Understanding The UK's Seventh Carbon Budget

Photo by Nicholas Doherty on Unsplash

How Much More Greenhouse Gases Can We Emit?

The UK's Climate Change Committee answers this question for the UK Parliament in the form of Carbon Budgets, which are segmented into five-year periods. The Seventh Carbon Budget was released at the end of February.

The Parliament receives these budgets as advice, which they can use to instate the key elements as legally binding.

Before the last carbon budget was released this year, six budgets had been produced, budgeting UK emissions as follows:

Published Budget Periods	Budget (tonnes CO2e)	Budget Met?
2008-2012	3 billion	Yes
2013-2017	2.7 billion	Yes
2018-2022	2.5 billion	Yes
2023-2027	1.9 billion	N/A
2028-2032	1.7 billion	N/A
2033-2037	0.96 billion	N/A
2038-2042	0.5 billion	N/A

The results from the UK government are impressive, as the country has stayed within budget and even outperformed the recommended budgets. This is mainly due to the rollout of renewable energy sources and the phase-out of coal power generation.

When it comes to the scope of the seventh budget, it's important to highlight that it doesn't cover all emissions. It covers territorial emissions - greenhouse gases emitted in the UK by UK activities. While previous carbon budgets did not include aviation and shipping emissions, the seventh budget does.

Because of this, greenhouse gas emissions arising from imports are not included in the carbon budget. Therefore, the Climate Change Committee recommends that

"alongside carbon budgets covering territorial emissions, the Government should introduce a non-legally binding benchmark against which emissions from imports can be monitored and should identify priority sources and policy levers to reduce imported emissions."

So What's The Plan?

Building on previous carbon budgets, the Seventh Carbon Budget expands the Balanced Pathway—the pathway to net zero that allows the UK to meet its net zero target.

In the Balanced Pathway, "electrification and low-carbon electricity supply make up the largest share of emissions reductions [...], 60% by 2040."

The remaining 40% is divided between carbon sinks (when nature absorbs CO2), engineered removals (technological solutions to absorb CO2 and other gases), low-carbon fuels, CCS, and changes in demand - meaning that behaviour change (reduced meat consumption and using public transport for instance) plays an important role in the transition.

The rollout of electricity-based technologies and infrastructure is clearly achievable, with an estimated pace and scale similar to other technologies we all know:

"The roll-out rates required for the uptake of electric vehicles (EVs), heat pumps, and renewables are similar to those previously achieved for mass-market roll-outs of mobile phones, refrigerators, and internet connections."

The net cost should be 0.2% of GDP—a small price to bear, as some studies estimate that the cost of inaction could be a contraction of 25-50% of global GDP.

If all countries manage to achieve their own pathways, the benefits will be monumental. Averting a climate crisis is likely to save hundreds of millions of lives, if not billions, as well as the livelihoods of the global population.

Not to mention that cleaner air, more resilient infrastructure, energy independence, and healthier diets will lead to additional health and security benefits for the UK population, no matter how well the rest of the world manages their emissions.

At CAFA, we believe that membership organisations are key to the solution.

Averting the climate crisis requires enabling infrastructure, subsidies, and funding schemes, as well as clear, stable policies. Additionally, the economy needs coordinated efforts that are sector-wide to enable buyer alliances, the rapid spread of new behaviors, rules, processes, and technologies, and industry decarbonisation pathways.

If you and your members have the skills internally, it is essential that you coordinate to plan how you can further electrify activities (from manufacturing to commuting and heating), move away from high-emission activities (such as flying), and lobby for climate policies that will help you and your members with these endeavors (read our Best Practice Framework for Membership Organisations to find what practices you can put in place to align with net zero imperatives).

For this transition to happen, we need funding. For that reason, you can also advocate in favor of low-carbon investments and public funding, implement a Beyond Value Chain Mitigation strategy to support the development of electrification and removals projects, and divert your investments.

The net costs will amount to around £110 billion by 2050, with a peak in 2029 due to the costs being front-loaded.

The reason for the front-loaded nature of the cost curve is simple: the world, in 2023, had 250 billion tonnes CO2e left to emit globally before reaching a 50% chance of overshooting 1.5°C and causing the climate to spiral out of control and throw us into uncharted but extremely deadly territory. In other words, without immediate reductions, we'd be out of budget in four years.

Peak net costs would only reach £33 billion—less than the UK's 2024-2025 £57 billion defense budget. It seems like a surprisingly affordable trade-off for avoiding such a catastrophe.

The Seventh Carbon Budget therefore provides great insights by updating its cost assumptions, showing investors and the UK Government and Parliament that reaching net zero can be a monumental achievement with fairly low costs relative to the benefits.

The Climate Change Committee has therefore laid out a path for the UK that is very encouraging.

However, the carbon budget might lack a bit of ambition. Developed countries like the UK have an economic head start and a larger historical contribution to global emissions. Yet, if we meet our plans, we're only going to make it at the last minute, in 2050. If we meet our targets in 2050, can we expect developing countries to be as fast as us? Shouldn't we lead by example and mitigate risk by adding a buffer and aiming for net zero sooner? (Let's note, though, that emissions should be halved by 2030, so the majority of the avoided emissions would happen early in the next 25 years).

Aiming for the last minute to reach Net Zero seems risky enough, but it's not the only source of risk. The global budget for greenhouse gas emissions was 250 billion tonnes CO2e in 2023, so it should be around 150-200 billion tonnes right now with our current rate of emissions. This is if we're happy with a 50% risk of overshoot.

If we wanted higher chances of succeeding at reaching the 1.5°C target than the equivalent of flipping a coin—let's say 83%—then our budget in 2023 would have been 100 billion tonnes CO2e.

At a low estimate (using a GWP100 for gases like methane, even though a case could be made for using much smaller GWPs), greenhouse gas emissions amount to 55 billion tonnes CO2e a year.

In other words, under these assumptions, our budget is zero. And let's not forget that these assumptions still don't include imported emissions.

So let's roll up our sleeves and make sure that in the next 5 years, we make up for being at least 25 years late in avoiding the biggest crisis in human history.

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