CCC: Costly gas means reaching climate goals ‘could save UK 0.5% of GDP’
Record-high gas prices mean efforts to cut UK carbon emissions could save the economy 0.5% of GDP, says the Climate Change Committee (CCC).
Its latest annual progress report to parliament says decarbonising the UK could save money, if fossil fuel prices remain very high. Its earlier estimates said reaching net-zero would cost less than 1% of GDP, while helping to avoid dangerous warming and bringing significant health benefits.
High fossil fuel prices following Russia’s invasion of Ukraine “reinforce the case for a rapid transition away from fossil fuels”, the report says, warning that some will use the crisis as an excuse to expand fossil fuel production or pause coal phaseouts.
Yet the CCC says the UK is on track to deliver sufficient progress against just eight of 50 new “key indicators”, with 11 “significantly off track”. And it says the government only has “credible” plans for 39% of the required emissions cuts to meet the UK’s legally binding carbon budgets.
CCC chief executive Chris Stark tells Carbon Brief there has been “a hell of a lot of progress” over the past year, but calls the government’s climate strategy “very risky”. He says there are “massive flashing red lights” over its approach to buildings, industry, agriculture and land use.
The committee’s overall verdict is that the government’s current climate programme “will not deliver net-zero”. In a foreword to the report, which places a strong emphasis on delivery, outgoing CCC chair Lord Deben says “the government is failing in much of its implementation”.
- Global context
- UK progress
- Road transport
- Agriculture and land use
- CO2 removal
- Fuel supply
- Aviation and shipping
- Waste and F-gases
This year’s CCC progress report comes against the backdrop of Russia’s invasion of Ukraine and an inflation-fuelling global energy crisis that is “much bigger” than the 1970s oil shocks.
Many countries – including the UK and the EU – have responded with policies to boost their energy security, ease the burden on consumers and wean themselves off Russian gas, coal and oil.
The oil shocks had a lasting impact on the world’s energy use, prompting fuel-efficient cars, the nuclear fleets of some countries and cheap solar, which can be partially traced to this period.
The current crisis is likely to be just as consequential. But, for now, the CCC says it is “unclear” how it will affect global emissions, with some responses leading to faster carbon dioxide (CO2) emissions cuts and others expected to push in the other direction. It says:
“The sharp increase in fossil fuel prices improves the cost advantages of renewable power generation, electric cars and investment in energy efficiency…[But] commitments from Europe to reduce imports of fossil fuels from Russia are leading to investment in new fossil fuel production and fossil fuel infrastructure…[which] risks [carbon] lock-in.”
The committee adds: “The invasion of Ukraine has led to record highs in fossil fuel prices and highlighted the role of the low-carbon transition in providing long-term energy security.”
The report also says that high fossil fuel prices “has created a window to encourage even faster decarbonisation” and adds that they are “shifting the economics of decarbonisation”.
In its advice over the level of the UK’s sixth legally binding carbon budget – issued during a period of historically low gas prices – the CCC had estimated that the transition to a zero-carbon economy would cost less than 1% of GDP, not including health benefits, the benefits of avoided climate impacts or the potential economic benefits of investment in infrastructure for net-zero.
Now, with gas prices four times higher than assumed at that time, the CCC says decarbonising the economy could result in a saving of 0.5% of GDP in 2035, if gas prices remain elevated.
Stark tells Carbon Brief that future gas prices are unknowable, but that the transition to net-zero would likely have a “very low cost…and probably less than zero – in other words, a cost saving”.
However, he emphasised the need for government intervention to ensure the aggregate economic costs and benefits are shared fairly across society. (The committee will publish a report in 2023 on the distributional impacts of climate and energy policies.)
Lord Deben writes in his foreword that high fossil fuel prices “should have given added impetus to improving energy efficiency, yet the necessary programmes are not in place”. He raised similar points in a press briefing, pointing to the cost savings from cheap renewables:
“It is interesting that if we were doing now what we have agreed to do by 2030 people’s bills would be £125 a year less. Renewable energy is the cheapest form of generation. If we want to deal with a cost of living crisis, if we want to deal with the issues in front of us, that’s exactly what we have to do. It’s the same programme.”
Beyond the current crisis, the report also points to the upcoming COP27 climate talks in Sharm El-Sheikh, Egypt, which follow the COP26 summit hosted by the UK last year.
