more of the total cost of deployment. These policies are all included in the carbon pricing scenarios as well, meaning that they model an additional carbon price signal on top of the existing policy context.

In the carbon tax scenarios, the carbon price is completely exogenous, i.e., it is pre-set and is not an output of the modelling calculations itself. In the ETS scenarios, the carbon price is the price of ETS allowances that must be purchased by fuel suppliers to cover emissions from the combustion of transport and heating fuels which they sell. This price is a function of allowance supply (the number of allowances available to buy in a year, which is capped and declines each year), and demand (the emissions from combusting transport and building heating fuels, that year). The difference between supply and demand acts as an “allowance scarcity”, which affects the carbon price (the higher the allowance scarcity, the higher the carbon price). The carbon price in a given year is determined based on the marginal abatement cost given the allowance scarcity, and the historic carbon price (see next section).

Consumption responses are assumed to vary by archetype (see Section 4.1), with differences primarily driven by differentiated price elasticity of demand and the average annual fuel demand. The price elasticity of demand is set at -0.1 for building heating (Office for Budget Responsibility, 2023). This figure refers to natural gas consumption, which makes up most Scotland’s heating fuel consumption (Scottish Government, 2025c). A demand elasticity of -0.1 means that a doubling of the price will result in a 10% reduction in demand.

The price elasticity of demand is set at -0.25 for transport (Department for Transport, 2024). After consultation with the project Steering Group (SG) we have assumed that the price elasticity of demand for transport varies by income level (-0.15 – -0.35 from high to low income deciles, respectively, with linear interpolation). Demand elasticity of -0.25 means that a doubling of liquid transport fuel prices will result in a 25% reduction in demand.

Features of the four carbon pricing scenarios are shown in Table 4 and Table 5. Carbon taxes are assumed to start in 2027, and ETS schemes in 2028 (this was necessary to avoid circularity in the model). In the ETS scenarios, the supply of allowances is set at the start of the scheme as the projected annual emissions for Scotland’s transport and building sectors, decreasing year-on-year by a reduction factor increasing from 5.38% in 2028 to 10% in 2045. We assume that all allowances are auctioned with no free allocation, and a Market Stability Reserve (MSR) is simulated to address issues of over- or under-supply of allowances in the market. This is done by withdrawing allowances from the market and releasing them from the MSR, respectively, based on the total number of allowances in circulation (TNAC – the number of allowances remaining unclaimed in the market after all emissions have been covered) being above or below, respectively, a pre-set threshold (see Table 5). In the ETS scenario with a price cap, the MSR is also triggered to release allowances if the allowance price exceeds £50/tCO₂ (equivalent to the EU ETS2 soft price cap level after accounting for inflation). Withdrawal and release from the MSR are assumed to occur in the year following over- or under-supply or of price exceedance, and only one rule can be triggered at a time.

Simulation of the ETS module

The carbon price in the ETS scenarios is simulated through an ETS “module”, linked to the main investment model. Two scenarios are modelled: one with a price cap and one without. For the scenario with the price cap, we set the price cap at £50/tCO₂ at the start of the scheme, increasing year on year to reflect increasing decarbonisation ambition. As it is a soft price cap, there is no hard limit on the ETS price – rather, when the ETS price exceeds the cap, the supply of allowances is increased (see below).

The basic logic of the ETS module is that the allowance scarcity (i.e., the difference between the annual allowance cap and the actual emissions generated under the scenario) drives a carbon price on the heating and transport sectors. This carbon price feeds into the main investment model, generating behaviour change and emissions reductions. The updated yearly emissions are then fed back into the ETS module, changing the allowance scarcity and thus the supply of allowances via behaviour of the Market Stability Reserve (see below). The carbon price triggers behaviour change starting from 2028, even though the scheme is simulated to start in 2027. This was necessary to avoid circularity in the investment model.

