Scotland has set an ambitious goal to deliver a just transition to net zero by 2045, but achieving this will require significant public spending alongside private investment. This report examines how Scotland can use its devolved fiscal powers to meet this challenge in the face of growing pressure on public finances. We find that rising demands on health, care, and welfare budgets, combined with constrained borrowing and shrinking capital budgets, are creating a widening gap between current fiscal plans and the funding needed for a just transition.

The report argues that a just transition is not only about reducing emissions, but about building a fairer, more resilient economy through strong public services, workforce investment, and community empowerment. Our central finding is that delivering this vision will require higher public revenue from taxation. While a just transition necessitates that taxation is progressive, we find that relying solely on further increases at the top of the income distribution is neither sufficient nor sustainable. Through detailed tax-benefit modelling, we set out a credible package of tax reforms capable of raising £2.3 billion annually while protecting low-income households and supporting Scotland’s climate and social goals. Key reforms include progressive income tax rises, replacing council tax and LBTT with a new progressive property tax, replacing non-domestic rates with a land value tax, and introducing a new frequent flyer levy.