1. Outline
This is a letter from Lord Deben, Chairman of the Climate Change Committee, to Rt Hon Anne-Maire Trevelyan MP, Minister of State for Energy, Clean Growth and Climate Change and to Robert Courts MP (Parliamentary Under Secretary of State at the Department for Transport), Julie James MS (Minister for Climate Change in the Welsh Government), Michael Matheson MSP (Cabinet Secretary for Net Zero, Energy and Transport in the Scottish Government) and Edwin Poots MLA (Agriculture, Environment and Rural Affairs Minister in the Northern Ireland Executive), providing updated advice on the level of the cap of the UK Emissions Trading Scheme (UK ETS) and advice on the interaction between the UK ETS and the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).
2. Key messages
The Committee is providing updated advice to Government on the level of the cap for the UK ETS, consistent with the CCC pathway to Net Zero. The advice has been updated to align emissions included in the recommendation to the correct scope of the UK ETS, now that there is clarity both on the level of the Sixth Carbon Budget and on the scope of emissions covered by the UK ETS in terms of emitting sectors, greenhouse gases and geographic coverage:
- Our updated advice on the path for emissions covered by the UK ETS entails emissions reductions for currently traded sectors of 53% to 59 MtCO2/year in 2030 against 2019 levels, or by 57% to 54 MtCO2 per year if emissions removals are included.
- Our previous advice entailed emissions reductions for currently traded sectors to 61 MtCO2 per year by 2030. The level of the cap is tighter under updated advice to reflect several minor adjustments, the largest of which is the removal of Northern Ireland power sector emissions (which are included in the EU ETS, as agreed under the Northern Ireland Protocol).
- The updated advice also corrects a mistake reporting the CCC’s previous advice on the level of the cap, from the Sixth Carbon Budget report.
- As noted in the Government’s response to the consultation on The Future of Carbon Pricing, there is an opportunity to align the ETS cap to the CCC pathway to Net Zero from as early as January 2023.
Government is consulting on the interaction between the UK ETS and CORSIA, and has recently published a response to its consultation on the monitoring, reporting and verification requirements for CORSIA:
- The Government’s consultation set out six options for interaction between CORSIA and the UK ETS. Based on our advice on the use of international credits we consider three of these options to be inappropriate.
- Any interaction between CORSIA and the UK ETS should ensure that CORSIA credits do not qualify to offset emissions from flights covered by the UK ETS unless and until they can satisfy strict eligibility criteria (equivalence, additionality, permanence, sustainability).
- The Government’s response to the CORSIA consultation does not propose to include a requirement for plane operators to monitor and report on non-CO2 climate effects of aviation. This would be a missed opportunity. While it is true that further research is needed to understand these impacts better, and estimates may change as the science evolves, it is crucial that the data needed to enable these estimates starts being collected now.
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