Global climate pledges and net-zero commitments “have the potential to limit warming to around 2C”, the report says, but it adds: “[M]ost of these commitments are not yet backed by credible plans and Paris Agreement-aligned 2030 targets.”
One outcome of the talks was the “Glasgow climate pact”, under which all countries were asked to “revisit and strengthen” their international climate pledges for 2030.
The CCC says 11 of the G20 major economies have domestic 2030 goals rated “insufficient” by Climate Action Tracker and says “these targets should be revisited…[and] strengthened ahead of COP27”. (This list of countries includes China, India, Indonesia and Brazil.)
Other G20 countries have “almost sufficient” 2030 targets, including the EU, US, Japan, South Africa and Canada. The CCC says: “Revised and strengthened NDCs submitted ahead of COP27 should prioritise clear plans for delivery and explore further increases in 2030 ambition.”
The report then reiterates the committee’s view that the UK 2030 target is “ambitious and consistent with the Paris temperature goal”. It notes that the NDC involves a 55% reduction in CO2 emissions from 2010 to 2030, which is “a greater reduction in CO2 emissions than global scenarios consistent with 1.5C (-45% from 2010 to 2030)”. It points to the Climate Action Tracker rating:
“The UK’s recently updated 2030 emissions target is one of the only domestic 1.5C compatible targets in the world when rated by the Climate Action Tracker against global least cost modelled domestic pathways.”
(The rating goes on to say that the 2030 target is “insufficient” on what CAT describes as the UK’s “fair-share contribution”, pointing to the need for “additional financial support for emissions reductions achieved in developing countries”.)
As a result, the CCC says:
“The UK should focus on delivery of its 2030 emissions reduction target…and set out in detail how this will be achieved in its revised submission to the UN.”
Indeed, delivery and implementation is a major focus of the progress report, as shown by the chart below. For example, the words “deliver” or “delivery” were used around 1.3 times per page on average in the 2022 report (red bar), some 60% more frequently than in 2020 (light blue).Number of times selected words are used in recent CCC progress reports, average per page. Source: Carbon Brief analysis of CCC reports. Chart by Carbon Brief using Highcharts.
The analysis in the chart shows a recent and continued focus on risk, which is another major theme in the report (see below). In contrast, the use of the words “ambition” and “policy” has declined in frequency in the latest report, as the chart above shows.
Stark told a press briefing that “the challenge is really delivery”, adding:
“[W]e need to move beyond just spotting gaps in policy and to understanding how things are delivered on the ground and whether we’re seeing the change that we need to see, to believe that we’re on track for the targets that we set under the Climate Change Act.”
The report says:
“The emphasis must now be on action to scale up and roll out low-carbon solutions and to deliver the necessary emissions reductions.”
After surveying the global context and concluding that the UK needs to now focus primarily on delivering its climate pledges, the CCC turns its attention to assessing progress.
The report says that UK greenhouse gas emissions were 47% below 1990 levels in 2021, after decreasing 10% on 2019 levels due to Covid and then rising 4% on 2020 levels as the economy recovered. This rebound in 2021 was primarily in transport and electricity generation.
Progress is rated against the government’s own “delivery pathway”, setting out how it aims to reach net-zero emissions by 2050. The CCC also makes an assessment of delivery risks.
Key cross-cutting risks identified by the report include the government’s lack of public engagement strategy on net-zero and a failure to “properly” embed net-zero in the machinery of government. The latter is “vital to the credibility” of the government’s net-zero strategy, the CCC says.
The CCC also criticises the government’s broad failure to tackle demand, resulting in “higher dependence on engineered [CO2] removals” to meet the net-zero target.
The report says the government could do more to encourage shifts in diets, noting that it “has not set out any ambition for UK consumption of meat and dairy to be reduced”. Similarly, it could aim to reduce demand for flights, to “mitigate the risks relating to technology developments in aviation”.
In last year’s progress report, the CCC said credible plans and policies were only in place to deliver 13% of the emissions cuts needed to meet the sixth carbon budget, with another 5% “potentially on track”. More than a fifth (22%) of the carbon cuts required were subject to “major policy gaps”.
The situation has improved, says the new CCC report. The government’s net-zero strategy, published last October, means “credible” policies are in place to deliver nearly two-fifths of required emissions cuts by 2035.
Yet there are still “significant risks” relating to a third of the carbon savings that will be needed – and another 5% where plans are “either completely missing or currently clearly inadequate”.
