Further memorandum submitted by the Department
of Energy and Climate Change (DECC)
INTRODUCTION
This update to DECC's original memorandum of
evidence to the Environmental Audit Committee (EAC) Carbon Budgets
Inquiry was requested by the Committee. While the original memorandum
remains entirely valid, significant progress has been made in
relation to carbon budgets since April. There have also been several
oral evidence sessions where further specific questions have been
discussed. This should therefore be seen as an addition, but not
a replacement, to the original, responding to these developments.
GENERAL UPDATE
In May the following Statutory Instruments were
debated and approved by both Houses of Parliament:
— Carbon Budgets Order 2009 (SI
No. 1259), which set the level of the first three carbon budgets.
— Climate Change Act 2008 (2020 target,
credit limit and definitions) Order 2009 (SI No. 1258), which
amended the level of the 2020 target in the Act, set the limit
on international credits in the first budget period, and defined
international aviation and international shipping for reporting
purposes under the Climate Change Act.
— Carbon Accounting Regulations 2009
(SI No. 1257), which set out the rules to be followed for
determining compliance with carbon budgets.
Following Parliamentary approval, the SIs came
into force, and therefore the carbon budgets became law, on 31
May.
In July the Government published a White Paper—The
UK Low Carbon Transition Plan—alongside the Renewable Energy
Strategy, the UK Low Carbon Industrial Strategy and a Low Carbon
Transport Strategy. The Transition Plan shows how we will meet
the first three carbon budgets through action in all sectors of
the economy. It sets out the steps for making a permanent shift
to low carbon, while maximising economic opportunities, growth
and jobs. By 2020, this should mean that:
— 40% of UK electricity will be from low-carbon
sources—renewables, nuclear and clean coal;
— 7 million homes will enjoy pay-as-you-save
home energy refurbishments, and more than 1.5 million households
will be supported to produce their own clean energy;
— The UK will be importing 20-30% less
gas than we otherwise would;
— The average new car will emit 40% less
carbon than now; and
— More than 1.2 million people will be
in green jobs.
The Transition Plan also sets out our proposals
for how we will manage carbon budgets in Government, with every
major department allocated their own share of the budget.The Plan
is the most systematic response to climate change of any major
developed economy and demonstrates our commitment in the lead
up to global climate talks in Copenhagen in December. As already
announced, the Government will tighten the carbon budgets in the
light of a credible global agreement being reached at Copenhagen,
and once proposals on sharing out the new EU target are agreed.
There are a number of forthcoming milestones
relating to carbon budgets. In October the Committee on Climate
Change will publish its first annual progress report to Parliament;
the Government must respond by 15 January 2010. By next spring,
the Government will publish a roadmap setting out the path to
2050 in the energy sector; and individual Departments will publish
their carbon reduction delivery plans showing how they will meet
their share of the carbon budgets.
ADDITIONS AND
UPDATES TO
ANSWERS IN
ORIGINAL MEMORANDUM
Whether the UK's statutory targets for greenhouse
gas reductions are consistent with the Government's objective
of limiting global warming to no more than 2°C and whether
they are enforceable
As stated in the original memorandum, the UK's
statutory targets are consistent with the conclusion of the Intergovernmental
Panel on Climate Change (IPCC) Fourth Assessment Report, and therefore
with a 50% chance of limiting the temperature rise to 2°C
up to 2100. This estimate is also consistent with recent results
from the DECC and Defra-funded research programme called "AVOID"
(see below).
The Government considers that the Committee
on Climate Change (CCC) has given full weight to the science in
advising on carbon budgets and targets, while recognising that
achievement of a stabilisation goal is not something that the
UK can deliver on its own and that an international agreement
is required. It will also be necessary to keep under review the
developments in scientific understanding to inform the scale of
domestic and international mitigation action.
The original memorandum also notes that the
targets and budgets under the Climate Change Act are legally binding
and that the Government is fully committed to meeting them. The
provision to allow "credits", representing emissions
reductions overseas brought into the UK, to be counted against
carbon budgets, means that credits can be bought to meet budgets
if they are not met through reductions in domestic emissions.[4]
If a carbon budget is exceeded, even taking into account of any
credits, section 19 of the Climate Change Act requires the Secretary
of State to lay before Parliament a report setting out proposals
and policies to compensate in future periods for the excess emissions.
The extent to which the Committee on Climate Change's
recommended budgets to 2020 are consistent with the UK's target
for 2050
As already announced—and in line with
the CCC's advice—the Government will tighten the carbon
budgets in the light of a credible global agreement being reached
at Copenhagen. The CCC has made clear, in evidence to the EAC
and elsewhere, that the `intended' budget levels they recommended
in their December 2008 report were indicative, pending a global
deal.
