Achieving Net Zero Contents

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1Net zero plans and progress

1.On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department for Business, Energy and Industrial Strategy (the Department) and HM Treasury about achieving net zero.1

2.In June 2019, government passed legislation committing it to achieving ‘net zero’ greenhouse gas emissions by 2050. This means reducing emissions substantially from current levels, requiring the UK’s greenhouse gas emissions in 2050 to be equal to or less than what is removed from the atmosphere by either the natural environment or carbon capture technologies. Government set the net zero target to deliver on the commitments it had made by signing the Paris Agreement in 2016. As part of the Paris Agreement,189 countries and territories committed to pursuing ways to limit global temperature rises this century to well below 2 degrees Celsius above pre-industrial levels and to try to limit the temperature increase further to just 1.5 degrees Celsius.2

3.Net zero is an increase in ambition from the government’s previous target, set in 2008, to reduce net emissions by 80% by 2050 compared with 1990 levels. In 2018, the UK emitted 496 million tonnes of carbon dioxide equivalent (the unified measure of greenhouse gas emissions combining all greenhouse gases). Between 2008 and 2018, the UK’s emissions reduced by 28%, faster than any other G20 economy. The power sector was responsible for 56% of the overall decrease in emissions between 2008 and 2018, industry for 22% and waste for 9%. Reducing emissions further to achieve net zero is a colossal challenge, requiring wide-ranging changes to the UK economy and to the way we all live our lives, including further investment in renewable electricity generation, as well as changing the way people travel, how land is used and how buildings are heated.3

4.The Department has overall responsibility in government for achieving net zero. It also has lead responsibility for decarbonising many of the highest-emitting sectors of the economy, such as power and industry. HM Treasury has a key role to play given it allocates budgets to government departments. It is central to assessing the relative priority of policies across government and ensuring that departments have sufficient financial resources to manage programmes aimed at reducing emissions. The Department must work with devolved administrations and other departments, like the Ministry of Housing, Communities and Local Government (MHCLG), Department for Environment, Food & Rural Affairs (Defra) and the Department for Transport, which each hold responsibility for decarbonisation in their respective policy areas.4

Plans for achieving net zero

5.Government introduced the net zero target through an amendment to the Climate Change Act (2008), which originally set a target of at least an 80% reduction in net greenhouse gas emissions in the UK relative to 1990 levels. Government also aimed to set an example for other countries to follow in the run-up to hosting the 26th United Nations’ Climate Change Conference of the Parties (COP26). The Climate Change Act required government to set ‘carbon budgets’, legally binding targets for UK emissions over a five-year period. The first five carbon budgets, up to 2032, were set to achieve progress towards the 80% reduction target.5 In December 2020, the Prime Minister announced a new target to reduce the UK’s emissions by at least 68% by 2030, compared to 1990 levels to put it on a pathway to net zero.6 The Climate Change Committee (CCC), which advises the UK and devolved administrations on meeting their emissions reductions targets and preparing for climate change, has recommended that the UK sets a Sixth Carbon Budget to require a reduction in UK greenhouse gas emissions of 78% by 2035 relative to 1990, in line with net zero.7

6.The UK met the first and second carbon budget and the Department currently forecasts that it is very likely to achieve the third carbon budget but will fall short against carbon budgets 4 and 5, from 2023 to 2027 and 2028 to 2032, respectively. We asked the Department how it could be confident that it would achieve the new 68% target when it was off track for the less ambitious fourth and fifth carbon budgets and what action it was taking to get back on track. The Department explained that it would establish additional policies to close the gap by publishing sector strategies over the next year, culminating in an overall net zero strategy. The Department told us that its success to date in achieving reductions in carbon emissions gave it confidence it could make the huge transformation needed. However, the majority of the reductions so far have been achieved in the power sector and required less behaviour change by consumers than would be necessary for other sectors that need to decarbonise, such as heat and transport.8

