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Letter: Advice on the use of international emissions credits to Rt Hon Kwasi Kwarteng MP

1. Outline

This is a letter from Lord Deben, Chairman of the Climate Change Committee, to Rt Hon Kwasi Kwarteng MP, Secretary of State for Business, Energy and Industrial Strategy. As required by the Climate Change Act, this letter provides the Climate Change Committee’s advice on the use of international emissions credits (and related mechanisms) to meet carbon budgets, as well as providing an assessment of whether they may be necessary to meet the Fourth Carbon Budget.

2. Key recommendations

This letter states that:

  • The use of international carbon credits in place of domestic action poses several risks including that the use of credits would detract from UK climate leadership and reduce clarity on the steps required in the UK to meet Net Zero.
  • The Climate Change Act also allows for the ‘carry forward’ of outperformance of carbon budgets to help meet the subsequent budget. Our clear advice is that such carry forward of outperformance should not occur. It would lead to worse climate outcomes and jeopardises the achievement of later targets, given the stretching nature of the Net Zero target.
  • The Committee would, however, support the purchase of international carbon credits as an additional lever to support climate mitigation action internationally, in addition to domestic delivery of the legislated carbon budgets.
  • We recommend that international emissions credits are not allowed to contribute to meeting the Fourth Carbon Budget (i.e. that a limit of zero is set on their use). We also reiterate our advice in the strongest terms that the expected large outperformance of the Third Carbon Budget should not be carried forward to help meet the fourth and subsequent budgets.