4 Delivering the carbon budgets
The Government's track record
in reducing emissions
50. The Government has a domestic target to reduce
emissions of carbon dioxide by 20% on 1990 levels by 2010. The
Secretary of State believed that the domestic 2010 target was
very stretching but that the UK had made good progress against
it.[122] In 2009 the
Government predicted UK emissions of greenhouse gases were on
track to fall by around one-third from 1990 levels by 2020 and
would be lower than required for the first and second carbon budget
periods and well within the range of uncertainty for the third
budget period.[123]
51. Professor Ekins told us emissions would have
been higher if the Government had not had policies in place to
meet the 2010 target but that the Government "will miss its
20% domestic carbon dioxide reduction target for 2010, despite
having been aided [
] by the global recession. Policy-related
emissions reductions since 1997 have clearly been difficult to
achieve".[124]
52. Between 2003 and 2007 emissions fell at below
1% per year.[125] Lord
Turner told us that the UK would meet the carbon budgets for the
first budget period but only because of the economic recession.[126]
Declining economic activity was likely to have reduced emissions
by about 2% during 2008. He warned that recession induced reductions
must not be confused with underlying progress, but the Government
maintains underlying progress has been made and disputed the Committee
on Climate Change's assessment of the impact of the recession.[127]
In a report published in July 2007, we said that the Government's
was consistently over-optimistic when projecting how successful
its policies would be.[128]
Professor Anderson believed that the Committee on Climate Change
and the Government had been far too optimistic.[129]
53. This contested record in reducing emissions,
and the consistent optimism bias in the Government's projections
of progress towards its 2010 target, raises concerns about the
prospects of hitting the 2020 target. The Government will want
to be optimistic about the policies it has devised and the progress
it is making but it must be careful that this optimism does not
cause it to downplay the impact of the recession or over-estimate
the underlying progress that has been made in reducing emissions
during the economic downturn. The Government should investigate
whether there is a way to report emissions figures corrected for
the economic cycle as is done for the public service agreements
on productivity (PSA1) and employment (PSA8).
The rate of emissions reduction
54. The Low Carbon Transition Plan said that emissions
had fallen about 1% per year since 1990 and now needed to fall
at a rate of 1.4% a year.[130]
The analysis underpinning the Committee on Climate Change's recommendations
on targets and budgets assumed global emissions would fall at
3-4% per annum after peaking sometime between 2015 and 2020 and
then continue to fall until 2100. From this it derived a requirement
for emissions in the UK to fall at 2-3% per annum (across all
Kyoto greenhouse gases) in order to meet the 2050 target. This
is slightly below the global 3-4% because the UK's reported emissions
have actually fallen a little since 1990, whereas global emissions
are still rising and will need to come down from a higher level
before reaching 2050 targets.
55. In a paper in 2008 Kevin Anderson and Alice Bows
argued that meeting the objective of avoiding dangerous climate
change would require greenhouse gas emissions to be reduced by
4% per annum, with energy and process emissions falling at 6.5%
per annum as part of that.[131]
Their analysis indicated that if emissions were allowed to peak
as late as 2020, emission from all sources of greenhouse gases
would have to fall at about 10% per annum. But they noted that
historically emissions reductions of greater than 1% had only
ever been associated with 'economic recession or upheaval' and
rates in excess of 3% were rarely considered viable.[132]
For example, "the collapse of the former Soviet Union's economy
brought about annual emission reductions of over 5% for a decade.