The supply of allowances (or allowance cap) is pre-set for 2025 at the level of surface transport and building emissions projected by the CCC in its 7^th Carbon Budget (Climate Change Committee, 2025b). At the start of the project, the supply was set based on historic average emissions of these sectors, but this made the initial market much too tight and drove the early-year carbon prices very high. As this would not be expected in an ETS, a more generous allowance supply was set as the starting value for 2025. The same value was used for 2026, following which a linear reduction factor (LRF), increasing from 5.38%/year in 2027 to 10% by 2045. This LRF is quite high compared to that used in the EU ETS2 (5.38%) but at lower values the market becomes very “loose” because emissions reduce rapidly even under the baseline scenarios. The allowance supply is rebased in 2030, 2035, and 2040 by calibrating it to the actual emissions generated under the ETS scenarios for the same years, to ensure the cap is tracking actual emissions reductions.

The supply of allowances is influenced by a simulated Market Stabilisation Mechanism (MSR), mimicking that designed for the EU ETS2. The MSR withdraws and releases allowances based on specific trigger rules (see Table 5): quantity-based withdrawal and release trigger rules, related to the Total Number of Allowances in Circulation (TNAC, a measure of market liquidity) and price-based release trigger rules, related the carbon price (in the price-capped scenario). Only one trigger rule can be applied at a time. The MSR behaviour thus affects the allowance supply and resulting allowance scarcity. The MSR is triggered in year+1, i.e., the TNAC of the previous year is evaluated and the MSR is triggered subsequently to rebalance the market. This may happen multiple times per year in an actual ETS, but could not be simulated in our simple model.

The allowance scarcity (i.e., the difference between the annual allowance cap and the actual emissions generated under the scenario) would in theory lead to the lowest marginal abatement needed to close the allowance scarcity setting the carbon price. Marginal abatement costs are calculated at an archetype level for each year by evaluating the additional costs associated with the relevant low-carbon technology (including both capital and operating expenditures) and dividing it by the lifetime emissions savings from switching from the fossil to clean technology. Given that we only model one technology per sector (heat pumps for buildings and EVs for transport), the abatement costs decrease as technology costs decline and in some of the commercial archetypes are very low due to the modelling of a “representative” building or goods vehicle. As such, instead of translating the minimum marginal abatement cost to meet the required allowance scarcity, we calculate the median marginal abatement cost and combine it with a “market tightness” factor (see below).

The ultimate carbon (allowance) price is made up of the marginal abatement cost, combined with the historic (previous year’s) carbon price. The relative contribution of the marginal abatement cost and historic carbon price is driven by the allowance scarcity through a “market tightness” parameter. When the market is tight (i.e., low amount of surplus allowances available), the carbon price tends towards the marginal abatement cost, as consumers will be forced to decarbonise. Conversely, when the market is loose the carbon price will be more driven by previous year values, as the market will track historic price trends in the absence of allowance scarcity to drive decarbonisation. To generate an increasing carbon price trajectory, in line with expectations from literature, the contribution of the marginal abatement cost was set at a lower value at the start of the scheme, assuming to account for the phase-in of the scheme and eventual association exemptions. By 2035, both the marginal abatement cost and historic price are fully contributing to the carbon price, with relative contributions set by market tightness at the time. A carbon price floor is set, equivalent to the Auction Reserve Price (ARP) in the UK ETS (£28 in 2026, increasing with inflation to reach £49.1 in 2045).

The carbon prices generated under the two ETS scenarios are shown below. The carbon prices are much more volatile in the capped ETS scenario, which is unintuitive. This is due to the behaviour of the MSR. As carbon prices are above our soft price cap early in the ETS scenarios, the MSR is constantly triggered to release, flooding the market with allowances and subsequently being triggered to withdraw allowances to keep the market reasonably tight. This shows that the price cap is designed to keep the scheme affordable, not necessarily stable (this is a wider remit of the MSR).

Detailed modelling assumptions

In addition to the assumptions presented in the main text, key assumptions used to implement the model in Excel are the following:

• Consumer-related assumptions: Consumers act as rational economic agents when taking investment decisions, with archetypes reflecting the average activity of consumers and subsectors and income deciles assumed to remain constant. Investments are constrained by “affordability factors”, artificially set ranging from 0.5 – 1.5 across income ranges to progressively constrain affordability across decreasing income deciles due to the absence of suitable data to construct these affordability factors. Affordability concerns are also reflected in the discount rates used for evaluation of the net present value (NPV) of alternative technologies, which range from 2-38% for domestic consumers also in line with income ranges. Behavioural factors influencing technology uptake are not modelled.
  