This is shown in the chart below, with black lines illustrating historical emissions and the stepped area showing the UK’s legally binding carbon budgets. The government’s net-zero “delivery pathway” is shown in red and the CCC assessment of delivery risk relating to current government policies is shown in green (“credible”), yellow (“some risk”) and orange (“significant risk”).
(Beyond policies with significant risk attached, there is still a gap to meeting the government “delivery pathway”. This relates to areas where plans are missing or inadequate.)UK greenhouse gas emissions including international aviation and shipping (IAS), millions of tonnes of CO2 equivalent. Lines show historical emissions (black), the pre-strategy baseline (dashed grey) and the UK net-zero strategy’s “delivery pathway” (red). Projected emissions are shown under what the CCC defines as “credible” policies (green); credible policies, plus those with “some risk” (yellow); and policies that are credible, have some risk or “significant risk” (orange). Legislated carbon budgets levels are shown as grey steps. The first five budgets did not include IAS, but “headroom” was left to allow for these emissions. Source: CCC progress report. Chart by Carbon Brief using Highcharts.
The government has faced criticism for failing to publish its own emissions projections in light of the net-zero strategy, despite press reports that it has calculated the impact of those policies.
The Department of Business, Energy and Industrial Strategy (BEIS) and its predecessors have published energy and emissions projections every year since 2008, offering a crucial window onto the government’s progress in meeting the UK’s legal requirements on climate change.
The latest “2019” edition of the projections was published 18 months ago, in December 2020.
The government published its “net-zero strategy baseline” in March 2022, setting out how it expected emissions to have developed to 2050 in the absence of recent policy.
Yet it still has not published its own projections showing the emissions impact of its net-zero strategy, making it hard for the public or parliament to scrutinise the government’s plans.
In response to a parliamentary question in January 2022, BEIS minister Greg Hands said the government would publish updated projections “in due course”. A spokesperson for the department had not responded to questions about the projections from Carbon Brief, at time of publication.
The CCC assessment of government policy credibility is broken down by sector in the figure below. The distance from the dashed grey “baseline” to the solid black “government pathway” shows how far each sector needs to cut emissions to meet the sixth carbon budget, covering 2033-2037. The colour coding shows the level of delivery risk, from “credible” (green) through to “insufficient” (red).
To drill deeper into what is driving UK emissions, the committee has developed a new, more granular monitoring framework, containing hundreds of indicators – 317 by Carbon Brief’s count.
This partly explains the report’s length. At 619 pages, it is three times longer than those issued in 2020 and 2021, and more than six times the length of the 2019 edition.
Stark told a press briefing:
“This is the longest ever CCC progress report by some distance – and that’s because it’s very content heavy. We’ve got hundreds of these on-the-ground indicators of progress and that, in turn, gives us a much more detailed risk-based assessment.”
The framework has been two years in the making and is designed to check for “tangible changes”, across every sector of the economy. It will be used to create an online dashboard and ultimately, this may be updated in real time rather than annually, Stark tells Carbon Brief.
Indicators range from emissions from UK peatland to the demand for aviation, the share of homes rated “C” or higher for energy efficiency or the average carbon intensity of the car fleet.
For each sector (see below), the committee has mapped “required outcomes” to meet the UK’s carbon targets, below which it looks at “enablers” that are needed to make things happen and finally the policies that will need to be in place to steer delivery.
For example, the “required outcome” for the electricity sector is to be largely decarbonised with a carbon intensity – the emissions per unit of electricity generation – falling below 5g of CO2 per kilowatt hour (kWh) by 2035. Enablers include a faster planning process and policies
Of 50 key indicators, eight are “on track”, three are “slightly off track” and 11 are “significantly off track”. It is “too early to say” for 13 indicators, there is no data for another four and the final 11 indicators do not have a benchmark or target.
This year’s CCC progress report is the longest ever, at 619pp, partly due to mega new on-the-ground monitoring framework— Simon Evans (@DrSimEvans) June 29, 2022
Of 50 key indicators…
🟥11 “significantly” off track
🟧3 “slightly” off track
🟩8 on track
⬛️13 too early to say
⬜️11 no data
The report notes bright spots when it comes to electric vehicles (EVs) and decarbonising the power sector but points to “shocking” failures on making homes more energy efficient.
