1. Introduction to carbon budgets
In early 2025 the Climate Change Committee (CCC) will advise the UK on the level of its Seventh Carbon Budget, the legal limit for UK net emissions of greenhouse gases over the years 2038 to 2042.
The CCC has now started the analytical work that will underpin the Seventh Carbon Budget advice. This document sets out our intended methodological approach to this advice, including plans to assess the impact on the UK economy and costs and benefits of the transition to Net Zero.
It also sets out how we intend to build our evidence base through communication and engagement. Part of this is the call for evidence accompanying this document, with specific questions that can be found on our webpage. We will take responses to these questions into account before finalising our methodology for the Seventh Carbon Budget.
The rest of this chapter provides an introduction to carbon budgets under the Climate Change Act and gives an overview of the UK’s past and future emissions reduction targets.
Following this, Chapter 2 lays out our methodological approach for determining the appropriate level of the Seventh Carbon Budget. Chapter 3 lays out our approach for considering the economic, fiscal and wider social implications of the transition to Net Zero. And finally, Chapter 4 lays out our plans for engagement.
1.1 Carbon budgets under the Climate Change Act
The Climate Change Act 2008 (the Act) is the UK’s legal framework for tackling and responding to climate change. The Act sets in law the long-term goal of reaching Net Zero UK greenhouse gas emissions by 2050 as well as binding intermediate steps defined by the level of the carbon budgets. The carbon budgets are caps on UK greenhouse gas emissions over five-year periods. The first six carbon budgets have been legislated, covering the period 2008 to 2037.
The CCC is the UK’s independent expert advisor on climate change. Part of the CCC’s role is to advise the Government on the level of each carbon budget. The advice also includes the extent to which each carbon budget should be achieved via reducing UK emissions or the use of carbon units (also called carbon credits). Emissions accounting for the UK’s targets is explained further in Box 1.1.
The Act has helped drive the UK’s decarbonisation to date. The CCC’s advice on targets has been accepted and, so far, all carbon budgets have been met.
The UK Government must set in law the level of each carbon budget no later than the 30th of June in the twelfth year before the beginning of the period in question. This is done after first considering the Committee’s advice and any representations made by the Scottish and Welsh Governments and the Northern Ireland Executive. Prior to setting it in law, the UK Government’s proposed level of each carbon budget is laid before and agreed by Parliament. Subsequently the UK Government must prepare the policies and proposals required to achieve the target.
Scotland, Wales and Northern Ireland all have their own legal frameworks and their own decarbonisation targets. The CCC provides separate advice to each of the devolved administrations on their targets.
1.2 Current and future targets
1.2.1 Why Net Zero?
The UK target for reaching Net Zero greenhouse gas emissions by 2050 was legislated in 2019 following advice from the CCC. This advice reviewed the latest scientific evidence, assessed the costs and available decarbonisation options for reaching Net Zero greenhouse gas emissions and considered the UK’s commitments as a signatory to the 2015 Paris Agreement. The advice concluded that as well as being necessary to respond to the latest climate science and meet the UK’s Paris Agreement obligations, reaching Net Zero greenhouse gas emissions by 2050 is feasible for the UK.
Since the legislation of this target, the following developments have reinforced the Committee’s 2019 recommendation that Net Zero greenhouse gas emissions by 2050 is the appropriate long-term target for the UK:
- The Intergovernmental Panel on Climate Change (IPCC) completed its Sixth Assessment Report cycle, concluding that halting human-caused global warming will require global CO2 emissions to be close to Net Zero and for strong reductions in other greenhouse gas emissions to be made. Keeping peak levels of warming close to 1.5°C above pre-industrial levels (or well below 2°C) will mean tight limits on future global cumulative CO2 emissions and substantial reductions in the levels of other greenhouse gases. The UK’s Net Zero target is for all greenhouse gases, so Net Zero CO2 emissions should be reached prior to 2050.
- Modelled IPCC pathways that limit warming to 1.5°C (with >50% probability) reach global Net Zero CO2 in the early 2050s. These pathways see global greenhouse gas emissions peak between 2020 and 2025 and assume deep and immediate cuts in emissions are made across most sectors this decade.
- National Net Zero targets and ambitions now cover approximately 90% of present global emissions and major economies, including the EU and the United States, are also targeting Net Zero greenhouse gas emissions by 2050. These international targets are increasingly accompanied by ambitious policy packages designed to incentivise take-up of low-carbon technologies and boost domestic energy security and low-carbon competitiveness. Major low-carbon transition programmes are underway in the world’s largest economies; the EU, US and China.
The evidence remains consistent between IPCC reports and supports the UK’s legislated 2050 Net Zero target. This is therefore the long-term goal towards which our advice on the Seventh Carbon Budget will set the path.
1.2.2 Current intermediate targets
The five-year carbon budgets act as the legal path to Net Zero in the UK. They are necessary to make clear the required level of emissions reductions in the short and medium term to ensure the UK is on track to decarbonise by 2050.
- The first two carbon budgets were achieved. The Third Carbon Budget will be assessed in 2024 and is very likely to have been achieved. The Fourth, Fifth and Sixth Carbon Budgets, and all future budgets, will be assessed two years after the last year in the budget period, once reported emissions data are available (Figure 1.1).