By contrast, France's 40-fold increase in nuclear capacity in
just 25 years and the UK's 'dash for gas' in the 1990s both corresponded,
respectively, with annual CO2 and greenhouse gas emission
reductions of only 1%".[133]
But the Met Office suggested that the high rate of annual reductions
in emissions recommended by Anderson and Bows was an artefact
of their methodology and pointed to several other studies that
were consistent with the findings of the Committee on Climate
Change.[134]
56. The Committee on Climate Change's first annual
report to Parliament concluded that a step change was required
in the pace of UK emissions reduction to meet carbon budgets and
that more action must be taken to deliver the Government's Low
Carbon Transition Plan.[135]
Lord Turner told us that the Committee on Climate Change did not
believe that the carbon budgets needed to be changed as a result
of anything it had said in its first progress report and said
the Government should aim to outperform the first budget.[136]
But he stressed that if the gap in delivery was allowed to grow
too big at some point the carbon budgets would have to be adjusted.[137]
The Government agreed that new scientific evidence strengthened
the case for strong and early action on climate change,[138]
and accepted the need for a step change.[139]
The Government must deliver the carbon savings it has identified
in the Low Carbon Transition Plan and then increase the rate at
which emissions are falling to meet the 2-3% annual reduction
recommended by the Committee on Climate Change. In doing so it
must take account of the milestones that the Committee is using
to monitor progress. The Committee on Climate Change must watch
closely to see how the Government acts to close the gap in delivery
it has identified. In its response to the Committee on
Climate Change's progress report the Government should make clear
how the Low Carbon Transition plan will be strengthened. Strengthening
the policy framework and bringing forward new measures to get
the UK to meet its existing targets and budgets are higher priorities
than setting more stretching targets, even if new targets would
be justified on the basis of science. Unless we are on track to
meet current targets, increasing targets will only widen the shortfall
in delivery.
57. We now turn to an examination of the levers of
change over which the Government has direct influence.
The policy framework
58. The Low Carbon Transition Plan set out the steps
to a permanent shift to a low-carbon economy including:
· 40%
of electricity to come from low-carbon sources;
· energy efficiency
improvements in 7 million homes and 1.5 million households supported
to produce their own clean energy;
· 20-30% less
gas imported;
· 40% lower emissions
from new cars; and
· 1.2 million
people employed in green jobs.
59. In the evidence we took there was a great deal
of concern that the policy framework would be unable to deliver
the required reduction in emissions. Professor Allen, from the
Department of Physics at the University of Oxford, for example,
argued that the Government needed to have a flexible and adaptive
policy framework given all the uncertainties in climate science.[140]
Paul Ekins saw little evidence that:
[
] current policies will bring forward
the mix of demand reduction, efficiency increase and low-carbon
supply that will be necessary to meet the targets in the 2020
budget.[141]
His view was that the Government was not using carbon
pricing in a systematic way and that improvements in energy efficiency
were occurring too slowly and renewables were not being deployed
quickly enough. He described continuing uncertainties about whether
and when new nuclear and Carbon Capture and Storage (CCS) plant
would come on stream, what they would cost, and whether CCS would
even work. He believed that although many of the Government's
policies were innovative they had not been implemented strongly
enough.[142] Professor
Anderson believed that social frameworks, political structures
and policy framework to deliver the required reduction in emissions
were missing,[143]
saying that it was difficult to reconcile economic growth with
decarbonisation on the scale that was needed.[144]
The Institution of Mechanical Engineers believed that the tax
system and public procurement systems could be used more effectively
to reduce emissions.[145]
For EEF current policies and incentives did not go far enough
to ensure the economy would be decarbonised,[146]
and they did not detect a policy framework to translate the Government's
vision into reality and ensure the "UK is the number one
destination for low-carbon business".[147]
We made a similar point in our recent report on green jobs and
skills.
60. David Kennedy explained that the Committee on
Climate Change felt the policy framework needed to be tightened
on energy efficiency, transport, renewable electricity and renewable
heat[148] and that
there were actions that must be taken in the first and second
budget periods if the UK was to be on track in later budget periods.[149]
The Committee felt that the Government should aim to over-achieve
against its carbon budgets so that the UK made underlying progress
on decarbonisation over the next few years. Any over-achievement
of the budget in the first period should not be banked into the
second budget period. The Secretary of State for Energy and Climate
Change confirmed that the Low Carbon Transition Plan aimed to
over-achieve in each budget period.[150]
There is, however, a higher cost associated with over-engineering
the targets and budgets and it is essentially a political decision
as to whether this can be justified.[151]
61. The Government is right to try and over-achieve
against its carbon budgets but it should not be banking any over-achievement
from the first budget period into the second budget period. In
responding to the call by the Committee on Climate Change for
a 'step change' the Government must strengthen existing policies
and bring forward new measures, which must be rigorously monitored.
We understand the Government's desire to use market mechanisms
to ensure that emissions reductions are delivered at least cost
and in the most economically efficient way but it cannot rely
solely on market forces and may need to support these by a regulatory
approach and reforms to the fiscal framework.