It also raises doubts over delivery, with Stark telling a press briefing:
“We are concerned whether the government will stay the course, whether they will follow up with more serious attention to those high level commitments with some proper detail.”
The CCC says that it made 283 recommendations to specific government departments in last year’s report and describes progress on implementing those recommendations as “multi-speed”. BEIS, for example, has “achieved” four of 17 priority recommendations set out last year, with five “underway”, five “partly achieved” and three “not achieved”.
The Department for Environment, Food and Rural Affairs (Defra) has not achieved any of the six priority recommendations it was given by the committee and Number 10 has ticked off only one of four, leaving the remaining three “not achieved”, the CCC says.
For the year ahead, the CCC says “the government needs to produce a document making clear what needs to be done and by whom”. This would set out roles, responsibilities and accountability for delivering the net-zero strategy.
The report also reiterates its call from last year for all government policy decisions to be subject to a “net-zero test”. This would “identify policy areas or aspects of decisions that present risks or potential shortfalls relative to the net-zero pathway”.
Finally, another key recommendation is for the Treasury to carry out a “net-zero tax review”. This should “correct distortions that penalise low-carbon technologies” such as heat pumps, the CCC says, as well as supporting the UK commitment to ending inefficient fossil fuel subsidies.
While the main focus of the report is on emissions within the UK, which are under the country’s jurisdiction and are regulated by the Climate Change Act, the CCC also devotes a lengthy section to the question of “consumption emissions”. This includes emissions outside the UK that result from consumption of goods and services, for example via imported food or manufactured goods.
The latest government figures on the UK’s consumption emissions were published the day before the CCC progress report and show a decrease of 2% between 2018 and 2019.
Latest UK consumption emissions (carbon footprint) statistics out today. Courtesy of great work by @dr_anneowen https://t.co/KgQ7NJ1KJ4 pic.twitter.com/Zmk1W655Fa— Aaron Goater (@aarongoater) June 28, 2022
The CCC recommends greater investment in the collection of consumption emissions data to “ensure it can capture key improvements in the carbon-intensity of imports” and to enable “prompt” publication of the figures, rather than them being released years in arrears.
The report says a stronger focus on demand (see above) would do more to cut consumption emissions. It also calls for a “carbon border adjustment mechanism” for sectors most at risk of “carbon leakage” – the government has committed to consulting on this idea – and for mandatory minimum climate-related product standards elsewhere.
(A new report from thinktank Green Alliance supports both measures but goes further and says the UK should set a target for cutting consumption emissions.)
Progress on decarbonising the UK’s road transport has been “relatively strong”, with “credible” policies either in place or under development for over half of the emissions cuts required.
This is particularly significant given that this sector, especially cars, accounts for the largest share of the nation’s emissions, at 23% of the total.
Most of this progress has come from actions to boost the market for electric vehicles, in order to meet the government’s target of ending petrol and diesel car and van sales by 2030.
The CCC commends the plan from the transport decarbonisation strategy for a zero-emission vehicle mandate aimed at car manufacturers by 2024, which will give them percentage targets for electric vehicle sales.
As the chart below shows, sales of fully electric cars actually outstripped the CCC’s own net-zero trajectory in 2021, growing to 12% of the new car market. Local efforts to curb air pollution have also seen electric bus sales increase sharply.
This came in spite of cuts to grants, which were recently ended completely as the government said it would focus instead on funding new public charging stations.
This is in line with the CCC’s priority areas. The committee says that while the government has released a “credible” plan for charging infrastructure, it has a lot of work to do to scale up instalment, avoid regional disparities and expand the use of rapid chargers on the roads.
Meanwhile, efforts to cut the overall number of people driving are highlighted as the “biggest policy shortfall”, even as high fuel prices could provide an opportunity to do so.
While the government has “taken the welcome step of acknowledging the need to reduce traffic growth” and has allocated some funds to boost walking, cycling and public transport, the CCC notes that it has “not specified a level of ambition” for these activities.
It also highlights a lack of planning for government targets to remove diesel-only trains from the rail network by 2040 and end the sale of new diesel small HGVs by 2035 and large HGVs by 2040.
As for the “major risks” identified by the CCC, the two described as having no actions in place relate to the CO2 intensity of petrol and diesel cars that continue to be sold before 2030, and disruptions to the car market.
