Department of Energy and Climate Change

The Climate Change Act 2008 establishes a long-term framework to tackle climate change. The Act aims to encourage the transition to a low-carbon economy in the UK through unilateral legally binding emissions reduction targets. This means a reduction of at least 34 percent in greenhouse gas emissions by 2020 and at least 80 percent by 2050. Introducing these carbon budgets now will ensure we meet the targets for 2050 and beyond.

A 'carbon budget' is a cap on the total quantity of greenhouse gas emissions emitted in the UK over a specified time. Under a system of carbon budgets, every tonne of greenhouse gas emitted between now and 2050 will count. Where emissions rise in one sector, we will have to achieve corresponding falls in another.

Each carbon budget covers a five-year period, with three budgets set at a time. The first three carbon budgets will run from 2008-12, 2013-17 and 2018-22. The fourth carbon budget, covering the period 2023-2027, must be set by 30 June 2011.

By setting the trajectory to our 2020 and 2050 targets through carbon budgets, we can provide a clear, credible, long-term framework for the move to a low-carbon UK economy, and give businesses and individuals the direction and certainty they need to play their part.

Level of first three carbon budgets set in law

Alongside Budget 2009, the Government announced that it agreed with the Committee on Climate Change's approach on carbon budgets and intended to set the levels of the budgets now for the period 2008-2022. These ‘interim’ budgets require a reduction in greenhouse gas emissions by at least 34 percent by 2020, relative to 1990 levels. We will strive to meet these ‘interim’ budgets through domestic effort in the sectors not covered by the EU Emissions Trading System (EU ETS).

You can find more details about the Government’s response to the Committee of Climate Change in the document on carbon budgets published alongside the 2006 budget, on the HM Treasury: Budget 2009 - Building a low carbon economy: implementing the Climate Change Act 2008 web page.

In May 2009, the levels of the first three carbon budgets were approved by Parliament and are now set in law as follows: 

They are implemented by the following Statutory Instruments:

• The Carbon Budgets Order 2009 (SI 2009/1259) which sets the level of the first three carbon budgets, and
• The Climate Change Act 2008 (2020 Target, Credit Limit and Definitions) Order 2009 (SI 2009/1258) which amends the level of the 2020 target; sets the limit on international credits in the first budget period and defines international aviation and international shipping for reporting purposes under the Climate Change Act.

An Impact Assessment on the EU Climate and Energy package, the revised EU ETS Directive and meeting the UK non-traded target through UK carbon budgets is available below:

For more information on the EU ETS, please see the EU Emissions Trading Scheme web page.

Carbon Budgets delivery across Government

In July 2009 we published the UK Low Carbon Transition Plan which set out the proposals and policies for meeting the first three carbon budgets outlined here. The Transition Plan also announced that we will pilot a system of departmental carbon budgets covering every central government department. These budgets represent a commitment from all parts of Government to taking their carbon impacts seriously, and to managing total emissions from the UK. In March 2010 every department published a Carbon Reduction Delivery Plan which sets out how they will meet their departmental carbon budget. For departments which influence emissions beyond the public sector operations that they are responsible for, their plans include a suite of indicators for monitoring progress in relevant sectors of the economy.

Carbon accounting

Carbon accounting will be used to determine compliance with the carbon budgets and targets established under the Climate Change Act. However, secondary legislation is needed to establish the details and in May 2009 Parliament approved the Carbon Accounting Regulations 2009 (SI 2009/1257) which sets out the detail of the carbon accounting system.

The regulations were amended in December 2009 to address a minor error in the original regulations. The amended regulations are available on the Office for Public Sector Information (OPSI): Carbon Accounting (Amendment) Regulations 2009 (SI 2009/3146) web page.

The carbon accounting system was the subject of a consultation, held between 28 October 2008 and 19 January 2009. The consultation and a summary of responses are available on the Consultation on carbon units, the net UK carbon account and carbon accounting web page.

Plus, in response to consultation responses seeking further clarity on how the carbon accounting system will work, we have published guidance to stakeholders, which is available below:

This guidance was updated in December 2009 to reflect the minor amendment to the original regulations.

Annual statement of emissions

In order to monitor progress towards the carbon budgets in each year, the Government must lay before Parliament an “annual statement of emissions”. These statements must include information on UK greenhouse gases emissions and use of carbon units – where they have been brought in to the UK from overseas to offset UK emissions, or sold to a third party outside the UK – to provide information on our progress towards meeting the budgets in a clear and transparent way. The first statement, relating to 2008, was published on 18 March 2010 and is also available on the Official Documents website.