What are carbon budgets and why do we have them?
Carbon budgets set a legally binding limit on greenhouse gas emissions for the UK. Each carbon budget provides a five-year cap on total greenhouse gas emissions, which should not be exceeded, in order to meet the UK’s emission reduction commitments set out in the 2008 Climate Change Act.
Each carbon budget covers a five-year time period and is set by the Government on the advice of the Independent Committee on Climate Change. So far, four carbon budgets have been set in law, covering the period from 2008 to 2027 respectively. Under the budgets set, these require a 50 per cent reduction in annual UK greenhouse gas emissions by 2025. The fifth carbon budget, covering 2028 to 2032, will be set by the UK Parliament in 2016, following the recommendations by the Committee on Climate Change.
The latest currently legislated budget, the fourth carbon budget, covers the period of 2023 to 2027, and its targets will be reviewed in 2014 by the UK Government. While the carbon budget concerns overall emissions from all sectors, calculations by the Committee on Climate Change suggest that in order to meet the fourth budget target, the power sector will need to reduce its greenhouse gas emissions substantially during the 2020s. This is because of the significant contribution the sector makes to the total emissions for the UK, and because clean electricity is the basis for decarbonising other sectors such as surface transport and residential heating. The Department of Energy and Climate Change| estimates that around a quarter of total emissions in 2011 came from the power sector alone, for example. This is why it is important for the UK to consider its future energy mix now and seek to use energy technologies with lower greenhouse gas emissions.
A new Policy Brief, by the Grantham Research Institute, highlights that if the targets in the fourth carbon budget are watered down following their review in 2014, this could present a policy risk to the private sector and could deter investment in new low-carbon power plants and infrastructure. The brief notes that “a weakening of the fourth carbon budget would require more rapid emission reductions after the 2020s, which may prove to be costly, in order to achieve the 2020 (emission reduction) target”.
