The Carbon Plan: Delivering our low carbon future December 2011 The Carbon Plan: Delivering our low carbon future Presented to Parliament pursuant to Sections 12 and 14 of the Climate Change Act 2008 Amended 2nd December 2011 from the version laid before Parliament on 1st December 2011. December 2011 © Crown copyright 2011 You may re-use this information (not including logos) free of charge in any format or medium, under the terms of the Open Government Licence. To view this licence, visit http://www. nationalarchives.gov.uk/doc/open-government-licence/ or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or e-mail: [email protected]. Any enquiries regarding this document should be sent to us at Department of Energy & Climate Change, 3 Whitehall Place, London SW1A 2AW. This publication is available for download at www.official-publications.gov.uk and it is also available from our website at www.decc.gov.uk. Contents Foreword 1 Executive summary 3 Part 1: The Government’s approach to energy and climate change 13 Introduction 13 Our principles 14 The vision for 2050 15 2050 futures 16 Planning for the future 18 Part 2: Our strategy to achieve carbon budgets 21 Achieving carbon budgets 21 Buildings 29 Transport 47 Industry 59 Secure, low carbon electricity 69 Agriculture, forestry and land management 85 Waste and resource efficiency 93 Working with the EU and Devolved Administrations 100 Part 3: Delivering the fourth carbon budget 107 Scenarios to deliver the fourth carbon budget 107 Delivering non-traded sector emissions reductions 107 Delivering traded sector emissions reductions 110 Considerations for achieving the fourth carbon budget 111 Managing our performance 118 Annexes A 2050 analytical annex 121 B Carbon budgets analytical annex 137 C Carbon Plan action summary 208 1 Foreword Even in these tough times, moving to a low carbon economy is the right thing to do, for our economy, our society and the planet. This plan sets out how Coalition Government policies put us on track to meet our long term commitments. The Green Deal will help cut energy bills, the Green Investment Bank will attract new investment, and our reforms to the electricity market will generate jobs in new low carbon industries. Climate change requires global action; every country needs to play its part. This Carbon Plan shows that the UK is prepared to govern in the long term interests of the country and build a coalition for change. David Cameron Nick Clegg Prime Minister Deputy Prime Minister In June 2011, the Coalition Government enshrined in least-cost technologies winning the largest market law a new commitment to halve greenhouse gas share. Before then, our aim is to help a range of emissions, on 1990 levels, by the mid-2020s. This technologies bring down their costs so they are Carbon Plan sets out how we will meet this goal in a ready to compete when the starting gun is fired. way that protects consumer bills and helps to attract new investment in low carbon infrastructure, The transition to a low carbon economy will require industries and jobs. investment. But by insulating our homes better, and driving more fuel efficient cars, we will use less By 2020, we will complete the ‘easy wins’ that have energy, offsetting the funding needed for low helped emissions to fall by a quarter since 1990. By carbon energy. By investing in more diverse insulating all remaining cavity walls and lofts, while energy sources, we will be less vulnerable to fossil continuing to roll out more efficient condensing fuel price spikes. And by investing in industries that boilers, we will cut the amount consumers spend suit our geography and skills, such as offshore wind on heating by around £2 billion a year. Having and carbon capture and storage, we will gain a fallen by a quarter in the last decade, average long-term comparative advantage in industries with new car emissions will fall by a further third in a big future. the next, as internal combustion engines continue to become more efficient. Emissions from power This plan shows that moving to a low carbon stations, already down a quarter since 1990, will fall economy is practical, achievable and desirable. It will a further 40%, with most existing coal-fired power require investment in new ways of generating stations closing. energy, not a sacrifice in living standards. But turning it into reality will require business, government and Over the next decade, we must also prepare for the public pulling in the same direction. We face big the future. The 2020s will require a change of gear. choices on infrastructure and investment. I hope Technologies that are being demonstrated or over the next year this plan can help us