For the former, the committee says there is a risk that unless the UK’s CO2 regime is made as ambitious as the EU’s, the UK could become a “dumping ground” for less efficient models. In the past, it notes that efficiency improvements “have been lost to shifts towards larger, heavier vehicles such as sports utility vehicles”.
In addition, the report notes that disruption to semiconductor supply chains has resulted in a 29% smaller new car market in 2021 than pre-pandemic levels. Unless efforts are taken to improve supply-chain resilience, it says the transition to electric cars could take longer.
Finally, Stark told a press briefing that changes to the UK’s tax regime by chancellor Rishi Sunak would be critical to achieving net-zero, “in particular, transport taxes as we move more quickly towards electric cars”.
Some of the CCC’s priority recommendations to the government for the transport sector include:
- Confirm details of the zero-emissions vehicle mandate in regulation (Q1 2023).
- Introduce regulations to ensure that efficiencies of new conventional vehicles continue to improve, reversing the trend towards larger vehicles (Q1 2023).
- Make sustainable transport such as public transport, walking and cycling key parts of the planning reforms in the upcoming levelling up and regeneration bill (2022).
In a press briefing ahead of the report’s release, Stark described the failure to insulate the UK’s buildings as a “stunning fail” by the government, at a time when household energy costs are spiralling.
In fact, the “majority” of required emissions reductions by 2035 in UK buildings, which account for 20% of total domestic emissions, are linked with policies that contain “significant risks”, the CCC concludes.
While several of the 14 building recommendations from last year’s progress report have seen partial progress, just one – proposals for a fossil fuel boiler phase-out – has been achieved.
Energy efficiency improvements in non-fuel poor homes is “the most significant policy gap in the buildings sector”, according to the CCC, with only the private rented sector covered by a consultation concerning raising minimum efficiency standards by 2028.
Other areas identified as issues include the decision not to bring forward the target date for energy efficiency improvements in social housing or ensure all new gas boilers are hydrogen-ready by 2025.
As the chart below shows, rates of homes being fitted with insulation collapsed in 2013 after prime minister David Cameron, in a bid to “get rid of the green crap”, cut spending on energy efficiency.
Stark said achieving the levels of insulation set out in the CCC’s “balanced” pathway to net-zero (pale bars) or the government’s own benchmark (diamonds) would be challenging based on the limited measures announced so far:
“It’s difficult to imagine that we will scale these dizzy heights again, as we did in [the early 2010s] without more of a focus. There are better ways, frankly, to deal with this high gas price than the package that was announced by the chancellor earlier this year.”
Continuing on this theme, Mike Thompson, director of analysis at the CCC, told the briefing:
“There has never been a better time to insulate your house, with gas prices at the levels they are, the pressure on imports and energy security. This is the time for a policy on energy efficiency. This is the time for a government to be bold and to help people do what a lot of people want to do anyway. There’s no shortage at all of good ideas out there.”
He listed incentives within stamp duty and council tax attached to energy efficiency upgrades, obligations at the point of sale and green mortgages as ideas that have been floated by various thinktanks and commentators. Thompson said there were hopes that the government would bring forward something on this in the coming months.
However, Stark tells Carbon Brief that there is a concern that this will entail a “robbing Peter to pay Paul approach” in which money is taken from a scheme to boost efficiency in public buildings and used to support homeowners instead.
Given the CCC identifies a shortfall in funding for public building decarbonisation as a shortfall in government plans, Stark says this is “just the wrong approach”.
In terms of the “major risks” identified by the committee, it says there is a lack of clarity and insufficient action on efforts to help people with rising energy costs, increase the heat-pump and building retrofit workforce, and raise public awareness of building decarbonisation.
It also notes that the government only has “a short space of time to finalise and clarify a wide range of policy proposals” in this area. Heat-pump expansion is singled out as a sector that lacks detailed plans, despite the pledge of a market-based mechanism involving boiler manufacturers selling rising numbers of heat pumps.
Some of the CCC’s priority recommendations to the government for buildings include:
- Create a public energy advice service for households (2022).
- Launch a “fairness and affordability call for evidence” around energy bills and then make reforms, with the aim of making heat pumps cheaper to run than boilers (2022).
- Publish a final policy plan on the market-based approach to low-carbon heat (2022).
- New policies for home efficiency, to ensure that owner-occupied homes reach a minimum energy performance of EPC C by 2035 (H1 2023).