As the UK negotiates internationally on climate
change as part of the EU, the Government expects to agree the
UK's emissions reductions targets under any future international
agreement at European level. The CCC will therefore be asked to
reconsider its advice on the level of `Intended' budgets after
a global agreement and once proposals on sharing out of the EU
target are agreed. Government will then take this advice into
account in amending the budget levels.
The suitability of the climate models and the
validity of the assumptions used by the Committee on Climate Change
in setting carbon budgets
As stated in DECC's original memorandum, the
simple model used by the CCC, "MAGICC 4.1", incorporates
all climate feedbacks that have been identified from the more
detailed general circulation models (GCMs). The simple models
are able to closely simulate the global temperature response of
GCMs for baseline emissions scenarios, and the GCMs themselves
have been found to reproduce the observed climate within the expected
range of variability.
A major research programme, AVOID ("Avoiding
dangerous climate change"), jointly funded by DECC and Defra,
has built on the CCC approach to provide a more detailed analysis
of the sensitivity of climate outcomes to variations in both emissions
pathways and climate model parameters.[5]
The latest results from AVOID show, in agreement with the CCC's
report, that in order to limit warming to 2°C in 2100 with
a greater than 50% chance of remaining below this in 2100, early
action should be taken so that global emissions peak in the next
few years and very significant annual reductions are achieved
thereafter. Our aim in international negotiations is to secure
a global agreement that will deliver this.
Attention has been drawn to differences in the
targets suggested by the CCC and those published by the Tyndall
centre. These were primarily due to practical differences in scientific
method and assumptions between the studies. It should be noted
that there is a level of uncertainty inherent in such analysis
that is being explored more fully in the AVOID project.
The Committee has asked in an oral evidence
session about the integrity of our carbon accounting systems.
The system used for carbon budgets, which measures emissions by
way of our greenhouse gas inventory, reflects the agreed international
approach to measuring emissions of greenhouse gases. It is important
that the UK follows agreed international practice, as consistency
with this is essential if we are to successfully negotiate global
emissions reductions with other countries. Whilst it is also correct
to state that the underlying calculations rely to some extent
on estimates of activity data and emissions factors, we believe
that in the long run this approach will give the most accurate
results, and is preferable to an alternative approach which might,
for example, measure emissions at a location close to their source.
The basis on which the Committee on Climate Change
arrived at the UK's share of the global effort to cut emissions
With regard to international burden sharing,
the Government is working closely with EU partners and other countries
to secure an ambitious, effective and fair agreement at the UNFCCC
meeting in Copenhagen in December. We are seeking a comprehensive
agreement that includes a clear long-term vision for global emissions
reductions that is compatible with our 2°C goal. This would
include: ambitious and comparable mid-term targets for developed
countries; adequate contributions by developing countries according
to their responsibilities and respective capabilities; and international
architecture and mechanisms adequate to the task of meeting our
mitigation objectives in the most cost effective manner.
The Global Commons Institute's Contraction and
Convergence model was discussed in some detail during the Committee's
recent oral evidence sessions. We recognise that there are some
who regard this methodology as both effective and fair, given
its focus on equal emissions rights and the establishment of a
framework that would see all major countries participate from
the outset.
The EU's March Environment Council noted that,
based on elements such as current population projections, global
emissions per capita should be reduced to around two tonnes CO2
equivalent by 2050, and that, in the long term, gradual convergence
of national per capita emissions between developed and developing
countries would be necessary taking into account national circumstances.
In the current international negotiations, countries
are strongly protective of their right to act in accordance with
their national circumstances. Methodologies such as contraction
and convergence that focus on one particular indicator—in
this case per capita emissions—encounter strong resistance,
not least because they do not appear to give sufficient weight
to other important national indicators, such as mitigation potential,
economic capacity to act or human development status.
The compatibility of current Government policies
with achievement of the overall budget, how individual government
departments can ensure policies are consistent with overall carbon
budgets, and the potential role of departmental tradable carbon
allowances
The Low Carbon Transition Plan sets out the
proposals and policies that will enable the UK to meet its first
three carbon budgets, fulfilling a requirement in the Climate
Change Act. An annex to the Plan lists all the different policies,
sector by sector, and the emissions reductions they are expected
to generate in each year between 2008 and 2022, and over each
of the three budget periods.
The policies in the Transition Plan are reflected
in the latest emissions projections, published at the same time.
However, emissions projections can never fully guarantee that
the budgets will be met, as there will always be uncertainty about
future emissions. While some policies, like the EU Emissions Trading
System, guarantee that net emissions will be no higher than the
limit or "cap" that is set, in other areas there is
uncertainty about the level of emissions reductions that will
be delivered by policies and whether other factors, such as faster
than expected economic growth, will drive up emissions.
