What are the UK’s carbon budgets?

The UK Climate Change Committee (CCC) has set 6 carbon budgets since 2008; the budgets define the required fall in emissions of MtCO₂e over a 5-year period.[i] MtCO₂e refers to the metric tons of carbon dioxide equivalent; this is based on the global warming potential of different gases standardised to one unit of CO₂.[ii] Alongside these budgets, the CCC also sets out the necessary governmental, industrial, and individual actions needed to stay within the budget.

The six UK CCC carbon budgets proposed to date (base year = 1990)

                                                                  Source: CCC

The CCC reported that the 1^st and 2^nd carbon budgets were met and that the UK is on track to meet the 3^rd. However, the 4^th and 5^th are not projected to be met.[iii] For comparison, proposed EU reductions in emissions by 2030 would see a reduction of 55% against 1990 levels, and the new balanced pathway approach of the UK would see a 68% reduction by 2030 again since 1990. Per person, the UK target would see emissions more than 1/3 less than emissions per person in the EU.^iv

What is the Balanced Pathway?

The Balanced Pathway is the CCC’s assessment of required actions to meet the 6^th carbon budget, and it sets out to reach Net Zero for all GHG emissions by 2050, requiring 60% of the necessary reduction to be achieved in the next 15 years. Since 1990 GHG (Green House Gas) emissions have fallen by an average of 13 MtCO₂e per year and an average of 19 MtCO₂e since 2012 but only by 16 MtCO₂e per year in the five years prior to the 6^th carbon budget. The more rapid decrease from 2012 onwards has been driven by the decarbonisation of the electricity generating industry. Low-carbon and renewable electricity now account for half of all UK electricity generation. Notably, at the time of publishing the 6th budget, 99% of all miles driven in the UK were from petrol and diesel vehicles, all commercial aviation was run on fossil fuels, and just 5% of the energy used to heat UK homes was produced from low-carbon sources.

In order to meet the 6^th carbon budget, emissions must fall by an average of 21 MtCO₂e. But with the reduction of emissions associated with the electricity generation sector set to stall and the average reduction in emissions (excluding the reduction by the electricity generation sector) being only 7 MtCO₂e, other sectors must accelerate their efforts to meet this budget.

Percentage change in sectoral emissions in the balanced net zero pathway compared to 2019 levels.

                                                                      Source: CCC

How will the Balanced Pathway be achieved?

The achievement of the Balanced Pathway will look different for each key sector. Notably, the sectors which have the broadest impact on the general population are ‘surface transport’, ‘buildings’, ‘aviation’, and ‘waste’:

• For surface transport, for example, a sector that produces 22% of all UK GHG emissions, the Pathway requires the adoption of low-carbon fuels and more fuel-efficient technologies in petrol and diesel vehicles, combined with behavioural shifts to reduce travel demand and increase the use of low-carbon transport (trains, bus etc.). The question is whether a 70% reduction in surface transport emissions by 2035 is achievable. Issues with the projected progress have been identified by the Dawson Group, a leading haulage company in the UK, which in 2020 pointed out that at the time, there were no electric or hydrogen HGVs available to buy; thus, the 2040 target to phase out petrol and diesel HGVs may be unattainable.[iv] In fact, it was only recently that the UK saw its first trials of fully-electric HGVs, with Tesco operating 2 of these vehicles from December 2021 onwards[v].
• Within the building sector of the Balanced Pathway, there are four priorities: ensure all buildings achieve a C grade in their Energy Performance Certificate; increase the market for heat pumps to decarbonise heating; shift away from fossil fuel heat and power towards low-carbon and waste heat and prepare infrastructure for the introduction of hydrogen to heating systems.
• The Balanced Pathway approach to waste sees a ban on all biodegradable waste going to landfills by 2025; this will be supported by an increase in the adoption of anaerobic digestion and composting practices. Interestingly historic landfill sites and their associated methane production can be captured and utilised in the power and gas grids. As of 2018, 68% of this methane was captured, with this set to rise to 80% by 2050.^iv Landfills generate most of their lifetime methane within 20 years; if moves towards a circular economy are successful, landfill waste will reduce and thus their associated methane production. So whilst an innovative technique, this cannot be relied upon long term to meet a significant portion of gas requirements.

                                                         Source: Data from CCC

What financial impact will the Balanced Pathway have?

UK investment in low-carbon practices was £10 Billion in 2020; by 2030, it will rise to £50 Billion per Anum, where it is likely to remain until 2050. Estimates of annualised resource costs of achieving Net Zero have fallen to less than 1% of UK GDP; this follows previous estimations that by 2050 the cost could be up to 2% of GDP. The CCC used the office for budget responsibility (OBR) projections to assess the economic costs of net zero as a percentage of GDP, with ODR projections of a 38% increase in GDP by 2050.[vi]

The increase in investment is primarily deliverable through private companies and individuals; these investments are projected to create 400,000 jobs by 2050 in the energy workforce sector alone.[vii] There are further co-benefits to the 6^th carbon budget, for example, the use of green transport such as cycling, alongside healthier diets. When sizing the economic benefit of improving health in populations around the world, it was found that there could be a resultant $12 Trillion (8%) increase in global GDP by 2040.[viii] The 6^th carbon budget can also be viewed as a “green recovery” effort from the COVID-19 pandemic, which had caused a 9% drop in UK GDP in August 2020 relative to August 2019. Importantly, investment in Net Zero will lead to a cut in operating costs across the industry, and by 2050 aggregated investment costs will be matched by operational savings.^iv

Capital investment costs and operating cost savings in the balanced net zero pathway

                                                                                      Source: CCC

What can we learn from the 6^th carbon budget?

The objective of the CCC’s 6^th carbon budget is to demonstrate the feasibility of Net Zero but also to establish its clear economic and personal benefits. It presents the idea that whilst it is paramount that we act now to address the climate crisis for the sake of the wellbeing of our planet, rapid action will also present economic, lifestyle and health co-benefits. Whilst there have been issues raised by particular sectors, e.g. haulage, over the balanced pathway, the aviation sector can be seen to be outstripping the targets. For example, Safran Helicopter engines seek to achieve 50% usage of sustainable aviation fuel by 2025, smashing the target of 25% by 2050.[ix] This goes to show that for any ground lost in the pursuit of this budget, there are plenty of opportunities to get back on track.

References

[i] https://www.gov.uk/guidance/carbon-budgets

[ii] https://www.epa.gov/sites/default/files/2014-12/documents/ghgcalculatorhelp.pdf

[iii] https://www.lse.ac.uk/granthaminstitute/explainers/what-are-carbon-budgets-and-why-do-we-have-them/

[iv] https://www.telegraph.co.uk/business/2022/02/13/hgv-makers-will-not-ready-diesel-ban/

[v] Tesco to begin UK’s first commercial use of fully electric HGVs | Tesco | The Guardian

[vi] https://www.theccc.org.uk/wp-content/uploads/2020/12/The-Sixth-Carbon-Budget-Methodology-Report.pdf

[vii] https://www.climateaction.org/news/uk-needs-400000-extra-jobs-to-power-2050-net-zero-commitment

[viii] https://www.mckinsey.com/industries/healthcare-systems-and-services/our-insights/how-prioritizing-health-could-help-rebuild-economies

[ix] https://www.helis.com/database/news/safran-rtm322-saf-uk/?noamp=1

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