62. The Government has recently changed its approach
to carbon valuation within policy impact assessment from one based
on costing the damage associated with climate change to one based
on the cost of mitigating emissions. The new approach has been
welcomed by economists and environmental groups. It is not clear
whether any policy decisions will be reviewed in light of this
new methodology although the Government has indicated that preliminary
work on the decision to add capacity at Heathrow indicates that
"the economic case for Heathrow's third runway is robust
to the new carbon values".[152]
The new approach sets out projected carbon values from 2009 to
2050 as follows:
· A
short term traded price of carbon of £25 in 2020, with a
range of £14-£31.
· A short term
non-traded price of carbon of £60 per tonne CO2e in 2020,
with a range of +/- 50% (i.e. central value of £60, with
a range of £30-£90).
· A long term
traded price of carbon with a value of:
· £70
per tonne of CO2e in 2030, with a range of +/- 50% (i.e. £70
central estimate, £105 high estimate and £35 low estimate).
· £200
per tonne of CO2e in 2050, with a range of +/- 50% (i.e. £200
central estimate, £300 high estimate and £100 low estimate).[153]
It is not clear whether this change in the approach
to carbon valuation will do enough to bring about the step-change
needed for the transition to a low-carbon economy or whether it
addresses the short-term risk of carbon lock-in as a result of
fuel switching if investment decisions are taken in the near-term
when the carbon price is relatively low. How the Government's
new approach to carbon valuation within policy impact assessment
is applied is as important as the values used and we believe that
there is a case for the National Audit Office examining, in due
course, what impact it is having on decision making within government.
63. Action on emissions costs money.[154]
The Stern Review argued that reducing emissions could cost about
1% of global GDP every single year. Lord Stern pointed out that
the costs of meeting a given temperature or stabilisation target
will tend to rise for every month that policy action is delayed.[155]
The Committee on Climate Change believes that the cost of meeting
the 2020 targets would be less than 1% of GDP in 2020.[156]
Its view was that this was acceptable given the consequences and
costs of not acting. It estimated the costs of meeting the 2050
target as between 1 and 2% of GDP. Professor Ekins thought costs
in this range were unlikely to be noticed by the general public.[157]
Some of the increased costs to the consumer could be defrayed
by energy efficiency savings.[158]
In April 2009 Professor Sir David King, Director of the Smith
School of Enterprise and the Environment at the University of
Oxford, argued that the cost of reducing the UK's emissions would
be much higher than the Government had indicated but also that
the financial implications of not dealing with the climate change
threat were far higher than Lord Stern had suggested.[159]
Professor Anderson contrasted the money found to save the banks
with his perception that "we cannot find a few measly millions
or billions to deal with supposedly one of the greatest threats
we face".[160]
The issue for the nation is that only by investing now can we
hope to avoid the enormous and ultimately unquantifiable costs
of failing to avert dangerous climate change. The Government
needs to present the cost of action on climate change more clearly
and to make clear that this is not an additional cost but an alternative
to the economic, social and environmental cost of inaction.
