CCC Mitigation Monitoring Framework

11. Cross-cutting issues

Key messages

This chapter looks at how we are tracking cross-cutting aspects of the transition to Net Zero that do not fall into the sector chapters. We organise these indicators into the following themes:

• Governance. The transition to Net Zero will require joined-up action across all sectors of our economy and society. This requires effective leadership across the public sector, with Government departments, public bodies and local authorities developing and implementing plans to deliver emissions reductions across their remits. Good governance structures and processes should coordinate these and ensure that they are directed effectively.
• Public engagement. Meeting Net Zero will require rapid deployment of low-carbon technologies by households, businesses and the public sector and for people to choose lower carbon goods and services. Effective public engagement is essential to this transformation.
• Fair funding and affordability. To deliver the funding needed to achieve Net Zero, there will need to be a fair distribution of costs and benefits across households. Policies should incentivise the uptake of low-carbon technologies and behaviours by households, and support vulnerable groups with issues of affordability. This will have fiscal implications for the Exchequer.
• Workers and skills. Preparing the UK workforce for a transition to a low-carbon economy will require supporting workers, notably through reskilling and creating opportunities for domestic job creation in low-carbon markets. A successful transition will entail involving workers in the decision-making process, in particular vulnerable ones.
• Trade, carbon leakage and reducing consumption emissions. Domestic decarbonisation should not lead to carbon leakage, but rather reduce both consumption and territorial emissions. To achieve this, trade policy should play an important role. Further reductions in UK consumption emissions should be achieved through policies on consumption and efficiency, international leadership and further trade policy.

There are several themes that are important for the transition which we do not yet have indicators for:

• Business and Finance. The private sector will be critical for the delivery of the UK’s transition to Net Zero. Businesses must cut their own emissions and grow new markets in low-carbon technologies and behaviours, reskill employees, decarbonise and future-proof supply chains and make appropriate investments. Indicators for business and finance will be published in our future work on business. Many vital business actions are also be picked up in our sector monitoring.
• Innovation. Innovation is a fundamental component in the transition to Net Zero, which will require advances in the development and scale-up of new methods, services and technologies. While many of the required low-carbon technologies already exist, innovation is needed on delivery and ensuring sufficient consumer take-up. Indicators of progress could include technology costs, funding for Net Zero research and innovation and the growth of new markets. We include some of these (e.g. costs of electric cars and of heat pumps) in our sector monitoring.
• Infrastructure. A strengthened and climate-resilient infrastructure system will be a key part of reaching Net Zero. Emissions reduction and adaptation must be considered together when planning for Net Zero, so that upgrades to existing infrastructure and development of new infrastructure are resilient to expected future changes in the climate, especially in the energy, water and transport sectors. Many important aspects of infrastructure progress will also be picked up in our sector monitoring (e.g. energy efficiency of buildings, carbon capture and storage network development).

Governance

Why is governance important?

The transition to Net Zero requires action across all sectors of our economy, depending on delivery from the Government (both nationally and locally), private business, and the public. Delivery pathways will involve interdependencies between these sectors and will present opportunities to realise shared positive outcomes and co-benefits for other objectives (such as levelling up).

Effective governance structures and mechanisms are vital, to coordinate and lead this delivery. They should ensure that relevant actors work together constructively and understand the contributions for which they are responsible. By bringing together and empowering the right expertise, good governance can identify risks and opportunities at an early stage, allowing policies to be improved over time.

Good governance therefore gives the Government’s plans credibility and can ensure cost-effective delivery of Net Zero at the pace required, maximising the benefits for society and minimising trade-offs.

What action is needed on governance?

The Government must put in place the appropriate governance structures and mechanisms to steer the Net Zero transition effectively across the economy. This includes designing and refining structures both to coordinate progress across the economy and to enable development and implementation of joined-up, Net-Zero-aligned policy in each sector. Across all levels, good governance requires several key elements:

• Clear roles and responsibilities. The actions required cut across departmental remits and sectors of the economy. There should be a clear and agreed understanding of who is responsible for doing what and how actors should collaborate and communicate. This extends beyond central Government to the roles of local government, wider public bodies, and the private sector.
• Effective coordination and collaboration, across sectors and across levels of government.
  • Net Zero is a complex delivery programme with many interdependencies and feedback loops between the required actions. Governance structures should develop shared understanding of these interconnections and ensure actions reinforce rather than undermine each other, as well as facilitating change as this understanding evolves.
  • The UK Government will need to work effectively with the devolved administrations and local government to achieve this. This requires a clear, agreed framework of roles and responsibilities, strong coordination mechanisms, and willingness to cooperate across political divides to deliver actions that will bring benefits for communities and the country as a whole.
• Accountability mechanisms. With good coordination and clear roles and responsibilities, the aim should be to delegate as much delivery as is practical to those organisations with the requisite expertise. This requires clear accountability mechanisms that ensure buy-in and hold actors to account for the delivery that is required from them.
• Policy consistency and alignment of decision-making. Governance mechanisms should ensure that inconsistent policies and decisions are avoided.
  • Policies should work together constructively, rather than sending mixed messages. This clarity and consistency is important in building confidence to unlock private-sector investment and consumer action, both of which will be crucial in delivering the pathway to Net Zero.
  • Decisions across the entire economy will need to be compatible with Net Zero. This requires well-aligned processes and clear guidance that enable decision-makers to understand the actions required and to take decisions that are compliant with these. This applies both to overarching national policies and key enabling processes such as the planning system.
• Robust and transparent monitoring and evaluation. Monitoring and evaluation mechanisms should be designed into policies from the outset. These should be transparent in reporting on progress, to enable delivery bodies and partner organisations to learn by doing, identifying what works and addressing risks as soon as they emerge. This will enable the Government to ensure that policies that do not achieve the intended impact do not undermine wider delivery and to capitalise on those that achieve stronger outcomes than anticipated.
• Long-term funding and resourcing. In many areas, the long timescales of the Net Zero transition will require organisations, such as local government, to build and maintain capacity and expertise. While short-term funding competitions can succeed in driving innovation and supporting pathfinder projects, longer-term funding streams linked to organisations’ agreed roles and responsibilities are likely to be more suited for enabling longer-term tasks that require action across the UK.
• Skills and expertise. Building a good understanding across all areas of Government of the scale of the challenge of reaching Net Zero, the actions required and the practicalities of delivering these on the ground is important for developing effective policy. Furthermore, a range of specialist skills, including legal and financial, will be important in unlocking delivery in practice. Shared expertise and support from relevant public bodies could be valuable in providing this cost-effectively.

Theme indicators

Most of the progress in Net Zero governance is inherently related to policy, and therefore we will monitor it mostly through our annual assessments of policy progress. As a result, most of our annual assessment of this theme will be based on consideration of structural and procedural changes that have been made and progress against our recommendations.

Where possible and helpful, we will support this assessment with data and metrics that are indicative of progress made. We set out some of these below, although these represent only part of the picture. Limited transparency, for example around the frequency of meetings of Cabinet committees, limits our ability to monitor certain aspects quantitatively.

Indicator: Net Zero in departmental planning

ID: G1
Source: Cabinet Office Outcome Delivery Plans
Unit: N/A

• All Government departments are required to produce Outcome Delivery Plans, which list their priority outcomes and how they will work towards delivering these. This indicator is based on searching through the plans as published on the Government website.
• As a proxy for the importance being placed on Net Zero across Government, we can track the number of these plans that:
  • Include a specific priority outcome linked to Net Zero
  • Include specific actions linked to a cross-cutting Net Zero outcome
  • Do not have a specific Net Zero outcome, but do identify specific actions through which they can deliver their department’s contribution to Net Zero
  • Contain only minimal specific content relating to Net Zero.
• Allocation to each of these categories is based on our judgement of the content of each department’s plan.
• Policy. While not every department would be expected to list Net Zero as one of its priority outcomes, the actions that are required cut across all departments’ remits to some degree. We would expect departments to reflect this in their delivery planning, including identifying specific outcomes that need to be achieved and ways in which progress can be monitored.

Indicator: Departmental emissions footprints

ID: Not included in dataset due to volume of data. Refer to source below.
Source: Defra Greening Government Commitments
Unit: MtCO₂e

• Each year, the Government produces a report on progress against its Greening Government Commitments, including measures of emissions from the estates and activities of each department. This indicator tracks these emissions data.
• They are compared against the straight-line trajectory that would be required for each department to meet its target under the five-yearly Greening Government Commitments.
• Policy. It is important for the Government to set a positive example to businesses and individuals through its own behaviour. Government should aim to decarbonise its buildings and vehicle fleets in particular ahead of the pace required across the economy as a whole, to demonstrate the viability of these actions and help develop demand in these markets.

Indicators: Local authority climate emergency declarations and plans

ID: G3, G4
Source: Climate Emergency UK data
Unit: N/A

• At local government level, there is considerable ambition across parties to take action to mitigate and adapt to climate change. This is reflected through the number of local authorities that have declared a climate emergency.
• These indicators will track these declarations, recording the proportion of local authorities who have made a declaration. Furthermore, they will also monitor how many of these authorities have developed a plan to address this emergency. This data is all available through Climate Emergency UK.
• Policy. Delivery of Net Zero will require coordinated action across all areas of the country. Therefore, we would expect all local authorities to develop and publish a climate action plan, setting out how they will deliver their required contributions.
  • Councils should be supported to do this through a framework setting out agreed roles and responsibilities, clear guidance on what is expected, and, where necessary, additional funding linked to what is required.
  • A good plan should cover both climate change mitigation and adaptation and should set out the local authority’s approach to governing and monitoring the transition, engaging with their community and leveraging synergies with other local and national objectives. This discussed in more detail in the Committee’s report on Local Authorities and the Sixth Carbon Budget.

Data gaps

As described above, quantitative indicators are of limited value in tracking progress on Net Zero governance. We will continue to identify data that can offer insight into developments, but the majority of our assessment of this theme will continue to be based on consideration of policy, procedural, and structural developments.

