Review of the fourth carbon budget – background note

The UK has committed to reduce its greenhouse gas emissions by 2050 by 80% relative to 1990 levels through a set of carbon budgets covering five-year periods up to 2050.  So far, the government has approved four carbon budgets for the period up to 2027. However, in approving the fourth carbon budget, the government said that in 2014 it would review its commitments in the light of progress within the EU.  The following provides the background to the issues and analysis surrounding the level of the fourth carbon budget.

  • The UK has committed to achieving an 80% reduction in greenhouse gases (GHGs) that are responsible for climate change by 2050, relative to 1990 levels. This is set out in the UK Climate Change Act 2008: http://www.legislation.gov.uk/ukpga/2008/27/contents. Further information on the basis of this target is explained here.
  • The Climate Change Act specifies that a GHG emissions reduction pathway towards the 2050 target is to be achieved by setting a series of carbon budgets, which limit the amount of GHG emissions allowed during consecutive periods of five years, as explained here.
  • The Climate Change Act 2008 specifies that, before seeking Parliamentary agreement to its proposed level of a carbon budget, the Government must first receive advice from the Committee on Climate Change (CCC), as well as any representations by the other national authorities (i.e. the Welsh, Scottish and Northern Irish authorities).
  • Once set in legislation, a carbon budget can only be changed if there have been significant changes to the basis on which it was set, as explained here.
  • The Government set the fourth carbon budget (covering the period 2023-27) in legislation in the middle of 2011, following advice from the CCC in December 2010. This advice and the Government’s response to it is explained here,  - broadly speaking the Government accepted the CCC’s advice to set a budget of 1,950 MtCO2e over the 2023-27 period.
  • The Government specified that in 2014 it would review the fourth carbon budget in light of EU progress towards strengthening its 2020 target from a 20% to a 30% GHG reduction on 1990 levels. Specifically, if the EU ETS cap had not been tightened such that it was in line with a 30% EU target by 2020, then the Government would loosen the fourth budget so as to re-align the budget with the EU trajectory.
  • The Climate Change Act specifies that any review of a carbon budget must take into account significant changes affecting the basis on which it was set, as well as the advice of the CCC. The CCC published its advice in two reports: the first in November 2013, and the second inDecember 2013.
  • The first report assessed whether there had been any significant changes in EU and international circumstances, or in the underlying climate science. It concluded that there was no basis upon which to change the carbon budget when considering EU and international circumstances, as explained here. In addition, it concluded that the climate science basis for the fourth carbon budget, and indeed the 80% GHG reduction target by 2050, has not significantly changed since the budget was originally proposed, as explained here.
  • The second report included an updated assessment of the cost-effective level of the fourth carbon budget, using updated data on emissions projections and mitigation potential. The report also assessed whether there had been any significant changes to other elements of the basis upon which the original fourth budget was proposed (in addition to EU and international circumstances, as well as climate science, which were covered in the first report). As explained here, the CCC concluded that the original fourth carbon budget can still be met cost-effectively (if anything, more easily than previously envisaged) and that there was no change to the basis on which the original fourth carbon budget was set.
  • In summary, the CCC concluded that the fourth carbon budget should not be changed, as there was no basis for this, and any change at this time would actually harm investor confidence.

Read the full Grantham note on the review of the fourth carbon budget here.