Carbon budgets were introduced in the UK under the 2008 Climate Change Act. Each carbon budget provides a five-year, statutory cap on total greenhouse gas emissions, which should not be exceeded, in order to meet the UK’s emission reduction commitments.

Taken together, sequential carbon budgets define a cost-effective path towards Britain’s long-term climate objective. Set out in the Climate Change Act, this target was originally an overall cut in greenhouse gas emissions of at least 80 per cent by 2050, relative to 1990. However, in 2019 this was replaced with a target of achieving net zero emissions by 2050 and the sixth carbon budget will reflect this updated target.

The notion of national carbon budgets is related to, but different from the global carbon budgets calculated by scientists, which estimate the total level of emissions that is still permissible under an agreed climate objective, such as a rise of 2°C above pre-industrial levels.

Carbon budgets are set by Parliament on the advice of the independent Climate Change Committee. They are set 12 years ahead of time to provide sufficient long-term guidance to investors.

So far, six carbon budgets have been set in law, covering the period from 2008 to 2037. The first three budgets (for 2008-23) were set in 2008 and the fourth (for 2023-27) in 2011. The fifth carbon budget was set in 2016. It limits UK greenhouse gas emissions from all sources, excluding international aviation and shipping, to 1,725 MtCO2 between 2028 and 2032. This is equivalent to a 57 per cent reduction in annual UK emissions over this period on average, relative to 1990. The sixth carbon budget was set in 2021 and was the first budget to be set in line with the UK’s net zero target. It requires a 78 per cent reduction in average annual UK greenhouse gas emissions by 2035, relative to 1990.

The Climate Change Committee has reported that the first, second and third carbon budgets were met, but the UK is not on track to meet the fourth or fifth budgets.

When recommending a carbon budget, the Climate Change Committee takes into account a number of factors, including the latest evidence from climate science and relevant international developments (for example the Paris Agreement), but also the cost effectiveness of the proposed path and its impact on competitiveness, fuel poverty, the fiscal balance and the devolved administrations.

The Government considers this advice before making its own recommendations to Parliament, which sets the carbon budgets in law. So far, Government and Parliament have largely followed the advice of the Climate Change Committee, although the fourth carbon budget was passed subject to a review, which was carried out in 2014.

The carbon budgets concern overall emissions from all sectors. The relative contributions expected from different sectors is left to policy. After a carbon budget has been set, the Government is mandated under the Climate Change Act to define, as soon as practical, its strategy for meeting that budget.

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