The Committee on Climate Change (CCC), the statutory body set up to advise UK government on climate change, has urged Parliament to restore investor confidence by reviewing its post-2020 policies.
In its first official report to the new Parliament, the CCC described progress to reduce emissions in recent years as “good” but voiced concerns over whether this can be sustained through the 2020s.
The UK is currently on track to meet its legally-binding carbon budgets for the period up to 2022, and in 2014 emissions decreased by an impressive eight per cent compared to 2013.
However, part of this decrease was thanks to a mild winter, and when accounting for the weather, emissions reductions re-adjust to just six per cent.
The reduction also largely reflects a switch from coal to gas in the power sector, with limited underlying progress elsewhere in the economy. The CCC therefore argues that the UK’s current trajectory is unsustainable in the long-term.
The CCC points to the lack of policies currently due to be in place beyond 2020 as the key risk to future progress and recommends the Government extend some of its current funding arrangements into the next decade to boost green investment.
A large number of the Government’s existing policies and funding programmes are due to expire before and shortly after 2020, including:
- The Local Sustainable Transport Fund, which provides funding to local authorities for sustainable transport initiatives (2016)
- The Renewable Heat Incentive (RHI) subsidy scheme for domestic and non-domestic renewable heat technologies (2016)
- The Energy Company Obligation (ECO) energy efficiency scheme for domestic properties (2017)
- The Green Deal energy efficiency funding scheme (no end date but funds running out)
- Emissions per mile efficiency targets for cars and vans (2020)
- Subsidies and grants for electric and ultra low emission vehicles (2020)
- The Levy Control Framework (LCF), which caps the Government’s funding for renewable energy subsidies, including the micro-generation Feed in Tariff (FiT) subsidy (2021)
- Climate Change Agreements (CCAs), which set voluntary targets for certain industries in return for tax deductions (2023).
Without early action to extend these schemes or establish replacements, the CCC argues that the Government risks creating an uncertain “stop-start” investment landscape that will damage green business and ultimately lead to higher costs further down the line.
Its recommendations for the Government are as follows:
- Electricity: Extend funding for renewable energy under the LCF to 2025 and set decarbonisation targets for the power sector through the 2020s to give the sector a 10-year lead time for investment
- Buildings: Establish an action plan to address the “significant shortfall” in low carbon heat deployment and extend the RHI scheme to 2020; set out the future of the ECO scheme and other energy efficiency initiatives beyond 2017; implement the zero carbon buildings policy for new homes from 2016 and non-domestic buildings from 2019; and develop a strategy to address increasing flood risks
- Transport: Maintain support for the up-front costs of electric vehicles beyond 2020 while they remain more expensive than conventional vehicles and push for stretching 2030 emissions targets for new cars and vans at the EU level
- Infrastructure: Make a number of key infrastructure decisions as early as possible, including the future of carbon capture and storage (CCS) and infrastructure for heat networks and electric vehicles
- Land and water management: Introduce firm measures to ensure that all agricultural soils are sustainably managed by 2030 and review the effectiveness of schemes to protect peatlands and other natural ‘carbon sinks’.
The recommendations have received praise from commentators across the economy.
Paul Raynes, director of policy and manufacturers’ organisation, EEF, said: “Industry will welcome the recognition of the current gap in government policy to deliver emissions reductions during the 2020s.
“The progress report shows significant potential for emissions reduction from industry but only if government takes the right approach, one that works with and supports industry during this challenging transition.”
The Government is due to respond to the CCC’s recommendations by 15 October 2015, but has already announced that it is scrapping its ‘zero carbon homes’ policy for new homes and buildings – one of the CCC’s main recommendations.