Under the Climate Change Act, the UK Government has set ambitious targets for the UK emissions of greenhouse gases in 2050. There is currently a projected target of an 80% reduction in emissions based on a 1990 benchmark.
On the 19th July the House of Lords, following the House of Commons, approved the draft statutory instruction which legally binds the UK to a carbon budget of 1,725 MtCO2e for the period 2028 to 2032.
As a signatory of the Paris agreement (COP21), the UK has committed to “holding the increase in global average temperature to well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels”. This commitment has been further reinforced by the post-Brexit UK Government and sets out clearly our ambitions as a country to continue to be a leader in emissions reductions over and above those commitments under the EU.
The 57% target is more ambitious than the EU target of reducing emissions by 40% to 2030 and demonstrates the UK’s on-going commitment in continuing to pursue the low-carbon agenda despite the initial fears that a Brexit vote would damper the UK’s on-going commitment.
The newly formed BEIS (Business, Energy and Industrial Strategy) has clearly stated that climate change is still a significant threat and pursuing the ratification of COP21 and continuing the UK’s commitment to tackling climate is critical to our low carbon future, there has been concern by others than our ambitious plans are an act of economic self-harm.
Whilst the UK is on track to meet emissions reduction targets in the near-term there is still considerable concern that we are currently on target to meet the ambitious targets as detailed in the fourth carbon budget and the newly agreed fifth carbon budget. This suggests that the UK Government will need to seriously consider making strong policy decisions to bring the UK back in line with its ambitions.
The key concerns which arose from the House of Lords debate on the 19th July are:
It is anticipated that the impact of the UK’s carbon budgets and the subsidies supporting the UK electricity sector will be in the region of £150bn – £200bn between 2002 – 2035. This is a considerable cost which will be borne by the UK consumer and poses a risk to our industrial and commercial competitiveness over this period.
UK energy consumers are already seeing the impact of the current low-carbon ambitions through increased non-energy costs (levies and taxes to support low-carbon generation) and through increased compliance legislation (ESOS etc). The continued simplification strategy for carbon legislation has already seen the closure of the CRC – with the tax folded into the CCL from 2019 onwards. It is anticipated that the continued evolution of compliance markets, coupled with the strong policy decisions needed to meet the fourth and fifth carbon budgets, will:
The current state of uncertainty in a post-Brexit UK means that the current trajectory is our energy and carbon markets is likely to change. At this time, and until we start to see policy decisions from the UK Government to meet our fourth and fifth carbon budgets alongside the proposed impact of Brexit decisions on our UK energy market model and its links to the EU, it is difficult to fully gauge the anticipated risks or opportunities to energy consumers.
This uncertainty suggests that:
Beond is uniquely placed as a specialist energy market consultancy to consider the wider implications over and above the traditional energy procurement services. Our unique insights into current and future market conditions have been proven to deliver credible insights which have helped our clients deal with not only immediate energy and carbon savings but also support their organisations in planning for the future – which is a key requirement in a post-Brexit world.