Energy policy
64. Historically, growing energy use correlates with
economic growth, and emissions will grow unless energy is decarbonised.[161]
Global consumption of energy derived from fossil fuels is rising
and an unprecedented effort is needed to reduce energy consumption
and decarbonise global energy if emissions are to peak in the
coming decade.[162]
The Low Carbon Transition Plan set out the Government's plans
to get 40% of the UK's electricity from low-carbon sources by
2020.[163] The Committee
on Climate Change identified decarbonising the power sector as
the key to achieving emissions reductions targets.[164]
It called for a review of the current set of market arrangements
for power generation and a move beyond the current Supplier Obligation,
new rules to strengthen the investment climate for low-carbon
power generation, and more action on energy efficiency.[165]
Professor David MacKay, Professor of Natural Philosophy in the
Department of Physics at the University of Cambridge, believed
that the UK needed to build low-carbon generating capacity at
a much higher rate than it currently was if it was to decarbonise,[166]
saying the UK needed to build new low-carbon and renewable generating
capacity at the fastest rate possible.[167]
Dr Cameron Hepburn said that the Government needed to invest in
more low-carbon research and development.[168]
65. Targets for reducing emissions and carbon budgets
cannot be met without investment in renewables and low-carbon
generation. In the Trade and Industry Committee's report on new
nuclear build all the energy companies who gave evidence made
the point that a long-term stable carbon price was absolutely
fundamental for new build.[169]
There has been little progress on this issue since then. The UK
cannot meet the 2020 target without a carbon price high enough
to bring forward low-carbon investments.[170]
The Committee on Climate Change identified a risk that investment
might continue to flow predominantly to conventional fossil fuel
power generation in the third budget period and beyond. It said
that investors would be biased towards investment in conventional
fossil fuels rather than low-carbon generation, with investors
choosing to invest directly in gas-fired power stations despite
their increasing cost.[171]
66. The Government is relying in part on the EU-ETS
to drive a price for carbon that encourages investment in renewables
and low-carbon generation. Our forthcoming report on carbon markets
will examine this hypothesis in detail and the impact that carbon
prices will have on low-carbon investment. It will be clear from
that analysis that the Government cannot place too much reliance
on the price of carbon to drive investment in low-carbon technologies
as the current price is too low and too volatile. It must put
the right regulatory framework in place to ensure that the right
investment decisions are made. It is vital that we do not invest
in the wrong high-carbon infrastructure. Through interventions
in the market and complementary policy measures, using the full
range fiscal and policy instruments available, the Government
should drive up the price of carbon steadily to a level where
renewable and low-carbon investments become economically viable.
Energy efficiency improvements
67. 14% of all carbon dioxide emissions currently
come from commercial or public buildings[172]
and the UK's 25 million homes account for around a quarter of
carbon dioxide emissions.[173]
The Low Carbon Transition Plan proposes that by 2030 all cost-effective
energy-saving measures will have been fitted to all homes. It
sets out a community-based approach to delivering energy efficient
measures to low-income households and an extension of the supplier
obligation. The Government plans to spend £3.2 billion to
help households become more energy efficient by increasing and
then extending the current programme. It intends to roll-out smart
meters to every home by the end of 2020 and to pilot ways to help
people make their whole house greener. It plans to encourage the
use of low-carbon sources to generate heat or electricity through
'clean energy cash-back schemes'.[174]
68. The Progress Report from the Committee on Climate
Change favoured a whole-house and street-by-street approach to
energy efficiency improvements. It envisaged a 35% reduction in
emissions from residential buildings in 2022 compared to 2007
figures, and a 27% reduction in non-residential buildings and
industry. It suggested that policy should be strengthened in at
least three areas to achieve the required emissions reductions:
· energy
efficiency improvement in homes;
· energy efficiency
improvement in the commercial sector (including SMEs); and
· support for
renewable heat.[175]
69. It will take time for emissions from power generation
to be reduced given the lead time in building new infrastructure
and in the next few years the UK will rely on energy efficiency
measures to meet its carbon budgets. But current policy on energy
efficiency is too weak and too reliant on energy suppliers. In
our recent report on green jobs and skills we called for an increase
in the scale and speed of the programme to improve energy efficiency
in homes across the UK. If we are to have any chance of staying
within our carbon budgets, the Government must strengthen the
policy framework around energy efficiency as a matter of priority.
It must set out how it intends to drive forward investment in
energy efficiency to ensure that sufficient progress is made in
the remainder of the first budget period.
NATIONAL POLICY STATEMENTS
70. The Committee on Climate Change has identified
a risk that some investments, which could help the UK to meet
its short-term targets, could lock it into an emissions pathway
that meant it failed to meet the longer-term targets (see paragraph
36). Under the Planning Act 2008 the Infrastructure Planning Commission
will have to decide whether to give consent to applications to
develop infrastructure of national importance. These decisions
have the potential to determine the UK's emissions pathway far
into the future, and NPSs could have a major impact on the UK's
carbon budgets.[176]
It is the sum of all IPC decisions that will influence whether
budgets are met. Each of the IPC's planning decisions will
have to be made with the imperative in mind that we must keep
within our carbon budgets and it is the sum of all its decisions
that will shape our emissions pathway.[177]
Friends of the Earth argued that the IPC should be required to
base its decisions on the intended not interim carbon budget as
decisions taken now would see infrastructure built that would
remain in place for many years.[178]
The Committee on Climate Change in contrast thought that it did
not matter which budget was followed as what needed to be built
under the two budgets was broadly similar.[179]
71. The guidance that has been issued with the energy
NPSs said:
Given that the Government policies that underlie
NPSs have been set in accordance with the [Low Carbon] Transition
Plan and carbon budgets, the IPC does not need to assess individual
applications in terms of carbon emissions against the budgets.[180]
The NPSs on energy rely on the EU ETS to cap emissions
from the power sector and the carbon price to make high-carbon
power stations 'less and less attractive' and thus providing an
incentive to invest in cleaner electricity generation.[181]
It is crucial that all NPSs are properly assessed for their impact
on the Low Carbon Transition Plan and carbon budgets. Any new
fossil-fuel based generating capacity that is consented to will
make it harder to meet carbon budgets in future years and will
require higher rates of reduction from other sectors of the economy.