Public engagement and green choices

Meeting Net Zero will require rapid deployment of low-carbon technologies by households, businesses and the public sector. It will also require people to choose lower carbon goods and services. Effective public engagement is essential to this transformation. This theme looks at the ways in which the Government can more effectively engage with the public in this transition.

This section includes our preliminary list of indicators for use in our 2022 progress assessment. We intend to develop this further in due course. We do not include public attitudes to specific technologies such as electric cars and heat pumps – those are instead included within the sectoral assessments.

Why is public engagement important?

People and the choices they make are essential to Net Zero. Whether this is as investors making upstream investment decisions, as businesses manufacturing and installing low-carbon technologies, or as consumers and households choosing lower carbon goods and services. In our Balanced Pathway around 60% of abatement by 2035 relies on consumer choices. These will need effective, targeted public engagement to deliver.

There is a range of public engagement processes that the Government will need to use to engage people effectively with the policy making process. These include:

• Participatory and deliberative processes which enable the public to contribute to policy design and understand and approve of the rationale to move to Net Zero.
• Communications are essential to raise awareness of actions and implications of the Net Zero transition and for building public buy-in.
• Social research such as surveys and opinion polls can track people’s attitudes and views on a wide range of issues and help to inform policy making.
• Behavioural policy design, which builds on a systematic understanding of how people think and make decisions, can be used to shape policy design so that it can more effectively promote changes in green attitudes and behaviours.

What action is needed on public engagement?

There needs to be greater engagement with the public for the transition to Net Zero. More effective public engagement should result in:

• Increased public awareness of Net Zero, climate change and support for measures to deliver Net Zero.
• Increased use of participatory and deliberative processes in policy making, alongside wider considerations such as value for money, and increased public agreement and approval of the Government’s Net Zero Strategy.
• Increased perception that the Government is taking positive action for Net Zero, that the Government is trusted and that the Government communications campaigns are recognised and reach wide audiences.
• Creation of green markets that are affordable across different groups, leading to increased take-up of green actions, goods and services.

Theme indicators

We split our indicators into the following categories:

1. Public awareness of climate change
2. Support for Government action on climate change
3. Personal action being undertaken to reduce climate impacts
4. Communications and public engagement processes around climate change

Public awareness of climate change

Indicator: Public concern about climate change

ID: PE1
Source: DESNZ, Public Attitudes Tracker
Unit: % concerned

• This indicator measures the percentage of the UK public that self-report concern about climate change (from ‘fairly concerned’ to ‘very concerned’). It is a proxy measure that indicates how engaged the public are with climate change. The survey question was: “How concerned, if at all, are you about climate change, sometimes referred to as ‘global warming’?”.
• There is no Government goal or target about climate concern.
• This indicator is practical to include given its inclusion on the DESNZ Public Attitudes tracker since 2012 and is a high-level indication of public attitudes about climate change.
• This is not a direct behavioural measure. There are potential limitations associated with self-report measures of pro-environmental attitudes such as this since they are prone to over-claim and social desirability biases (i.e. answering questions in a way that would be viewed favourably by others).
• It should also be noted that there has been a change of methodology in relation to how the Public Attitudes Tracker is being administered post-COVI. The change from face-to-face interviews to an online panel may impact responses.

Indicator: Knowledge about the concept of Net Zero

ID: PE2
Source: DESNZ, Public Attitudes Tracker
Unit: % aware

• This indicator measures the percentage of the UK public that self-report at least some knowledge about the term ‘Net Zero’ (from ‘a lot’ to ‘a little’, excluding ‘hardly any awareness, but I’ve heard of this’ and ‘never heard of this’). It is a direct measure that indicates public knowledge and awareness of Net Zero.
• There is a commitment from the Government in the Net Zero Strategy to increase awareness of Net Zero.
• This indicator is a relevant reflection of how engaged the UK public are with the Government’s Net Zero Strategy and practical to include given its inclusion on the DESNZ public Attitudes tracker since 2020.
• There are potential limitations associated with self-report measures such as this since they are prone to over-claim and there could be social desirability biases.

Indicator: Perceived climate impact on the UK

ID: PE3
Source: DESNZ, Public Attitudes Tracker
Unit: % responding ‘a great deal’/’to some extent’

• This indicator measures the percentage of the UK public that self-report a belief that climate change currently impacts the UK public. It is a proxy measure that indicates how engaged the public are with climate change.
• The survey question is ‘How much, if at all, do you think climate change is currently affecting: b) people in the UK as a whole?’. Reponses included in this indicator are “some extent” and “a great deal”.
• There is no Government goal or target about climate perceptions.
• This indicator is practical to include given its inclusion on the DESNZ Public Attitudes tracker since 2019 and is a high-level indication of public attitudes about climate change.
• This is not a direct behavioural measure. There are potential limitations associated with self-report measures of pro-environmental attitudes such as this since they are prone to over-claim and social desirability biases.