To mitigate this uncertainty, the Transition
Plan provides an additional contingency margin. On the basis of
the central scenario for emissions projections, the policies in
the Plan will over-deliver against the carbon budgets by a margin
of 39 million tonnes CO2 equivalent in the third budget period
and by 147 million tonnes across all three periods. Uncertainty
has also been reduced by improving the accuracy of the latest
emissions projections, for example by removing any double counting
of carbon savings by policies. The Government will also continue
to explore new cost-effective policy options to reduce emissions
in the UK, for example new ways to help small businesses to save
carbon.
As well as proposals and policies across all
sectors, the Transition Plan sets out the Government's plans to
introduce a system of departmental carbon budgets, initially on
a pilot basis to be reviewed ahead of the second budget period
(2013-17). Their purpose is to ensure that every part of Government
is held accountable for delivery of the UK's carbon budgets. Each
major government department has been allocated its own carbon
budget, made up of two elements. The first reflects a share in
each of the major sectors of the economy, representing an approximation
of its relative degree of influence on reducing emissions in each
sector; and the second reflects emissions from the part of the
public sector it has responsibility for.
Sectoral shares have been calculated considering
departments' policy levers, policy responsibility for activities
increasing emissions, and general responsibility and influence
on economic sectors. They cannot be a precise measure of departments'
contributions, but will give departments a stake in reducing emissions
from a given sector, and a pressure to work with other departments
involved in that sector in order to deliver their budgets.
As a first step, the public sector element of
the departmental carbon budgets includes emissions from central
government departments, based on the existing SOGE framework,
and from departments' own administrative transport. They require
a 30% reduction in these two elements by 2020, against baselines
of 1999-2000 and 2005-06 respectively. The remainder of public
sector emissions are included in DECC's budget, given its policy
responsibility for the Carbon Reduction Commitment. But the intention
is to include emissions from schools, further and higher education,
and the NHS in the relevant department's carbon budgets by April
2010, and over time to include emissions from the wider public
sector in the budgets of the departments with responsibilities.
The issues around using emissions trading (both
credits from the EU Emission Trading Scheme, and carbon offset
credits) to meet carbon budgets, including the standards that
should apply to such credits
The Government has already said, on the basis
of the current 34% target for 2020, that it does not plan to buy
international offset credits in any of the three budget periods,
and will meet the budgets through domestic action alone. This
applies outside the EU Emissions Trading System, where businesses
can buy offsets within limits set at EU level. The UK Low Carbon
Transition Plan shows how it will be achieved in practice, by
setting out the policies that will reduce domestic emissions to
the level necessary across all three budget periods. Government
has only actually set a legal limit for the first period because
this is what the Climate Change Act requires.
Carbon budgets introduce a new imperative: they
are legally binding and must be met. The use of credits must therefore
remain as an "insurance option" to meet the current
carbon budgets, in the event that expected emissions reductions
are not delivered. However, it is not part of the Transition Plan
and should be seen as a risk management tool that would only be
used as a last resort. The chances of this last resort being needed
are low, due to the efforts to reduce uncertainty described above.
Furthermore, any need to buy credits would come at a cost which
effectively imposes a cash penalty on Government for failing to
deliver the policies in the Transition Plan.
When tighter budgets are set, following a global
deal, the Government will consider whether the extra emissions
reductions required should be delivered at home or through buying
offset credits that will deliver emissions reductions in developing
countries. In doing so, the Government will be guided by the most
cost effective path towards the 2020 and 2050 targets.
Under the carbon accounting regulations for
carbon budgets, the contribution to carbon budgets of the sectors
of the economy covered by the EU ETS (the "traded sector")
is equal to the level of the UK cap (with units credited or debited
to reflect the difference between the cap and actual emissions).
The Government considers that it would be misleading to use actual
UK emissions in the traded sector to count towards our carbon
budgets, rather than the UK's allocation under the EU ETS; for
example, although we might report reduced emissions in the UK,
these might actually be displaced by increased emissions elsewhere
in the EU, or vice versa.
It is also important to note that there will
be a significant reduction in the access to credits in the third
phase of the EU ETS (2013-20), compared to the second (2008-12).
In addition, the Transition Plan shows that we expect that the
UK will vary over the three budget periods between being net sellers
(actual emissions lower than the cap) and net purchasers (actual
emissions higher than the cap) of carbon units from abroad. This
is contrary to the expectations of some observers that the UK
is most likely to be a net purchaser over the period.
September 2009
4 As described below Government aims to meet the current
carbon budgets without purchasing credits, and this represents
an "insurance option" to be used only in the last resort. Back
5
www.avoid.uk.net Back
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