- Increase the multi-year funding commitments for decarbonisation in public buildings up until 2025 to match the government’s ambition for public sector decarbonisation (H1 2023).
Nearly all of the policies within what the CCC refers to as the “manufacturing and construction” sector are classed as coming with either “some” or “significant” risks.
Industry made up 14% of the UK’s emissions in 2020 and, while the committee says there are a set of “several strong policy plans emerging”, they are not on track to deliver net-zero.
Out of the 15 relevant departmental recommendations from last year’s report, none have been fully achieved, the committee says.
In part, this is because the policies underpinning the decarbonisation of the country’s steel production, chemical manufacture and other industrial processes – notably, regarding hydrogen and carbon capture and storage (CCS) – are not in place.
The CCC says that, to address this, the government needs to finalise the design of its hydrogen and CCC business models.
Unlike the committee’s pathway, the government sees only slow progress cutting emissions in this sector until 2025, as the chart below shows, and emissions last year were 3% higher than the government’s planned trajectory. There is “some evidence that CCS deployment is a year behind schedule”, the report notes.
It also identified a lack of data to assess progress in the deployment of hydrogen and in the wider manufacturing and construction sector, making it harder to ascertain whether it is on track for net-zero.
The committee also highlights a disproportionate focus on hydrogen and CCS at the expense of other areas that are highly relevant for industrial decarbonisation, such as electrification, and resource and energy efficiency. This leaves the UK at risk of “taking a more expensive decarbonisation route with lower energy security”.
It says these key policy gaps should be filled, along with boosting low-carbon off-road mobile machinery and incentives for fuel switching at small facilities not covered by the UK emissions trading scheme (UK ETS), which account for 40% of industrial emissions.
The CCC notes that it has “greater confidence of delivery” for emissions reductions covered by UK ETS.
One “major risk” identified is carbon leakage for which the CCC says the government should consider introducing a carbon border adjustment and products standards “by 2030 or earlier”.
Due to a combination of nuclear outages and low wind speeds last year, emissions from electricity generation rose by 10% in 2021, meaning they were 44% higher than set out in the government’s net-zero pathway.
Despite this, the CCC frames the power sector, which accounts for 11% of UK emissions, as one of those with a more positive outlook overall.
The government has committed to 95% clean power generation by 2030 and a fully decarbonised sector by 2035. Within its existing plans, the committee says more than half of the proposed emissions cuts by 2035 are “credible”.
As the chart below for projected renewables operational capacity shows, the recent energy security strategy contains targets that are far beyond anything proposed by the CCC – albeit missing hard targets for onshore wind expansion.
Stark tells Carbon Brief that he has some concerns about the more ambitious pledges made by the government, with the power sector being a good example of this:
“I have a general worry about the willingness of this government to follow through on these high-level commitments that it has made, particularly in the last 12 months in the run up to COP26.”
He says that, in the CCC’s view, the commitments introduced in the energy security strategy are “right on the edge of what is possible”, meaning there is not much margin of error:
“The capital programmes that sit behind power-sector decarbonisation are so enormous that even a short delay introduced by some consultation or some concern from industry…would derail entirely the plan to be entirely decarbonised by 2035.”
Electricity market arrangements, onshore and offshore network capacity and supply chain bottlenecks are all identified in the report as potential sources of delay.
Unlike other sectors, the government currently has no overarching delivery strategy to achieve these ambitious goals.
The CCC highlights this as a key priority, and says it will publish a report later in 2022 setting out “how a decarbonised and resilient electricity system could be delivered”. It also says it will release a technical expert group report over the summer on electricity market design.
The most significant risks identified by the committee are around policies to deliver low-carbon flexibility, such as hydrogen and CCS power plants, at the scale required to balance a renewables-based system, and also around the delivery of new nuclear plants, which the government has pledged.
The CCC sees a role for nuclear in its net-zero strategy, although nowhere near the eight reactors that prime minister Boris Johnson has touted for the coming years. “But history tells you that governments need to commit to eight to get one,” Stark notes.
As with other sectors, such as road transport and food, one of the biggest criticisms from the CCC is aimed at the government’s unwillingness to address demand.
The energy security strategy was focused largely on supply, and the report notes that “there remains an urgent need for equivalent action to reduce demand for fossil fuels to reduce emissions and limit energy bills over the longer term”. This could include moving the policy costs resulting from historical subsidies from electricity bills onto general taxation.