Support for Government action on climate change

Indicator: Support for Government action on climate change

ID: PE4
Source: IPSOS, Global attitudes to climate change
Unit: % agreement

• This indicator measures the percentage of the UK public that self-report agreement that Government inaction on climate change equates to ‘failing the people’. We are using it as a proxy measure that indicates public support for Government action. The survey question was: “If [the UK] government does not act now to combat climate change, it will be failing the people of [the UK]”.
• There is no direct Government goal or target about support for Government climate action.
• This indicator is practical to include given its annual reporting since 2020 and credible source (IPSOS). This is part of global reporting across over 30 countries.
• This is not a direct measure of ‘support for Government action on climate change’ and should not be equated to supporting specific Net Zero policies. Refer to the data gaps section below.

Personal action to reduce climate impacts

Indicator: Perceived ability to undertake climate positive actions

ID: PE5
Source: DESNZ, Public Attitudes Tracker
Unit: % agreement

• This indicator measures the percentage of the UK public that self-report agreeing that they have the ability to make lifestyle changes for Net Zero. We are using it as a proxy measure to indicate perceived access to green choices. The survey questioned respondents’ agreement with statements regarding climate change: “I have the ability to make changes in my life that could help reduce climate change”.
• There is no Government goal or target about climate perceptions.
• This indicator is practical to include given its inclusion on the DESNZ Public Attitudes tracker since 2019 and is a high-level indication of public attitudes about climate change.
• This measure is a general measure and phrased as ‘make changes’, rather than asking participants which action the public are willing to engage with, which is a limitation. Additionally, this is not a direct behavioural measure, thus there is the potential for participant over-claim bias (overestimating how much they could do) and social desirability bias.

Indicator: Do people make low-carbon choices – self reporting behaviours: at least one, at least three

ID: PE6, PE7
Source: DESNZ, Public Attitudes Tracker
Unit: %

• This indicator asks respondents about low-carbon choices and behaviours people are carrying out in everyday life. It asks respondents about their actions to recycle household waste, avoid food waste, minimise energy use, consider energy efficiency of products and appliances when making a purchase, use alternatives to car travel and drive electric vehicles. In previous waves of the Public Attitudes Tracker two additional behaviours were included: reduction of meat and dairy consumption and reduction of plane travel. These behaviours have now been dropped from the data collection.
• There is no Government goal or target about climate perceptions.
• This indicator is practical to include given its inclusion on the DESNZ Public Attitudes tracker. The question is limited in terms of the range of low-carbon behaviours considered. There is also the potential for over-claiming action. The question is asked without any reference to these behaviours being climate positive.

Communications and Public Engagement processes

Indicator: Trust in Government information about climate change

ID: PE8
Source: DESNZ, Public Attitudes Tracker
Unit: % responding ‘a great deal’ or ’to some extent’

• It is important that people trust information about climate change from Government sources, so that they can support actions to reduce emissions.
• This indictor tracks people’s perceived trust in Government information from the DESNZ Attitudes tracker.
• There is no Government goal or target about trusted information.
• The question relies on the public seeing information about climate change and relying on their perceptions of it.

Data gaps

We are still developing our approach to monitoring progress on public engagement and attitudes. There are areas where the current scope and reliability of indicators could impede our ability to measure. We have identified the following data gaps for the Public Engagement theme. These will be added to our framework when credible data sources are available.

• There is a lack of relevant longitudinal data about public engagement. Other than the DESNZ Public Attitudes tracker, most sources exploring awareness, engagement with Net Zero and public attitudes towards Net Zero behaviours and policies are part of one-off studies or recent trackers.
• There needs to be comprehensive monitoring of the willingness of people to undertake behaviours needed for Net Zero. This should include re-introducing questions around reducing air travel and the consumption of meat and dairy into the DESNZ Public Attitudes Tracker.
• There needs to be more data collected on the perception of current Government policies and possible future policy options.
• There needs to be more data collected on the characteristics of respondents to the survey questions – by geography, social status, ethnicity, etc. so that a broad representation of views can be assessed.
• There is a lack of data about the number and extent of public engagement procedures and processes on climate change in the UK. For example, there is no practical data source that monitors the number of official participatory/deliberative forums, no source that measures perceptions about Net Zero and climate change communications, and no source that monitors Government use of social research and behavioural policy design.
• There is lack of transparency about how the Government has assessed the results from different types of public engagement, alongside wider objectives in policy making.

Fair funding and affordability

Reaching Net Zero will require a major investment programme, which will affect the spending of businesses, households, and the Exchequer. This section focuses on how households and the Exchequer will pay and benefit from the transition, outlining why fair funding and affordability are key to delivering Net Zero, what actions are needed, and how we intend to monitor progress in the future.

Why is fair funding and affordability important?

A fair distribution of costs and benefits across households can build and maintain support for the transition to Net Zero, if policies are put in place to mitigate risks for the most affected groups. However, where costs fall disproportionately on those that are least able to pay, this could become a barrier to funding and delivering Net Zero.

