Does the Budget put the UK on course for net-zero emissions?
Chancellor Rishi Sunak's first Budget was brimming with green funding for natural climate solutions and carbon capture and storage (CCS), but key spending reviews and strategies on the horizon will clarify whether these will act as the launchpad for a net-zero carbon economy.
Sunak’s first Budget announcement came at a pivotal time for climate action in the UK. It has been 10 months since the Committee on Climate Change (CCC) provided the Government with its technical report on legislating for net-zero, which has since been enshrined into law for 2050. We are also eight months away from the start of COP26, the international climate summit being hosted in Glasgow that will likely see the UK advocate for stronger international climate policy.
As such, the details inside the Chancellor’s red briefcase acts as a litmus test for just how seriously ministers are pursuing the net-zero target, especially as calls for a “joined-up approach” to policy continue to grow.
At a glance, the red box was starting to turn green as Sunak announced a plethora of funding commitments ranging from flood defences to natural climate commitments, alongside dedicated funding for low-carbon heat and innovation.
Net-zero is mentioned 17 times within the ‘red book document’ while the phrase climate is mentioned more than 30 times. The Aldersgate Group’s chief executive Nick Molho summarised that the announcement “devoted more time to the environment and climate change than many of its predecessors”. That, as Molho acknowledged, doesn’t mean it is enough to act as a springboard towards net-zero emissions and some glaring policy gaps exist.
What does net-zero require?
The CCC’s technical report from last year concluded that current technological solutions and stronger policy frameworks could enable the UK to reduce emissions by around 97% against a 1990 baseline. The remaining 3% could be achieved by the scale-up of carbon capture and storage (CCS) solutions and hydrogen energy technology.
Data from Carbon Brief found that UK carbon emissions have fallen by 29% over the last 10 years, while the economy grew by 20%. A 2.9% reduction in emissions recorded in 2019 marked the seventh consecutive year that carbon emissions fell in the UK which, according to Carbon Brief, is the longest stretch on record.
A promising start, but the Government’s own projections show that the UK is set to miss future carbon budgets – which will require emissions to fall by an additional 31% by 2030. It is estimated that current government policies will deliver a 10% reduction.
The Budget allocated an additional £10m to support the design and delivery of net-zero policies and programmes and confirms that a spending review from the Treasury will have climate change as one of its key priorities. However, the lack of focus on low-carbon power makes it hard to decipher how energy efficiency and consumption will reflect net-zero ambitions. But the Budget does focus on a few key areas to combat climate change.
It is positive that the Budget has committed to spending £800m through a CCS Infrastructure Fund to establish CCS in at least two UK sites, one by the mid-2020s, a second by 2030.
The CCC has labelled CCS as a “necessity, not an option” and the Committee’s chairman Lord Deben responded to the Budget by claiming that the focus on CCS was a “realistic start”.
CCS has historically been viewed as an economically unviable option for decarbonisation in the UK, and estimates from the CCC claim that the technology could cost £70-80/MWh for deployment in the second half of the 2020s.
The Energy Systems Catapult suggests that CCS could provide around 20GW of capacity, although this is based on the balancing of decarbonisation through other technologies and lifestyle changes. By 2050, CCS would help emission from industry fall from approximately 100MtCO2 today to 10MtCO2, the Catapult adds.
Last month, BP, Eni, Equinor, Shell and Total signed up to spearhead the development of the Net-Zero Teesside project that aims to develop the UK’s first decarbonised industrial cluster through the use of carbon capture, utilisation and storage technology (CCUS).
Net-Zero Teesside aims to fully decarbonise a cluster of carbon-intensive businesses by as early as 2030, and research suggests that it will deliver £450m in annual benefits to the area and support up to 5,500 direct jobs.
Elsewhere, Drax, Equinor and National Grid have already published roadmaps fleshing out their plans to create the world’s first zero-carbon industrial hub in the Humber region by 2040. Both projects assist with the Government’s net-zero target and more succinct plans to develop the “world’s first net-zero carbon industrial cluster by 2040 and at least one low-carbon cluster by 2030”, as part of the Industrial Clusters Mission.