Some of the CCC’s priority recommendations to the government for the electricity sector include:
- Publish a strategy for 95% decarbonisation of the grid by 2030 and fully by 2035 (Q1 2023).
- Through a “review of electricity market arrangements” develop a strategy for market design (2023).
- Remove legacy policy costs from electricity bills and instead pay for them via general taxation (2022).
- Publish a strategic framework to identify the power network requirements for net-zero (2022).
Agriculture and land use
The agriculture and land sectors are identified as the “worst-scored” sectors in the report, largely because the Department for Environment, Food and Rural Affairs (Defra) has yet to release its strategy for net-zero. Stark tells Carbon Brief:
“[We are] very, very critical about the land use and agriculture stuff because it is the last bit of the strategy where there isn’t policy in place – there’s a giant [environment secretary] George Eustice-shaped hole in the net-zero strategy at the moment, and it won’t be filled, we’re told, until next year.”
These areas currently amount to 12% of UK emissions and their levels have hardly changed in more than a decade.
According to the CCC, the land-use sector specifically needs to become a net sink – removing more CO2 than it emits – by the mid-2030s. This will require major peatland restoration and tree-planting efforts.
Half of the targeted emissions reductions were identified as coming with “significant” risks, while for the other half plans were “insufficient”.
There has been limited progress made since last year’s CCC progress report, with just one of the 27 recommendations for agriculture and land use – extending woodland creation – achieved, and a further eight “underway or making sufficient progress”.
Nevertheless, while tree-planting rates are currently on track, the report notes that they “do not meet the trajectory to hit UK-wide annual targets of 30,000 hectares by 2025”. Peatland restoration and hedgerow creation plans are also lacking in sufficient detail, the committee says.
The CCC says that, following Brexit, the reform of the EU’s Common Agricultural Policy, which has long been criticised for its impact on the environment, represents a “once-in-a-generation opportunity” to coordinate climate policy and targets.
However, it adds that this currently risks being squandered due to a lack of progress and detail around new subsidies, both in England and the devolved administrations. Therefore, there are “significant risks that farmers will not be willing to take up measures at the scale and timings needed”, the report notes.
Demand for high-emissions foods, such as red meat and dairy, were not addressed in the net-zero strategy or the recent government food strategy, and the committee says it is “unclear how the government intends to make up the shortfall in emissions abatement from the associated reduction in livestock numbers”.
The CCC says the government should “set out policies and plans for reducing meat and dairy consumption, including the role of the public sector, industry, and consumers”.
The required shift in land use in the UK will require significant changes in employment, including a shift to low-carbon farming and woodland and peatland restoration, and away from more high-emitting practices, such as livestock farming. This will require policy makers to be mindful of a “just transition”, the committee says.
Some of the CCC’s priority recommendations to the government for the agriculture and land sectors include:
- Set out a net-zero delivery strategy for the agriculture and land use sectors (Q1 2023).
- Ensure that funding and incentives are set at the correct level to meet the UK’s tree planting targets (2023).
The UK government’s net-zero strategy relies on more engineered removals of CO2 from the atmosphere than the CCC’s own “balanced” pathway to net-zero.
As it stands, there are no up-and-running facilities in the UK using technologies such as bioenergy with carbon capture and storage (BECCS) and direct air capture with carbon capture and storage (DACCS).
According to the committee, the government’s high reliance on these early-stage technologies “creates risk around the increased need for contingency emissions reductions from other sectors if deployment of engineered removals goes off-track”.
It also emphasises that engineered removals cannot be relied on to pick up the slack from other sectors if the government does not encourage enough emissions cuts – through dietary shifts, for example.
Nevertheless, the committee notes that all of its recommendations from last year’s progress report are now underway, with work so far limited to gathering evidence and developing supportive policies.
Now, the CCC says, the government should clearly communicate its position on market design, support mechanisms and governance.
It also notes that the upcoming biomass strategy will need to examine the sustainability of the bioenergy feedstock needed for BECCS, ensuring it does not rely on too much imported material. If this is not feasible, the government should look to other removal options or ways to cut emissions instead.
The UK’s fuel supply industries – predominantly fossil fuels, but to a lesser extent hydrogen and biomass – accounted for 8% of its emissions in 2020.