• For Net Zero to be delivered, low-carbon technologies and wider measures need to be affordable. Without appropriate funding mechanisms, households might not be able to bear new costs, which in turn could slow down the transition to Net Zero. For example, the adoption of low-carbon heat and energy efficiency retrofits in homes will require considerable upfront investment. Access to funding options or price mechanisms that lower the costs of low-carbon alternatives can help ensure all households are able to decarbonise. Energy demand reduction measures can similarly support households by reducing their energy bills.
• The government should be alert to the distributional impacts of its climate policies, as disparity of impacts is likely across many sectors and for different households and businesses. A fair transition will require that vulnerable groups do not disproportionately bear the costs of the transition. The decarbonisation of power will result in lower electricity costs in the long term, however, there could be upward pressures on energy bills this decade as low-carbon policy costs are passed on to consumers. Addressing the distributional impacts of Net Zero will entail targeting subsidies and tax breaks to households most at risk, notably fuel poor homes.
• We also expect households to benefit from the transition as they experience large savings, notably from shifting to electric cars that have much lower fuel costs. The transition should also lead to wider benefits for households that range from improved health to better access to the natural environment. These benefits could in turn help embrace Net Zero and accelerate delivery.
• The perception of fairness will be essential, as evidence shows that perceptions of policy fairness are a key determinant in policy acceptability.

What action is needed on fair funding and affordability?

Ensuring fair funding and affordability of the transition requires action now.

• Rebalance costs in energy bills. Historical costs of low-carbon policies have been passed on to consumers through energy bills, which has not only undermined the case for electrification but has also had a regressive effect on households. There are different options to address this distortion in energy prices, which should be put in place now. Policy costs currently passed on through electricity bills could be shifted to general taxation while – at a point when fossil fuel prices have moderated – applying a carbon tax to heating fuels, as appropriate (see Chapter 3 on Buildings in this document).
• Embed distributional considerations in policymaking. In the past, decarbonisation costs were mainly passed on to consumers through energy bills, however other options are available (e.g. targeted funding to fuel poor households, obligations on manufacturers). Government should assess the distributional impacts of different policies on households alongside considerations of decarbonisation incentives. This should be embedded in Government’s decision-making to avoid regressive effects on households.
• Protect the most vulnerable households. Even though Government has already put forward policies to support fuel poor households, these policies have not been sufficient to tackle all fuel poverty. More policy is therefore needed to protect vulnerable groups from the additional effects from Net Zero. A combination of policies (including the rebalancing of costs in energy bills) are more likely to effectively address issues of affordability (see Chapter 3 on Buildings in this document).
• Address fiscal impacts of Net Zero. The transition to Net Zero will have implications for public spending and revenue.

• Public spending will be needed to fund public sector decarbonisation and stimulate private investment through research and development or subsidisation, for example. While the HM Treasury Net Zero Reviewprovided principles to guide funding, it did not set out how Net Zero will be funded. This will be needed to determine whether the level of public and private investment is on track to delivering Net Zero.
• In addition, the reduction in tax revenue from fossil fuels and emissions (e.g. fuel duty) will result in revenue loss for the Exchequer, as recognized by the Office for Budget Responsibility and HM Treasury. The Government should identify how to raise new sources of revenue – which some have suggested could be done through road pricing. These decisions need to be made early to avoid revenue gaps that could slow down Net Zero delivery.

Theme indicators

Monitoring the fair funding and affordability of low-carbon measures can cover multiple dimensions, from identifying the distributional impacts of climate policies, to assessing the market distortions created by energy subsidies and tax breaks, or the general affordability of energy as well as low-carbon products and technologies. There is currently limited evidence available on these issues. As a result, for now we focus on monitoring fuel poverty in the UK where data is already available.

Indicator: Fuel poverty rates

ID: FF1, FF2, FF3, FF4
Source: Scottish Government, Scottish Household Survey; Welsh Government, Dwelling Stock Estimates for Wales; Northern Ireland Executive, Northern Ireland House Condition Survey; DESNZ, Fuel poverty statistics.
Unit: Percent of households in fuel poverty

• The Climate Change Acts sets out that when the CCC makes recommendations to Government on carbon budgets the likely impact of the decision on fuel poverty must be considered.
• These indicators track rates of fuel poverty across the UK, with data disaggregated by devolved administration (DA), based on the number of households who are required to spend more than 10% of their income on domestic energy. These have not been aggregated to provide an overall UK figure because different DAs define fuel poverty differently. In this dataset, fuel poverty rates in England and Scotland are calculated after housing costs, while in Northern Ireland and Wales they are calculated before housing costs. Data for Scotland also considers other factors such as benefits received for a care need or disability and childcare costs.
• There is no explicit target set by the UK Government for fuel poverty, as it is mostly covered by DAs, however the Committee on Fuel Poverty stated in its 2021 annual report that it is determined to ensure that all fuel poor homes have access to sources of targeted financial and energy efficiency support. There is a statutory fuel poverty target for England to improve as many fuel poor homes as is reasonably practicable to a minimum energy efficiency rating of band C by the end of 2030, while the Scottish and Welsh governments have targets that not more than 5% of households are estimated to be living in fuel poverty, as far as reasonably practicable, by 2040 and 2035 respectively.

Data gaps

As noted above, there is limited data on the distributional impacts of climate policies. Some aspects, such as perceptions of affordability and fairness across different societal groups, are likely to be subjective and harder to track quantitatively.

