Carbon budgetary responsibility

James Murray
clock • 4 min read
Carbon budgetary responsibility

Ministers' decision not to rollover surplus emissions savings into the next Carbon Budget period is good news, but it also hands a huge challenge to whoever forms the next government

Credit where it is due. The government yesterday made an admirable, responsible, and economically and politically astute decision in confirming it will not water down the UK's current Carbon Budget - a move which should help to bolster investor confidence and accelerate decarbonisation efforts through to 2030 and beyond. 

There had been pretty widespread concerns Ministers would 'roll over' the surplus emissions saved during the Third Carbon Budget into the current Fourth Carbon Budget period, effectively diluting emissions targets through to 2027. It was easy to envisage how a government that has in recent months performed a series of climate policy u-turns and embraced rhetoric that has characterised the net zero transition as a burden to be minimised could be tempted to deploy an accounting trick that would make it easier to meet near term emissions goals.

Add in the recent High Court ruling branding the government's current decarbonisation plans as inadequate, and the political ingredients were there for a cynical ploy that would have eased the legislative pressure on the government to bring forward more ambitious climate policies.       

Instead, the government has resisted this temptation and is, in the words of Energy Security and Net Zero Minister Justin Tomlinson, "doubling down on our commitment to reach net zero". 

The economic and environmental rationale for doing so is compelling.

The 15 per cent of surplus emissions savings clocked up during the last Carbon Budget period were largely the result of the pandemic lockdowns and the slower than expected economic growth achieved over the past five years (something the government surprisingly declined to mention yesterday). Had the government rolled forward these one-off savings it would have reduced the need to deliver structural and infrastructure changes over the course of the current Carbon Budget period. But the longer term goal to reach net zero emissions by 2050 at the latest would have remained firmly in place. Decarbonisation measures would have been delayed rather than cancelled, and ultimately the need to deliver real world emissions reductions would have caught up with the government, probably some time in the 2030s. Relying on pandemics or flat-lining economic growth to help meet emissions goals is neither a reliable nor a popular strategy.   

There is also plenty of economic modelling that shows how slower emissions reductions now only serve to necessitate steeper emissions reductions later, resulting in higher emissions overall and increased costs further down the line. 

Consequently, the sensible thing to do from an economic and climate perspective is to retain the existing carbon targets, providing policymakers, investors, and businesses with a clear and steady trajectory towards net zero emissions. There are good reasons why the Climate Change Committee (CCC) was so emphatic in calling on the government not to rollover the surplus emissions.    

But there is also a political component to the government's decision. Had Ministers chosen to make use of the surplus emissions they would have faced yet more fierce criticism from green campaigners and opposition parties, while further undermining the government's genuinely impressive record in having hit all its emissions targets to date. In contrast, by retaining the current targets the government has made the decarbonisation challenge even more acute for the next government and has crucially established a precedent that will be difficult to break with.

The truth is the current Fourth Carbon Budget is highly likely to be met, in part because of the surge in renewables development and electric vehicle (EV) adoption, and in part because of that still sluggish economic growth. The big challenge is how to meet the Fifth and Sixth Carbon Budgets that run through the 2030s. Barring a remarkable polling recovery that is widely expected to soon be Labour's problem.

On the same day as reports emerged of a list of honeymoon-ending potential crises doing the rounds in Labour HQ - Thames Water collapse, prison overcrowding, public sector pay negotiations, more local authority bankruptcies, universities going under, and NHS funding shortfalls all make the list - current Ministers highlighted how whoever forms the next government will have to deliver a raft of new policies to ensure still-demanding emissions targets are met. They will also have to move quickly to comply with a High Court ruling to strengthen the UK's net zero strategy. 

As such, the next government will have to get offshore wind and grid development back on track, turbocharge the EV and heat pump roll out, deliver a fit for purpose national energy efficiency programme, and build a new generation of potentially expensive nuclear, CCS, and hydrogen projects, all while fending off constant media attacks over the cost implications of net zero policies. And if it is tempted to water down future emissions targets to make this daunting task slightly easier, the Conservatives will be able to rightly say that such a move would both break with the precedent they established and undermine the net zero transition that they got started.

A version of this article first appeared as part of BusinessGreen's Overnight Briefing email, which is available to all BusinessGreen Intelligence members.

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