The Government's approach does not address the danger identified
by the Committee on Climate Change that investments made now,
on the basis of a low current carbon price and projections that
suggest it will not rise much, could lock us into a high level
of emissions for years to come if investors favour coal and gas
over low-carbon and renewable generation in the short- to medium-term.
The Government must put in place a mechanism to ensure that
the sum of the decisions taken by the IPC are consistent with
the carbon budgets and the milestones that the Committee on Climate
Change has set out to ensure the infrastructure needed to meet
future budget periods is put in place in the next few years. The
Energy and Climate Change Select Committee may wish to examine
this issue more closely as part of its scrutiny of the National
Policy Statements on energy.
Managing the budgets
Measuring emissions
72. Greenhouse gas emissions are not directly measured
but are estimated from use of fossil fuels and other industrial
and agricultural processes. It takes up to 15 months to produce
final emissions estimates although provisional estimates are available
at 3 months and near final estimates at 13 months. In their response
to a consultation by the Department for Energy and Climate Change
on carbon accounting the Environment Agency said:
[the EU ETS and Carbon Reduction Commitment]
[
] currently include only carbon emissions, and do not include
the full basket of six Greenhouse gases that are required for
the carbon budget. The additional sources of data that the Government
will be using to calculate the full carbon account need to be
clearly identified.[182]
In March 2008, the NAO reviewed the measurement and
reporting of UK greenhouse gas emissions. They found uncertainty
in emissions of carbon dioxide was relatively low but was relatively
high for other greenhouse gases. The National Physical Laboratory
stressed the importance of being able to measure emissions accurately.
They said:
[
] multiple and inconsistent measurements,
calculations and estimation protocols for [greenhouse gas] emission
and avoidance are a fragile basis for the present and are likely
to be an inadequate basis for the future carbon marketand
a burden for business.[183]
They called for the UK to become a world leader in
carbon metrology.[184]
73. Accurate measurement of emissions is fundamental
to understanding the impact of policy. The Government needs
to address the issues with measuring and reporting on greenhouse
gases, particularly the uncertainty around measures of gases other
than carbon dioxide. The Government should look carefully at the
case the National Physical Laboratory makes for the creation of
a centre of excellence in carbon metrology in the UK.
THE ROLE OF OFFSETS
74. In international emissions trading it is common
to treat the purchase of each foreign credit as being equal to
reducing domestic emissions by an equivalent amount. We have previously
expressed reservations about this principle. In our 2007 report
on the Draft Climate Change Bill, we observed: "Trading only
guarantees global emissions reductions if each country has its
own national emissions limits, set in harmony with others, at
a level designed to achieve a global reduction target."[185]
We will consider the role of offsets in carbon markets in detail
in a forthcoming report. The key issue in the present context
is the extent to which offsets should be counted against the achievement
of our carbon budgets.
75. The Committee on Climate Change has said that
the UK should aim to limit the use of offsets and meet the carbon
budgets through domestic reductions. The Government also aims
to meet the first three interim carbon budgets without purchase
of overseas credits outside the EU ETS, but it does reserve possible
credit purchase as a fallback option.[186]
If the UK moved to a tougher budget as a result of a global deal
on climate change the Government would expect to use offset credits
to meet part of the additional effort required.
76. While the Secretary of State was clear that domestic
action must be the backbone of what we do.[187]
the Government has argued that there is a place for offsets because
they encourage least-cost mitigation in helping developing countries
to move to a low-carbon economy. But there are other ways of meeting
this objective without the downsides associated with offsets.