Workers and skills

Delivering Net Zero will require coordinated action from businesses, Government, and people. Workers in particular will need to play a role in creating new low-carbon markets and transforming processes, products and supply chains. Action is needed to meet the scale of the Net Zero objectives and help workers adjust to changing skill needs.

This section outlines why workers and skills are key to delivering Net Zero, what actions are needed, and our preliminary list of indicators to track progress.

Why are workers and skills important?

The transition to a low-carbon economy will result in a range of impacts for workers, from changes in occupation to adopting new skills in an existing role. While some workers will be in sectors that will need to grow as a result of the transition, others are in sectors which will need to phase down or change their processes significantly.

• The transition to a low-carbon economy should lead to a growing demand for low-carbon goods and services, which in turn should result in greater demand for skilled workers. That is the case for buildings construction and retrofit where heat pump engineers will be essential to decarbonise space heating in homes. Failing to train the workforce could compromise sectoral targets and wider climate commitments by delaying the roll out of low-carbon measures. These sectors fall under a category that we call Expected UK Growth.
• Some sectors will have a fundamental role in enabling other sectors to decarbonise, such as workers in education and training or finance. By embedding changes to regulation, finance and knowledge in businesses and society, workers in these sectors will be key to change systems that can either accelerate or create bottlenecks for the transition across the economy. We call these Enabling
• By setting up the right conditions for workers and skills, the UK can maximise the benefits of the transition to Net Zero. New low-carbon markets could grow in the UK, provided it attracts sufficient investment, of which skills is an important determinant. For example, developing gigafactories in the UK to meet the growing demand for EV batteries could create new jobs domestically, however this is not guaranteed to happen and depends on the UK’s competitiveness. We categorise sectors which could grow in the UK, but where this is not guaranteed, as Conditional UK Growth. Managing Net Zero can also provide an opportunity for growth in high-quality jobs, distributing opportunities across regions and increasing diversity.
• As certain sectors’ processes, production, and supply chains decarbonise, workers will need to shift their skills to adjust to changing demands. We call these sectors Redirect For example, in the agriculture sector, supporting farmers to adopt new farming practices that align more closely to Net Zero, will require new or additional skills. Without accessible and affordable support to transition to low-carbon alternatives, there is a risk of leaving workers behind while limiting the acceptability of the transition.
• Some sectors will see demand for their goods and services fall, as limited options are available to decarbonise. These are sectors that will need to Phase Down. That is the case for the oil and gas industry where workers are expected to move to new sectors, such as hydrogen and CCS or renewable energy. Creating bridges towards low-carbon skills and/or sectors will be essential to delivering a fair transition.

What action is needed on workers and skills?

With the right conditions, Net Zero can provide an opportunity for growth in high-quality jobs, distributing opportunities across regions and increasing diversity. However, without active management, there are risks of an inadequate UK skills base to deliver the transition and inequitable or disruptive impacts for the workforce and communities. Policy is needed to facilitate changes in the workforce and to protect against the risks.  Existing labour market mechanisms and education and training systems will have an essential role to play in supporting both new entrants in the workforce and existing workers. Planning an effective and fair workforce transition will entail:

• Strategic assessment of skill needs. Government has already put forward policies to support workers as they adjust to changing skill requirements. However, it is unclear whether these policies will be sufficient to meet the scale and skill needs that are specific to Net Zero. A framework to identify employment and skills priorities and gaps is needed to ensure sufficient progress in addressing these gaps is being made.
• Ensuring Net Zero is delivered. Making progress on Net Zero means providing clear signals to finance, businesses, and workers about upcoming changes. Greater certainty on direction of travel provides businesses and workers with higher incentives, and lower risks, to reshape workforces, undertake skills training programmes and enable the transition to Net Zero.
• Protecting communities from disruptive impacts. While the total number of job losses is small, the job losses that could happen are in areas that are more economically dependent on this employment. In these areas, the transition must be carefully managed, by actively involving workers in the decision-making processes, providing targeted support for reskilling and training programmes, and offering financial support to workers and community projects.
• Harnessing wider opportunities. By building low-carbon businesses and developing new supply chains, employment in low-carbon sectors is likely to increase. Supporting workforce skills can also help to attract investment into the UK for workers and areas that have not benefited from this before. While this will be led by the private sector in many sectors, Government policies can support investment and innovation to gain competitiveness in areas that will benefit employment and distribute opportunities across the UK.
• Clear responsibilities. Supporting workers will entail coordinated action across education and training providers, businesses, local authorities and Government. In current policies, businesses and local authorities have led the assessment of skill needs while Government supported initiatives through grant funding. While this approach can be effective, there is a need for responsibilities to be clearly laid out to understand where these different actors might need to have a different role to best support workers.

Theme indicators

Monitoring progress involves tracking both the opportunities and the risks associated with the transitions. In light of this, to assess the proportion of UK workers likely to be impacted by the Net Zero transition, we consider employment and attractiveness of employment for each of the categories outlined above (Growth, Expected UK Growth, Enabling, Phase Down and Redirect). We also consider the number of workers in the Low Carbon and Renewable Energy Economy, although this is a narrower definition of a ‘green job’. Our indicator work in this area is still in development, but we aim to include other indicators in future such as characteristics of the workforce and the affordability, availability and accessibility of skills support needed for the Net Zero transition. For sector-specific workforce indicators, see sector chapters (e.g. Buildings, Surface transport).