The Carbon Capture and Storage Association’s chief executive Luke Warren claimed that “the UK Government has clearly recognised that CCS is an essential tool if we are to achieve the net-zero target and they have now taken action to make CCS a reality”.
We could well see more information on how CCS infrastructure will be funded – likely a blend of the £800m fund and private investment – in the July spending review. The announcements match up to the CCC recommendations and we could finally be on the cusp of a CCS boon following years of the technology being stifled by Government.
Natural Climate Solutions
Tree-planting is viewed as another “essential” by those that have studied roadmaps to net-zero.
The CCC estimates that at least 30,000 hectares of woodland will need to be planted annually to meet tree-planting targets that are in line with the net-zero target, while also revamping farm practices in relation to climate change. An additional 20,000 hectares may be required if decarbonisation levels slow.
The Budget revealed a Nature for Climate Fund, which will invest £640m in tree planting and peatland restoration in England. It is estimated that this will increase the rate of tree planting by more than 600%. The ECIU’s director Richard Black pointed out on Twitter that natural climate solutions have 0.1% of the funding allocation of infrastructure (£640m vs £640bn) in this budget.
However, the Government estimates that 30,000 hectares of trees will be planted over the next five years to create a forest area the size of Birmingham.
This is well below the Conservatives manifesto commitment to triple tree-planting rates to 30,000 hectares annually. More worryingly is the fact that the Government’s efforts to plant 11 million trees by the end of this year is well below target, with Shadow Environment Secretary Dr Alan Whitehead claiming that the Government may be more than 70% behind the target.
The aforementioned Energy Systems Catapult study suggests that planting a forest of up to 50,000 hectares annually (around twice the size of Birmingham) may be required to offset up to 33Mt of carbon emissions equivalent by 2050.
As with CCS, the Government has made positive steps to ringfence funds for essential net-zero solutions. But in mimicking CCS policy to date, previous Government efforts mean the natural solutions efforts being made today will still be handicapped by historical levels on inaction.
Earlier this month, it emerged that the Government’s long-awaited 30-year National Infrastructure Strategy (NIS) had been delayed again. The NIS outlines how £100bn will be spent over this parliament, and the BBC states that investments will be used to “level up” regions and outline spending projections for transport and digital infrastructure.
This week’s Budget still focused heavily on infrastructure, with Sunak outlining more than £27bn for roads. This is arguably the most contentious announcement listed in the Budget.
Before the Budget, the BBC has reported that the new roads programme could be challenged in the courts after it learnt that proposals don’t take emissions reduction commitments into account.
Many green campaigners have been buoyed by the decision from the Court of Appeal, to uphold the challenge issued by environmental groups that the Heathrow expansion was unlawful on climate grounds. Indeed, naturalist and broadcaster Chris Packham has also launched a legal challenge to the £100bn HS2 project.
The official lines from the Government are that both HS2 and the roads programme will be “delivered alongside the government’s plans for decarbonising the transport sector” and are therefore aligned to the net-zero ambition. Unlike Heathrow, and the worry about additional polluting flights, the roads investment may coincide with the rapid growth of electric vehicles (EVs) – another central focus of the Budget – but there are still clouds of confusion as to the impact of this investment. The answers won’t likely be revealed until the NIS is published.
There have already been calls for the NIS to bolster plans on energy efficiency, zero-carbon infrastructure and resources. Carbon Brief is reporting that the £9.2bn in support for energy efficiency in existing homes, schools and hospitals pledged in the Conservative election manifesto could be allocated in the NIS. However, green groups are calling for a greater focus on renewable energy, which was noticeably absent from Budget announcements.
One thing to note is that the National Infrastructure Commission has previously claimed that the UK can deliver a net-zero carbon energy system by the 2050s without creating an economic burden.
More to come…
As is often the case with major policy announcements on climate change, the granular, science-based details are conspicuously missing and green groups and businesses will yet again have to wait as the conveyer belt of green legislation continues to churn out, Bills, strategies and amendments. But the immediate aftermath of the Budget suggests that higher ambitions are required to propel the UK towards its 2050 target.
Bigger things may well come in the Spending Review, the NIS and indeed the Autumn Budget – but with COP just around the corner and the UK already a quarter of the way through a “year of climate action” – the roadmap to net-zero remains undefined.