This is a sector that has been in the spotlight in recent months as fuel prices have surged and the government’s energy security strategy has supported an increase in North Sea oil-and-gas production to offset imports from Russia. The new energy profits levy has introduced a 90% tax relief for companies that invest in domestic extraction.
The CCC itself has not outwardly opposed new fossil fuel projects, but has said that North Sea production must have very low emissions, with cuts of 68% by 2030 to stay on track for its “balanced” net-zero pathway.
Instead, the government has set a target of a 50% reduction by 2030. The CCC says that the potential increased production in the North Sea makes cutting emissions from oil-and-gas production “even more important”.
It says that “even with some additional North Sea fossil fuel production as part of the energy security strategy, it should be possible to outperform the government’s pathway”. However, it also identifies a lack of a clear mechanism to drive the electrification of oil-and-gas platforms.
The CCC also notes that if gas prices remain high, this may limit the government’s recently enhanced plans to expand hydrogen production using gas with carbon capture and storage (CCS), known as “blue” hydrogen.
While some of this could be compensated with “green” hydrogen made using renewable power, the committee says there are questions around whether it would be sufficient to make up the shortfall.
Finally, the report notes that the biomass strategy must indicate how land can be freed up – for example, through lower livestock numbers resulting from less meat consumption – to make room for biomass growth.
Some of the CCC’s priority recommendations to the government for fuel supplies include:
- Clarify plans and responsibilities for electrification of oil-and-gas infrastructure through integration with the offshore wind planning process and/or the onshore grid (Q3 2023).
- Develop minimum emissions-intensity standards for domestic oil-and-gas production by the next licensing round (Q1 2023).
- Establish funding mechanisms to support the development of 10GW of low-carbon hydrogen production by 2030 (2023).
Aviation and shipping
A key area of risk identified in the report is the government’s reliance on “very nascent” technologies scaling up quickly to cut emissions from aviation, which currently accounts for 3% of the UK total.
Only one recommendation from the last progress report has been fully achieved, and the CCC says there are “significant risks” to achieving the government’s pathway.
A priority the committee identifies is for the government to implement its sustainable aviation fuel mandate, requiring suppliers to use an increasing blend of sustainable fuels, “as soon as possible this year with a strong set of criteria for the fuels included in the mandate”.
Importantly, it says there is no policy framework to cut growth in demand for flights if technologies such as zero-emission aircraft and sustainable fuels cannot be deployed as planned.
The committee notes that people are now more aware of the environmental impact of flights, and around two-fifths say they would pay more for tickets if it helped to address the environment or noise impact of flying.
But as the chart below shows, the prices of both short- and long-haul air travel are falling as a result of efficiency improvements, while the cost of rail travel – a potential alternative – is increasing.
The government is still yet to release its full “jet zero” strategy, which is due in July, and the CCC says it is important that fiscal policies – such as frequent flyer levies and subsidies for low-emission alternative forms of transport – are implemented to cut demand now.
As for shipping, which accounts for another 3% of UK emissions, the UK’s strategy relies on uptake of low-carbon fuels from the 2030s, and the CCC says the “slow nature of current international progress represents a significant delivery risk”.
A key priority recommendation is therefore for the UK to “take a leadership role” in pushing for a net-zero by 2050 target within the 2023 update of the International Maritime Organisation’s greenhouse gas strategy.
Waste and F-gases
Waste, particularly landfills, contributed to 6% of UK emissions in 2020, and is another area of concern for the CCC.
It identifies all the planned emissions cuts in this sector as either subject to “significant risks” or “insufficient plans”.
Out of 24 recommendations the committee made to the UK government and devolved administrations in its last progress report, none was judged to have been achieved in full.
It highlights risks around cutting emissions from landfill, with a lack of policy detail and risk of delay around the government’s pledge to eliminate biodegradable waste from landfill. The CCC also identifies wastewater emissions and energy from waste as policy gaps in the government’s plans.
The report therefore recommends that the government should publish a detailed plan to decarbonise the waste sector, which includes these areas.
Finally, fluorinated gases, or F-gases – which are used in refrigeration, air conditioning, heat pumps and inhalers and made up 3% of UK emissions in 2020 – are largely expected to be addressed by the existing F-gas regulation.
The CCC describes the regulation as “credible and likely to lead to the intended emissions reductions”, but identifies some small areas of concern – for example, around health providers’ plans to switch to lower-emissions treatments for asthma patients.