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UK projected emissions set to breach 4th and 5th carbon budgets

The UK’s latest greenhouse gas emissions projections reveal the mitigation gap relative to tightening carbon budgets is set to widen to almost 400mt CO2 equivalent by 2032 as new policies continue to be delayed.

The updated energy and emissions data for 2018, released on 16 April, confirm expectations that the third five-year carbon budget from 2018 to 2022 is likely to be met comfortably, with headroom of 88MtCO2e. But the UK is on course to breach the crucial fourth and fifth carbon budgets from 2023-27 and 2028-32 respectively. The fourth carbon budget, in many ways seen as a five-year transition to deeper reductions, now has a projected shortfall of 139MtCO2e in 2018, up from 94 MtCO2e in 2017.

The fifth carbon budget is intended to play a pivotal role in delivering decarbonisation, particularly of the power sector, with carbon intensity of generation now expected to fall from around 300 grams CO2e per kWh to just 41gCO2e/kWh by 2035. Overall, 2030 gross emissions – disregarding carbon trading - are to fall at least 61% relative to 1990. It has to provide the glidepath to meeting the UK’s current 80% target for 2050 cost-effectively, with minimum economic dislocation. Yet the latest data reveal a yawning gap in emissions reduction, with the 2017 reference case shortfall increased from 196MtCO2e to 245 MtCO2e, with scenarios ranging from 176 MtCO2e to as high as 353 MtCO2e. Delayed action is widely recognised as far more costly, challenging and risks economic dislocation.

Technical breach

Failure to provide a clear plan "as soon as practicable" as to how the government intends to meet a carbon budget once approved is technically a breach of the Climate Change Act 2008, given the fifth carbon budget was set into law back in July 2016, and the fourth even earlier in 2011. BEIS’ main vehicle for mitigation measures was the long-delayed Clean Growth Strategy (CGS), published in 2017, but this fell well short of providing policy clarity and much of it remains under discussion.

BEIS points out it can only include policies in its projections "if they are either currently implemented or firmly planned in the future: i.e. we do not include policies which are still under development". It adds: "We will continue with our ambitious implementation of the policies and proposals set out in the Clean Growth Strategy to address the gap."

The power sector has been the main engine of emissions mitigation so far, through rapid phase-out of coal generation, a shift to natural gas, growth of renewables and energy efficiency. But while the projections assume low-carbon and renewable generation are to account for around 80% of generation by 2032, a response to the CGS in 2018 by the Grantham Research Institute on Climate Change and the Environment and the ESRC Centre for Climate Change Economics and Policy stressed it is unclear how renewable power can be ramped up so quickly given current support levels envisaged.  

An additional £557m (in 2012 prices) has been allocated by BEIS for further contracts for difference support for renewables, to include a third CfD auction in early 2019. But beyond this, HM Treasury has said no further money will be available before 2025. The UK carbon price, the price of carbon allowances under the EU ETS topped up by the domestic Carbon Price Floor levy, stands at just £24.50/tonne CO2e currently, and would need to rise to nearer £31-62/tCO2e by 2020 to meet the more ambitious Paris Agreement objectives, according to the High-Level Commission on Carbon Prices co-chaired by Lord Stern. The government has said it will not raise the carbon price again before 2025.

Slow progress outside power

Other sectors have seen far less progress, notably homes, which account for 40% of all emissions, and have seen setbacks from cancellation of the 2016 zero carbon new homes target, deep cuts to the Energy Company Obligation (ECO) domestic energy efficiency upgrade scheme, loss of the Green Deal pay-as-you-go upgrade scheme and of the voluntary Code for Sustainable Homes. A fresh low-carbon home newbuild commitment has been mooted, but much time has been lost in the interim, leading to strong recent criticism from the advisory Committee on Climate Change (CCC). All sectors will need to play their part to meet the fifth carbon budget, including transport.

The CGS does allow for "flexibilities" in meeting shortfalls, including carryover of over-achievement from previous budgets, but the CCC has traditionally advised against this controversial practice, and it is likely to be seen as a last resort. BEIS has previously said it is confident this will prove unnecessary given rapid cost reductions in renewables and its ambitious policies and proposals in the CGS.

Awkwardly, the projections came shortly before a crucial report by the CCC expected in late April, commissioned by BEIS on the implications of setting a considerably more ambitious, net zero carbon emissions target for 2050. The move is widely accepted as vital to meeting the aims of the Paris Agreement of staying well below 1.5°C - 2°C of global warming to avoid the rapidly growing risk of dangerous climate change.

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