Indicator: LCREE Employment, UK

ID: WS11
Source: ONS, Low carbon and renewable energy economy, UK: 2021.
Unit:  Full time equivalent (FTE) employees

• The ONS publishes annual data that shows the number of workers in the low-carbon and renewable energy economy (LCREE). The LCREE data focuses on jobs that have traditionally been categorised as ‘green’, such as jobs in the renewable energy sector, but does not include all sectors relevant to Net Zero, such as land use.
• While it is a narrower definition than those used in indicators WS1-WS5, it is still useful to monitor LCREE employment data as it considers employment at a more granular occupational level than indicators WS1-WS5, and can therefore provide employment information on specific sub-sectors such as offshore wind.

Indicators: Employment in sectors impacted by the transition to Net Zero, UK

ID: WS1, WS2, WS3, WS4, WS5
Source: ONS, Industry (two, three and five-digit Standard Industrial Classification) – Business Register and Employment Survey (BRES): Table 2, CCC analysis
Unit: Full time equivalent (FTE) employees

• These indicators track employment in key sectors, categorised by the expected impact of the Net Zero transition on those sectors. These are included in addition to indicator WS11 (employment in the Low Carbon and Renewable Energy Economy) because they cover a wider range of Net Zero impacts beyond the traditional definition of ‘green jobs’.
• The transition to Net Zero will require fundamental shifts across every sector of the UK economy. It will result in growing demand for certain goods and services and shrinking demand for others. It will also require means of production to change so that all goods are produced in a low-carbon way. This will result in a range of impacts on the total demand for labour, the occupations of that labour force, and the types of skills they require.
• For each of the UK’s economic sectors, we have assessed the expected changes resulting from the uptake of decarbonisation options in our Balanced Pathway, which could in turn affect sector employment. We have categorised sectors based on these expected changes, as outlined above. These indicators look at how employment in these sectors has changed over time, with sector categorisations as follows:
  • WS1) Grow: Expected UK growth
  • WS2) Grow: Conditional UK growth
  • WS3) Transition: Phase down
  • WS4) Transition: Redirect
  • WS5) Adjust: Enable
• While we don’t have set milestones for these indicators, we would expect growth in indicators WS1 and WS2, a decrease in indicator WS3 and relative stability in indicator WS4. Indicator WS5 is less easy to predict, but we would expect it to either grow or remain stable.

Indicator: Salary premium for jobs in Net Zero growth sectors

ID: WS6, WS7, WS8, WS9, WS10
Source: ONS, Table 16.7a   Annual pay – Gross (£) – For all employee jobs: United Kingdom, 2021.
Unit: Percentage salary difference, relative to UK median salary

• These indicators track salary premiums in key sectors, categorised by the expected impact of the Net Zero transition on those sectors (see Indicators WS1-WS5 for more information). Salary premiums are presented as percentage differences between median salaries in the category and the UK median salary.
• It is important to consider incentives for workers to take up jobs and skills training programmes created in the transition to Net Zero, such as salaries, job security, working conditions and enjoyment, union representation and the cost of training itself. We do not have indicators for all of these elements, but consider salary premiums as a proxy until further data is available.
• While there is no explicit aim for jobs in core sectors to have salary premiums relative to the UK median (in fact this may have negative distributional impacts if workforce diversity gaps are not addressed), it is useful to monitor these incentives and their position relative to each other and to the national average. For example, the salary premium in sectors expected to phase down as part of the Net Zero transition is currently higher than in sectors expected to grow in the UK as part of the transition. This is likely to discourage workers in phase down sectors (e.g. oil and gas) from moving into sectors expected to grow in the UK as part of the Net Zero transition (e.g. renewable electricity generation).

Data gaps

As mentioned above, monitoring progress in this sector will rely in part on a qualitative assessment of the progress and quality of policy, training and transition plans. In order to develop monitoring in this area and quantitative indictors, more data should be made publicly available:

• Publication of the Labour Force Survey results with detailed SIC codes by regional disaggregation.
• There are currently no Standard Industrial Classifications (SIC) or Standard Occupational Classifications (SOC) for professions in areas such as heat networks and energy efficiency retrofits. The absence of good information makes it difficult to target policies and track their effectiveness.
• There is currently no UK-wide data published on skills training programmes for Net Zero. This should include aggregated and disaggregated data on uptake of skills training programmes, as well as their affordability, availability and accessibility.

There are also wider challenges to track progress in this area:

• The heterogeneity of methods to estimate job impacts from Net Zero, make it difficult to compare job creation across sectors. Indeed, both direct and indirect jobs can be accounted for, which can lead to double-counting job creation and losses.
• There is no disaggregated data that could help us assess the attractiveness of jobs in low-carbon sectors relative to that of high-carbon ones, for example through the assessment of wages by occupation and region. Other useful indicators of job attractiveness would include job security, working conditions and union representation.
• Data on workforce characteristics such as age, race and gender are only published at a sector level, making it difficult to provide a clear picture of workforce diversity in specific sub-sectors. For example, while existing ONS data shows a lack of ethnic diversity in the energy sector, it is not possible to assess relative diversity gaps within sub-sectors such as offshore wind and offshore oil and gas.