to forge a deployed on a small scale now will need to move new national consensus on our energy future. towards mass deployment. By 2030, up to around a half of the heat used in our buildings may come from low carbon technologies such as air- or ground-source heat pumps. Electric or hydrogen fuel cell cars will help to reduce vehicle emissions to less than half today’s levels. New low carbon power stations – a mix of carbon capture and storage, Chris Huhne renewables and nuclear power – will be built. In the Secretary of State for Energy and 2020s, we will run a technology race, with the Climate Change 3 Executive summary 1. This plan sets out how the UK will achieve In the next ten years, we will develop and deploy decarbonisation within the framework of our the technologies that will be needed to halve energy policy: to make the transition to a low emissions in the 2020s. This will put the UK on a carbon economy while maintaining energy security, path towards an 80% reduction by 2050. and minimising costs to consumers, particularly those in poorer households. 3. By moving to a more efficient, low carbon and sustainable economy, the UK will become less 2. Emissions are down by a quarter since 1990.1 reliant on imported fossil fuels and less exposed Current policies put the UK on track to cut to higher and more volatile energy prices in emissions by over a third, on 1990 levels, by 2020. the future. Box 1: The Climate Change Act 2008 and the carbon budget framework The Climate Change Act established a legally binding target to reduce the UK’s greenhouse gas emissions by at least 80% below base year levels by 2050, to be achieved through action at home and abroad.2 To drive progress and set the UK on a pathway towards this target, the Act introduced a system of carbon budgets which provide legally binding limits on the amount of emissions that may be produced in successive five-year periods, beginning in 2008. The first three carbon budgets were set in law in May 2009 and require emissions to be reduced by at least 34% below base year levels in 2020. The fourth carbon budget, covering the period 2023–27, was set in law in June 2011 and requires emissions to be reduced by 50% below 1990 levels.3 This report sets out the proposals and policies for meeting the first four carbon budgets. First carbon budget Second carbon Third carbon Fourth carbon (2008–12) budget (2013–17) budget (2018–22) budget (2023–27) Carbon budget level (million tonnes 3,018 2,782 2,544 1,950 carbon dioxide equivalent (MtCO2e)) Percentage reduction below 23% 29% 35% 50% base year levels 1 This figure includes the effect of emissions trading. UK territorial emissions have fallen by 28% over the same period. 2 The base year is 1990 for carbon dioxide, nitrous oxide and methane, and 1995 for hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride. 3 To be reviewed in 2014 in light of EU Emissions Trading System cap. 4 Executive summary Progress so far Vision 4. Our past record shows that progress is 10. However, if we are to cut emissions by 80% by possible. Between 1990 and 2010 emissions from 2050, there will have to be major changes in how power stations fell by almost a quarter, as the we use and generate energy. Energy efficiency will ‘dash for gas’ in the 1990s saw large numbers have to increase dramatically across all sectors. of coal-fired power stations replaced. In the last The oil and gas used to drive cars, heat buildings decade wind and other renewables have grown and power industry will, in large part, need to be to the point that they now provide nearly a tenth replaced by electricity, sustainable bioenergy, or of UK generating capacity. With nuclear power hydrogen. Electricity will need to be decarbonised generating 16% of total UK electricity, a quarter of through renewable and nuclear power, and the electricity generation is now low carbon. use of carbon capture and storage (CCS). The electricity grid will be larger and smarter at 5. In buildings, emissions have fallen by 18%, balancing demand and supply. despite the growth in population and housing. Regulation has required the introduction of new, 11. But there are some major uncertainties. more efficient condensing boilers, saving at least How far can we reduce demand? Will sustainable £800 million this year on energy bills. Eleven million biomass be scarce or abundant? To what extent homes, 60% of all homes with cavity walls, have will electrification occur across transport and been fitted with cavity wall insulation. This will heating? Will wind, CCS or nuclear be the cheapest reduce the amount the UK spends on heating in method of generating large-scale low carbon 2011 by £1.3 billion.