- The Sixth Carbon Budget (2033-2037) is the first budget set at a level consistent with a pathway to Net Zero by 2050. It is also the first budget that includes the UK’s share of emissions from international aviation and shipping, which are also included in the Net Zero target (Box 1.1).
- For 2030, the UK has an international commitment to reduce emissions by 68% compared to 1990 levels (excluding emissions from international aviation and shipping). This is the UK’s 2030 Nationally Determined Contribution (NDC), that was submitted to the United Nations Framework Convention on Climate Change (UNFCCC) and it is also consistent with a pathway to Net Zero by 2050.
1.2.3 The Seventh Carbon Budget (2038-2042) and the 2035 NDC
The CCC’s advice on the level of the Seventh Carbon Budget will be consistent with trajectories for reaching Net Zero emissions by 2050 and will consider the Paris Agreement principles for countries’ efforts to reflect their highest possible ambition and capabilities. It will consider both the latest scientific evidence on climate change, including the outputs from the IPCC’s Sixth Assessment Report cycle, and international climate progress and developments in key low-carbon technologies.
The Seventh Carbon Budget will include emissions from international aviation and shipping (Box 1.1) and advise on how the UK could help to further worldwide climate action, such as measures to address UK consumption emissions (Chapter 2, Section 2.8).
As part of this work, the CCC will also prepare advice on the 2035 NDC that considers the emissions reduction required over the Sixth Carbon Budget period and the UK’s obligations under the Paris Agreement (Box 1.2).
Emissions accounting in the UK’s targets
|Territorial emissions. The UK’s emissions targets cover territorial emissions. These are defined as emissions that take place within the UK’s borders. They do not cover emissions in other countries, even if these emissions result from the production of goods or services which are consumed within the UK (See Chapter 2, Section 2.8 on consumption emissions).
Traded and non-traded sectors. For the First and Second Carbon Budgets, and partway through the Third Carbon Budget (up to and including 2020), emissions in the traded sectors (i.e. emissions which were covered by the EU Emissions Trading Scheme (ETS)) were covered in a different way to those in the non-traded sectors. The emissions that were counted against the targets were those allocated to the UK in the EU ETS. When UK emitters produced more or less emissions than their collective allocation (buying or selling EU ETS allowances accordingly), these increases or decreases in emissions were not counted in assessments of whether the target was met. From 2021 onwards, this is not necessary as the UK left the EU ETS in 2020.
International aviation and shipping. The Sixth Carbon Budget and the Net Zero target include international aviation and shipping emissions in their scope. This demonstrates that all emissions must be reduced, and there is no special treatment compared to other sectors. The UK is a key player in driving strong international mechanisms for reducing emissions in these sectors. Details on our advice on the inclusion of international aviation and shipping emissions in the target scope is in our Sixth Carbon Budget advice report. We continue to advise that all future targets should include these emissions.
Carbon units/credits. The Climate Change Act allows for the purchase of carbon units also known as carbon credits) to contribute to the achievement of carbon budget targets. Following the CCC’s advice, the Government has previously decided that units/credits would not be allowed to contribute, as there has always been sufficient potential to reduce emissions via domestic action. There are also potential issues over the verification and integrity of international carbon credits.
Banking and borrowing. The Climate Change Act allows for over-achievement against carbon budget targets to be carried over to the next carbon budget period, allowing emissions in that period to be correspondingly higher than the original target (banking). It also permits emissions to be borrowed from future carbon budgets, allowing emissions in that period to be higher but resulting in the target for the future carbon budget being correspondingly lower. The Committee has consistently advised that an over-achievement of a budget should not be carried forward unless it can be demonstrated that it was due to policy action significantly ahead of schedule and that the carry forward would pose no risk to the long term goal of Net Zero. This is particularly important when considering the over-achievement of the carbon budgets that were not set in line with Net Zero (i.e. the First to the Fifth Carbon Budgets). To ensure that the UK remains on track for a smooth transition to Net Zero it is essential that carry forward of surplus does not loosen the trajectory to Net Zero. This is essential to avoid the need for unrealistic actions as we approach 2050.
Source: Climate Change Committee (2020) Sixth Carbon Budget.
The UK’s 2035 Nationally Determined Contribution
|Commitments to the international effort to limit global warming in line with the Paris Agreement are made through Nationally Determined Contributions (NDCs) submitted to the UNFCCC every five years. The UK’s 2030 NDC was set on the advice of the CCC in line with a pathway to the UK’s Sixth Carbon Budget and Net Zero by 2050.
As part of the next cycle of the Paris Agreement, the UK Government will need to produce its 2035 NDC. This is to be submitted to the UNFCCC by February 2025 at the latest (nine months before the COP30 climate conference).
As part of its work on the Seventh Carbon Budget, the CCC will prepare advice on the 2035 NDC that considers the emissions reduction required over the Sixth Carbon Budget period and the UK’s obligations under the Paris Agreement.
 The UK’s share of emissions from international aviation and shipping were excluded from the scope of the UK’s NDC in common with all other countries’ 2030 NDC targets. If these emissions are included, the 2030 NDC target corresponds to a 64% reduction on 1990 emissions.