Trade, carbon leakage and reducing consumption emissions

Why are trade, carbon leakage and reducing consumption emissions Important?

The UK has a considerably larger consumption emissions footprint than its territorial-based. Reducing UK consumption emissions, not just UK territorial emissions, can increase the UK’s contribution to global climate action.

To ensure that policy designed to reduce territorial emissions does not increase consumption emissions, it must be designed to avoid causing carbon leakage – the situation that may occur if, for reasons of costs related to climate policies, businesses were to transfer production to other countries with less stringent emission constraints. While this is important for emissions reduction, it is also important for the UK economy and workforce.

Trade policy offers a key option for both (a) avoiding carbon leakage and (b) making further contributions to reducing the UK’s consumptions emissions by, for example, reducing deforestation or providing a leadership signal to the international community.

This section covers these three issues of trade, carbon leakage and reducing consumption emissions, which are interlinked by their interactions with imported emissions.

What action is needed on trade, carbon leakage and reducing consumption emissions?

Actions in this area fall into two groups: (a) actions required for the UK to meet its legally-binding territorial carbon budgets and which also help with reducing consumption emissions (b) actions to reduce the UK’s imported emissions further, for which the UK does not have a binding target. While the latter is not required by carbon budgets, we recommend that the UK aims to reduce its overseas consumption footprint as part of its contribution to reducing global emissions.

• Actions required to tackle territorial emissions that also reduce imported emissions include: (1) policies to support resource and energy efficiency and wider consumption policy (2) policies to ensure that domestic decarbonisation does not drive carbon leakage, including policies on imports. The sectoral chapters of this Monitoring Framework provide detail on the actions required on resource efficiency, energy efficiency and reducing consumption. We set out principles for carbon leakage policy in our Sixth Carbon Budget advice and provide further detailed recommendations in our annual progress reports.
• Actions to reduce imported emissions further include (1) policies to bring down the carbon-intensity of imported products and services (e.g. to the level of UK production) in sectors where there is not a high risk of carbon leakage, and (2) international leadership on mitigation action and international development support to help with international decarbonisation. Box 11.1 sets out more detail on what options the UK has to lead on international mitigation action and provide international development support.

Figure 11.1 shows how these actions interact to reduce consumption emissions.

Theme indicators

Our indicator work in this area is early in development. We currently track two indicators without a pathway and will seek to develop further indicators in the year ahead.

Indicators: Consumption emissions and emissions from production of imports

ID: T&C1 and T&C2

Source: Defra UK’s carbon footprint

Unit: MtCO₂e

• We monitor progress on both these indicators. However, we do not currently have an indicator pathway for either consumption emissions or emissions from production of imports, against which to track.
• We plan to develop an indicator pathway for a full or partial scope of consumption emissions and or emissions from production of imports in the next year. We’ve previously set out exploratory scenarios (see Figure B7.2 on page 349 of our Sixth Carbon Budget report), although these scenarios were not constructed for the purposes of indicating appropriate ambition. In developing any pathways, we will assess which scope of consumption or imported emissions would be the most effective basis for a pathway. We will also consider the principles underpinning the pathway and the feasibility of tracking progress.

Potential future indicators

In future we will seek to expand our set of indicators for trade, carbon leakage and consumption emissions. For tracking the context on carbon leakage, this could include tracking relative international carbon costs. For tracking progress and context on trade and policy on imports, this could include tracking carbon-intensities of imports, useful actions in trade deals, the breakdown of the products we import and consume, and the breakdown of the source of imports.

Data gaps

We have identified three key challenges associated with consumption emissions data for which we propose next steps. We will review and identify data gaps further as we continue developing our monitoring framework in this area.

• Without further improvements, there is a risk that consumption emissions statistics will not properly capture reductions in the UK’s carbon footprint, because of the methodological approach. Government and data developers should establish a short- and medium-term strategy to improve the underlying methodology to ensure it can capture key improvements in the carbon-intensity of imports.
• Consumption emissions statistics are published much later than territorial emissions statistics (In 2022, there was a 30-month lag between the end of the 2019 emissions year and data publication). That limits its usefulness for giving insights on emerging issues. While this is partly a facet of gathering international data, Government should ensure sufficient resource is dedicated to the task to enable annual emissions statistics to be produced as promptly as possible each year.
• Annual consumption emissions statistics do not account for international deforestation emissions (nor wider land use emissions) that arise from UK consumption. We recommend that Government improves data collection and standardises methodologies for monitoring of, and reporting on, international land use emissions that arise from UK consumption, particularly from deforestation. The Government should aim to report on these international emissions from deforestation on an annual basis from 2023. This may build on the experimental statistic of the Joint Nature Conservation Committee.

Overall, Government should improve the UK’s capacity to track progress on consumption emissions, by increasing investment in, and improving the collection and reporting of, consumption emissions data.