Time to think ahead. By mid-summer 2016, the Government must outline the role UK businesses and homes will play at the halfway point to meeting binding 80% carbon reduction targets in 2050. Several pieces of the fifth carbon budget are still missing. Jon Herbert looks at what has become a bumpy journey.

Are you planning your renewable energy use for 2028–2032? By law, the Government is doing so on your behalf. Its decisions will affect how everybody uses and buys energy.

The Government’s independent expert advisors have already explained what must be done under the 2008 Climate Change Act and how it can be done; making it happen is now in Whitehall’s court. The Committee on Climate Change (CCC) recommended at the end of 2015 that the fifth carbon budget be set at 1765 mega-tonnes of carbon dioxide equivalent (MtCO2e, including international shipping emissions that form part of the UK’s carbon footprint. This should deliver a 57% emissions cut by the 2030s.

Ministers now face a difficult balancing act. By June 2016, new legislation must be introduced to put this legally binding route map into law with the aim of reducing greenhouse gas and carbon emissions by 80% by 2050 compared with 1990 levels. How the fifth budget goes into practice will reflect the Government’s tough autumn 2015 spending and energy review; ministers are expected to release more details through the spring.

Political and economic tensions are likely. Government tends to take a pragmatic view — “the art of the possible”. The CCC must advise on what is essential and has a duty to dissuade ministers from tempting short-cuts. It has already headed off Treasury moves to dilute carbon reduction targets. The CCC wants the fifth budget to contain new policies encouraging changes in the behaviour of businesses and individuals. It also believes that clear, long-term signals to investors are important.

Vision for the 2030s

Part of the CCC’s brief is to recommend a course for government where the transition to low-carbon energy sources is made at reasonable cost, does not harm competitiveness, recognises energy security and manages the impact of fuel poverty. New technologies will need to be harnessed that do not jeopardise long-term investments firms and individuals have already made. At the same time, the CCC wants to ensure continuous progress towards the 80% target without leaving too much to be done too close to the 2050 deadline.

To date, says the CCC, good progress has been made with emissions already down by 36% over 1990 levels, a figure that will increase to 43–46% by 2020 if current policies prove effective. However, to meet the 2050 target, emissions must fall by 52% through the fourth carbon budget from 2023 to 2027. The proposed fifth budget will then have to deliver a steady reduction of emissions equivalent to 2% annually from 1990 to 2014, 3% per year from 2014 to 2030 and 4% annually from 2030 to 2050. The strategy is in line with the UK’s current EU and global commitments and is designed to promote wider international climate action. In practice, the CCC wants to see a number of milestones reached. By the 2030s, circa 1 in 7 UK homes should be heated by low-carbon fuel sources, not only to contributing significantly to overall emissions cuts, but also acting as a driver to further low-carbon heat market innovations.

Also in the 2030s, it believes that a majority of new cars and vans bought in the UK must be fully or partially electric to remove the large fraction of emissions currently generated by transport. Two important knock-on benefits will be improvements to the UK much-criticised air quality and a potential boost to British manufacturing.

Central to the 2030s strategy is that the UK will be largely powered by low-carbon electricity sources with emissions below 100 grammes of CO2 per kilowatt-hour. The comparable 2015/2016 figure is 450g.

Last but certainly not least, by the 2030s the CCC hopes that nearly all UK homes where it is cost-effective will reduce energy use and bills. Greater energy efficiency is seen as one of the most powerful weapons in the low-carbon arsenal and the CCC wants to see a new generation of innovative energy technologies brought to market.

Government action

The Government has acknowledged that making the fourth climate budget work will be challenging after warnings last year from the CCC that it was off track and needed remedial action.

Ministers have also faced sharp criticism for decisions to remove subsidies from the further development of renewable energy sectors such as large-scale solar and onshore wind. The decision to scrap incentives for carbon capture and storage technology development has also been viewed in a negative light.

In response, Climate Change Secretary Amber Rudd and Environment Secretary Liz Truss have argued that it is important to spend time now forming the right framework and approach for the decades ahead. After the fifth budget is finalised in June, they are expected to give a clearer picture of how future targets will be met, adding that “our new emissions reduction plan towards the end of 2016 will set out our proposals in full”.

They also don’t deny that reducing emissions and preparing to meet the impacts of climate change will be challenging, noting that there will be no overnight transformation but a long-term transition that will affect every part of the economy.

However, the Government has been let off the hook following last December’s UN global climate change summit in Paris. There, 196 nations decided en mass that to protect the world from dangerous overheating, emissions must be cut not only to keep global temperature rises since pre-industrial times to less than 2°C, but within a longer-term target of 1.5°C.

The CCC has told Amber Rudd that no further changes to its fifth carbon budget recommendations are needed to meet the Paris deal terms, a decision that campaigners have described as “desperately disappointing”. They also note that the UK’s Climate Change Act does not include a reduction to net zero emissions, as specified in Paris.

Progressive reductions

UK carbon budgets are intended as benchmarks along the route to 2050 and beyond. The first carbon budget from 2008 to 2012 was set at 3018 MtCO2e, or 23%. The current and second budget from 2013 to 2017 has a ceiling of 2782 MtCO2e, or 29%. The third from 2018 to 2022 is 2544 MtCO2e which should achieve a 35% reduction by 2020. The fourth budget, which is currently being questioned, sees a target of 1950 MtCO2e with 50% reduction by 2025.

One of the CCC’s key goals is to make sure that progress towards 2050 is not continually postponed. It points out that this would not make economic sense and adds that, given current technical limits, any low-carbon investment delays might make the end goal unachievable. At the same time, changing too quickly could risk companies having to scrap higher-carbon investments. To safeguard their position, the CCC wants investment managers to be able to plan sensibly for low-carbon replacements as opportunities arise.

Not only future target emissions are important. Cumulative emissions over the whole period will have a profound effect. Under the system of carbon budgets, every tonne of greenhouse gases released between now and 2050 will have an impact.

Offshore wind contribution

Offshore wind has been identified as a sector with the potential to make a major contribution to UK low-carbon power. In 2011, the CCC envisaged some 400TWh per year coming from UK offshore waters. The development of floating wind farms could be a game-changer. Currently, offshore wind-generating capacity costs almost twice that of new-build gas plants. However, analysis shows it should be possible to reduce offshore wind costs down to their gas plant equivalents if total carbon costs are taken into account.

An extension of the existing policy framework, clarity about incentive for low-carbon investments in the 2020s, extended funding under the Levy Control Framework until at least 2025, and low-carbon contracts via auction should continue until a competitive point is reached with unabated gas plants. The CCC, which believes that the North Sea coast with gently sloping shorelines offers some of the best offshore wind sites in the world, thinks the Government should demonstrate that it plans to contract 1 to 2 GW of new capacity each year, providing costs fall. Subsidies should end in the 2020s, it says.

Meanwhile, a recently report published by Finnish Innovation Fund Sitra suggests that grid-connected solar power is the most effective way to cut global greenhouse gas emissions by 2030. Based on data from Germany, it predicts that 12 gigatonnes of global emissions can be avoided in the next 15 years using a mix of renewable energy technologies.

Published by Croner-i on 15 February 2016



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