77. Professor Kevin Anderson argued that buying an
offset from a country with lower long-term ambitions than the
UK was not the equivalent of reducing domestic emissions by the
equivalent of a tonne of carbon, and suggested that there may
be a need for an exchange rate or discount rate for offset credits.[188]
In the USA there are proposals for a discount rate to be applied
to international offset credits used within any federal cap and
trade scheme, meaning that an American firm would need to buy
and surrender five offset credits for every four tonnes carbon
dioxide it emitted. The Government told us that current EU legislation
would allow the EU ETS to apply such a discount rate to offset
credits; simply the threat of applying it could help to improve
the robustness of offset projects.[189]
We recommend the Government explore the use of a discount rate
on offset credits and that the Government work on proposals for
discounting the carbon value of offset credits within the EU ETS.
78. A potential weakness of treating the purchase
of EU ETS credits as being necessarily equivalent to reducing
UK emissions comes from Phase I of the scheme. Throughout this
period, the UK sectors included in the scheme as a whole emitted
an excess of carbon dioxide above their allocations; in 2005 the
UK was a net purchaser (i.e. from elsewhere in the EU) of 25.2
million credits; in 2006, 31.4 million; and in 2007, 25.7 million.[190]
In its official publications, the Government has treated these
purchases as though UK emissions were lower by the same amounts
than they actually were in each of those years.[191]
The Government's official emissions figures for 2005-2007, which
incorporate the net purchase of EU ETS credits, are therefore
somewhat misleading in suggesting that UK emissions were reduced.
Simply making a purchase of EU ETS credits does not necessarily
mean that the UK is funding real and equivalent emissions reductions
elsewhere; it depends on how tight or loose the overall cap is.
The Government should not score any EU ETS credits purchased from
Phase I as having reduced emissions in the UK by an equivalent
amount. We recommend that efforts should be made to determine
what actual savings were in order to provide a sound basis for
future budgets to deliver the necessary real savings in emissions.
79. In the carbon budgets the Government intends
to count allocations rather than actual emissions for sectors
covered by the EU ETS. The Government felt it would be misleading
to count actual emissions without taking account of EU ETS trading.[192]
Doing so could mean, for example, that the Government reported
reduced emissions in the UK, when these might actually have been
displaced by increased emissions elsewhere in the EU (or vice
versa). The Department for Energy and Climate Change argued that
the practice of counting allocated rather than actual emissions
in the traded sector reflected the agreed international approach
to measurement of emissions.[193]
The Government pointed out that the approach had been agreed by
most of those who had responded to the consultation on carbon
accounting and was approved by both Houses of Parliament.[194]
The Government's approach has been criticised by environmental
groups. Friends of the Earth said:
[The] EU ETS is just one policy which affects
UK traded sector emissionsin that case, given that the
Climate Change Act is about UK emissions, it surely is more appropriate
to count actual emissions (i.e. judging the progress of ALL policies
in the traded sector) rather than allocated emissions (i.e. solely
counting the UK's initial allocation in the EUETS, just one policy)
[
] if this method of accounting continues, then for the
purposes of assessing compliance with the legal requirements of
the Act, it does not matter WHAT actually happens in 40% of the
entire carbon budget.[195]
We recommend the UK should only accept emissions
credits (whether from the EU ETS or any other scheme) for use
within UK carbon budgets, if they have come from countries that
have implemented equivalent national emissions targets and managed
to cut emissions below them.
DEPARTMENTAL BUDGETS AND CARBON REDUCTION DELIVERY
PLANS
80. There needs to be a process to ensure that the
totality of the machinery of Government delivers the UK's carbon
budgets.[196] The Government
told us a system of departmental carbon budgets would be introduced
ahead of the second budget period with the intention of ensuring
that every part of government can be held accountable for delivery
of the UK's carbon budgets. Each department's budget is made up
of two parts: one to reflect its share in each of the major sectors
of the economy (based on its relative degree of influence over
emissions in that sector) and the other reflecting emissions from
the public sector it has responsibility for.[197]
Initially schools, further and higher education establishments
and the NHS fall on the Department for Energy and Climate Change's
budget but will be transferred to the relevant departmental budgets
by April next year.