• Technology-related assumptions: Technologies were assumed to be available up to the limit of desired consumer investments, with S-curve deployments modelled based on the relative costs of fossil and clean technologies. Technologies were assumed to be taken up at the end of life of their predecessors (e.g. heat pumps replace gas boilers at the end of life of the gas boiler). Due to the scope of the modelling and analysis, second-hand markets for vehicles were not modelled and simplified cost curves were used for new technologies (not reflecting the range of possible technology models).
  
• Carbon pricing and policy assumptions: Electricity prices and consumption were assumed to not be covered by carbon pricing or emissions trading schemes, given that the existing UK ETS covers power generation, with carbon pricing modelled at an annual value. Banking or re-sale of allowances under ETS scenarios is not permitted. Revenue recycling effects were not modelled due to complexity, though are discussed in Section 4.5.2. Only CO₂ emissions are priced, and non-CO₂ emissions are not considered (as they were assumed to be negligible in the target sectors). Future changes in policy and regulatory support for low-carbon technologies were not modelled apart from a halt in the sale of new gas boilers from 2035, which may produce conservative estimates for technology rollout compared to other modelling results (e.g., the 7^th Carbon Budget), and a gradual phase out of the £7,500 grant for heat pumps and other low-carbon domestic heat (which is assumed to fall by £500 p.a. from 2029. This is the end date of England and Wales’ current Boiler Upgrade Scheme).

The ETS scenarios are based on several distinct assumptions, outlined below:

• The TNAC in the first year of operation of the ETS is assumed to be equal to the allowance surplus (i.e., allowance cap minus emissions) as there is no MSR adjustment until the second year of operation.
  
• The price threshold increases with time, in contrast to the EU ETS2 design where it is set at a fixed value; this was introduced as the carbon price regularly exceeds the originally-designed price cap of £50/tCO₂. Under this increase, the price trigger level reaches £140 in 2025.
  
• The MSR trigger rules are more stringent than those in the EU ETS2 (withdrawal of 18%-30% of allowances rather than 12%-24%, release only when TNAC is less than 15% of allowance cap rather than 20%).
  
• The market tightness parameter is calculated based on the assumption that a very loose market is one where TNAC is more than 80% of the allowance cap, and a very tight one is where TNAC is less than 10% of allowance cap.

Model limitations

The simplicity of the investment model is intentional, given the complexity of cross sector scenario modelling, which imposes a limit on how realistic the simulated effects of carbon pricing are. It is intended as a starting point to assess the order of magnitude of potential impact of a carbon pricing system which future studies can build on. This also applies to simulation of wider economic and market factors. For example, changes in future fossil fuel prices beyond the DESNZ fossil fuel price assumptions are not accounted for, including the effect of future supply-side shocks.

The assumptions outlined above also introduce several limitations. Most prominently, excluding the early retirement of conventional fossil technologies means that the uptake of new technologies modelled in this study may be relatively conservative. The complexity of ETS schemes also means that the carbon price trajectory in an implemented scheme may unfold quite differently than in the modelling. We do not model the effects of revenue recycling on technology uptake and the subsequent emissions abatement.

Second-order effects of accelerated uptake on technology capital costs are not included, and policy interactions between carbon pricing and other policies are not modelled due to the inherent complexity. Policy interventions that affect the cost of fuel and electricity for specific income deciles and consumer groups were not included, due to data challenges. Our simple model also does not account for non-price barriers and non-economic factors, such as availability of financing, energy literacy, the “hassle factor” and access to quality equipment and installers, which can be a substantial barrier for low-income groups.

It should be noted that our model does not include minimum acceptable fuel consumption limits, thus an increasing carbon price would cause consumption to decrease ad infinitum. This is a theoretical result due to the simple nature of our model. In practice, consumers are likely to change their investment behaviour if further reducing their fuel consumption becomes unsustainable for their quality of life.

Appendix B Full list of model data sources

The data sources used in the investment model are outlined in Table 6 and Table 7.