House of Commons Environmental Audit Committee Progress on Carbon Budgets Fifth Report of Session 2013–14 Volume I: Report, together with formal minutes, oral and written evidence Additional written evidence is contained in Volume II, available on the Committee website at www.parliament.uk/eacom Ordered by the House of Commons to be printed 11 September 2013 HC 60 Published on 8 October 2013 by authority of the House of Commons London: The Stationery Office Limited £17.50 Environmental Audit Committee The Environmental Audit Committee is appointed by the House of Commons to consider to what extent the policies and programmes of government departments and non-departmental public bodies contribute to environmental protection and sustainable development; to audit their performance against such targets as may be set for them by Her Majesty’s Ministers; and to report thereon to the House. Current membership Joan Walley MP (Labour, Stoke-on-Trent North) (Chair) Peter Aldous MP (Conservative, Waveney) Richard Benyon MP (Conservative, Newbury) [ex-officio] Neil Carmichael MP (Conservative, Stroud) Martin Caton MP (Labour, Gower) Katy Clark MP (Labour, North Ayrshire and Arran) Chris Evans MP (Labour/Co-operative, Islwyn) Zac Goldsmith MP (Conservative, Richmond Park) Mark Lazarowicz MP (Labour/Co-operative, Edinburgh North and Leith) Caroline Lucas MP (Green, Brighton Pavilion) Caroline Nokes MP (Conservative, Romsey and Southampton North) Dr Matthew Offord MP (Conservative, Hendon) Mr Mark Spencer MP (Conservative, Sherwood) Paul Uppal MP (Conservative, Wolverhampton South West) Dr Alan Whitehead MP (Labour, Southampton, Test) Simon Wright MP (Liberal Democrat, Norwich South) The following members were also members of the committee during the parliament: Ian Murray MP (Labour, Edinburgh South) Sheryll Murray MP (Conservative, South East Cornwall) Powers The constitution and powers are set out in House of Commons Standing Orders, principally in SO No 152A. These are available on the internet via www.parliament.uk. Publications The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the internet at www.parliament.uk/eacom. A list of Reports of the Committee in the present Parliament is at the back of this volume. The Reports of the Committee, the formal minutes relating to that report, oral evidence taken and some or all written evidence are available in a printed volume. Committee staff The current staff of the Committee are Simon Fiander (Clerk), Nicholas Beech (Second Clerk), Lee Nicholson (Committee Specialist), Andrew Wallace (Senior Committee Assistant), Anna Browning (Committee Assistant), Sayeda Begum (Committee Support Assistant) and Nicholas Davies (Media Officer). Contacts All correspondence should be addressed to the Clerk of the Environmental Audit Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 6150; the Committee’s email address is [email protected] Progress on Carbon Budgets 1 Contents Report Page Summary 3 1 Introduction 5 Our latest inquiry 6 2 The carbon budgets 8 Developments in climate change science 8 Feedback effects 9 Climate sensitivity 11 European and international efforts 14 Review of the fourth carbon budget 16 Widening the budgets 21 Emissions from international aviation and shipping 21 Emissions embedded in imports 21 3 Management of carbon budgets 23 Progress to date 23 The need for new policies to meet the carbon budgets 25 Domestic energy efficiency 25 Electricity market reform 27 Fluorinated gases 30 The Government’s management of carbon budgets 30 Role of local authorities 34 Conclusions 37 Recommendations 39 Formal Minutes 41 Witnesses 42 List of printed written evidence 43 List of additional written evidence 43 List of Reports from the Committee during the current Parliament 44 Progress on Carbon Budgets 3 Summary The Government is required to set a series of five-year carbon budgets to restrict greenhouse gas emissions so that the UK’s longer term statutory climate change targets are met. Four carbon budgets have been set covering the period up to 2027. In this report we explore the Government’s response to our 2011 report on carbon budgets and take stock of progress against them. Compared with 2011, the case for strong action to avoid dangerous climate change has strengthened. The world is currently on track to warm by 4°C. The Committee on Climate Change’s figures showed that in the UK emissions rose by 3.5% in 2012. Climate models are not yet able to include some potentially significant feedback effects, but continue to be developed, improving our understanding. Since we last reported in 2011, there has been controversy about a mismatch between rising greenhouse gas concentrations in the atmosphere and negligible global temperature increases since the late 1990s, giving the false impression to some that the risk of climate change has become overstated. While the range of likely climate sensitivity may have slightly narrowed, most climate models are still consistent with observations and therefore do not lessen the