81. The Low Carbon Transition Plan notes that the
Treasury "will play a key role in the departmental carbon
budget system".[198]
The Department for Energy and Climate Change and the Treasury
will manage the departmental budgets together. Mr James Hughes,
the head of carbon budgets policy in the Department for Energy
and Climate Change, described how senior staff in each department
were being 'account managed' to oversee the work on their departmental
budget and departmental carbon reduction delivery plans, and that
the Department for Energy and Climate Change was working to build
capacity in all departments to manage carbon budgets.[199]
Departmental reduction delivery plans would ideally include indicators
and milestones similar to those used by the Committee on Climate
Change.[200] James
Hughes also stressed the importance of having a rigorous process
for monitoring progress.[201]
82. However, the process of setting budgets for departments
has been essentially one of trial and error.[202]
For example, the Treasury's departmental carbon budget is based
solely on the carbon savings it expects to make on its own estate,
but Friends of the Earth argue that it should have a sectoral
share of the carbon budgets to reflect the control it has over
spending and tax.[203]
More widely, the Secretary of State assured us that the Treasury
"institutionally understands the importance of meeting carbon
budgets",[204]
and that it would play an important role in the system, particular
in the context of the spending reviews.[205]
In our view the Low Carbon Transition Plan has probably under-estimated
the importance of taxation as a lever to affect emissions. The
Treasury has significant influence over the shape of the Government's
climate change programme and the Low Carbon Transition Plan. Changes
in taxation and spending could have a major impact on carbon emissions
and on levels of investment in low-carbon industries. We believe
that this influence should be acknowledged in departmental carbon
budgets.
83. Ensuring that each department's carbon reduction
plan is adequate and closely monitoring progress against departmental
budgets will be key to ensuring that the whole of government is
working towards meeting the UK's carbon budgets and its longer-term
targets to reduce emissions. Clearly the Committee on Climate
Change has a role to play in monitoring the overall delivery.
It is not currently resourced to monitor and examine departmental
budgets but is willing to do so if asked.[206]
Our successors should consider how scrutiny of departmental budgets
and departmental carbon reduction plans should be taken forward.
The NAO could assist parliamentary scrutiny of departmental carbon
reduction plans.
84. The Association for the Conservation of Energy
said there was a risk that each sector could try to pass on responsibility
for reducing emissions to other sectors and as a result little
progress would be made.[207]
But the Low Carbon Transition Plan made clear the expectation
for each sector of the economy and each government department;
the challenge now is to turn this into meaningful action that
reduces emissions by at least 2-3% per annum. The Committee on
Climate Change will next report on the progress towards meeting
targets for reducing emissions and carbon budgets in June 2010.
We recommend that our successors in the next Parliament should
follow up progress on carbon budgets because of the cross-departmental
nature of the Low Carbon Transition Plan.
85. The management of the carbon budget is as
vital as the management of the fiscal budget. It requires the
same level of political attention and civil service commitment,
and the same degree of parliamentary scrutiny. Our successors
should lead the way in rigorously monitoring the robustness of
the carbon budgets and the progress the UK makes in meeting them.