7.The government originally planned to publish many of its strategies during 2020. Publication was later than it previously intended, partly because of reprioritisation of Government activity in response to the coronavirus crisis.9 For example, the publication of the Heat and Buildings strategy was delayed from August 2020 and is yet to be published. Publication of the Fuel Poverty strategy was similarly delayed from April 2020 and did not publish until to February 2021.10 The Department told us that it would like to have published many of the sector strategies months earlier than they were likely to be published. It asserted that it was now in a good place to publish them and expected the strategies to be stronger as a result of the delay and would reflect a greater degree of political commitment. It accepted that the strategies would need to be clear, and provide detail, about the policies, timing and process that underpinned them. It told us that this particularly applied for high-emitting sectors including buildings, transport and industry. We asked the Department when the strategies were now due to be published and to provide a publication programme for the next 12 months. The Department would not provide details of the months that it planned to publish the individual strategies, asserting that it would ‘put them out at the right time, when they are ready’. It told us it expected the Heat and Building strategy and the fuel poverty strategy very soon, followed by the industrial decarbonisation, hydrogen and transport strategies. It expected to publish the nature strategy later in 2021, before the net zero strategy. The Department told us that it was ‘very confident’ that it would be able to publish a net zero strategy in advance of COP26.11

Progress monitoring

8.In early 2019, government established new coordination arrangements for the departments involved in achieving net zero. The arrangements include: cabinet committees for climate action strategy (chaired by the Prime Minister) and implementation; a Climate Change National Strategy Implementation Group (NSIG) of senior officials from the main departments involved; a net zero steering board for strategy and delivery supporting the NSIG; and boards within departments to oversee progress of emissions reductions.12 The Department’s overall responsibility for achieving net zero means it is responsible for ensuring cross-government arrangements are working effectively. The NAO found that while the Department reported actual and forecast greenhouse gas emissions annually and progress against the carbon budgets, giving it a high-level view of whether the UK is on track to meet net zero, it had not yet embedded performance monitoring into its cross-government coordination arrangements. It did not have a consolidated list of policies key to achieving net zero, nor did it collate data on how these policies were performing overall. This meant that the Department could not identify the key risks and issues emerging across government activities to achieve net zero that needed to be escalated to senior groups such as the cabinet committees.13

9.We asked what the Department was doing to ensure that it would be able to track progress towards net zero when responsibility was shared across departments. The Department told us that the new coordination structures provided it with clarity on total emissions and the level of emissions for which each department has responsibility. It asserted that this meant each department could be held to account for its area of responsibility while the Department was overall accountable for total emissions. It also explained that departments would be set an overall emissions ‘envelope’, which all emissions related to their policy decisions must come in under and that this envelope would fall over time. The Department acknowledged that it needed to enhance its reporting on the different net zero delivery programmes across government and told us that it had tasked a net zero governance team to work on this issue.14 The Treasury told us that the Department was working with the Climate Change Committee (CCC) to develop measures that could be used to track progress. It explained, however, that it would take ‘some time’ to develop this and make sure that it was designed and implemented in the right way, but that it hoped to improve the data and information available to make policy and spending decisions this year.15

10.We asked the Department about the recent decision to allow deep coal mining in Whitehaven, Cumbria and how this aligned with the government’s intention to move away from depending on fossil fuels and towards cleaner energy sources. The Department told us that the mine in question was for coking coal rather than producing power, a necessary fuel for steel production for which there is, currently, no green substitute. The Department stated that the steel industry was expected to decarbonise later than other sectors but accepted that the UK nonetheless needed to move to clean steel. More broadly, the Department commented that it is not possible simply to “switch off” certain high-emitting industries and acknowledged that there is a need to help the public better understand that net zero will come in stages with some industries decarbonising later than others.16 We asked that the Department ensures it publishes targets and milestones encompassing all sectors and that these are brought together and updated regularly so the public can see, in one place, what progress has been made.17

Appraising policies and projects

11.Net zero is an all-encompassing challenge that will affect every part of government. It will not be achieved if it is not sufficiently prioritised when departments make decisions that could impact on greenhouse gas emissions.18 We asked whether other departmental priorities, such as building enough homes, could supersede net zero and if the Department had the power to overrule these decisions in favour of net zero. We also asked how net zero was being prioritised in decisions like the granting of North Sea oil and gas licences, which could send the wrong message to the public about Government’s commitment to net zero. The Department explained that achieving net zero relied on its system of collective ownership, which should ensure everyone acted in support of the overall goal, rather than one department directing all others. The Department expected that where departments consistently fall behind, they would be held to account through the new coordination arrangements, which run from the Prime Minister and the Cabinet Committees, to the relevant secretary of state and the department itself, to ensure necessary action was taken to achieve net zero. The NAO found that spending reviews, led by HM Treasury, will be crucial to achieving net zero, as they allocate budgets to departments in the medium term (typically three to five years) and will provide an opportunity to encourage a coordinated approach. The Treasury and Department agreed that an important change in the most recent spending review was including officials from the Department to help scrutinise departments’ bids to ensure they aligned with the wider net zero strategy.19