imperative to take action to avoid dangerous climate change. The carbon budgets are each split into a ‘traded sector’, which is based on the UK’s share of the EU Emissions Trading System emissions limit and covers power and heavy industry, and a ‘non-traded sector’ covering road transport, agriculture and buildings. A lax EU ETS emissions limit may bring pressure to bear on the non-traded sector which will have to produce further emissions reductions to cover the gap left by the traded sector. But there are too many uncertainties at the moment to warrant reviewing and making any changes to the 2023–2027 fourth carbon budget. We concluded in 2011 that the fourth carbon budget as currently set represents the minimum needed to ensure that the emissions reduction target is met, and that loosening the budget following the planned review of that budget in 2014 would put achieving that target in jeopardy. That imperative has not diminished and the Government should commit to not loosening the fourth carbon budget, identify when it will come forward with key policies to bridge the required emissions cuts in the non-traded sector of the fourth carbon budget, and state how it plans to help strengthen the EU ETS. The Carbon Plan—the Government’s plan for meeting the carbon budgets—is out of date and requires revision. Arrangements for managing and reporting progress against the carbon budgets have not been working as intended and improvements are needed to enhance transparency. The National Emissions Target Board, charged with coordinating action across government and ensuring departments are held to account for their share of emissions reductions, should convene regularly and take control of identifying the new policies and incentives needed in the next two years to get the UK on track to meet the third and fourth carbon budgets. Local authorities have an important role to play in driving down emissions, particularly those from buildings, transport and waste. However, there is a significant risk of inaction because of authorities’ constrained fiscal position and the Government’s decision not to 4 Progress on Carbon Budgets implement the Committee on Climate Change’s recommendation to place a statutory duty on local authorities to produce low-carbon plans. The Government should reconsider placing a statutory duty on local authorities to produce low-carbon plans for their area and work to ensure that all local authorities are measuring and reporting on their emissions. The Committee on Climate Change found that on a consumption basis the UK’s carbon footprint had increased over the past two decades so that the UK now had one of the largest footprints in the world. In preparation for a global deal on climate change in 2015, inevitably couched in terms of the ‘production’ of emissions, the Government should re- examine with the Committee on Climate Change the possibility of introducing a supplementary target focused on emissions ‘consumption’ embedded in imports, and the potential implications of such a target for the industrial strategies recently published by BIS. In the main body of this report, conclusions are printed in bold and recommendations are printed in bold italics. Progress on Carbon Budgets 5 1 Introduction 1. The Government is required to set a series of five-year carbon budgets to restrict emissions so that the UK’s statutory targets set out in the Climate Change Act 2008, to cut carbon emissions by at least 34% by 2020 and by at least 80% by 2050 (against a 1990 baseline), are met. Under the Act, the Committee on Climate Change (CCC) is charged with advising the Government on setting the level of these carbon budgets. The first three carbon budgets were set in May 2009 and the fourth set in June 2011 (Figure 1). Each carbon budget is split into a ‘traded sector’, which is based on the UK’s share of the EU Emissions Trading System emissions limit and covers power and heavy industry, and a ‘non-traded’ sector of road transport, agriculture, buildings, etc. The Act requires the Government to set out a plan to meet the carbon budgets and report progress against that plan.1 The Act also requires the Committee on Climate Change to report annually on progress in reducing emissions to meet the carbon budgets. Figure 1: The carbon budgets Budget 1 Budget 2 Budget 3 Budget 4 (2008–12) (2013–17) (2018–22) (2023–27) 2 Carbon Budgets (MtCO2e) 3018 2782 2544 1950 Reduction below 1990 levels 22% 28% 34% 50% 2. We published a report on the Carbon Budgets in October 2011.3 That report looked ahead to the December 2011 publication of the Government’s Carbon Plan that replaced the 2009 Low Carbon Transition Plan.4 We recommended that the Carbon Plan be improved by: • including a quantification of the emissions reductions expected from the policies listed in the Plan; • introducing accountability arrangements for government departments to replace the Departmental Carbon Budgeting regime; and • setting out a role for local authorities in delivering emissions reductions.