122 Q 262 Back
123
HMT, Budget 2009: Building Britain's future, April 2009,
para 7.11 Back
124
Ev 75 Back
125
Committee on Climate Change, Meeting Carbon Budgets-the need
for a step change, progress report to Parliament, October
2009, Executive summary, p10. Back
126
Q 226 [Turner] Back
127
Q 256 [Hughes] Back
128
Environmental Audit Committee, Seventh Report of Session 2006-07,
Beyond Stern: From the Climate Change Programme Review to the
Draft Climate Change Bill, HC (2006-07) 406, para 26 Back
129
Q 106 Back
130
DECC, The Low Carbon Transition Plan: National strategy for
climate and energy, July 2009 Back
131
Kevin Anderson and Alice Bows, Reframing the climate change
challenge in light of the post-2000 emission trends, Philosophical
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132
Tyndall Centre, Making a climate commitment: analysis of the
first report (2008) of the UK Committee on Climate Change,
March 2009 Back
133
Kevin Anderson and Alice Bows, Reframing the climate change
challenge in light of the post-2000 emission trends, Philosophical
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134
Q 152 and Ev 53 Back
135
Q 223 [Turner] Back
136
Q 224 [Turner] Back
137
Q 226 [Turner] Back
138
Ev 103 Back
139
Q 252 Back
140
Q 154 [Allen] Back
141
Ev 75 Back
142
Q 185 Back
143
Q 73-74 Back
144
Q 77 Back
145
Ev 138 Back
146
Ev 130 Back
147
Ev 130 Back
148
Q 225 Back
149
Q 224 [Kennedy] Back
150
Q 255 Back
151
Q 122 Back
152
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153
DECC, Carbon valuation in UK policy appraisal: a revised approach,
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154
Q 158 [King] Back
155
Stern, Key elements of a global deal on climate change,
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156
Committee on Climate Change, Meeting Carbon Budgets-the need
for a step change, progress report to Parliament, October
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157
Q 241 [Turner] Back
158
Q 241 [Kennedy] Back
159
BBC News, Clash over ecological economics, 27 April 2009, news.bbc.co.uk Back
160
Q 105 Back
161
Q 186 Back
162
Anderson, Bows and Mander, From long-term targets to cumulative
emission pathways: Reframing UK climate policy, Energy Policy,
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163
DECC, The Low Carbon Transition Plan: National strategy for
climate and energy, July 2009, Summary, p4 Back
164
Committee on Climate Change, Meeting Carbon Budgets-the need
for a step change, progress report to Parliament, October
2009, Summary, p9-10 Back
165
Q 223 [Turner] Back
166
Q 209 Back
167
Q 210 Back
168
Q 166 [Hepburn] Back
169
Trade and Industry Committee, Fourth Report of Session 2005-06,
New Nuclear? Examining the issues, HC (2005-06 1122 Back
170
Q 188 Back
171
Committee on Climate Change, Meeting Carbon Budgets-the need
for a step change, progress report to Parliament, October
2009, p134-136 Back
172
The Committee on Climate change, www.theccc.org.uk/sectors/buildings-a-industry/non-residential-buildings Back
173
The Committee on Climate Change, www.theccc.org.uk/sectors/buildings-a-industry/homes Back
174
DECC, The Low Carbon Transition Plan: National strategy for
climate and energy, July 2009, Summary, p4 Back
175
Committee on Climate Change, Meeting Carbon Budgets-the need
for a step change, progress report to Parliament, October
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176
Ev 133 Back
177
Ev 135 Back
178
Ev 135 Back
179
Ev 100 Back
180
DECC, Draft Overarching National Policy Statement for Energy
(EN-1), November 2009, section 2.1.5 Back
181
DECC, Draft Overarching National Policy Statement for Energy
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182
Environment Agency, Response to DECC consultation, Carbon Units,
the Net UK Carbon Account and Carbon Accounting, January 2009,
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183
Ev 138 Back
184
Ev 138 Back
185
Environmental Audit Committee, Seventh Report of Session 2006-07,
Beyond Stern: From the Climate Change Programme Review to the
Draft Climate Change Bill, HC (2006-07) 460, para 108. Back
186
HMT, Building a low-carbon economy: implementing the Climate
Change Act 2008, April 2009, Para 3.3 Back
187
Q 263 [Miliband] Back
188
Q 101 Back
189
Oral Evidence taken before the Environmental Audit Committee on
2 June 2009, HC (2008-09) 393-v, Qq 317-8 Back
190
DECC, 2007 UK Greenhouse Gas emissions, final figures,
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191
DECC, UK Climate Change Sustainable Development Indicator:
2007 Greenhouse Gas Emissions, Final Figures, Feb 2099, www.defra.gov.uk/evidence/statistics/environment/globatmos/download/ghg_ns_20090203.pdf Back
192
Ev 120 Back
193
Ev 120 Back
194
Ev 119 Back
195
Ev 136 Back
196
Oral evidence taken before the Environmental Audit Committee on
4 February 2009, HC (2008-09) 234, Q 19 [Turner] Back
197
Q 293 [Hughes] Back
198
DECC, The Low Carbon Transition Plan: National strategy for
climate and energy, July 2009, p47. Back
199
Q 293 [Hughes] Back
200
Q 293 [Hughes] Back
201
Q 293 [Hughes] Back
202
Q 293 [Miliband] Back
203
Ev 133 Back
204
Q 292 Back
205
Q 291 Back
206
Ev 100 Back
207
Ev 128 Back
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