Walking alone? How the UK’s carbon targets compare with its competitors’
The UK Government is reviewing the fourth carbon budget for the period 2023-27. The Committee on Climate Change has recommended that the budget, which was originally legislated in 2011, should remain unchanged. That is, the UK should plan to cut its greenhouse gas emissions by 50 per cent, relative to 1990 levels, by 2025 — the midpoint of the fourth carbon budget period. The fourth carbon budget has been criticised for committing the UK to a unilateral, and potentially economically damaging, emissions reductions pathway, the ambition of which is not shared by its international competitors. This paper explores whether this concern is well founded by comparing the UK with its competitors on three indicators of climate change policy action:
- the presence of national greenhouse gas emissions targets;
- the adoption of climate change legislation; and
- the resulting implicit or explicit price of carbon.
- The UK is a global leader on climate change policy action, but it is not alone. Rather, it is part of a leading group of nations which are taking policy action on climate change. Also in this group are many of the UK’s major trading partners, including France, Germany, Norway, Korea, Mexico and China.
- There is no major economic power that has not taken steps to combat climate change — although taken together this action falls short of the global commitment to stabilise climate change at no more than 2°C of average warming.
- A comparison of the UK’s greenhouse gas emissions reduction targets with its competitors’ shows that:
- All but one (Turkey) of the UK’s main trading partners and competitors have quantified greenhouse gas emissions reduction or limitation targets;
- the UK’s fourth carbon budget appears consistent with the ambitions of the European Union for the period to 2030;
- expressed in terms of carbon intensity (emissions per unit of GDP), China’s climate change target is slightly more ambitious than the UK’s;
- Many other jurisdictions — 62 of 66 surveyed — have also given legal form to their climate change ambitions, with these countries typically passing a climate change law every 18-20 months, suggesting climate change has become a core legislative concern worldwide.
- The UK’s 2008 Climate Change Act is widely praised as a trailblazing piece of legislation. The sectors covered and types of legal mechanisms used in UK climate law are similar in scope to competitor countries, though the UK has 22 pieces of climate change-related legislation, which is relatively high in comparison with other developed countries; its climate policy landscape is relatively, and perhaps unnecessarily, complex.
- Comparisons of explicit and implicit carbon prices between countries put current UK carbon prices in the middle to upper end of the global range. Notably, medium industrial energy users in the UK pay lower green taxes on their electricity bills than the European Union average. Emerging markets are also beginning to price carbon.
- A key area where the UK is ahead of many its competitors is in its forward planning. Such long-term thinking is laudable and a deliberate feature of the Climate Change Act. It provides certainty and forward guidance to investors.