12.The Treasury’s Green Book guidance requires all policy, programme and project proposals to consider environment and climate impacts, including UK greenhouse gas emissions. The Department noted that this was another means by which the compatibility of departments’ decisions with net zero could be taken into account.20 HM Treasury has recently reviewed the Green Book guidance, due to concerns that the guidance may undermine the Government’s aim to “level up” poorer parts of the UK. The updated Green Book emphasises the importance of demonstrating the fit of a proposed intervention with government’s strategic objectives, such as net zero, and highlighting whether it supports or conflicts with them.21 The Treasury told us that departments, in line with Green Book guidance, should be considering the impact of policies on wider strategic objectives, such as net zero, even if policies were not directly related to climate change.22

13.We asked what impact measures such as the Green Book guidance had on major infrastructure projects like High Speed 2. The Department told us that departments were each responsible for ensuring that the projects within their areas remained below their overall emissions envelope and that it did not micromanage individual projects. It explained that in the case of the Department for Transport, the plans to achieve net zero would include a range of transport modes, from cycling, walking, cars, trains and planes, as well as core infrastructure projects such as HS2. It explained that this provided departments flexibility to balance their projects’ greenhouse gas emissions as if they went over on one project, the departments would need to find savings elsewhere.23

14.We asked the Treasury why, in its updated Green Book, it had not introduced a specific requirement for policies to explain how they aligned with net zero. The Treasury told us that the guidance already required Departments to consider greenhouse gas emissions as part of their appraisal process.24 The NAO found, however, that Departments’ adherence to guidance, including that in the Green Book, was often inconsistent. The Treasury accepted that taking greenhouse emissions into account was “not always happening on a consistent basis” and that it needed to do more to set the expectations of Departments.25 In the most recent spending review, the Treasury asked departments to provide a detailed assessment of the climate impact of their capital expenditure plans, but not all departments did so. It explained that the main issue was the capability of departments, as much of the capability for assessing the climate impact of policies sits within the Department. The Treasury recognised that there was more it could do to ensure departments have the tools and capabilities to assess the climate impact of policies.26

Impact on global emissions

15.Limiting global temperature rises to reduce the climate change impacts will require a global reduction in greenhouse gas emissions. The net zero target applies to emissions generated in the UK and does not include emissions generated in the production of goods imported into the UK. This is consistent with internationally-agreed rules around climate change targets to prevent double counting of emissions.27 We asked about the potential risk that if Government policies reduce emissions in the UK but at the expense of higher emissions abroad then the UK’s progress towards net zero could mask the fact that global emissions are not reducing.28 The CCC found that the UK’s greenhouse gas emissions were 69% higher in 2016 if emissions generated in imports were included and that imported emissions have risen as a fraction of the UK’s total greenhouse gas emissions. This, it reported, reflected the UK’s progress in reducing emissions domestically and that the UK imports energy-intensive industrial products like steel. The CCC also emphasised the importance of government prioritising actions that reduce both UK-generated emissions and imported emissions, such as increasing energy efficiency and reducing waste.29

16.We asked how the Department would ensure that the impact of the UK’s progress towards net zero would not inadvertently result in higher emissions elsewhere. The Department told us that, so far, reductions in the UK’s emissions had been the result of real change, particularly in the power and industrial sectors, and not the result of pushing emissions abroad, but that it was monitoring this. HM Treasury similarly told us that as other countries decarbonise, imports from those countries will have less embedded carbon and so the risk of pushing emissions abroad would be reduced. The Department told us that emissions generated in imports were difficult to estimate, which is why it was not used as an overall target. It noted that preventing the export of emissions in general relied on careful policy design. For example, regulating the carbon make-up of products on the market, rather than solely regulating how goods are made in this country.30

17.We asked about the feasibility of a tax based on carbon embedded in imports (a carbon border adjustment tax) to reduce the risk of pushing emissions abroad. The Treasury told us that it was considering this as part of its net zero review. It explained that it needed to further investigate the proposal, particularly whether it would be effective in maintaining UK jobs and facilitating decarbonisation in the Global South, how it could be implemented and whether it would comply with World Trade Organisation rules. It explained that the European Commission was considering a carbon border adjustment tax and it expected to learn from this about how the UK could tackle the issue of imported carbon in future.31